Trading glossary

The words you will meet on every broker site and platform, explained in one or two sentences.

⚠️ Risk warning: CFDs and leveraged forex are complex instruments with a high risk of losing money rapidly. Most retail accounts lose money. This content is education only, not investment advice or a recommendation.

Ask: The price at which you can buy. Always slightly above the bid.
ATR (Average True Range): An indicator showing how far a market typically moves per candle; useful for setting stop distances.
Base currency: The first currency in a pair. In EUR/USD the euro is the base.
Bear market / bearish: Falling prices, or expecting prices to fall.
Bid: The price at which you can sell.
Bollinger Bands: An indicator that draws bands two standard deviations above and below a moving average, widening when volatility rises.
Bull market / bullish: Rising prices, or expecting prices to rise.
Candlestick: A chart bar showing open, high, low and close for one period.
CFD (contract for difference): A contract that pays the difference in price between opening and closing, without owning the asset.
Commission: A fixed fee per trade or per lot charged by some brokers in addition to, or instead of, a wider spread.
Demo account: A practice account with virtual money and real prices.
Drawdown: The fall in account value from a peak to a later low, usually shown as a percentage.
Economic calendar: A schedule of data releases and central bank events that can move markets.
Equity: Account balance plus or minus the profit or loss on open positions.
Expert Advisor (EA): An automated trading program that runs inside MetaTrader.
Free margin: Equity minus used margin: money available to open new positions or absorb losses.
Gap: A jump in price between one candle's close and the next candle's open, common after weekends or big news.
Hedging account: An MT5 account mode that allows several positions, including opposite ones, on the same symbol.
Leverage: Borrowed exposure: 1:100 lets $1 of margin control $100 of a position.
Limit order: A pending order to buy below or sell above the current price.
Liquidity: How easily a market can be traded without moving the price. Major pairs and gold are highly liquid.
Long: A buy position that profits if the price rises.
Lot: The unit of trade size. One standard forex lot is 100,000 units of the base currency.
MACD: Moving Average Convergence Divergence: an indicator built from the difference between two moving averages, used for trend and momentum.
Margin: The deposit set aside to keep a leveraged position open.
Margin call: A warning when the margin level falls to the broker's threshold; new trades are usually blocked.
Margin level: Equity divided by used margin, as a percentage.
Market order: An order to buy or sell immediately at the best available price.
Moving average (MA): The average price over a set number of candles, plotted as a line to show the trend.
Netting account: An MT5 account mode with one combined position per symbol.
Pip: The standard unit of price movement: 0.0001 for most pairs, 0.01 for yen pairs.
Point: The smallest price step a platform shows; often a tenth of a pip.
Position size: How many lots you trade; should be calculated from your risk and stop distance.
Quote currency: The second currency in a pair. In EUR/USD it is the US dollar.
Requote: A new price offered by the broker because the market moved before your order was filled.
Resistance: A price zone above the market where selling has repeatedly stopped rises.
Risk-to-reward ratio: The planned loss compared with the planned profit, for example 1:2.
RSI (Relative Strength Index): A momentum indicator from 0 to 100; readings above 70 or below 30 are often called overbought or oversold.
Short: A sell position that profits if the price falls.
Slippage: The difference between the expected price and the actual fill price.
Spread: The difference between the bid and ask prices; a cost on every trade.
Stop loss: An order that closes a position at a chosen loss level.
Stop order: A pending order to buy above or sell below the current price.
Stop out: The margin level at which the platform starts closing positions automatically.
Support: A price zone below the market where buying has repeatedly stopped falls.
Swap (rollover): An overnight financing charge or credit on leveraged positions.
Swap-free account: An account with no interest-based overnight swap, often called an Islamic account; other fees may apply.
Take profit: An order that closes a position at a chosen profit level.
Timeframe: The period each candle represents, from M1 (one minute) to MN1 (one month).
Trailing stop: A stop loss that follows the price at a set distance as the trade moves in your favour.
Volatility: How much and how fast prices move.