Ask
The price at which the market — or your broker — is willing to sell an instrument to you. It is always slightly above the bid.
Glossary
Every trading term, in plain language
The vocabulary of the markets, defined without jargon so you always know exactly what you are reading.
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A
B
Bid
The price at which the market is prepared to buy an instrument from you. The gap between bid and ask is the spread.
Bear Market
A sustained period in which prices fall and pessimism dominates market sentiment.
Bull Market
A sustained period of rising prices supported by strong investor confidence.
C
CFD
Contract for Difference: a derivative that pays the price difference of an asset between opening and closing, without ownership of the asset.
Commodity
A physical, tradeable raw material such as gold, crude oil, coffee or natural gas.
D
Drawdown
The decline from a portfolio's peak value to its lowest point before a new peak is reached.
E
Equity
The current value of your account including all open profit and loss.
F
Forex
The global over-the-counter market where national currencies are exchanged in pairs.
Fundamental Analysis
Valuing an asset by studying economic data, earnings, interest rates and geopolitical events.
L
Leverage
Borrowed exposure that lets you control a larger position with a smaller deposit. It magnifies both profit and loss.
Liquidity
How easily an instrument can be bought or sold without significantly moving its price.
Long Position
A trade opened in the expectation that the price will rise.
Lot
A standardised trade size. One standard forex lot equals 100,000 units of the base currency.
M
Margin
The capital reserved from your balance to keep a leveraged position open.
Margin Call
A notification that your equity has fallen too close to the required margin and positions may be closed.
P
Pip
The smallest standard price move in a currency pair, normally the fourth decimal place.
S
Short Position
A trade opened in the expectation that the price will fall.
Slippage
The difference between the price you requested and the price at which your order was actually filled.
Spread
The difference between the bid and the ask price, which represents the cost of entering a trade.
Stop Loss
A pre-set order that closes a losing position automatically at a defined price to limit risk.
Swap
The interest credited or debited when a leveraged position is held overnight.
T
Technical Analysis
Forecasting price direction by studying charts, patterns and statistical indicators.
Take Profit
A pre-set order that locks in gains by closing a position once your target price is reached.
V
Volatility
The speed and size of price movement in an instrument over a given period.
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