Trading dictionaryTrading glossary.
Trading glossary.
Plain language, no jargon.
Short, risk-aware definitions of the forex, CFD, and binary terms that most often trip up beginners.
24 terms- Balance
- The cash in your account excluding open positions — it updates only when a trade is closed.
- Bid & Ask
- Bid is the price a buyer will pay; ask is the price a seller wants. You buy at the ask and sell at the bid.
- Binary Option
- A fixed-time contract with an all-or-nothing payout. Structurally high risk and restricted or banned in many jurisdictions.
- Broker
- A firm that gives you access to the market to place trades. Its execution model, fees, and — crucially — its regulation determine how safe it is.
- CFD
- Contract for Difference — a derivative where you speculate on price movement without owning the underlying asset. Usually leveraged and high-risk.
- Demo Account
- A practice account with virtual money that mirrors live prices — the safe place to learn a platform before risking real funds.
- Drawdown
- The drop from a peak in your account balance to a trough — a key measure of how much risk a strategy really carries.
- Equity
- Your account balance plus or minus the running profit/loss of any open positions.
- Leverage
- Borrowed exposure that lets you control a large position with small capital (e.g. 1:100). It magnifies both profit and loss — high leverage is a fast way to lose your balance.
- Liquidation
- The forced closing of positions when your margin can no longer support them — often at a large loss. High leverage makes this happen fast.
- Long / Short
- Going long = buying, betting price rises. Going short = selling, betting price falls.
- Lot
- A standardized trade size. 1 standard lot = 100,000 units, 1 mini lot = 10,000, 1 micro lot = 1,000.
- Margin
- The capital a broker locks as collateral to keep a leveraged position open. Not a fee — it is returned when the position closes.
- Margin Call
- A broker warning that your equity has fallen near the minimum margin. If ignored, positions may be force-closed.
- Order Types
- Market order fills now at the best price; limit order waits for a better price; stop order triggers once a level is hit.
- Payout
- In fixed-time/binary products, the percentage return paid on a winning contract. Compare it against the full loss risked on a losing one.
- Pip
- The smallest standard price move in a currency pair — usually the 4th decimal (0.0001), or the 2nd decimal (0.01) for JPY pairs.
- Regulation
- Oversight by a financial authority (e.g. FCA, ASIC, CySEC, BAPPEBTI). Real regulation adds accountability — always verify a license at the regulator's own database.
- Slippage
- The difference between the price you expected and the price your order actually filled at — common during fast or thin markets.
- Spread
- The gap between the bid (sell) and ask (buy) price. It is a core cost of trading — the wider the spread, the more the price must move before you profit.
- Stop Loss
- A pre-set order that closes a losing trade at a chosen price to cap the loss. It is a risk-control tool, not a guarantee — gaps can fill it worse than set.
- Swap / Rollover
- An interest charge or credit applied for holding a position overnight, based on the interest-rate difference between the two currencies.
- Take Profit
- A pre-set order that closes a winning trade once price reaches a target, locking in the gain.
- Volatility
- How sharply and quickly a price moves. Higher volatility means bigger opportunity and bigger risk.