Beginner – Options Trading Quiz

Welcome to your Beginner - Options Trading Quiz

The beginner binary options trading quiz helps individuals understand the basic concepts of binary options trading. It covers topics such as the definitions of call and put options, expiry times, and the basic mechanics of binary trading. This quiz is perfect for beginners to ensure they have a solid understanding of the fundamentals before they start trading.

What is binary options trading?

A type of options trading with a fixed payout or nothing

Trading commodities only

Trading only in the Forex market

A form of stock investment

None

What does “in the money” mean in binary options?

A losing trade

A profitable trade

An unfinished trade

A trade with no potential to lose

None

What is the primary goal of binary options trading?

To own stocks

To invest for long-term growth

To predict price direction within a set period

To hedge other investments

None

In binary options, what does “expiry time” mean?

The time when trading is not allowed

The time a trade is placed

The start time of the trading day

The time the trade closes

None

Which asset classes are commonly traded in binary options?

Commodities, indices, currencies, and stocks

Real estate only

Artwork and collectibles

Cryptocurrencies exclusively

None

How does a “call option” work in binary options?

Holding a stock indefinitely

Investing in real estate

Predicting that the asset’s price will fall

Predicting that the asset’s price will rise

None

What does a “put option” represent in binary options?

Predicting an asset’s price will fall

Selling an asset at a future date

Predicting an asset’s price will rise

Holding an asset for dividends

None

In binary options, what does “out of the money” mean?

A profitable trade

A losing trade

A break-even trade

A guaranteed winning trade

None

Which of the following is a common binary options trading strategy?

Buy and hold

Hold and wait

Trend-following

Dividend reinvestment

None

10.

What is a “one-touch” binary option?

An option that pays out only at the end of the expiry

An option with no payout conditions

A low-risk, high-reward option

An option that pays out if a price hits a target once before expiry

None

11.

Which type of market analysis involves studying historical price patterns?

Technical analysis

Fundamental analysis

Economic analysis

Sentiment analysis

None

12.

What is a “boundary” or “range” option in binary trading?

An option that pays if the price stays within a set range until expiry

n option that requires the price to move outside a defined range

A short-term option that expires within minutes

An option that involves multiple asset classes

None

13.

What does “high/low” binary option mean?

Trading at the highest point of the day

Predicting only highs of an asset's price

Predicting the highest and lowest prices within a timeframe

Choosing whether the price will be above or below the current level at expiry

None

14.

What factor is essential when choosing an expiry time for a binary trade?

Asset popularity

Asset availability

Market volatility

Trading volume

None

15.

In binary trading, what is the “strike price”?

The highest price of the day

The predetermined price level for the option’s success

The price at which an option will expire

The entry price for purchasing stocks

None

16.

What is “fundamental analysis” in binary options trading?

Calculating profit and loss ratios

Tracking past price movements

Studying chart patterns

Evaluating economic factors to understand market direction

None

17.

Which of the following best describes the risk in binary options trading?

No risk

Fixed risk on each trade

Unlimited risk on each trade

Low risk compared to other trades

None

18.

Why is it essential to choose a reputable broker in binary options?

To ensure access to economic reports

To guarantee successful trades

To minimize trading fees

To ensure fair trade conditions and security of funds

None

19.

What is an “asset” in binary options trading?

Any financial instrument traded in binary options

Commodities exclusively

Property investments

Only stocks

None

20.

How does “payout percentage” affect binary options trading?

It sets the minimum loss on a trade

It changes the risk level of a trade

It shows the maximum profit potential on a trade

It guarantees profit on all trades

None

21.

What is the primary purpose of an expiration time in binary options trading?

To determine when the trade closes

To specify when the option becomes active

To increase the trade's payout

To reduce trade risk

None

22.

Which type of binary options trade involves predicting if an asset’s price will touch a specific level before expiry?

High/low option

Range option

Boundary option

Touch option

None

23.

In binary options, which strategy is best suited for stable, low-volatility markets?

Ladder trading

Boundary trading

Touch trading

Scalping

None

24.

Which of the following is a common mistake for beginners in binary options trading?

Using stop-loss orders

Following a trading plan

Using proper risk management

Trading without a strategy

None

25.

How can economic news impact binary options trading?

It always strengthens the currency

It only affects long-term trades

It has no impact on trades

It can cause sudden price movements

None

26.

What is the role of a “trailing stop” in binary options trading?

To lock in profits if the trade moves favorably

To guarantee profits

To determine the expiration time

To choose a fixed exit point

None

27.

What does it mean when an asset is “overbought”?

The price has been driven up to unsustainable levels

The asset has exceeded its supply

The asset is about to gain in value

The asset has limited trading volume

None

28.

In binary trading, what is a “double touch” option?

An option with a longer expiry time

A trade based on two different assets

An option predicting a price level will be touched at least once

An option predicting that an asset will touch a price twice

None

29.

What is the purpose of using Bollinger Bands in binary options trading?

o determine the asset’s trend direction

To forecast economic conditions

To identify volatility and potential price reversals

To measure trading volume

None

30.

Which chart pattern signals a potential bullish reversal in binary options?

Head and Shoulders

Double Bottom

Double Top

Descending Triangle

None

31.

How does the “Martingale strategy” work in binary options trading?

It involves using fixed trade sizes regardless of outcome

It involves setting a strict stop-loss

It involves doubling the trade size after each loss

It involves reducing trade size after each loss

None

32.

Which of the following terms refers to a period of inactivity in the price movement of an asset?

Consolidation

Retracement

Correction

Divergence

None

33.

What is the function of “support” in binary options trading?

It acts as a price ceiling

It acts as a price floor

It sets the expiration time

It determines volatility

None

34.

How does volume analysis help in binary options trading?

By confirming trends and potential reversals

By identifying asset ownership

By predicting exact price movements

By setting a fixed stop-loss

None

35.

What does “at the money” mean in binary options trading?

The trade resulted in a small profit

The trade returned a 200% payout

The option expired favorably

The option closed at the predicted price

None

36.

Which indicator is best for identifying trend reversals in binary options trading?

MACD

Fibonacci Retracement

Moving Average

RSI

None

37.

What is a “boundary” option in binary trading?

An option predicting whether the price will stay within a range

An option with a short expiration time

An option predicting a reversal

An option with a high payout

None

38.

Which of the following is considered a fundamental factor impacting binary options in currency trading?

Moving averages

RSI levels

Market liquidity

Political events

None

39.

Which of the following factors can affect the pricing of binary options?

The volatility of the underlying asset

The time until expiration

Market sentiment

All of the above

None

40.

What is the primary purpose of "demo accounts" in binary options trading?

To trade real money

To guarantee future profits

To practice trading strategies without financial risk

To learn about technical analysis

None

1 out of 4

Time's up

Beginner – Options Trading Quiz

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