Learn
Trading glossary
Short, plain-English definitions of the words you meet when you trade forex and CFDs. Examples use made-up numbers and are not trading advice.
90 terms shown
A
- Account currency
- The account currency is the currency your trading account is held in: balance, margin, profit and loss are all shown in it.
- Actual, forecast and previous
- Actual, forecast and previous are the three figures an economic calendar shows for each release: the figure just published, the consensus forecast of economists surveyed beforehand, and the figure for the period before.
- Ask
- The ask (or offer) is the price at which you can buy an instrument.
B
- Balance
- The balance is the money in your trading account without counting open positions: deposits, minus withdrawals, plus or minus closed trades and charges.
- Banxico
- Banxico (Banco de México) is the central bank of Mexico, and its main mandate, set in Mexico's Constitution, is to keep the purchasing power of the national currency stable.
- Base currency
- The base currency is the first currency in a pair: the one whose price is being quoted.
- Bid
- The bid is the price at which you can sell an instrument.
- Buy limit
- A buy limit is a pending order to buy at a price below the current price.
- Buy stop
- A buy stop is a pending order to buy at a price above the current price.
C
- Central bank
- A central bank is the public institution that manages a country's or region's currency and sets its monetary policy, including the policy interest rate.
- CFD
- A CFD is a contract between you and a broker to exchange the difference in an asset's price between when the position is opened and when it is closed.
- Commission
- A commission is a fee charged per trade, usually per lot, on top of the spread.
- Commodities
- Commodities are raw materials such as oil, natural gas and metals.
- Consumer confidence
- Consumer confidence is a survey-based measure of how households feel about the economy, their finances and their spending plans.
- Core inflation
- Core inflation is the rise in consumer prices excluding items whose prices swing a lot, usually food and energy.
- CPI
- CPI (Consumer Price Index) measures the average change in the prices households pay for a basket of goods and services, and it is the most widely followed measure of inflation.
- Crypto CFD
- A crypto CFD is a contract on the price of a cryptocurrency, such as bitcoin, against a currency like the US dollar.
- Currency pair
- A currency pair is the price of one currency expressed in another, written as two currency codes such as EUR/USD.
D
- Demo account
- A demo account is a practice account that uses virtual funds and live-like prices.
- Deposit
- A deposit is money you add to your trading account.
- Drawdown
- Drawdown is the fall in an account's value from a peak to a later low, usually shown as a percentage.
E
- ECB
- The ECB (European Central Bank) is the central bank of the euro area, the countries that use the euro.
- Economic calendar
- An economic calendar lists scheduled releases and events, such as interest rate decisions, inflation and employment data, with their dates and times.
- Economic indicator
- An economic indicator is a statistic that measures part of an economy, such as employment, prices, output or spending, and is published on a regular schedule.
- Equity
- Equity is your account balance plus or minus the unrealised profit or loss of your open positions.
- Execution
- Execution is the filling of an order: the moment and price at which a buy or sell instruction becomes a trade.
- Exotic pairs
- Exotic pairs combine a major currency with the currency of a smaller or emerging economy, such as USD/MXN or USD/ZAR.
F
- Federal Reserve
- The Federal Reserve (the Fed) is the central bank of the United States.
- Forex
- Forex is the global market where currencies are bought and sold against each other.
- Free margin
- Free margin is the part of your equity not used as margin by open positions: equity minus used margin.
G
- Gap
- A gap is a jump in price between one quote and the next, with no trading in between.
- GDP
- GDP (Gross Domestic Product) is the total value of the goods and services an economy produces over a period, and its growth rate is the broadest measure of economic growth.
- Gold (XAU/USD)
- XAU/USD is the price of one troy ounce of gold in US dollars.
H
- Hawkish and dovish
- Hawkish and dovish describe the tone of a central bank or its officials on interest rates.
- Hedging
- Hedging is opening a position that offsets some or all of the risk of another one.
- High-impact event
- A high-impact event is a scheduled release or announcement that an economic calendar rates as the most likely to coincide with large price moves, often marked in red or with three icons.
I
- Indices
- An index measures the combined value of a group of shares, such as the largest companies on one stock exchange.
- Interest rate decision
- An interest rate decision is a central bank's announcement of whether it raises, cuts or keeps its policy interest rate, usually with a statement explaining why.
J
- Jobless claims
- Jobless claims count the people who filed a new claim for unemployment insurance benefits in the United States during the previous week.
K
- KYC
- KYC is the identity check a regulated financial company must carry out before and during a client relationship.
L
- Leverage
- Leverage lets you open a position larger than the money you put up as margin, shown as a ratio such as 1:100.
- Liquidity
- Liquidity is how easily an instrument can be bought or sold without moving its price much.
- Live account
- A live account is a trading account funded with real money, so gains and losses are real.
- Long position
- A long position is a buy trade: it gains when the price rises and loses when the price falls.
- Lot
- A lot is the unit used to set the size of a trade.
M
- Major pairs
- Major pairs are the most traded currency pairs, each combining the US dollar with another major currency.
- Margin
- Margin is the amount of your funds set aside to open and keep a leveraged position.
- Margin call
- A margin call is an alert that your equity has fallen to a set share of the margin your open positions use.
- Margin level
- Margin level is your equity divided by your used margin, shown as a percentage.
- Market order
- A market order is an instruction to buy or sell immediately at the best price available.
- Metals
- Metals are commodities such as gold and silver, usually quoted against the US dollar.
- MetaTrader 5
- MetaTrader 5 (MT5) is a multi-asset trading platform for desktop, web and mobile, with charts, technical indicators and automated trading through Expert Advisors.
- Micro lot
- A micro lot is one hundredth of a standard lot: 1,000 units of the base currency, written as 0.01 lots.
- Mini lot
- A mini lot is one tenth of a standard lot: 10,000 units of the base currency, written as 0.10 lots.
- Minor pairs
- Minor pairs, or crosses, are currency pairs between major currencies that do not include the US dollar.
- Monetary policy
- Monetary policy is what a central bank does to influence interest rates and the amount of money and credit in an economy, usually to keep inflation low and stable.
N
- Negative balance protection
- Negative balance protection means a client's losses cannot take the account below zero.
- NFP
- NFP (Non-Farm Payrolls) is the monthly change in the number of paid jobs in the United States, excluding farm workers, private household employees and the self-employed.
O
- One-click trading
- One-click trading is a platform setting that sends an order with a single click, without a confirmation window.
- Open position
- An open position is a trade that has been opened and not yet closed.
P
- PAMM
- PAMM (Percentage Allocation Management Module) is the system that shares one strategy's trading results across investors according to each investor's share of the funds.
- Pending order
- A pending order is an instruction to open a position later, when the price reaches a level you set.
- Pip
- A pip is the standard unit for measuring a change in a currency pair's price.
- Pipette
- A pipette is one tenth of a pip: the extra decimal place many platforms show in prices.
- PMI
- PMI (Purchasing Managers' Index) is a monthly survey of companies' purchasing managers about orders, output, employment and prices, summarised as one number.
- Position sizing
- Position sizing is deciding how large a trade to open, usually from the amount you are prepared to lose if the stop loss is hit.
- PPI
- PPI (Producer Price Index) measures the average change in the prices that domestic producers receive for their goods and services.
Q
- Quote currency
- The quote currency is the second currency in a pair: the price shows how much of it one unit of the base currency costs.
R
- Regulation
- Regulation means a financial company is licensed and supervised by a public authority that sets rules on capital, client money and conduct.
- Retail sales
- Retail sales measure the total value of goods sold by shops and other retailers, including online stores, and are used to follow consumer spending.
- Risk-reward ratio
- The risk-reward ratio compares the possible loss of a trade, up to its stop loss, with the possible gain, up to its take profit.
S
- Segregated funds
- Segregated funds are client money kept apart from the company's own money.
- Sell limit
- A sell limit is a pending order to sell at a price above the current price.
- Sell stop
- A sell stop is a pending order to sell at a price below the current price.
- Short position
- A short position is a sell trade: it gains when the price falls and loses when the price rises.
- Slippage
- Slippage is the difference between the price you expected and the price at which an order is actually filled.
- Spread
- The spread is the difference between the ask (buy) price and the bid (sell) price of an instrument.
- Standard lot
- A standard lot is a trade size of 100,000 units of the base currency, written as 1.00 lot.
- Stop loss
- A stop loss is an order that closes a position automatically when the price moves against it to a level you set.
- Stop out
- A stop out is the automatic closure of open positions when the margin level falls to the stop-out level.
- Swap
- A swap is the interest charged or paid for keeping a position open overnight, also known as rollover.
T
- Take profit
- A take profit is an order that closes a position automatically when the price reaches a gain level you set.
- Trade balance
- The trade balance is the value of a country's exports minus the value of its imports over a period: a surplus when exports are larger, a deficit when imports are larger.
- TradeLocker
- TradeLocker is a trading platform for web, desktop and mobile with TradingView charts built in.
- Trading session
- A trading session is the part of the day when a major financial centre, such as Sydney, Tokyo, London or New York, is open for business.
- Trailing stop
- A trailing stop is a stop loss that follows the price at a set distance as the trade moves in your favour, and stays put when the price moves against you.
U
- Unemployment rate
- The unemployment rate is the share of the labour force (people who are working or looking for work) who have no job and are actively looking for one.
- Unrealised P&L
- Unrealised P&L is the profit or loss of positions that are still open, at current prices.
V
- Volatility
- Volatility is how much and how quickly a price moves.
W
- Withdrawal
- A withdrawal is money you take out of your trading account to your own payment method.