Account currency
The currency your trading account is held in. Balance, margin and profit or loss are all shown in it, whatever instrument you trade.
Education — Glossary
Trading terms, in plain English
77 words you will meet on charts, order tickets and statements, each explained in a sentence or two. Search for one, or browse from A to Z.
77 / 77 terms
A
3 terms
B
6 terms
Balance
The money in your account from deposits, withdrawals and closed trades. It does not move with open positions; equity does.
Base currency
The first currency in a pair. In EURUSD it is the euro, and the price says how many US dollars one euro costs.
Bear market
A sustained period of falling prices. A trader who expects prices to fall is described as bearish.
Bid price
The price at which you can sell an instrument. It is the lower of the two quoted prices.
Breakout
A move through a level that had previously held price back, such as a support or resistance line. Not every breakout continues.
Bull market
A sustained period of rising prices. A trader who expects prices to rise is described as bullish.
C
7 terms
Candlestick
A chart shape that shows the open, high, low and close of one period. The body spans open to close; the wicks reach the high and low.
CFD
Contract for difference. An agreement to exchange the change in an instrument’s price between opening and closing a position, without owning the underlying asset.
Commodity
A raw material traded on markets, such as crude oil or natural gas. Commodity CFDs follow its price without physical delivery.
Contract size
The amount of the underlying that one standard lot represents, for example 100,000 units of the base currency for a forex pair.
Counterparty
The other side of your trade. With a CFD, the provider of the contract is your counterparty.
Credit
Funds added to an account that count toward equity and margin but are not part of the withdrawable balance.
Cross pair
A currency pair that does not include the US dollar, such as EURGBP or EURJPY.
D
4 terms
Day trading
Opening and closing positions within the same day, so that nothing is held overnight.
Demo account
A practice account funded with virtual money. It uses the same terminal and rules as a live account, without real money at risk.
Dividend adjustment
A cash adjustment applied to share and index CFD positions when the underlying pays a dividend. Long positions are typically credited and short positions debited.
Drawdown
The fall in an account from a peak to a later low, usually given as a percentage. It measures how deep a losing run went.
E
3 terms
Equity
Balance plus credit plus the floating profit or loss on open positions. It is what the account is worth at this moment.
Exotic pair
A currency pair that combines a major currency with a less traded one. Exotics usually have wider spreads and sharper moves.
Exposure
The full market value of an open position, as opposed to the margin set aside to hold it.
F
4 terms
Fill
The execution of an order. The fill price is the price at which the order was actually completed.
Floating P/L
The unrealised profit or loss on open positions. It changes with every price tick until the position is closed.
Free margin
Equity minus used margin. It is the amount available to open new positions or absorb losses on existing ones.
Fundamental analysis
Judging an instrument by economic and financial information, such as interest rates, growth, earnings or supply and demand.
G
3 terms
Gap
A jump between one price and the next with no trading in between, often seen when a market reopens after a weekend or after major news.
Going long
Buying, in the expectation that the price will rise. A long position gains when the price goes up.
Going short
Selling first, in the expectation that the price will fall. A short position gains when the price goes down.
H
1 term
I
2 terms
L
4 terms
Leverage
The ratio between the size of a position and the margin needed to open it. At 1:100, 1,000 of margin controls a 100,000 position. It magnifies losses as much as gains.
Limit order
A pending order to buy below the current price or sell above it. It fills only at the chosen price or a better one.
Liquidity
How easily an instrument can be traded without moving its price. Liquid markets usually have tighter spreads.
Lot
The unit in which trade volume is measured. One lot equals the contract size; 0.01 lot is one hundredth of it.
M
7 terms
Major pair
One of the most traded currency pairs, each of which includes the US dollar, such as EURUSD, GBPUSD or USDJPY.
Margin
The funds set aside as collateral while a position is open. It is not a fee; it is released when the position closes.
Margin call
A warning that equity has fallen to the margin call level, 100% of used margin on this platform. It is a signal to reduce risk or add funds.
Margin level
Equity divided by used margin, shown as a percentage. The higher it is, the more room the account has.
Market order
An order to buy or sell immediately at the current price.
Minor pair
Another name for a cross pair between major currencies that leaves out the US dollar.
Moving average
The average price over a set number of periods, redrawn as each new period closes. It smooths the chart to show direction.
N
1 term
O
1 term
P
5 terms
Pending order
An instruction to open a position later, when the price reaches a level you set. Limit and stop orders are both pending orders.
Pip
The standard unit of movement for a currency pair: the fourth decimal place for most pairs and the second for pairs quoted in yen.
Point
The smallest price step an instrument can move. On a five-digit forex quote, ten points make one pip.
Position
An open trade. It stays open, with a floating profit or loss, until you close it or a stop, target or stop-out closes it.
Position sizing
Choosing the volume of a trade so that the loss at your stop equals an amount you decided in advance.
Q
1 term
R
6 terms
Range
A market moving sideways between a floor and a ceiling rather than trending in one direction.
Realised P/L
Profit or loss that has been locked in by closing a position. It is added to or taken from the balance.
Requote
A new price offered in place of the one you asked for, because the market moved before the order could be filled.
Resistance
A price area where rises have stalled before. Sellers have tended to appear there.
Risk/reward ratio
The distance from entry to stop compared with the distance from entry to target. A 1:2 trade aims to make twice what it risks.
Rollover
The moment a position passes from one trading day into the next, when swap is applied.
S
10 terms
Scalping
A style of trading that holds positions for seconds or minutes and aims for small price moves.
Sentiment
The overall mood of market participants toward an instrument: optimistic, pessimistic or undecided.
Slippage
The difference between the price you expected and the price you were filled at. It appears mostly in fast or thin markets.
Spread
The gap between the bid and the ask. It is a cost of trading, paid as soon as a position is opened.
Stop loss
An order attached to a position that closes it if the price moves against you to a level you chose.
Stop order
A pending order to buy above the current price or sell below it, used to enter once a move is under way.
Stop-out
The automatic closing of positions when margin level falls to the stop-out level, 20% on this platform. The largest losing position is closed first.
Support
A price area where falls have stalled before. Buyers have tended to appear there.
Swap
The overnight financing adjustment on a position held past rollover. It can be a charge or a credit and differs for long and short positions.
Swing trading
A style of trading that holds positions for days or weeks to follow a larger move.
T
6 terms
Take profit
An order attached to a position that closes it once the price reaches your target.
Technical analysis
Judging an instrument from its price history: trends, levels, patterns and indicators on the chart.
Tick
A single change in the quoted price. Charts and floating profit or loss update on every tick.
Timeframe
The period each candle or bar covers, from one minute to one day. The same market looks different on each.
Trailing stop
A stop loss that follows the price at a fixed distance as a trade moves in your favour, and stays put when the price turns back.
Trend
The general direction of price over a period: up, down or sideways.
U
1 term
V
2 terms
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