Within the world of trading, and online trading, there is a separate vocabulary and jargon on itself, and one that everyone involved in any way possible with trading should know and learn before moving forward with your buying and selling. That said, let’s go over some basic binary option terminology and vocabulary for everyone’s benefit:

Call Option

A ‘call’ option is when a trader predicts the asset will increase in price.

Expiration Date

The time or date at which the Binary options cease to exist and the price is observed to see whether or not you are ‘in’ or ‘out of the money’.

Forex

Forex refers to the global foreign exchange market. Forex also refers to currencies and currency pairs. Forex tells you how much of one currency you can exchange for another. Currencies represent the largest asset class in the world as most people have their money in cash of their home country or that of another. The forex markets operate 24 hours a day, except on weekends. The forex market is also probably the world’s oldest market as people exchanged money since ancient times.

There are many participants in the global forex market. Those participants include large banks and financial institutions, central banks, institutional investors, currency speculators, corporations, governments, and retail investors.

Hi Lo

This type of Binary bet is simply whether the high or low of an asset in a trading day will be a set distance from the high or low of the previous day’s trading.

Ladder

The Ladder binary bet is a wager on whether the market will end the period of the trade above a certain level. For example a ‘gold to be above 1700’ bet will be settled at 100 if the market finishes above that figure or 0 if it finishes below it.

Options

Options are contracts which give the owner the right to buy or sell an underlying asset at a specified strike price on or before a specified date or time. Options are part of a larger class of financial products known as derivatives.

One Touch

A one touch binary bet is if the underlying market reaches a set price before the expiration of the trade. If the market does go through this set price it will be settled at 100, if not the bet will be settled at 0. For example, will gold touch $1700 within a given time frame? If gold reaches that price and the trader bet accordingly, the trader wins. If it doesn’t and the trader bet that it would, the trader loses. The trader can also wager that it won’t reach $1700.

Out of the Money (OTM)

This is where the asset price is out of the target range that the trader wagered and the options will become worthless. This is known as a losing bet.

Pip

A percentage in point, or Pip, is a unit of change in an exchange rate of a currency pair. An example is if the currency pair of the Australian Dollar versus the US Dollar is trading at an exchange rate of 1.0400 (1 AUD = 1.04 USD) and the rate changes to 1.0410, the price ratio increased by 10 pips.

Put Option

A ‘put’ option is when a trader predicts the asset will decrease in price.

Target

A Binary target bet is whether a particular market will end the trading period within a particular price range. As an example, Gold to Finish Up 10 – 20 would settle at 100 if the market finished the trading period between those two figures and would settle at 0 if it didn’t. Another example is Gold to finish between 1700 and 1710 before the expiration time.

Tunnel

This kind of Binary bet is whether the underlying market will trade between two barriers which are stated before the bet is made. The Tunnel bet might be Gold will trade between 1700 and 1720 during the course of the trading day. If the market hits any of these levels throughout the day the bet will be settled at 0, if it doesn’t touch any of these levels it will be settled at 100.

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