Trading glossary
Plain-language definitions of common trading terms.
- Ask
- The price at which you can buy an instrument.
- Bid
- The price at which you can sell an instrument.
- CFD
- Contract for Difference: a derivative that tracks an asset's price without owning it.
- Leverage
- Using a small deposit to control a larger position. It magnifies both gains and losses.
- Lot
- A standardised trade size. One standard forex lot is 100,000 units of the base currency.
- Margin
- The deposit required to open and maintain a leveraged position.
- Margin call
- A warning that your equity is low relative to the margin you are using.
- Pip
- The smallest standard price move for a currency pair, usually 0.0001.
- Spread
- The difference between the bid and ask price.
- Stop-loss
- An order that closes a position at a set price to limit loss.
- Swap
- A fee or credit for holding a position overnight.
- Take-profit
- An order that closes a position at a set profit level.