Education
Trading Terms & CFD Glossary
Learn the essential terms you may encounter when trading CFDs, forex, shares, commodities and indices.
- Account
- A trader's record with the service provider, including balance, trades, orders, deposits, withdrawals and margin usage.
- Account Balance
- The cash value in the account after closed trades and transactions, excluding floating profits or losses on open positions.
- Appreciation
- An increase in the price of a currency or financial asset due to rising demand or changing economic and market conditions.
- Arbitrage
- An attempt to profit from a price difference of the same asset between two markets by buying at the lower price and selling at the higher price in close timing.
- Ask
- The price at which a trader can buy a financial instrument; usually higher than the bid price.
- Aussie
- A common nickname in the forex market for the Australian Dollar (AUD).
- Back Office
- The department responsible for administrative operations such as settlements, documentation, account management and record keeping.
- Balance of Payments
- A record summarising the economic and financial transactions between residents of a country and the rest of the world over a specific period.
- Balance of Trade
- The difference between a country's exports and imports of goods and services over a given period.
- Bar Chart
- A type of price chart that displays the open, close, high and low prices for a specific period.
- Base Currency
- The first currency in a pair; in EUR/USD, the euro is the base currency.
- Basis Point
- A unit used to measure small changes in financial ratios; one basis point equals 0.01%.
- Bear
- A trader or investor who expects the price of an asset or market to fall.
- Bear Market
- A prolonged period during which market prices generally decline and negative sentiment dominates.
- Bid
- The price at which a trader can sell a financial instrument; usually lower than the ask price.
- Bonds
- Debt instruments issued by governments or companies to borrow money in exchange for paying interest and returning the principal under specified terms.
- Broker
- A party that provides traders with access to markets or trading instruments and executes orders according to its business model and terms.
- Bundesbank
- The German central bank and part of the European System of Central Banks.
- Bull
- A trader or investor who expects the price of an asset or market to rise.
- Bull Market
- A period in which market prices generally rise, usually accompanied by positive investor sentiment.
- Candlestick Chart
- A chart that shows the open, close, high and low prices for a given period using a candlestick for each period.
- Central Bank
- The institution responsible for managing monetary policy, issuing currency and maintaining price stability and the financial system of a country.
- Chartist
- A person who relies on studying charts and past price movements to find patterns and potential signals.
- Clearing
- The process of confirming trade details and calculating financial obligations in preparation for settlement.
- Closed Position
- A trade whose market exposure has ended after an opposite transaction or final closing.
- Commission
- A fee that may be charged for executing a trade or providing a trading service, either as a fixed amount or a percentage of the transaction value.
- Confirmation
- A document or electronic notice showing the final details of a transaction, such as instrument, size, price and time.
- Contract
- A unit or financial agreement that defines the terms of trading, instrument size and related value.
- Counterparty
- The other party participating in a transaction or financial contract.
- Cross Rate
- An exchange rate between two currencies that does not include the local currency or the US dollar, depending on context.
- Currency
- A recognised medium of payment and exchange, existing in cash or electronic balance form.
- Currency Pair
- Two currencies priced against each other, such as EUR/USD or GBP/JPY.
- Currency Risk
- The possibility of loss due to exchange rate movements in an unfavourable direction for a trade or investment.
- Day Trading
- A style in which trades are opened and closed within the same trading day to benefit from short-term price movements.
- Dealer
- A party that buys or sells financial instruments for its own account and may act as the counterparty in the transaction.
- Deficit
- A state in which expenses or imports exceed revenues or exports over a specified period.
- Delivery
- The completion of a transaction by transferring the currency or financial asset according to the contract terms, when the instrument requires physical delivery.
- Deposit
- Funds placed in an account with a financial institution that may earn returns according to the account type and its terms.
- Depreciation
- A decline in the value of a currency or asset due to changes in supply, demand or economic and market conditions.
- Derivatives
- Contracts whose value is derived from the price of another asset, such as currencies, shares, indices or commodities.
- Devaluation
- An official decision to lower the value of a currency tied to a fixed or managed exchange-rate system.
- ECB (European Central Bank)
- The institution responsible for monetary policy and price stability in the euro area.
- Mark to Market
- The daily revaluation of open positions according to current market prices to show unrealised profits or losses.
- EUR
- The official currency used in euro-area countries.
- Execution Date
- The day on which an order is executed and the trade is entered into.
- Fed (Federal Reserve)
- The central bank of the United States, responsible for monetary policy and oversight of parts of the financial system.
- Fixed Exchange Rate
- A system in which a country pegs its currency to another currency or basket of currencies, with authorities intervening to maintain the rate or range.
- Flat
- A state in which the trader has no open market exposure, or where opposing positions are balanced.
- FOMC
- The Federal Reserve committee responsible for monetary policy decisions and open-market operations.
- Forex
- The global market in which currencies are traded by buying one currency and selling another simultaneously.
- Forward
- A private agreement to buy or sell an asset at an agreed price, with settlement taking place on a future date.
- Forward Points
- A value added to or subtracted from the spot price to calculate the forward rate, usually related to interest-rate differentials.
- FRA (Forward Rate Agreement)
- A contract between two parties to lock in an interest rate on a specified amount and future period.
- Front Office / Back Office
- The front office handles trading, clients and direct activities, while the back office manages settlement, documentation and administrative operations.
- Fundamental Analysis
- The study of economic, financial and political data to evaluate factors that may affect an asset's price.
- Futures
- Standardised contracts usually traded on regulated exchanges, obligating the purchase or sale of an asset at a specified price and date.
- G5
- A historical label for a group of five major industrial economies that coordinated on economic and financial issues.
- G7
- A forum of seven advanced economies that cooperate on discussing global economic and political issues.
- GDP (Gross Domestic Product)
- The total value of final goods and services produced within a country's borders during a specific period.
- GNP (Gross National Product)
- The value of production and income linked to a country's citizens and institutions, including income earned abroad.
- GTC (Good Till Cancelled)
- An order that remains active until it is executed or cancelled, unless the platform sets a different duration.
- Hedging
- Using a position or financial instrument to reduce the impact of risk arising from another position.
- High / Low
- The highest and lowest levels an asset price reached during a given period.
- Inflation
- A general and sustained increase in the prices of goods and services that reduces the purchasing power of money.
- Initial Margin
- The minimum amount of funds required to open a leveraged position.
- Interbank Rates
- The prices at which major banking institutions trade currencies with each other.
- Forex Intervention
- A measure taken by a monetary authority to influence the currency price, which may include buying or selling currencies.
- IRS (Interest Rate Swap)
- An agreement in which two parties exchange different interest-rate streams, such as fixed for floating.
- Kiwi
- A common nickname for the New Zealand Dollar (NZD) in the forex market.
- Leading Economic Indicators
- Data used to forecast the likely direction of the economy, such as new orders, consumer confidence and business activity.
- Leverage
- A tool that allows you to open a position larger than the margin used, magnifying both potential profits and losses.
- LIBOR
- A historical benchmark interest rate widely used to measure interbank borrowing costs before being gradually replaced by alternative reference rates.
- Liquidation
- Closing an open position and ending the associated exposure.
- Liquidity
- How easily an asset can be bought or sold without causing a significant price change.
- Long Trade
- A position opened when expecting the asset price to rise.
- Long Position
- A position that generally benefits from a price rise and is hurt by a price decline.
- Loonie
- An informal nickname for the Canadian Dollar (CAD) in the forex market.
- Lot
- A standard unit used to determine trade size; its value differs by market and instrument.
- Margin
- The amount required to open and maintain a leveraged trade.
- Market Maker
- A party that continuously provides bid and ask prices to support liquidity and enable transaction execution.
- Market Order
- An instruction to buy or sell immediately at the best available price; the final execution price may vary during volatility.
- OCO (One Cancels the Other)
- Linking two orders so that executing one automatically cancels the other.
- Open Order
- An order that has not yet been executed and remains pending until the specified price or conditions are met.
- Open Position
- A trade that is still active and exposed to market movements, showing unrealised profits or losses.
- Options
- Contracts that give the holder the right to buy or sell an asset at a specified price within a certain period without obligating them to do so.
- Order
- Instructions given by a trader to buy or sell a financial instrument according to a specified type, price and conditions.
- Overnight Position
- A trade that remains open after the end of the trading day and may be subject to financing fees or adjustments.
- Pip
- A small unit for measuring currency pair price movements, usually 0.0001, and generally 0.01 for Japanese-yen pairs.
- Position
- The amount of a trader's exposure to a financial instrument through a buy or sell trade.
- Premium
- An additional amount above the reference price; its meaning and calculation differ by instrument and market.
- P&L (Profit and Loss)
- The financial result of trades, including realised results for closed trades and unrealised results for open positions.
- Quote
- A display showing the current available bid and ask prices for a financial instrument.
- Rally
- A noticeable price increase over a given period, which may occur after a decline or within an existing uptrend.
- Range
- The difference between the highest and lowest price an asset recorded during a given period.
- Exchange Rate
- The value of one currency measured against another currency.
- Repo (Repurchase Agreement)
- A short-term financing transaction in which a security is sold with an agreement to buy it back later at a set price.
- Resistance
- A price area where selling pressure may increase, making continued upward movement more difficult.
- Risk Management
- Identifying, assessing and taking measures to control potential risks, such as sizing positions and using protective orders.
- Rollover
- Moving a position or its settlement date to a later day, which may result in a financing cost being added or deducted.
- Settlement
- The completion of a transaction and recording of financial obligations, or the exchange of assets and funds between parties.
- Short Trade
- A position opened when expecting the asset price to fall.
- Short Position
- A position that generally benefits from a price fall and is hurt by a price rise.
- Spot Transaction
- A transaction executed at the current market price according to the settlement rules of the instrument.
- Spot Price
- The current price available to buy or sell an asset for immediate or near-term settlement.
- Spread
- The difference between the bid and ask price, representing a potential trading cost.
- Stop-Loss Order
- An order designed to close a trade at a specified level to limit losses; execution price may differ during gaps or strong volatility.
- Support
- A price area where demand for the asset may appear, which can slow a decline or cause the price to bounce back.
- Swap
- An amount that may be added to or deducted from the account when holding a trade open past the specified rollover time.
- Technical Analysis
- The study of price movement, charts, indicators and historical data to find trends or future probabilities.
- Tick
- The smallest permitted price movement of a financial instrument according to market specifications.
- Tom/Next
- A foreign-exchange transaction used to roll a position's settlement from the next business day to the day after.
- Two-Way Price
- A quote that includes both the bid and ask prices for an instrument at the same time.
- US Prime Rate
- A benchmark interest rate used by US banks to price certain loans to highly creditworthy customers.
- Value Date
- The date on which the financial obligations resulting from a transaction are settled.
- Volatility
- A measure of how quickly and widely an asset's price changes over a given period; higher volatility is usually associated with increased risk.
- Trading Volume
- The total number of units, shares or contracts traded during a specific period.