What the words mean

69 terms, in plain language. Where a word is commonly used to make something sound better than it is — “zero commission”, “risk-free”, “no requotes” — the entry says so, because that is the part a definition usually leaves out.

Contents

The price

What a quote is made of, and why two brokers showing the same market can cost different amounts.

Pip: The standard smallest increment of a price — 0.0001 on most currency pairs, 0.01 on yen pairs, because the yen is quoted to two decimals rather than four. What a pip is worth in money depends on the pair and your position size, and on yen pairs it also depends on where the price is.Pip value calculator
Pipette(fractional pip, point): A tenth of a pip: the fifth decimal place on most pairs, the third on yen pairs. Worth knowing chiefly because spreads are often advertised in them — 0.8 pips reads better as 8, and a comparison between two brokers quoting in different units is not a comparison at all.
Spread: The gap between the buy and sell price, and the cost of entering a trade. It is not fixed: it widens when fewer banks are quoting, which is why the same trade costs more at 03:00 UTC than during the London afternoon, and why it widens sharply in the seconds around a data release.When spreads widen
Bid and ask(offer): The bid is what you can sell at, the ask is what you can buy at, and the ask is always the higher of the two. A new position therefore starts slightly negative by the width of the spread — the market has to move in your favour before you break even.
Base and quote currency: In EUR/USD the euro is the base and the dollar is the quote: the price says how many dollars one euro costs. Which is which matters more than it sounds — it decides whether your position size is fixed in dollars or moves with the price, and therefore what margin it needs.Margin calculator
Lot: The standard unit of position size. One standard lot is 100,000 units of the base currency in forex, 100 troy ounces in gold. Most platforms allow 0.01 lots as a minimum, which is what makes small accounts tradeable at all.
Slippage: The difference between the price you clicked and the price you got. It happens when the market moves between the two, and it is not a fault or a trick — it is what a real market does when there is no longer anyone at your price. It runs both ways, though people only remember the losing side.
Gapping: A price jumping from one level to another with no trading in between, usually at a weekend reopen or on unscheduled news. It is the reason a stop loss is not a guarantee: if the price never traded at your level, your order fills at the first price that existed after it.
Liquidity: How much can be bought or sold without moving the price. Deep liquidity means tight spreads and fills near the price you clicked; thin liquidity means the opposite. It is a property of the hour and the instrument, not of the broker.
Volatility: How far a price moves in a given time. High volatility is not the same as opportunity — it widens spreads, makes stops more likely to be hit, and means a position sized for a quiet market is too large for a loud one.

Money and leverage

The account arithmetic that decides whether a losing run is survivable.

Leverage: Trading a position larger than your deposit. At 100:1, $1,000 controls $100,000 — and the whole $100,000 moves with the market, which is the half people forget. Leverage does not increase your exposure; it reduces the deposit required to take it. The exposure was always the risk.Margin calculator
Margin: The part of your balance set aside while a position is open. It is your own money, not a fee, and it is released when the position closes. It is also not what you can lose — the position value is much larger, and that is the number that moves.
Balance and equity: Balance is the money in the account with no open positions counted. Equity is balance plus or minus what open positions are currently worth. Equity is the real number: it is what margin is measured against, and it is what you would have if everything closed right now.
Free margin: Equity minus the margin already committed. It is what is available to open something new — and it is what shrinks as an open position moves against you, which is why a second trade that looked affordable this morning may not be by the afternoon.
Margin level: Equity divided by the margin in use, as a percentage. It falls as open positions lose and rises as they gain, and it is the number the platform watches to decide when to warn you and when to start closing positions on your behalf. Everything else on an account statement is information; this one has consequences.
Margin call: The warning that your margin level has fallen too far. It is not a request for more money so much as notice that the account is close to closing positions by itself. By the time it arrives, the decision worth making — position size — was made hours or days ago.
Stop-out: Positions being closed automatically because margin has run out, largest loss first, at whatever price exists at that moment. It is not a stop loss you chose, it happens whether you are watching or not, and in a fast market it can fill well past the level you expected.
Notional value: What the position is actually worth — one lot of EUR/USD at 1.0900 is $109,000, not the $1,090 of margin it required. This is the figure that moves with the market and the one to size a trade against.
Negative balance protection: A policy of writing off any account balance that goes below zero after a gap or a stop-out, rather than pursuing it. Whether it applies, to whom, and on which products is a matter of the specific terms — it is worth reading rather than assuming.
Drawdown: The fall from an account’s peak to its low point, in percent. It is the honest measure of a strategy, because it is what you would have had to sit through — and a 50% drawdown needs a 100% gain to recover, which is why the arithmetic of losing is worse than it feels.

What a trade costs

The full sum is spread plus commission plus financing. Anything quoting one of the three is quoting part of a price.

Commission: A fee per lot traded, charged on account types that offer tighter raw spreads in exchange. A "zero commission" account is not a free account — the cost has moved into the spread, and which is cheaper depends on how much you trade.
Swap(overnight financing, rollover): The daily charge or credit for holding a leveraged position past the daily rollover, reflecting the interest difference between the two currencies. On a position held for weeks it can outweigh the spread entirely, and it is the cost people are most often surprised by.
Triple swap: One day a week — usually Wednesday — the financing for the coming weekend is charged in one go, so the swap is roughly three times the normal amount. Nothing has changed except the calendar; spot settlement is two business days ahead.
Swap-free account(Islamic account): An account on which overnight interest is not charged, offered for religious reasons. It is worth reading the terms rather than the label: the cost is usually recovered elsewhere, through a wider spread or an administration fee after a number of days.
Conversion cost: What it costs when a profit or loss arises in a currency other than the one your account is denominated in and has to be converted back. Small on any single trade and easy to overlook entirely on an account that trades across several currencies, where it accumulates quietly in the background.
Inactivity fee: A charge applied to accounts that have not traded for a set period, usually some months. It is a genuine cost of opening an account and then leaving it, it appears in the fee schedule rather than the marketing, and it is one of the few charges that can reduce a balance while you are doing nothing at all.

Orders

What you are actually instructing the platform to do, and what it can and cannot promise.

Market order: Buy or sell now, at whatever the next available price is. It guarantees that you are in; it does not guarantee at what. In a quiet market the difference is nothing. Around a data release, or at the weekend reopen, it can be substantial — which is the trade-off you accept in exchange for certainty of execution.
Limit order: Buy below or sell above the current price. The mirror image of a market order: it guarantees the price or better, and does not guarantee you are filled at all. The market can turn a tick away from your level and leave without you, which is the cost of insisting on a price.
Stop order: An order that becomes a market order once a level is reached. Used to enter on a breakout, or as a stop loss to exit. Because it becomes a market order, the fill can be past the level in a fast market.
Stop loss: A stop order placed to close a losing position at a defined level. It is the single most useful order type and the most commonly misunderstood: it caps the loss in normal conditions and does not cap it across a gap.Size a position from its stop
Take profit: A limit order to close a winning position at a defined level. Setting it at the time of entry, rather than in the moment, is what stops a plan being rewritten by a position that is currently working.
Trailing stop: A stop that follows the price at a fixed distance as the trade moves in your favour, and stays put when it moves against. It locks in gains at the cost of being taken out by ordinary noise more often.
Guaranteed stop: A stop that fills at your level even across a gap, because the broker absorbs the gap risk instead of you. It is a real protection and the only order type that closes the hole an ordinary stop leaves — and it is not free: it carries a premium, and usually has to be placed further from price than a normal stop.
Requote: Being offered a different price than the one you clicked and asked to accept or decline, rather than being filled. Less common on modern execution models than it once was, which is why "no requotes" appears in marketing — it describes an execution model rather than promising you the price you saw.
Partial fill: Getting some of your order filled at one price and the rest at another, or not at all. It happens when there is not enough available on the other side at your price, so it is a size-against-liquidity problem rather than an execution fault — and it appears far more often at 03:00 than at 14:00.

Instruments

What is actually being traded, which is not always what it looks like.

CFD(contract for difference): An agreement to exchange the difference in an asset’s price between opening and closing. You never own the asset — no share certificate, no shareholder vote, no metal in a vault — which is what allows the position to be leveraged and short, and what makes it a different product from the thing it tracks.How our markets work
Spot forex: Currency traded for near-immediate settlement, as opposed to a future-dated contract. A retail forex CFD tracks the spot price without ever settling, which is why financing is charged nightly instead.
Major, minor and exotic pairs: Majors involve the US dollar and one other large currency and carry the tightest spreads. Minors are two large currencies without the dollar. Exotics pair a major with a smaller economy’s currency: wider spreads, thinner liquidity, and sharper moves on local news.
Contract size: How much of the underlying one lot represents — 100,000 units in forex, 100 ounces in gold. It is a convention rather than a law, and it varies between brokers on some instruments, which is why a position size that behaved one way elsewhere may not behave the same here.
Dividend adjustment: When a share or index goes ex-dividend, the price drops by roughly the dividend. On a share or index CFD an adjustment is applied to compensate — credited on a long position, debited on a short one — so the dividend itself is not a free gain or an unfair loss.
Rollover(expiry): Futures-based CFDs — many commodities and some indices — have expiry dates, and a position held through one is rolled into the next contract, usually with a price adjustment. It is a scheduled event worth knowing about before it arrives rather than after.
Contango and backwardation: Contango is when later-dated futures cost more than nearer ones, backwardation the reverse. It matters for commodity CFDs because rolling from one contract to the next in contango costs a little each time, which quietly erodes a long position held for months.

Analysis

The two ways people try to read a market, and what each is actually capable of.

Technical analysis: Reading price and volume history to judge probability. Its honest description is that it is a way of organising what has already happened; the indicators derive from the price, so none of them knows anything the price does not.Our hourly technical readings
Fundamental analysis: Judging a market by the economics behind it — rates, inflation, growth, earnings. The difficulty is not gathering the facts, it is that the price already contains everyone else’s reading of them, which is why a strong number can be followed by a fall.What is scheduled
Support and resistance: Levels where price has repeatedly stopped. They work partly because they are watched — a level everybody sees attracts the orders that make it hold — and stop working when everybody who was going to act on them has.
Moving average: The average price over a set number of periods, redrawn as each new period closes. It smooths out noise, and it lags by construction — the average of the last fifty hours cannot know about the fifty-first. It describes what the trend has been, which is useful, and never what it is about to do, which is what people want it for.
RSI(relative strength index): A momentum reading from 0 to 100 comparing the size of recent gains to recent losses. Above 70 is conventionally "overbought" and below 30 "oversold" — but a strong trend can hold an extreme reading for weeks, and selling into one is how people fight trends.
MACD: The distance between two moving averages, plotted against its own average. It reads as momentum: the lines crossing is the standard signal, and like every derived indicator it confirms a move that has already begun.
ATR(average true range): The average size of a period’s range, including gaps. It is the most practical indicator on this list because it is not a signal at all — it is a measure of how much room a stop needs in current conditions.
Pivot point: Support and resistance levels calculated arithmetically from the previous session’s high, low and close. The formula itself has no predictive content; the levels matter because a great many traders and a great many automated systems are drawing the same lines from the same numbers, and orders cluster where people are looking.

How the market is put together

Who is on the other side, and why the hour changes what you pay.

OTC(over the counter): Traded directly between parties rather than on an exchange. Spot forex is the largest OTC market in the world, which is why there is no single official price and no opening bell — only banks in different time zones quoting to each other.
Liquidity provider: A bank or institution quoting prices that a broker can pass on to its clients. How many are competing at a given moment is most of what determines your spread — which is why the same instrument costs more to trade at 03:00 UTC than at 14:00, with nothing about the instrument having changed.
Market maker: A model in which the broker quotes its own prices and may take the other side of your trade. It is a legitimate model and it creates a conflict of interest that has to be managed and disclosed rather than denied.
STP and ECN: Models in which orders are passed to liquidity providers rather than internalised, usually with a raw spread and a commission. The distinction matters less than the total cost and the quality of the fills, both of which are measurable and neither of which is the acronym.
Trading session: The conventional windows in which Sydney, Tokyo, London and New York are dealing. They are a convention, not a timetable — but the London and New York overlap really is where the liquidity is, and the gap between New York closing and Tokyo opening really is where spreads are widest.Which sessions are open now
Execution: What actually happens between your click and your fill: how fast, at what price, and how often the two differ. It is the part of a broker’s service that is measurable, and therefore the part worth asking for numbers about.

Risk and behaviour

The half of trading that is not about the market.

Position sizing: Choosing size from what you are willing to lose rather than from what feels right. It is the single habit that separates accounts that survive a bad month from accounts that do not, and it is done backwards by almost everyone at the start.Position size calculator
Risk-reward ratio: What a trade stands to make against what it stands to lose. A good ratio on paper means nothing if the target sits somewhere the price has no reason to reach — both halves have to be honest, and the loss is the half people round down.
Hedging: Holding an offsetting position to reduce exposure rather than to make money. Used deliberately it is a risk tool; used to avoid closing a loser it is a way of paying financing on both sides while the decision is postponed.
Correlation: The tendency of two instruments to move together. It is what turns what looks like diversification into one large position — three long positions in dollar pairs is a single bet on the dollar, sized three times.
Overtrading: Taking positions because you are watching rather than because the conditions are there. Costs accumulate per trade, so a method that trades five times as often needs to be five times as right merely to break even.
Revenge trading: Trading to recover a loss rather than because a setup exists — usually larger, usually immediately after. It is the most reliable way to turn a bad day into a bad month, and the standard remedy is mechanical: a maximum daily loss, after which the platform is closed.

Regulation and your account

The words that appear on legal documents, in plain language.

Regulator: The authority that licenses and supervises a firm. Which entity holds the licence matters as much as the licence: a group may have several, in several places, and only one of them is your counterparty.Our legal documents
Segregated funds: Client money held in accounts separate from the firm’s own, so that it is not the firm’s to use and is identifiable if the firm fails. The scope and the limits are set by the rules the firm operates under, and are worth reading rather than assuming.
KYC(know your customer): The identity and address checks a regulated firm is required to complete before it can take your money. It is not optional and not a delaying tactic — a firm that skips it is breaking the rules it is licensed under.
AML(anti money laundering): The obligations that require a firm to know where client funds come from, monitor for unusual patterns and report suspicion. It is why deposits from a third party are refused, and why a withdrawal usually has to return to the source it came from.
PEP(politically exposed person): Someone holding, or close to someone holding, a prominent public position. It is not an accusation — it triggers extra checks because such accounts carry a higher regulatory risk, and declaring it is part of the application.
Appropriateness assessment: The questions about your experience and understanding during onboarding. They exist because leveraged products are not suitable for everyone, and answering them to get past the form defeats the only protection in the process that is aimed at you.Practise first, on a demo
Complaint: A formal expression of dissatisfaction, which a regulated firm must record, investigate and answer within set timescales. It is a defined process with a paper trail, not a customer service conversation, and escalating it is a right rather than a favour.

A definition is not the same as having done it

Knowing what a margin call is and watching one approach are different experiences. A demo account costs nothing, never expires, and uses the same platform and prices as a live one.

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