Master trading terminology with our comprehensive A-Z dictionary of forex, CFD, and macroeconomic concepts.
The price at which a trader can buy a base currency against a quote currency. It is always slightly higher than the bid price.
The first currency listed in a currency pair. For example, in EUR/USD, the Euro (EUR) is the base currency.
The price at which a trader can sell a base currency. It is always slightly lower than the ask price.
A market condition characterized by a sustained period of rising prices and general market optimism.
Trader slang for the GBP/USD currency pair. The term originates from the transatlantic telegraph cable used to synchronize quotes between London and New York in the 1800s.
A derivative product that allows traders to speculate on the rising or falling prices of global financial markets without owning the underlying asset.
The use of borrowed capital from a broker to increase the potential return of an investment. For example, 1:100 leverage allows you to control a $100,000 position with $1,000 of margin.
The standardized quantity of a financial instrument being traded. In forex, a standard lot is 100,000 units of the base currency, a mini lot is 10,000 units, and a micro lot is 1,000 units.
The amount of money required in your account in order to open and maintain a leveraged position.
A demand from a broker to deposit further cash to cover potential losses when your account equity drops below the required margin level.
The smallest standardized price move that a given exchange rate makes based on market convention. In most major currency pairs, it is the fourth decimal place (0.0001).
The difference between the expected price of a trade and the price at which the trade is actually executed. Often occurs during periods of high volatility.
The difference between the bid and the ask price of a currency pair or instrument. This acts as the primary cost of trading.
The interest added or deducted for holding a position open overnight. It is determined by the overnight interest rate differential between the two currencies involved in the trade.
A statistical measure of the dispersion of returns for a given security or market index. Higher volatility means the price changes dramatically over a short time period.
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