Nearly all of the terms that you will come across that are used in connection with binary options trading are also common terms used in the main markets. ITM, meaning in the money, and OTM, meaning out of the money, are two such cases. When applied to options trading, these terms are associated with both active price placement and the final standing at the time that the trade ends.
ITM meaning in trading
What does ITM Mean?
Answer: ITM means “In The Money”. When you have a successful trade you are “In The Money” and making a profit.
An ITM (In the Money) placement indicates that in an active binary options trade, the asset price is presently in a profitable position. For instance, should you have decided upon a Call position and the asset price is now higher than the price point when the trade was initiated, then that trade is said to be in the money at that point. In a closed trade, an ITM placement is one which ended in the placement you anticipated and so, ended in profit.
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What does OTM Mean?
Answer: OTM means “Out Of the Money”, which is when a placement is exactly the reverse. In an open trade, it indicates that the asset price is presently in a position that will not return a profit. An out of the money end occurs when your asset price forecast was not correct and therefore you lose your investment money. Needless to say, it is ideal for binary options trades to be in OTM placements as infrequently as is possible. If too many trades are finishing out of the money, corrections need to be made to your strategy and approach.
ITM and OTM binary options
Besides itm and otm binary options also have the rate trading status ATM meaning “At The Money”. ATM placements are quite rate in general when seeking a time to trade rare during times when a market is very active. Not many positions close in an ATM position. Any kind of price activity that pushes the asset price in a different direction from the entry price point (whether it be up or down) is going to be a determining factor when the trade ends.
Getting ITM with OlympTrade app is another way to get “in the money” while you are on the go where as other traders prefer the more advanced binary.com MT4 platform. Please stay alert that no trading platforms can guarantee that you end in ITM. As a matter of fact majority of trades finish OTM, so make sure to study our binary options trading course online.
The trade will either be ITM or OTM as long as some variance, regardless of how large or small, has taken place.An additional term is used which describes a tie. This is ATM (At the Money). The ATM position in an active trade is one wherein the closing asset price is identical to the entering price. In a trade that has ended, it means an end result of the closing price being precisely the same as the beginning, or entering price. When this happens, the investment funds are returned to you, the trader. Essentially, the position closes as a tie.
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Conclusion: itm and otm meaning in finance
Note that the final outcome of all positions will be determined by comparing the entry price with the closing price. These are some of the binary options basics to consider. Some amount of price movement will always be required in order for the trade to be profitable (or result in a loss). Even the smallest amount of price activity is enough to determine the outcome, a fact which means that profits and losses can certainly come from relatively flat market movement. Binary options trading is extremely unique in that it provides many different situations in which profits can be earned.
There is always good rule which is to apply general logic if you wish to get ITM and understand the meaning of ITM finance. You start off with the best binary options education you possibly can find and understand. If you are looking for a high yield binary trading strategy you could invest time into reading about touch options.
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