Trading Glossary

• ASX 200

  The ASX 200, formally the S&P/ASX 200, is the benchmark stock index for Australia, tracking the 200 largest companies listed on the Australian Securities Exchange, weighted by free-float market capitalisation. It is heavily weighted towards financials and materials, especially the major banks and mining companies, so it is sensitive to interest rates and commodity prices.

• ATR (Average True Range)

  The ATR (Average True Range) is a volatility indicator that shows the average size of an asset's price range over a set period, usually 14. Developed by J. Welles Wilder, it accounts for gaps between sessions. The ATR does not indicate price direction, only how much the price typically moves, and traders often use it to set stop-loss distances and position sizes.

• After-Hours Trading

  After-hours trading is trading in shares after the regular stock exchange session closes, which in the United States is at 16:00 New York time. Many US companies publish quarterly results after the close, so after-hours sessions let traders react before the next day's open. Lower liquidity means wider spreads and larger price swings than during regular hours. Available hours depend on the broker.

• Altcoin

  An altcoin is any cryptocurrency other than Bitcoin. The term covers thousands of coins and tokens, from large networks such as Ethereum to small projects with limited trading. Altcoins are typically more volatile than Bitcoin and often less liquid, which can mean wider spreads. Many altcoin prices move closely with Bitcoin, particularly during sharp market-wide rises and falls.

• Ask Price

  The ask price, also called the offer price, is the lowest price at which the market is currently willing to sell an asset, and therefore the price at which a trader can buy. In a two-way quote it is the higher of the two prices. Long positions are opened at the ask, and short positions are closed at the ask. The ask minus the bid equals the spread.

• Balance

  Balance is the amount of money in a trading account excluding the profit or loss on positions that are still open. It changes when the trader deposits or withdraws funds, or when a position closes and its result is realised. Swaps and commissions charged on closed trades are also reflected in the balance. Equity, by contrast, includes floating profit and loss, so the two figures match only when no positions are open.

• Base Currency

  The base currency is the first currency in a currency pair and the one being priced. In EUR/USD, the euro is the base currency, and a quote of 1.1000 means one euro costs 1.10 US dollars. Buying the pair means buying the base currency; selling the pair means selling it. Lot sizes are also measured in the base currency, so one standard lot of EUR/USD is 100,000 euros.

• Bear Market

  A bear market is a sustained period of falling prices in a financial market, commonly defined for stock indices as a decline of 20% or more from a recent high. Bear markets are often linked to economic slowdowns, falling earnings or financial stress. Traders can seek to profit from falling prices by opening short positions, which CFDs allow. Its opposite is a bull market.

• Bid Price

  The bid price is the highest price at which the market is currently willing to buy an asset, and therefore the price at which a trader can sell. In a two-way quote it is the lower of the two prices. Long positions are closed at the bid, and short positions are opened at the bid. The gap between the bid and the higher ask price is the spread.

• Bitcoin

  Bitcoin (BTC) is the first and largest cryptocurrency by market capitalisation, launched in 2009 by a person or group using the name Satoshi Nakamoto. It runs on a public blockchain secured by proof-of-work mining, and its total supply is capped at 21 million coins. Bitcoin trades 24 hours a day, seven days a week, and is more volatile than major currencies and stock indices. It can be traded as a CFD.

• Bitcoin Halving

  A Bitcoin halving is a scheduled event that cuts the reward paid to Bitcoin miners for each new block by 50%, reducing the rate at which new bitcoins are created. It occurs every 210,000 blocks, roughly every four years, and most recently took place in April 2024. Halvings are written into Bitcoin's code and will continue until the 21 million supply cap is reached.

• Blue-Chip Stock

  A blue-chip stock is a share in a large, well-established company with a long record of stable earnings and a strong market position, often paying regular dividends. Examples include constituents of the Dow Jones Industrial Average or the top of the FTSE 100. Blue chips are generally less volatile than smaller companies, but their share prices can still fall sharply.

• Bollinger Bands

  Bollinger Bands are a volatility indicator consisting of a moving average, usually over 20 periods, with an upper and lower band set two standard deviations above and below it. Developed by John Bollinger, the bands widen when volatility rises and narrow when it falls. Prices touching the outer bands can indicate stretched conditions, and a narrow squeeze often comes before a larger move.

• Breakout

  A breakout is a price move beyond a defined level, such as resistance, support, a trend line or the edge of a trading range. Breakout traders enter in the direction of the move, expecting it to continue, often using buy stop or sell stop orders. A breakout that quickly reverses back inside the level is called a false breakout, a common risk of this approach.

• Brent Crude Oil

  Brent crude oil is a benchmark for light, low-sulphur crude originally sourced from the North Sea and one of the two main global oil price references, alongside WTI. Its benchmark futures contract trades on ICE Futures Europe. Brent is used to price a large share of the crude oil traded internationally, and it reacts to OPEC+ decisions, geopolitical events and global demand.

• Bull Market

  A bull market is a sustained period of rising prices in a financial market, commonly defined for stock indices as a rise of 20% or more from a recent low. Bull markets are usually associated with economic growth, rising company earnings and strong investor confidence. The term applies to any asset class, including currencies, commodities and cryptocurrencies. Its opposite is a bear market.

• Buy Limit

  A buy limit is a pending order to buy an asset at a price below the current market price. It is used when a trader expects the price to fall to a certain level and then rise, for example at a support level. The order executes at the limit price or lower. If the price never drops to the chosen level, the order stays unfilled until it is cancelled or expires.

• Buy Stop

  A buy stop is a pending order to buy an asset once its price rises to a level above the current market price. It is used to enter a long position when the price breaks through resistance, on the view that the upward move will continue. Once triggered, it executes as a market order, so the fill price can differ from the stop level during fast markets.

• CAC 40

  The CAC 40 is France's benchmark stock index, tracking 40 of the largest companies listed on Euronext Paris, weighted by free-float market capitalisation. It includes major luxury goods, energy, industrial and banking companies, many with significant international revenue. It is most active during the European trading session and is often traded alongside the DAX 40 and FTSE 100.

• CFD (Contract for Difference)

  A CFD (contract for difference) is an agreement between a trader and a broker to exchange the difference in an asset's price between the moment a position opens and the moment it closes. The trader never owns the underlying asset, can go long or short, and usually trades on margin, so gains and losses are both magnified. Our guide on what is a CFD covers costs and worked examples.

• CPI (Consumer Price Index)

  The CPI (Consumer Price Index) is a measure of the average change over time in the prices consumers pay for a basket of goods and services, and the most widely used gauge of inflation. Central banks watch it closely when setting interest rates. A CPI reading above market forecasts can raise expectations of higher rates, which often strengthens the currency and weighs on stock indices.

• Candlestick Chart

  A candlestick chart is a price chart in which each period is shown as a candle displaying four prices: open, high, low and close. The body spans the open and close, and thin lines called wicks show the high and low. A candle is usually drawn in one colour when the close is above the open and another when it is below. The technique originated in Japan.

• Carry Trade

  A carry trade is a strategy of borrowing or selling a currency with a low interest rate to buy one with a higher rate, earning the interest rate differential. In forex, the carry is received as a positive overnight swap for each day the position is held. The main risk is exchange rate movement: a fall in the higher-yielding currency can quickly outweigh months of accumulated interest.

• Central Bank

  A central bank is the institution that manages a country's or region's currency, money supply and interest rates, such as the US Federal Reserve, the European Central Bank or the Reserve Bank of Australia. Its main tools are setting the policy interest rate and buying or selling financial assets. Its decisions and statements move exchange rates, bond yields and stock indices, particularly when they differ from market expectations.

• Commission

  A commission is a fee a broker charges for executing a trade, separate from the spread. It is usually charged per lot or as a percentage of the trade value, and it is often applied on both opening and closing the position. Commission-based accounts typically offer tighter spreads, while commission-free accounts build the broker's fee into a wider spread. Comparing total cost requires adding the two together.

• Commodity Currencies

  Commodity currencies are the currencies of countries whose economies depend heavily on exporting raw materials, so their value tends to move with commodity prices. The main examples are the Australian dollar (iron ore, coal, gold), the Canadian dollar (crude oil) and the New Zealand dollar (dairy and agricultural products). The Norwegian krone, linked to oil, is sometimes included.

• Contract Size

  Contract size is the quantity of the underlying asset represented by one lot of a CFD or futures contract. In forex, one standard lot is 100,000 units of the base currency; for gold CFDs, one lot is commonly 100 troy ounces. Contract size determines the money value of each price move and the margin required, and brokers list it in the contract specifications for each instrument.

• Copy Trading

  Copy trading is a form of trading in which an investor's account automatically replicates the trades of another trader, usually in proportion to the funds allocated. The investor chooses whom to follow, often based on published performance, risk and drawdown, keeps the funds in their own account and can pause or stop copying at any time. Copied trades carry the same market risk as manual ones, and past performance does not guarantee future results.

• Crypto CFD

  A crypto CFD is a contract for difference that tracks the price of a cryptocurrency such as Bitcoin or Ethereum, letting a trader go long or short without owning coins, a wallet or an exchange account. Crypto CFDs are traded on margin in a market that is often open seven days a week, so price moves are large and losses can build quickly. Retail access is restricted in some jurisdictions, including the UK.

• Cryptocurrency

  A cryptocurrency is a digital asset that uses cryptography and a decentralised network, usually a blockchain, to record ownership and transfers without a central authority such as a bank. Bitcoin, launched in 2009, was the first. Cryptocurrency prices are highly volatile and trade around the clock. Traders can gain price exposure without holding coins through crypto CFDs, where these are permitted.

• Currency Pair

  A currency pair is the quotation of one currency's value against another, such as EUR/USD. The first currency is the base currency and the second is the quote currency; the price shows how many units of the quote currency buy one unit of the base. Buying the pair means buying the base and selling the quote. Our guide to major currency pairs explains how pairs are quoted and traded.

• DAX 40

  The DAX 40 is Germany's benchmark stock index, tracking the 40 largest companies listed on the Frankfurt Stock Exchange by free-float market capitalisation. It expanded from 30 to 40 companies in September 2021. The DAX is a total return index, meaning its value assumes dividends are reinvested. It is heavily weighted towards industrial, automotive and chemical companies with significant export exposure.

• Day Trading

  Day trading is a trading style in which all positions are opened and closed within the same trading day, so none are held overnight. Day traders aim to profit from intraday price moves and avoid overnight funding charges and the risk of price gaps between sessions. The style requires time in front of the screen, tight cost control and strict risk management, because frequent trading multiplies spread and commission costs.

• Demo Account

  A demo account is a practice trading account funded with virtual money that uses live or near-live market prices. It lets a trader learn a platform, test order types and try a strategy without risking real funds. Results on a demo account do not fully reflect live trading, because slippage, fill quality and the emotional pressure of real money differ. Our guide on how to start trading explains how to use one properly.

• Dividend

  A dividend is a payment a company makes to its shareholders from its profits, usually in cash and on a regular schedule such as quarterly or twice a year. The amount is set by the company's board and is not guaranteed. Only investors who buy the shares before the ex-dividend date receive it. Holders of share CFDs receive a cash adjustment instead of the dividend itself.

• Dividend Adjustment

  A dividend adjustment is a cash amount a broker credits or debits to a CFD position when the underlying share or index goes ex-dividend. Long positions are usually credited and short positions debited, reflecting the drop in price that occurs when a dividend is paid out. The adjustment keeps CFD holders economically neutral to the dividend rather than creating a profit or loss from it.

• Dow Jones Industrial Average

  The Dow Jones Industrial Average, often called the Dow, is a stock index of 30 large companies listed in the United States. First published in 1896, it is one of the oldest stock indices still in use. Unlike most major indices, it is price-weighted, so companies with higher share prices have more influence on its movement regardless of their overall market value.

• Drawdown

  Drawdown is the decline in a trading account or strategy from its highest value to a subsequent low, usually expressed as a percentage. An account that grows to $12,000 and then falls to $9,000 has a 25% drawdown. Maximum drawdown, the largest such decline over a period, is widely used to judge a strategy's risk, including when choosing traders to follow on copy-trading platforms.

• Dynamic Leverage

  Dynamic leverage is a system in which the maximum leverage available on an account changes automatically in tiers, most commonly according to account equity. Leverage is highest on smaller balances and is reduced as equity grows, which increases the margin required for the same position size. The tiers and their thresholds are set out in the broker's account terms.

• Earnings Per Share (EPS)

  Earnings per share (EPS) is a company's net profit divided by the number of its ordinary shares outstanding, showing how much profit is attributable to each share. A company earning $2 billion with 1 billion shares has an EPS of $2. Analysts publish EPS forecasts ahead of results, and a gap between reported and expected EPS often moves the share price sharply.

• Economic Calendar

  An economic calendar is a schedule of upcoming economic data releases, central bank decisions and other events that can move financial markets. For each event it usually lists the time, country, previous result and market forecast. Traders use it to prepare for volatility around releases such as interest rate decisions, inflation data and employment reports, when spreads can widen and prices can gap.

• Equity

  Equity is the current value of a trading account, calculated as the account balance plus or minus the floating profit and loss on open positions. If the balance is $5,000 and open positions show a $300 loss, equity is $4,700. Equity changes with every price movement, while the balance changes only when positions close. Brokers use equity, not balance, to calculate free margin and margin level.

• Ethereum

  Ethereum is a blockchain network that runs smart contracts, programs that execute automatically when set conditions are met, and supports decentralised applications. Its native cryptocurrency is ether (ETH), the second-largest cryptocurrency by market capitalisation. Ethereum moved from proof-of-work mining to a proof-of-stake system in September 2022. Its price can be traded as a CFD.

• Ex-Dividend Date

  The ex-dividend date is the first trading day on which a share trades without the right to its next dividend. Investors who buy on or after this date do not receive the upcoming payment. On the ex-dividend date, the share price typically falls by roughly the dividend amount at the open. Brokers make dividend adjustments to share and index CFD positions on this date.

• Expert Advisor (EA)

  An Expert Advisor (EA) is an automated trading program that runs on the MetaTrader platform and opens, manages and closes trades according to coded rules. On MetaTrader 5, EAs are written in the MQL5 language and can be tested on historical data with the built-in strategy tester. An EA trades only while the platform is running, which is why some traders host it on a virtual private server (VPS).

• FTSE 100

  The FTSE 100 is a stock index of the 100 largest companies listed on the London Stock Exchange, weighted by market capitalisation. Many of its constituents earn most of their revenue outside the UK, particularly in energy, mining, banking and consumer goods. As a result, the index often moves inversely to the British pound: a weaker pound raises the sterling value of overseas earnings.

• Fibonacci Retracement

  Fibonacci retracement is a technical analysis tool that marks potential support and resistance levels at set percentages of a previous price move. The most used levels are 23.6%, 38.2%, 50%, 61.8% and 78.6%, derived from ratios in the Fibonacci sequence, although 50% is not a Fibonacci ratio. Traders use the levels to anticipate where a pullback within a trend might end.

• Forex (Foreign Exchange)

  Forex (foreign exchange, or FX) is the global market for exchanging one currency for another. It is the world's largest financial market by trading volume, according to the Bank for International Settlements, and trades 24 hours a day from Monday morning in Asia to Friday evening in New York. Currencies are always traded in pairs, and retail traders usually access the market through brokers offering spot forex or CFDs.

• Free Margin

  Free margin is the money in a trading account that is available to open new positions or absorb losses on existing ones. It is calculated as equity minus used margin. Free margin changes continuously while positions are open because equity moves with floating profit and loss. When free margin reaches zero, the trader cannot open new positions, and further losses bring the account closer to a margin call.

• Fundamental Analysis

  Fundamental analysis is a method of assessing an asset's value by studying the economic, financial and other factors that drive it. In forex it focuses on interest rates, inflation, growth and central bank policy; for shares, on company earnings, revenue, debt and valuation. Fundamental analysts aim to identify when a market price differs from underlying value. It is often combined with technical analysis.

• Hang Seng

  The Hang Seng Index is the main stock index of Hong Kong, tracking the largest and most liquid companies listed on the Hong Kong Stock Exchange, weighted by free-float market capitalisation. Many constituents are mainland Chinese companies, so the index reacts strongly to Chinese economic data and policy. It is most active during the Asian trading session.

• Hedging

  Hedging is the practice of opening a position designed to offset potential losses on another position or holding. A trader long EUR/USD might open a short position in a correlated pair, or a shareholder might short an index CFD to protect a portfolio during a downturn. A hedge reduces risk but also limits profit, and it carries its own costs, such as spreads and overnight funding on both positions.

• Index CFD

  An index CFD is a contract for difference that tracks the price of a stock index, such as the S&P 500 or DAX 40, letting a trader go long or short on a whole market in one position. The trader does not own the shares in the index. Index CFDs are traded on margin and priced from the underlying cash index or index futures.

• Interest Rate Decision

  An interest rate decision is a central bank's announcement on whether to raise, lower or hold its policy interest rate, such as those made by the US Federal Reserve, the European Central Bank or the Reserve Bank of Australia at scheduled meetings. Markets price in expected outcomes in advance, so the currency and stock indices often react most to surprises and to the guidance given about future rates.

• Islamic Account (Swap-Free)

  An Islamic account, or swap-free account, is a trading account that neither charges nor pays overnight swaps, designed for traders who follow Sharia principles that prohibit interest. Positions can be held overnight without the swap charge or credit that applies on standard accounts. Eligibility, the instruments covered and any alternative fees are set out in the broker's account terms.

• KYC (Know Your Customer)

  KYC (Know Your Customer) is the process a regulated financial firm uses to verify a client's identity, usually by checking a government-issued photo ID and a proof of address. It forms part of anti-money laundering (AML) rules. Brokers normally require KYC to be completed before a client can trade on a live account or withdraw funds, and may ask for updated documents later.

• Leverage

  Leverage is the ratio between the full value of a trading position and the margin a trader must put up to open it. At 1:100 leverage, a $100,000 position requires $1,000 of margin. Leverage magnifies profits and losses by the same factor, so a small price move against the position can use up the margin quickly. Regulators in several jurisdictions cap the leverage available to retail clients.

• Limit Order

  A limit order is an instruction to buy or sell at a specified price or better. A buy limit is placed below the current price and a sell limit above it, so the order fills only if the market moves to the trader's chosen level. Limit orders control the entry price but do not guarantee execution: if the price never reaches the level, the order is not filled.

• Liquidity

  Liquidity is the ease with which an asset can be bought or sold without significantly moving its price. A liquid market, such as EUR/USD during the London–New York overlap, has many buyers and sellers, tight spreads and fast execution. An illiquid market has fewer participants, wider spreads and a higher risk of slippage. Liquidity changes through the day and usually drops around holidays and session closes.

• Long Position

  A long position is a trade that profits when the price of an asset rises. The trader buys at the ask price and later closes the position by selling at the bid price. With CFDs, going long gives exposure to the price increase without owning the underlying asset. If the price falls instead, the long position loses money in proportion to the size of the move and the position size.

• Lot

  A lot is the standard unit for measuring the size of a trade. In forex, one standard lot equals 100,000 units of the base currency, a mini lot 10,000 units and a micro lot 1,000 units. For CFDs on other instruments, the lot size is set in each contract specification; for gold it is commonly 100 troy ounces. Position size determines both the margin required and the value of each price move.

• MACD

  MACD (Moving Average Convergence Divergence) is a trend-following momentum indicator that shows the difference between two exponential moving averages of price, usually the 12-period and 26-period. A 9-period average of the MACD, called the signal line, is plotted alongside it. Crossovers between the MACD and the signal line, and moves above or below zero, are used to identify changes in momentum.

• MAM Account

  A MAM account (Multi-Account Manager) is a managed trading arrangement in which a money manager trades several client accounts at once from a single master account. Each client keeps a separate account in their own name, and trades are allocated according to a chosen method, such as by lot size, percentage or equity. MAM setups give the manager more flexibility in allocation than a PAMM account.

• Margin

  Margin is the amount of money a broker sets aside from a trader's account to keep a leveraged position open. It works as a deposit, not a fee: it is released when the position closes. The margin required equals the position value divided by the leverage, so a $50,000 position at 1:50 needs $1,000. If losses reduce account equity too far, the broker can issue a margin call or close positions.

• Margin Call

  A margin call is a warning from a broker that a trader's account equity has fallen too close to the margin needed to hold open positions. It is triggered when the margin level drops to a threshold set by the broker. The trader can respond by depositing funds or closing positions. If the margin level keeps falling and reaches the stop-out level, the broker starts closing positions automatically.

• Margin Level

  Margin level is the ratio of account equity to used margin, expressed as a percentage: equity divided by used margin, multiplied by 100. An account with $2,000 of equity and $1,000 of used margin has a margin level of 200%. Brokers use this figure to decide when to issue a margin call and when to trigger a stop-out. A higher margin level means more room before either happens.

• Margin Requirement

  A margin requirement is the percentage of a position's full value that a trader must hold in the account to open and maintain it. A 5% margin requirement corresponds to 1:20 leverage; a 1% requirement corresponds to 1:100. Requirements differ by instrument, account type and jurisdiction, and brokers can raise them before major events or during volatile markets, which increases the margin held for the same position.

• Market Capitalisation

  Market capitalisation, or market cap, is the total market value of a company's shares, calculated by multiplying the share price by the number of shares outstanding. A company with 1 billion shares trading at $50 has a market cap of $50 billion. It is used to classify companies as large-cap, mid-cap or small-cap, and most major stock indices weight their constituents by it.

• Market Order

  A market order is an instruction to buy or sell immediately at the best price currently available. It prioritises speed of execution over price, so the fill can differ from the last quoted price when markets move fast, which is known as slippage. Market orders are used when getting into or out of a position matters more than the exact price. Pending orders are the alternative.

• MetaTrader 5 (MT5)

  MetaTrader 5 (MT5) is a multi-asset trading platform developed by MetaQuotes and released in 2010, used by brokers to offer forex, CFDs on indices, commodities, shares and cryptocurrencies. It provides charting with built-in indicators, multiple order types, a depth-of-market view and an economic calendar. Automated strategies run on MT5 as Expert Advisors written in the MQL5 language, and the platform is available on desktop, web and mobile.

• Micro Lot

  A micro lot is a forex trade size of 1,000 units of the base currency, entered as 0.01 lots on MetaTrader. On a pair quoted in US dollars, such as EUR/USD, one pip is worth $0.10 per micro lot. Micro lots let traders with small accounts size positions precisely and keep the risk per trade low, which is why they are commonly used when moving from a demo to a live account.

• Moving Average

  A moving average is a technical indicator that shows the average price of an asset over a set number of periods, updated with each new period to smooth out short-term fluctuations. The simple moving average (SMA) weights all periods equally; the exponential moving average (EMA) gives more weight to recent prices. Traders use moving averages to identify trends and potential support or resistance.

• Nasdaq 100

  The Nasdaq 100 is a stock index of the 100 largest non-financial companies listed on the Nasdaq stock exchange, weighted by a modified market capitalisation method. It is heavily concentrated in technology and communication companies, so it tends to be more volatile than the broader S&P 500. It is widely traded through index CFDs, futures and exchange-traded funds.

• Natural Gas

  Natural gas is an energy commodity used for heating, electricity generation and industry. The main traded benchmark is US Henry Hub natural gas, whose futures trade on the New York Mercantile Exchange and are quoted in US dollars per million British thermal units (MMBtu). Prices are highly volatile and sensitive to weather forecasts, storage data and seasonal demand.

• Negative Balance Protection

  Negative balance protection is a broker policy that stops a retail client from losing more than the money deposited in the trading account. If a sharp or gapping market pushes the account below zero before positions can be closed, the broker resets the balance to zero and absorbs the shortfall. It limits the maximum loss to the account's funds but does not prevent that loss from occurring.

• Nikkei 225

  The Nikkei 225 is a stock index of 225 large companies listed on the Tokyo Stock Exchange, published by Nikkei Inc. Like the Dow Jones Industrial Average, it is price-weighted, so companies with higher share prices have more influence on its movement. The index is sensitive to the Japanese yen, as a weaker yen tends to support its many export-oriented companies.

• Non-Farm Payrolls (NFP)

  Non-farm payrolls (NFP) is the monthly change in the number of paid US workers, excluding farm workers and a few other categories, published by the US Bureau of Labor Statistics. It is released as part of the employment report, usually on the first Friday of the month. The release often causes sharp moves in the US dollar, gold and US stock indices, particularly when the figure differs from forecasts.

• PAMM Account

  A PAMM account (Percentage Allocation Management Module) is a managed trading arrangement in which investors allocate funds to a money manager who trades them as a single pool. Profits and losses are shared in proportion to each investor's percentage of the pool. Investors can typically see performance but not control individual trades, and the manager usually receives a performance fee on profits.

• Performance Fee

  A performance fee is a charge paid to a money manager or signal provider as a percentage of the profits they generate for an investor, such as 20% of net gains over a period. It is paid only when the manager makes a profit for the investor, not on losing periods. Performance fees are common in PAMM, MAM and copy-trading arrangements.

• Pip

  A pip is the standard unit for measuring price movement in a currency pair. For most pairs it is the fourth decimal place, 0.0001; for pairs quoted in Japanese yen it is the second decimal place, 0.01. If EUR/USD moves from 1.1000 to 1.1025, it has moved 25 pips. The money value of a pip depends on the position size, as shown in our guide to major currency pairs.

• Pipette

  A pipette is one-tenth of a pip, shown as the fifth decimal place in most currency pairs and the third decimal place in pairs quoted in Japanese yen. Brokers that use five-digit pricing quote EUR/USD as 1.10025, where the final 5 is the pipette. Pipettes allow finer pricing and tighter spreads, but trading results and spreads are still usually described in pips.

• Pivot Points

  Pivot points are price levels calculated from the previous period's high, low and closing prices and used to identify potential support and resistance. The main pivot point is the average of the three, and additional levels called S1, S2, R1 and R2 are derived from it. Day traders commonly use daily pivot points, with the market considered bullish above the main pivot and bearish below it.

• Position Sizing

  Position sizing is the process of deciding how large a trade should be, based on how much of the account the trader is willing to lose if the stop loss is hit. A common method limits risk to a fixed percentage of the account per trade: with a $10,000 account, 1% risk and a stop 50 pips away, the position is sized so that 50 pips equals $100.

• Pre-Market Trading

  Pre-market trading is trading in shares before the regular stock exchange session opens. In the United States, the regular session runs from 09:30 to 16:00 New York time, and pre-market activity starts several hours earlier. Liquidity is usually thinner and spreads wider than during regular hours, and prices can react strongly to earnings or news released overnight. Available hours depend on the broker.

• Quote Currency

  The quote currency, also called the counter currency, is the second currency in a currency pair, in which the price of the base currency is expressed. In GBP/USD, the US dollar is the quote currency, and a price of 1.2500 means one pound costs 1.25 dollars. Profit and loss on a forex position is calculated in the quote currency first, then converted into the account currency.

• RSI (Relative Strength Index)

  The RSI (Relative Strength Index) is a momentum indicator that measures the speed and size of recent price changes on a scale from 0 to 100. Developed by J. Welles Wilder, it is usually calculated over 14 periods. Readings above 70 are commonly treated as overbought and below 30 as oversold. In strong trends the RSI can stay in these zones for long periods.

• Raw Spread

  A raw spread is a spread quoted without a broker markup, close to the prices the broker receives from its liquidity providers. Raw spreads on major currency pairs can fall to 0.0 pips during liquid hours. Instead of earning from the spread, the broker charges a separate commission per lot traded, so the total cost of a trade is the raw spread plus the commission.

• Risk-Reward Ratio

  The risk-reward ratio is the comparison between the potential loss on a trade and its potential gain, measured from the entry price to the stop loss and to the take profit. A trade risking 50 pips to target 100 pips has a ratio of 1:2. The ratio alone does not make a strategy profitable: the win rate matters too. At 1:2, a trader breaks even, before costs, by winning one trade in three.

• S&P 500

  The S&P 500 is a stock index that tracks around 500 of the largest companies listed in the United States, weighted by free-float market capitalisation. Maintained by S&P Dow Jones Indices, it covers roughly 80% of the US stock market's value and is the most widely used benchmark for US equities. Large technology companies make up a significant part of its weight.

• Safe-Haven Asset

  A safe-haven asset is an investment that tends to hold or gain value during periods of market stress, when riskier assets such as stocks fall. Gold, the Japanese yen, the Swiss franc and US government bonds are the most commonly cited examples. These assets can still fall during a crisis, particularly when investors sell holdings to raise cash.

• Scalping

  Scalping is a trading style that aims to take many small profits from very short-term price moves, with positions often held for seconds or minutes. Because each target is only a few pips, trading costs make up a large share of every trade, so scalpers usually trade liquid instruments on low-spread or raw-spread accounts. The style depends on fast execution and is sensitive to slippage.

• Segregated Client Funds

  Segregated client funds are client deposits that a broker holds in bank accounts separate from its own operating money. Segregation means client money should not be used to pay the broker's expenses or creditors, and it makes client balances easier to identify if the firm fails. It does not protect against trading losses, and the level of protection depends on the rules of the broker's regulator.

• Sell Limit

  A sell limit is a pending order to sell an asset at a price above the current market price. It is used when a trader expects the price to rise to a certain level and then fall, for example at a resistance level. The order executes at the limit price or higher. If the price never rises to the chosen level, the order stays unfilled until it is cancelled or expires.

• Sell Stop

  A sell stop is a pending order to sell an asset once its price falls to a level below the current market price. It is used to open a short position when the price breaks through support, or to close a long position and limit a loss. Once triggered, it executes as a market order, so the fill price can differ from the stop level during fast markets.

• Share CFD

  A share CFD, also called a stock CFD, is a contract for difference that tracks the price of a company's shares, letting a trader go long or short without owning the shares. The trader has no voting rights, but positions are adjusted for dividends and other corporate actions. Share CFDs are traded on margin, so both gains and losses are magnified relative to the capital committed.

• Short Position

  A short position is a trade that profits when the price of an asset falls. The trader sells at the bid price and later closes the position by buying back at the ask price. With CFDs, opening a short position does not require borrowing the asset. If the price rises instead, the short position loses money, and in theory the loss is not capped because a price can keep rising.

• Short Selling

  Short selling is a strategy that aims to profit from a fall in an asset's price. In the traditional stock market, the seller borrows shares, sells them, and later buys them back to return to the lender, keeping the difference if the price has fallen. With CFDs the same exposure comes from opening a short position, with no borrowing of shares. Losses grow if the price rises.

• Signal Provider

  A signal provider, also called a strategy provider, is a trader whose trades are made available for others to copy on a copy-trading platform, or who publishes trading signals. Followers' accounts replicate the provider's positions automatically. Providers are often paid a performance fee or subscription. Followers should assess a provider's track record, drawdown and trading style rather than returns alone.

• Slippage

  Slippage is the difference between the price a trader expects when placing an order and the price at which the order is actually filled. It happens when the market moves between the order being sent and executed, most often during fast markets, news releases or periods of thin liquidity. Slippage can work for or against the trader. Stop orders are exposed to it because they execute as market orders.

• Social Trading

  Social trading is a form of trading in which traders share their positions, strategies and results on a platform where others can follow, discuss and copy them. It combines a social network with trading data such as performance and risk statistics. Copy trading is the automated part of social trading, in which an investor's account replicates another trader's positions.

• Spot Price

  The spot price is the current market price at which an asset can be bought or sold for immediate delivery, as opposed to a futures price for delivery at a later date. For gold, the spot price is the reference quoted as XAU/USD. Spot and futures prices usually differ by an amount reflecting interest rates, storage costs and supply expectations.

• Spread

  A spread is the difference between the bid (sell) price and the ask (buy) price of a financial instrument. It is the main trading cost on most accounts, paid when a position opens. If EUR/USD is quoted at 1.1000 bid and 1.1002 ask, the spread is 2 pips. Spreads are usually tighter in liquid markets and widen during low-liquidity hours and around major news releases.

• Stock Index

  A stock index is a measure of the performance of a group of shares, calculated from their prices under a fixed methodology. The S&P 500, FTSE 100 and ASX 200 are examples. Most major indices weight companies by market capitalisation, while some, such as the Dow Jones Industrial Average, weight by share price. Traders can take a view on a whole index through index CFDs, as explained in our guide to index trading.

• Stock Split

  A stock split is a corporate action in which a company increases the number of its shares by dividing each existing share into several, reducing the price per share in the same proportion. In a 2-for-1 split, a holder of 100 shares at $200 ends up with 200 shares at $100. The company's market capitalisation does not change, and brokers adjust CFD positions accordingly.

• Stop Loss

  A stop loss is an order that closes a position automatically when the price moves against the trader to a set level, capping the loss on that trade. On a long position it sits below the entry price; on a short position, above it. A standard stop loss executes as a market order, so in a gapping or fast market the position can close at a worse price than the stop level.

• Stop Order

  A stop order is an instruction to buy or sell once the price reaches a specified level, at which point it becomes a market order. A buy stop is placed above the current price and a sell stop below it. Stop orders are used to enter a trade when the price breaks through a level or to exit a losing trade. Because they fill at market, slippage can occur.

• Stop Out

  A stop out is the automatic closure of open positions by a broker when an account's margin level falls to a set threshold, called the stop-out level. It happens without the trader's confirmation, to prevent losses from exceeding the funds in the account. Positions are closed until the margin level recovers above the threshold. The stop-out level is set out in the broker's account terms.

• Support and Resistance

  Support and resistance are price levels at which a market has repeatedly stopped falling or rising. Support is a level below the current price where buying interest has tended to halt declines; resistance is a level above it where selling has tended to cap rises. When price breaks through one of these levels decisively, former resistance often becomes support, and former support becomes resistance.

• Swap (Overnight Funding)

  A swap, or overnight funding, is a charge or credit applied to a leveraged position held past the broker's daily cutoff time. For currency pairs it reflects the interest rate difference between the two currencies; for CFDs on other assets it reflects a financing rate. A swap can be positive or negative, and the rate for each instrument is listed in the broker's contract specifications.

• Swing Trading

  Swing trading is a trading style in which positions are held for several days to a few weeks to capture a single price swing within a broader trend. Swing traders typically combine technical analysis, such as support, resistance and moving averages, with awareness of scheduled news. Because positions stay open overnight, swing traders pay or receive overnight funding and are exposed to price gaps at the weekly open.

• Take Profit

  A take profit is an order that closes a position automatically when the price reaches a set level in the trader's favour, locking in the gain. On a long position it sits above the entry price; on a short position, below it. It executes as a limit order, so it fills at the set price or better. Traders often place it together with a stop loss when opening a trade.

• Technical Analysis

  Technical analysis is a method of forecasting price movements by studying past market data, mainly price and volume, on charts. Technical analysts look for trends, support and resistance levels and chart patterns, and use indicators such as moving averages, RSI and MACD. It assumes that price reflects available information and that patterns tend to recur. It is often combined with fundamental analysis.

• Trading Session

  A trading session is a period of the day when a major financial centre is open and trading activity in forex concentrates there. The four main sessions are Sydney, Tokyo, London and New York. Liquidity and volatility are usually highest when sessions overlap, especially London and New York. Our guide to forex market hours sets out session times in Australian time.

• Trading Signals

  Trading signals are suggestions to buy or sell a specific instrument at a given price, usually with a stop loss and take-profit level. They can come from human analysts, from automated systems based on technical indicators, or from other traders on copy-trading platforms. The trader still decides whether to act on a signal, how large the position should be and how much to risk.

• Trailing Stop

  A trailing stop is a stop-loss order that moves with the price when a trade goes in the trader's favour, staying a fixed distance behind it. If the price reverses by that distance, the trailing stop closes the position. It protects part of an unrealised profit without capping further gains. On MetaTrader 5, a trailing stop runs in the client terminal, so it stops working when the platform is closed.

• Trend Line

  A trend line is a straight line drawn on a price chart to connect a series of highs or lows and show the direction of a trend. In an uptrend it joins rising lows and acts as support; in a downtrend it joins falling highs and acts as resistance. A trend line is considered more reliable the more times price touches it, and a clear break can signal a trend change.

• Troy Ounce

  A troy ounce is the standard unit of weight for precious metals such as gold, silver and platinum, equal to 31.1035 grams. It is about 10% heavier than the ordinary ounce of 28.35 grams used for everyday goods. Prices for gold and silver, including the XAU/USD and XAG/USD quotes, are expressed per troy ounce, and metals contract sizes are set in troy ounces.

• US Dollar Index (DXY)

  The US Dollar Index (DXY) is an index that measures the value of the US dollar against a basket of six major currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. The euro carries by far the largest weight. A rising DXY means the dollar is strengthening against the basket. Traders use it to gauge broad dollar trends that affect currency pairs, gold and commodities.

• Volatility

  Volatility is the degree to which an asset's price varies over a given period. High volatility means large and frequent price swings; low volatility means smaller, steadier moves. It is often measured statistically as the standard deviation of returns, or with indicators such as the Average True Range. Higher volatility creates more trading opportunities but also larger potential losses, especially on leveraged positions.

• WTI Crude Oil

  WTI (West Texas Intermediate) crude oil is a grade of light, low-sulphur crude produced in the United States and one of the two main global oil price benchmarks, alongside Brent. Its benchmark futures contract trades on the New York Mercantile Exchange, with delivery at Cushing, Oklahoma. WTI prices react to US inventory data, OPEC+ supply decisions and global demand expectations.

• XAG/USD

  XAG/USD is the trading symbol for the price of silver quoted in US dollars per troy ounce. XAG is the international code for one troy ounce of silver. Silver is used both as a store of value and as an industrial metal in electronics and solar panels, so its price reacts to economic growth as well as to safe-haven demand. It is typically more volatile than gold.

• XAU/USD

  XAU/USD is the trading symbol for the price of gold quoted in US dollars per troy ounce. XAU is the international code for one troy ounce of gold, used in the same way as a currency code, so the quote shows how many US dollars buy one ounce. Our practical guide on how to trade gold covers what drives the price and how gold CFDs work.

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