Glossary

Profitbinarytrade Glossary

Assets

The underlying instrument used to determine a contract. It generally is a commodity, stock, currency pair, or index.

At-the-Money

A term used to describe a neutral loss and gain as a result of the asset value at expiry being roughly what it was at purchase.

Bearish

An adjective describing the opinion that an asset, or a market in general, will decline in price.

Contracts which enable investors to earn a fixed amount if they correctly predict whether the value of the given asset will reach above or below the strike price when it expires. If investors incorrectly predict the direction of the asset’s value, they lose their investment.

Bullish

An adjective describing the opinion that an asset, or the market in general, will rise in price.

Currency Pairs

The two currencies that comprise a Forex rate. A Forex rate is the amount that the first currency in the pair is worth expressed in terms of the second currency.

Double Up

If you believe that your trade will finish “In the Money,” Double Up enables you to open a new trade that is exactly the same as the current trade, except that it opens at what the current rate is now. This is an excellent way to open a profitable trade quickly as you do not have to re-enter all the same conditions that you did when first invested. This allows you to double your profits from the trade, enabling you to maximize your profits in the shortest amount of time.

Economic Indicator

A statistic that indicates current economic growth and stability, or the lack of it. Common indicators include, Gross Domestic Product (GDP), employment rates, inflation, retail sales, trade balance, etc.

Expiration Time

The time and date at which an option expires.

Early Closure

This is a feature that allows a trader to close a position before the expiry time.

Financial Ladder

Type of CFD in which you are presented with a range of rate levels at equal intervals (ladder rungs), combined with various expiry choices. And, of course, Call or Put CFDs.

Fundamental Analysis

One of the two major schools of analysis, used to examine macroeconomic data such as national economic health, central bank decisions, political events, or geologic events. At its core fundamental analysis believes that assets may be mispriced temporarily, but eventually will reach their correct price, and by examining macroeconomic events one can deduce what that eventual correct price will be.

Futures

A class of indirect securities, made up of a contract to either buy or sell some sort of commodity at a time in the future. A strict futures contract requires that the holder buy or sell the commodity, while a futures option gives them the choice to do so.

In-the-Money

This is the term used to describe when an investor reaches a position when they realize profit. A call option is in the money if the expiry price is situated above the strike price. A put option is in the money if the expiry price is situated below the strike price.

Investment Amount

The amount you invest on each trade you make.

Long-Term CFDs

Long-Term CFDs are trades that are opened for at least 24 hours. This type of trading is more suited for investors who wish to take advantage of technical and fundamental analysis.

Out-of-the-Money

This is a term used to describe when an investor reaches a position where they experience loss. A call option is out-of-the-money if the expiry price is situated below its strike price. A put option is out of the money if the expiry price is situated above its strike price.

Pairs

Pairs trade option is similar to a regular CFD. However, instead of deciding on which direction the price will head, you make your trade based on which asset will outperform the other in a given time frame.

Payout

The profit realized when a contract expires in-the-money.

Purchase Price

The underlining price of an asset when you open a trade and subsequently buy the asset.

Risk Management

If you are new to trading it is possible to make substantial losses as well as substantial profits. You can manage your risks via controlled risk trades, making it possible to put an absolute limit on potential losses.

Rollover

Rollover is an excellent feature that enables you to roll your expiry time over to the next available expiry time, if you believe that your option will expire “Out of the Money.” With the added time you can potentially turn a losing trade into a winning one. It is additionally a solid stop loss strategy to implement when trading. Please note that this tool is only available 10 minutes before your chosen expiry time and it can only be applied once per trade. Rollover is not available to use on the last expiry time of the day.

Selling Price

The underlining price of an asset when you close the trade and sell the asset.

Return on Investment / Profit

The amount you profit from each trade you make, excluding the investment amount.

Technical Analysis

One of the two major schools of analysis, used to examine historical data to predict future trends in an asset price. At its core technical analysis believes that all aspects of an asset price are built into the market price, and that trends can be deduced to determine the direction an asset will take.

Trading Hours

The markets open starting Sunday (22:00 GMT) and close Friday (20:00 GMT). However, there are some stock markets that operate on Saturday and Sunday.