Option Binary

All about trading binary options

CFD trading glossary. CFD expressions and terms clarified

Since surfing throughout the dense environment of this trading business might be confusing , the final thing in the mind should be needing to cope together with the current artifacts that are alien that’ll simply increase salt into the wound. To protect against that circumstance, this is actually your comprehensive dictionary glossary you require.

CFD (Contract for Difference) – It is actually a 2-party contract between a seller and a buyer, that agree to measuring the gap between value of a certain share, within a given time period. In cases like this, the customer doesn’t have to buy the share in order to control it, nor does he have to invest an amount equivalent to the share ‘s value.

Margin – The amount of money you need to invest in order to control a given share. The margin represents a certain percentage of the share ‘s full value and it serves to show the amount of money you risk losing. Although, with CFDs, you can lose more than your investment.

Leverage/Gearing – The store exposure you obtain by using the margin. The leverage will allow you to control a given X position only by investing a margined amount of money, representing a percentage of the X’s value.

Spread – The difference in the middle the Ask/Sell and the Bid/Buy costs.

Ask/Sell/Offer – The amount offered by the seller, which you need to pay in order to gain control over the share. It is the higher limit of the spread.

Bid/Buy – The amount at which you can sell the share towards other buyers. It is the lower limit of the spread.

Open position – The act of placing a trade, regardless of its nature.

Close position – The act of closing the trade, regardless whether the predicted outcome has been achieved or not.

Long – The act of purchasing an share, predicting that its value will climb, allowing you to resell it later on for benefit.

Short – The act of selling an share, predicting that its value will fall, allowing you to repurchase later cheaper and wait for it to climb again.

Pip/point – A single unit of a given amount. The spread (the difference in the middle the ask and the bid amount ) is measured in pips.

Holding costs/Overnight fees – A regular fee applied to all trading positions that are being hold open after the store is locked (5 PM New York time).

Hedging – A risk management performance relying on selling your position at a given amount and a given moment in the future, in case you suspect the store will move in the opposite direction of what you have predicted.

Stop-loss – An instruction placed into the system to automatically close your position if a specified amount is being reached or surpassed, with the purpose of cutting the losses.

Limit-profit – An instruction placed into the system to automatically locked your position when the goal amount is being reached or surpassed, with the purpose of guaranteeing cashing in the benefit.

Slippage – A phenomenon that occurs during high volatility marketplaces, when an share ‘s amount jumps or drops too fast for a stop-loss or limit-profit order to be executed in time.

Guaranteed stop-loss/Guaranteed limit-profit – A command prompt that functions exactly like regular stop-loss and limit-profit orders, with the difference being that, in this case, the action is guaranteed to be successful, regardless of any store slippages.

Trailing stop – It is a special limit-profit type of order that only closes your position if the store moves against your predictions. It allows you to set automatic thresholds for the trailing stop order to take into account when the store moves to your direction, which the system will see as reference points when deciding to close your position during store drawbacks.

New order – An automatic command prompt that will open a new position when the store reaches a cost specified in advance.
Gapping – The sudden and abrupt movements of the store, either in one direction or another, causing the amount to skip the costs in medially 2 given values (the one before the gap occurs and the one after it ends).

Charts/graphs – Visual representations registering amount movements over given periods of time. It is used for all types of stocks and its main role is to help identify patterns and place store predictions based on the information being displayed.

Trading platform – The software used to engage in the trading activity.

Quote – The amount being offered on the store, for a specific share.

Positive/negative settlements – The act of closing your position either with a benefit, or with a loss.

Futures – Financial contracts in the middle 2 parties, obligating the buyer to buy a specific share at a given amount and at a given moment in the future. Futures are usually used as hedges.

Fix return rate – A fix amount that is impassible to store fluctuations. The share delivering a fix return rate will not be influenced by store movements, regardless of their direction.

Variable return rate – A variable amount that is influenced by the movements of the store.

Rollover – Extending your position beyond its expiration date by opening a new position after closing the old one.

Underlying store – The totality of costs that serve as reference points for quotes. As the underlying store shifts, causing the underlying share costs to change, the quotes will change accordingly, for each case in particular.

Spread betting – Placing a bet on those stocks that have variable return rates.