Binary Options Glossary
The ultimate A-Z dictionary for algorithmic and manual traders. Master the terminology used on Quotex, Pocket Option, and global financial markets.
A
Algorithmic Trading (Algo Trading)
A method of executing orders using automated pre-programmed trading instructions accounting for variables such as time, price, and volume. It removes the human emotional element from trading. Tools like the Quotex Bot and Pocket Option Bot are prime examples of algorithmic trading utilized by retail investors.
Asset
The underlying financial instrument being traded. In binary options, this usually refers to currency pairs (e.g., EUR/USD, GBP/JPY), cryptocurrencies (e.g., Bitcoin), or commodities (e.g., Gold).
B
Binary Options
A financial exotic option in which the payoff is either some fixed monetary amount or nothing at all. Traders predict whether the price of an asset will be above or below a specific strike price at a given expiry time.
Broker
The platform or firm that facilitates your trades. For automated trading, we strictly recommend platforms with high API execution speeds like Quotex or Pocket Option.
C
Call Option (UP)
A prediction that the price of the asset will be higher than the current price at the time of expiration. Represented by the Green or "Up" button on broker platforms.
Compounding
The process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes. Professional traders use our Daily Compounding Calculator to plan their account growth geometrically over time.
E
Expiry Time
The exact moment when a binary options trade closes and the outcome is determined. TradeFather Bot signals typically recommend short-term expiry windows, such as 1-minute, 3-minute, or 5-minute durations.
I
ITM (In The Money)
A term used to describe a winning trade. If you placed a "Call" and the price expired higher than your entry point, the trade closed "In The Money," and you receive your payout yield.
M
Martingale Strategy
A high-risk money management system where the trader doubles (or multiplies) the size of their trade after a loss. The goal is to recover the previous loss and secure the initial profit on the next winning trade. You should always calculate your risk exposure using a Martingale Matrix Calculator before attempting this strategy.
O
OTC (Over-The-Counter)
Financial markets that run directly between two parties without a central exchange. On platforms like Quotex and Pocket Option, OTC pairs are algorithmically generated by the broker on weekends when real global markets are closed. Learn more in our guide on Why Algorithms Excel in OTC Markets.
OTM (Out of The Money)
A losing trade. The prediction was incorrect at the time of expiration, resulting in the loss of the initial investment amount.
P
Payout / Yield
The percentage of profit a broker offers for a successful trade. If you invest $100 on an asset with an 85% payout, closing "In The Money" will return your $100 plus an $85 profit.
Put Option (DOWN)
A prediction that the price of the asset will be lower than the current price at the time of expiration. Represented by the Red or "Down" button.
S
Signal
An alert or recommendation to enter a trade on a specific asset at a specific time. High-quality signals, like those provided by the TradeFather Telegram Bots, calculate indicators automatically and tell you exactly what to trade.
V
Volatility
A statistical measure of the dispersion of returns for a given security or market index. High volatility means the price moves rapidly up and down. Binary Options traders generally prefer high volatility as it causes prices to break clearly away from the entry strike price.
Put the Terminology into Practice
Now that you understand how the market works, it's time to leverage technology. Deploy our automated algorithms to start generating high-probability signals.