Trading glossary.

Bid / Ask

Bid is the price at which the market will buy from you; Ask is the price at which the market will sell to you. The difference is the spread.

CFD (Contract for Difference)

An agreement to exchange the difference in price of an underlying asset between trade open and close, without owning the asset itself.

Leverage

Trading on margin — borrowing capital from the broker to control a larger position. 1:100 leverage means $1,000 controls $100,000 of exposure.

Lot

The standard unit of trade size. One standard lot in FX is 100,000 units of base currency. Micro and mini lots are 0.01 and 0.1 standard lots respectively.

Margin call

The point at which your account equity drops below the broker's minimum margin requirement and the broker requests additional funds (or closes positions automatically).

Pip

The fourth decimal place in most FX pairs (e.g. 1.10001 → 1.10002 is one pip). For JPY pairs, it's the second decimal.

Slippage

The difference between your requested price and the price your order actually executes at. Can be positive or negative.

Spread

Ask minus Bid. Your effective transaction cost at the moment of opening a position.

Swap (rollover)

The overnight financing charge or credit applied to positions held past the daily rollover. Calculated from the interest-rate differential between the two currencies in the pair.

Stop loss / Take profit

Pre-set order types that automatically close a position once a chosen price is hit — limiting loss or locking in profit respectively.

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