Trading terms glossary
Essential Knowledge
Understanding trading terminology is essential at every stage of the trading journey. Whether you are learning the basics or refining your market knowledge, having clarity on key terms helps you make more informed decisions.
Our glossary provides clear, concise explanations of commonly used trading and financial market terms, designed to support both new and experienced traders.
Arbitrage
The simultaneous purchase and sale of an asset to profit from a difference in the price.
Ask Price
The price at which a trader can buy an asset. It is always higher than the bid price.
Asset Class
A group of financial instruments which have similar financial characteristics and behave similarly in the marketplace.
Base Currency
The first currency quoted in a currency pair. For example, in EUR/USD, EUR is the base currency.
Bear Market
A market condition in which the prices of securities are falling or are expected to fall.
Bull Market
A financial market of a group of securities in which prices are rising or are expected to rise.
CFD (Contract for Difference)
A financial derivative that allows traders to speculate on the price movements of various financial assets without owning them.
Commission
A fee charged by a broker or agent for executing a transaction.
Day Trading
The practice of buying and selling financial instruments within the same trading day.
Derivative
A financial security with a value that is reliant upon or derived from an underlying asset or group of assets.
Equity
The value of a trader's account after accounting for all open positions' profits and losses.
Exchange Rate
The value of one nation's currency versus the currency of another nation or economic zone.
Fibonacci Retracement
A popular technical analysis tool that uses horizontal lines to indicate areas of support or resistance at the key Fibonacci levels.
Forex
The marketplace where various national currencies are traded. It is the largest, most liquid market in the world.
Gap
A break between prices on a chart that occurs when the price of a stock (or another financial instrument) makes a sharp move up or down with no trading occurring in between.
Gearing
Another term for leverage; it refers to the ratio of a trader's own money to the total value of their open positions.
Hedge
An investment made with the intention of reducing the risk of adverse price movements in an asset.
Inflation
The rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.
Initial Margin
The percentage of the purchase price of securities that must be covered by cash or collateral when using a margin account.
Leverage
The use of borrowed funds to increase the size of a trading position beyond what would be possible with the trader's own capital.
Long Position
A position in which the trader expects the price of the asset to rise.
Lot
A standardized quantity of a financial instrument as set by an exchange or market regulator.
Margin
The amount of collateral required to open and maintain a trading position.
Margin Call
A broker's demand that an investor deposit additional money or securities so that the account is brought up to the minimum value.
Pip
The smallest unit of price movement in the Forex market, typically the fourth decimal place in a currency pair.
Spread
The difference between the bid price and the ask price of a financial instrument.
Stop Loss
An order placed with a broker to sell a security when it reaches a certain price, designed to limit a trader's loss.
Take Profit
A type of limit order that specifies the exact price at which to close out an open position for a profit.
Volatility
A statistical measure of the dispersion of returns for a given security or market index.
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