This trading glossary collects the terms that appear most often in our guides, across forex, shares and crypto. Definitions are kept to a few sentences; where a term needs numbers to make sense, it links to the page with a worked example or calculator.
How to use this trading glossary
Terms are listed alphabetically; use the letters to jump. If you are new, the table below groups the essentials by market so you can learn one set at a time.
| Market | Learn these first |
|---|---|
| Forex | Base currency, quote currency, pip, lot, spread, leverage, margin, rollover |
| Shares and indices | Dividend, market capitalisation, free float, index, ETF, settlement |
| Crypto | Blockchain, wallet, seed phrase, stablecoin, satoshi, halving, circulating supply |
| Every market | Bid, ask, market order, limit order, stop-loss, slippage, volatility |
Pairs of words that are easy to mix up
- Pip and point. Many platforms quote a fifth decimal place, and ten of those "points" or "pipettes" make one pip.
- Margin and margin call. Margin is the deposit a position ties up; a margin call is what happens when your equity no longer covers it comfortably.
- Coin and token. A coin is native to its own blockchain; a token is issued by a smart contract on another chain.
- Share and CFD. A share makes you an owner of part of a company; a share CFD only pays the price difference.
- Spread and slippage. The spread is a known cost at the moment you trade; slippage is the unplanned difference between the price you expected and the one you got.
Each of these confusions has cost beginners money, usually because a number was read in the wrong unit. When a platform shows a figure you are not sure about, find the unit first: pips or points, units or lots, dollars or percentage, coins or tokens. The contract specification or help page almost always states it, and checking takes less time than fixing a trade sized by mistake.
Terms A to Z
- Ask price
- The price at which you can buy an asset right now, also called the offer. It always sits above the bid, and the gap between the two is the spread. When you open a buy position you pay the ask, which is why a new trade usually starts slightly in the red.
- Base currency
- The first currency in a forex pair. In GBP/USD the pound is the base, so the price tells you how many dollars one pound costs. Buying the pair means buying the base currency and paying in the second one; the forex guide walks through a full example.
- Bid price
- The price at which you can sell an asset right now. Exchanges and dealers show it next to the ask, and open buy positions are valued at the bid, so a wide spread makes a new position look worse straight away.
- Blockchain
- A shared ledger of transactions grouped into blocks, each linked to the one before by a cryptographic fingerprint. Copies are held by many independent computers, so no single party can quietly rewrite the history. Bitcoin and Ethereum each run their own blockchain.
- Candlestick
- A chart symbol summarising price action over one period, such as an hour or a day. The thick body spans the opening and closing prices, and the thin lines, or wicks, mark the highest and lowest prices reached. Colour shows whether the period closed higher or lower.
- CFD (contract for difference)
- An agreement with a provider to exchange the difference in an asset's price between opening and closing a position. You never own the underlying share, currency or coin. CFDs are usually leveraged and carry overnight financing; retail leverage on them is capped in the UK, EU and Australia.
- Circulating supply
- The number of coins or tokens currently available to trade, as opposed to the maximum that may ever exist. Tokens released later from team, investor or treasury allocations can increase it, which is why unlock schedules matter when you compare coins.
- Commission
- A fee charged per trade or per lot, separate from the spread. Raw-spread forex accounts and many share brokers use it. To compare it with a spread-only account, convert both into money for one round trip at your size; see trading fees explained.
- Custody
- Safekeeping of assets on someone else's behalf. A share broker's nominee company holds your shares; a crypto exchange holds the keys for coins shown in your account. The rules protecting custody assets differ widely between regulated brokers and crypto platforms.
- Dividend
- A cash payment a company makes to its shareholders out of profits, often quarterly or twice a year. The board decides the amount and can cut or cancel it. Dividend yield is the annual dividend divided by the share price.
- ECN
- Electronic communication network: a system that matches buy and sell orders from several participants. Forex accounts described as ECN-style usually pass through raw prices from liquidity providers and charge a separate commission rather than widening the spread.
- ETF (exchange-traded fund)
- A fund whose shares trade on a stock exchange like a single company. Many track an index such as the S&P 500; others hold bonds, commodities or bitcoin. ETFs charge an annual fee, shown as a percentage of the amount invested.
- Free float
- The shares of a company that are available for public trading, excluding stakes held by founders, governments or strategic owners. Many indices, including the Nifty 50 and Bank Nifty, weight companies by free-float value rather than total value.
- Gap
- A jump in price between one session's close and the next session's open, usually because news arrived while the market was shut. Stop-loss orders cannot fill inside a gap, so a stop may be executed at a worse price than the level you set.
- Halving
- The scheduled cut in Bitcoin's block reward every 210,000 blocks, roughly every four years. The reward fell from 50 BTC at launch to 3.125 BTC in April 2024, and the next halving is expected around 2028. See what is Bitcoin.
- Index
- A single number that tracks the value of a basket of shares, such as the S&P 500, FTSE 100 or Bank Nifty. Its weighting method, by price or by market value, decides which members move it most.
- Leverage
- Borrowed exposure that makes a position larger than the money you put down. At 30:1, $1,000 of margin controls $30,000 of currency, so a 1% move changes the account by $300. Leverage magnifies losses exactly as much as gains.
- Limit order
- An instruction to buy at or below a set price, or sell at or above it. It controls the price you get, but may never be filled if the market does not reach your level.
- Liquidity
- How easily an asset can be bought or sold without moving its price. Major currency pairs and large company shares are highly liquid and usually have narrow spreads; small tokens and thinly traded shares are not.
- Lot
- The standard trade size in forex. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. For gold, one lot usually means 100 ounces.
- Margin
- The deposit set aside from your balance to open and hold a leveraged position. Required margin equals the position's value divided by the leverage. It is returned when the position closes; try the margin calculator.
- Margin call
- A warning, or an automatic action, when your account equity falls close to the margin required. For UK and EU retail CFD clients, providers must start closing positions once equity drops to 50% of the margin needed.
- Market capitalisation
- Share price multiplied by the number of shares in issue, or coin price multiplied by circulating supply. It measures the total value the market places on a company or network, which price per unit alone cannot tell you.
- Market order
- An instruction to buy or sell immediately at the best price available. It guarantees a fill in a working market but not the exact price, especially when prices are moving fast.
- Negative balance protection
- A rule, mandatory for retail CFD clients in the UK and EU, that stops losses exceeding the money in the account. If a sharp move takes the balance below zero, the provider resets it to zero.
- Order book
- The live list of buy and sell orders waiting at each price on an exchange. The highest bid and lowest ask sit at the top; the depth below them shows how much could trade before the price moves.
- Pip
- The standard unit of price movement in forex: 0.0001 for most pairs and 0.01 for yen pairs. One pip on a standard lot of a USD-quoted pair is worth $10. Convert other cases with the pip calculator.
- Quote currency
- The second currency in a forex pair, in which the price is expressed. In EUR/USD it is the US dollar, so profits and losses on that pair are calculated in dollars first.
- Rollover (swap)
- The daily financing charge or credit on a leveraged position held past 17:00 New York time. It reflects the interest-rate difference between the two currencies plus the provider's mark-up, and is usually charged three times on Wednesdays.
- Satoshi
- The smallest unit of bitcoin, equal to one hundred-millionth of a coin (0.00000001 BTC). Prices, fees and small purchases are often expressed in satoshis.
- Seed phrase
- A list of 12 or 24 words that backs up a crypto wallet's private keys. Anyone who sees it can take the funds, and nobody can restore it for you if it is lost. No genuine service will ever ask for it.
- Settlement
- The final exchange of cash and asset after a trade is agreed. US shares settle one business day after the trade date (T+1); crypto transfers settle on-chain, usually within minutes.
- Slippage
- The difference between the price you expected and the price you actually got. It is common in fast markets, around news releases and when stop orders trigger, and can work for or against you.
- Spread
- The difference between the bid and ask prices. It is a cost paid on every trade, including on platforms advertised as commission-free, and it tends to widen in quiet hours and around major news. See trading fees explained.
- Stablecoin
- A crypto token designed to hold a steady value, usually one US dollar. Fiat-backed stablecoins rely on reserves held by an issuer; USDT is the largest example.
- Stop-loss
- An order that closes a position once the price reaches a level you set, to cap the loss. It becomes a market order when triggered, so it can fill at a worse price in a gap. Size positions around it with the position size calculator.
- Token
- A crypto-asset issued by a smart contract on an existing blockchain rather than being native to its own network. Stablecoins such as USDT and most project tokens are of this kind. Some tokens let their issuer freeze or mint units, so read how the contract works.
- Volatility
- How widely and quickly a price moves. Higher volatility means bigger swings in both directions, which increases both the potential gain and the potential loss of any position.
- Wallet
- Software or a hardware device that stores the private keys controlling crypto on a blockchain. The coins themselves stay on the blockchain; the wallet proves you are allowed to move them.
- Yield
- Income from an investment expressed as a percentage of its price, such as annual dividends divided by the share price. A very high advertised yield with no clear source is a common feature of scams.
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