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Trading Terminology

Trading Terminology

A lot of times people might think trading or the market is complicated because of all the foreign and bizarre jargon they hear flying around. The truth is, once you decode the terminology, things become much clearer.

Let's break down some key terms all traders should know  

Asset – The financial instrument on which the trade was made. An asset can be a stock, commodity, currency, or index.

At The Money – When a trade expires at the strike price you are At The Money. This means you neither profit nor lose.

Bears – This is a term used for traders that are generally pessimistic, and believe that prices are declining. This term can also be used for a declining, or "Bearish" market.

Broker – This is the provider of the platform with which you execute trades. Register with Stockpair here.

Bulls – This is a term used for traders that are generally optimistic, and believe that prices are moving up. This term can also be referred to a rising or "Bullish" market.

Call– Choosing "Call" on your binary option means that you think the price of the asset will be higher at the time of expiry than at the time of execution.

Commodities – These are basic goods that are mined, such as gold, oil, and so forth.

Currency Pair – This is matching the value of two currencies (such as USD and GBP). When you set your trade, you are determining whether the base (first) currency's value will rise or fall within the pair's relation.

Expiry Time or Expiration – When the option trade ends. The asset's price at this point compared to the price at placing decides if you win or lose your trade.  

Fundamental Analysis – The use of real world data on companies, industries, or countries to assess the intrinsic value of an asset.

In The Money – When a trade expires in the direction the trader determined compared to the strike price. If a trade ends "In the Money" the trader has won and profited.

Index or Indices – A grouped collection of stocks. The value of the index is comprised of the value of the individual stocks.

Market Price (Of Asset) – The current quoted price of an asset on the market.

Out Of The Money – When a trade expires in the opposite direction than the trader determined compared to the strike price. If a trade ends "Out the Money" the trader has lost.

Payout- The amount of profit the trader will receive if the trade end "In the Money"

Platform – The program provided by the broker to allow traders to execute trades.

Put Option – Choosing "Put" on your trade means that you thing the price of the asset will be lower at the time of execution than at the time of expiry.

Strike Price – The price of the asset at the time an option is executed.

Technical Analysis – A method to predict price movements and market trends by studying the charts and various parameters of past market behavior.

Trading Minimum – The minimum amount required to execute an option. This amount varies by broker 

 

 

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