Glossary
Learn the key terms in a simple way.
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Altcoin
Any cryptocurrency other than Bitcoin.
Arbitrage
Profiting from price differences of the same asset across different platforms.
Ask Price
The lowest price a seller is willing to accept for an asset. In other words, the price at which traders can open a Buy order.
Asset
Any financial CFD instrument that can be traded, such as currencies, Indices, cryptos, or commodities.
Bear Market
A market trend where prices of trading instruments are consistently falling.
Bid Price
The highest price a buyer is willing to pay for an asset. In other words, the price at which traders can open a Sell order.
Bitcoin
The first and most well-known cryptocurrency.
Blockchain
A decentralized digital ledger that records transactions securely.
Broker
A company that facilitates trades between buyers and sellers, basically provides traders access to a trading platform to facilitate trading transactions.
Bull Market
A market trend where prices of trading instruments are rising over a period.
Buy Order
An order to purchase an asset expecting its price to rise.
Candlestick Chart
A chart type showing price movement with open, high, low, and close values in the form of a candle.
CFD (Contract for Difference)
A financial contract that allows traders to speculate on asset price movements without owning the asset.
Chart Patterns
Visual formations on a price chart that can signal potential market direction.
Commission
A fee charged by brokers for executing trades.
Commodity
Raw materials or primary agricultural products traded on exchanges (e.g., gold, silver and oil).
Correlation
A measure of how two instruments move in relation to each other.
Cryptocurrency
Digital or virtual currencies secured by cryptography, like Bitcoin or Ethereum.
Currency Pair
Two currencies quoted together, where one is bought and the other is sold (e.g., EUR/USD, USD/JPY).
Day Trading
Opening and closing trades within the same trading day.
Demo Account
A risk-free trading account using virtual funds to practice strategies.
Derivative
A financial product derived from an underlying asset; all CFDs are derivatives as they derive prices from the underlying asset.
Drawdown
A reduction in account equity due to losses on open trades.
EA (Expert Advisor)
Automated trading software that executes trades based on programmed rules.
Economic Calendar
A schedule of upcoming economic events that may affect markets.
Equity
The total value of a trading account, including open positions.
Execution
The process of completing a trading order, the trade's execution takes place on trading platforms.
Fibonacci Retracement
A technical analysis tool for identifying support and resistance levels.
Fiat Currency
Government-issued currency not backed by a physical commodity (e.g., USD, EUR, GBP).
Fill
The successful execution of a trade order.
Floating Spread
A spread that varies depending on market conditions.
Forex (FX)
The global currency exchange market. Involves all currencies available worldwide.
Fundamental Analysis
Evaluating an asset & its price movement using economic and political data.
Gap
A price area on a chart where no trading occurred. In other cases when there is a difference in the closing price of the last candle and the opening price of the next candle.
Hedging
A risk management strategy to offset potential losses by taking opposite positions in the same asset.
High-Frequency Trading
Algorithmic trading that executes a large number of orders at very fast speeds.
Holding Period
The length of time a trade remains open.
IB (Introducing Broker)
A partner who refers clients to a broker in exchange for a commission.
Index
A measurement of a section of the stock market (e.g., S&P 500, Dow Jones).
Indicator
A tool used in technical analysis to forecast market trends.
Inflation
A general rise in prices across an economy.
Instant Execution
An order execution method where trades are placed at the prevalent market price.
Interest Rate
The cost of borrowing money, often a key driver in Forex.
IPO (Initial Public Offering)
When a private company goes public by offering shares.
Journaling
The practice of recording trading activities, including entry and exit points, trade rationale, and outcomes, to analyze performance and improve strategies.
J-Curve
A graphical representation of a trader’s or firm’s performance, often showing an initial loss followed by a recovery and potential profit over time.
Key Performance Indicator (KPI)
Metrics used to evaluate a trader’s success, such as profit/loss ratio, win rate, or risk-adjusted returns.
Leverage
Using borrowed funds to increase exposure to the market.
Limit Order
A buy or sell order at a specific price or better.
Liquidity
How easily an asset can be bought or sold without affecting its price.
Long Position
Buying an asset with the expectation that its price will rise.
Lot
The standard trading size in the market.
Margin
The capital required to open a leveraged position.
Margin Call
A broker's demand for additional funds to maintain open positions.
Market Order
An order to buy or sell immediately at the best available price.
MetaTrader 5 (MT5)
A powerful, multi-asset trading platform used globally.
Micro Lot
A trade size of 1,000 units of a base currency.
Momentum
The rate of acceleration of a security's price or volume.
Netting
A method that combines multiple positions into one to reduce risk exposure.
News Trading
A strategy based on market-moving news events.
Order Book
A list of buy and sell orders for a specific asset.
Overnight Position
A trade held open past the market close.
Pip
The smallest price move in a currency pair, usually 0.0001.
Portfolio
A collection of financial investments held by a trader or investor.
Position Size
The number of units involved in a trade.
Profit/Loss (P&L)
The outcome of a trade, either gain or loss.
Quote Currency
The second currency in a currency pair (e.g., USD in EUR/USD).
Requote
When the broker provides a new price due to market movement.
Resistance
A price level where an asset may face selling pressure.
Risk-Reward Ratio
A measure comparing potential profit to potential loss in a trade.
Rollover
Extending the settlement date of an open position.
Scalping
A trading strategy aiming for small, quick profits from tiny price movements.
Short Position
Selling an asset in expectation that its price will fall.
Slippage
The difference between expected and actual execution prices.
Spread
The difference between the bid and ask prices.
Stop Loss
An automatic order to close a trade to limit losses.
Support
A price level where an asset tends to find buying interest.
Swap
A fee or credit for holding a position overnight.
Swing Trading
Holding trades for several days to profit from short-term market moves.
Symbol
The abbreviation or code used to represent a trading instrument (e.g., EUR/USD).
Tape Reading
The practice of analyzing the flow of buy and sell orders in the market (the "tape") to gauge short-term price movements.
Trading Plan
A structured document outlining a trader’s strategy, including entry/exit criteria, risk management rules, and performance goals.
Transaction Cost
The total cost incurred in executing a trade, including commissions, spreads, and slippage.
Underlying Asset
The financial instrument (e.g., stock, currency, commodity) on which a derivative contract, such as an option or future, is based.
Unrealized P&L
The profit or loss on an open position that has not yet been closed, calculated based on current market prices.
Value at Risk (VaR)
A statistical measure used to assess the potential loss in a portfolio or trading position over a specific time frame at a given confidence level.
Volatility
The degree to which an asset’s price moves up or down over a given period. In brokerage trading, it is often measured using standard deviation and plays a key role in evaluating market risk and trading opportunities.
Volume-Weighted Average Price (VWAP)
A benchmark price calculated by weighting the price of an asset by its trading volume, often used to evaluate trade execution efficiency.
Wash Trading
An illegal practice where a trader buys and sells the same asset to create artificial market activity or manipulate prices.
Whipsaw
A market condition where prices rapidly move in one direction, then reverse, causing losses for traders with incorrect directional bets.
XAU/USD
The trading symbol for gold (XAU) priced in US dollars (USD). It shows how much one ounce of gold is worth in dollars. Traders and investors closely watch this pair because it reflects the global value of gold against the world’s primary reserve currency.
Yield
The income generated from an investment, shown as a percentage of its value. In trading, yield is commonly used to assess returns from fixed-income products like bonds and helps investors compare potential opportunities.
Year-to-Date (YTD)
A performance metric reflecting the total return or loss of a trading account or portfolio from the start of the calendar year to the present.
Zero-Sum Game
A market scenario where one participant’s profit directly equals another participant’s loss. This is often seen in derivatives trading and highlights the competitive nature of certain financial markets.
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