Glossary: Key Trading Terms Explained

How to Use This Glossary

This glossary covers the terms you will encounter on binary options trading platforms, in broker reviews, and in analytical content. Every term is specific to binary options and fixed-outcome trading — you will not find forex-only concepts like leverage, margin calls, or spreads here.

Each term links to a dedicated page with a full explanation, examples, and common misconceptions.

All Terms — Alphabetical

A

Asset — Any instrument available to trade: currency pair, cryptocurrency, commodity, or index.

At the Money (ATM) — When the current price equals the strike price at the moment of entry. Neither winning nor losing.

B

Binary Option — A fixed-outcome contract: you either receive a defined payout or lose your stake. No other outcome is possible.

Breakeven Win Rate — The minimum percentage of trades you must win to avoid losing money at a given payout rate.

C

Call Option — A prediction that price will be higher at expiry than at entry. The bullish direction.

Candlestick — A chart element showing open, high, low, and close price for a defined period.

D

Demo Account — A practice environment using virtual funds. No real capital at risk. Profits cannot be withdrawn.

Divergence — When a momentum indicator and price move in opposite directions — a signal that current momentum may be weakening.

Expiry Time — The moment at which a trade settles. Only the price at this exact moment determines the outcome.

I

In the Money (ITM) — When your prediction is correct at expiry. You receive your stake plus the payout percentage.

Indicator — A mathematical calculation applied to price data to help identify trend direction, momentum, or potential entry points.

M

Momentum — The rate at which price is moving in a given direction. The basis for indicators like RSI and MACD.

O

Out of the Money (OTM) — When your prediction is incorrect at expiry. You lose your entire stake.

OTC (Over-the-Counter) — Assets priced internally by the broker rather than an external exchange. Typically available on weekends.

Overbought — When an indicator suggests price has risen unusually fast relative to recent history. RSI above 70.

Oversold — When an indicator suggests price has fallen unusually fast. RSI below 30.

P

Payout Rate — The percentage of your stake returned as profit on a winning trade.

Put Option — A prediction that price will be lower at expiry than at entry. The bearish direction.

R

Refund / Rebate — Some platforms return a small percentage of the stake on losing trades. Reduces the effective loss but is usually linked to bonus conditions.

S

Strike Price — The price of the asset at the exact moment you enter the trade. This is the reference point against which expiry price is compared.

Support and Resistance — Price levels where buying or selling pressure has previously caused reversals.

T

Timeframe — The duration each candlestick on the chart represents. A 5-minute timeframe means each candle shows 5 minutes of price action.

Turnover Requirement — The trading volume that must be generated before bonus funds (and sometimes profits) can be withdrawn.

V

Volatility — The degree to which price fluctuates. High volatility means larger, faster price moves.

W

Win Rate — The percentage of trades that result in a profit over a defined sample.