This trading glossary collects the terms used across TradoGlobal's guides and calculators. Each entry gives a working definition and, where it helps, a short example or a note on why the term matters. Follow the links for the full explanation.
Many of these words belong together. Pip, lot, leverage, margin and margin level describe one chain of cause and effect in a leveraged currency trade. Blockchain, wallet, proof of work and halving describe how Bitcoin keeps its records. Reading the linked entries as a group is often quicker than reading them one at a time.
Definitions describe how terms are generally used. Individual providers can set their own contract sizes, trading hours and charges, so for anything you intend to trade, the provider's contract specification is the final word.
- Ask price
- The price at which you can buy an instrument right now. It is always slightly above the bid price, and the gap between the two is the spread. When you open a long position you pay the ask, so the position starts with a small loss equal to the spread.
- Base currency
- The first currency in a pair. In EUR/USD it is the euro. Position sizes are measured in the base currency, so one standard lot of EUR/USD is 100,000 euros. Buying the pair means buying the base currency. See the forex guide.
- Bid price
- The price at which you can sell an instrument right now. A long position is valued at the bid, and closed at the bid when you sell. In quiet or stressed markets the bid can drop away from the ask, widening the spread.
- Blockchain
- A shared ledger of transactions grouped into blocks, each containing a cryptographic fingerprint of the block before it. Many independent computers hold copies and check each new block against the rules, so no single party can quietly change the record. See how crypto works.
- Candlestick
- A chart bar that shows four prices for a period: open, high, low and close. The thick body spans open to close, coloured to show whether the price rose or fell, and the thin wicks mark the highest and lowest prices reached.
- CFD
- A contract for difference: an agreement with a provider to exchange the difference between an asset's price when the contract is opened and when it is closed. It gives exposure to price moves without ownership, is usually leveraged, and depends on the provider's soundness.
- Commission
- A fee charged per trade or per lot, separate from the spread. Some accounts charge a commission with narrower spreads; others charge no commission and build all their costs into the spread. Compare the combined total, not either figure alone.
- Cross pair
- A currency pair that does not include the US dollar, such as EUR/GBP or GBP/JPY. Profit and loss arrive in the quote currency, so pip values must be converted into your account currency using a second exchange rate.
- Custody
- Safekeeping of assets on someone's behalf. Share brokers usually hold client shares in nominee accounts; crypto platforms may hold the private keys to customers' coins. Who has custody decides what happens to your assets if the firm fails.
- Dividend
- A cash payment a company makes to its shareholders out of profits, usually quarterly or twice a year. Dividends are decided by the board and can be raised, cut or cancelled. Reinvested over many years, they make up a large part of long-term share returns. See the stock market guide.
- Drawdown
- The fall in an account or investment from its peak to a later low, usually expressed as a percentage. Recovering from a drawdown takes a larger percentage gain than the fall itself: a 20% drawdown needs a 25% rise, and a 50% drawdown a 100% rise.
- ETF
- An exchange-traded fund: a fund whose units trade on a stock exchange like a share. Most ETFs track an index such as the FTSE 100 or S&P 500, spreading money across many companies in one purchase, usually at a low annual charge.
- Free float
- The portion of a company's shares available for public trading, excluding large strategic holdings such as those of founders or governments. Many indices, including the FTSE 100, weight companies by free-float market value rather than total value.
- Gap
- A jump in price between one trade and the next with no trading in between, typically when a market reopens after weekend or overnight news. Stop-loss orders cannot fill inside a gap, so they are executed at the first available price beyond it.
- Halving
- The event, every 210,000 blocks, when the new-coin reward paid to Bitcoin miners is cut in half. It happens roughly every four years; the April 2024 halving reduced the reward to 3.125 BTC per block. See Bitcoin explained.
- Index
- A number that tracks the combined value of a basket of shares or other assets, such as the FTSE 100 or the S&P 500. Methods differ: most weight companies by market value, while a few, like the Dow Jones Industrial Average, weight them by share price.
- Leverage
- Using a deposit to control a larger position. At 30:1, $1,000 of margin supports a $30,000 position, and every gain and loss is calculated on the $30,000. Leverage raises exposure, not skill, and retail limits exist because losses grow as fast as gains.
- Limit order
- An instruction to buy at or below a set price, or sell at or above one. It controls the price you receive, which helps in thin or fast markets, but it may never be filled if the market does not reach your level.
- Liquidity
- How easily something can be bought or sold in size without moving its price. Liquid markets, such as major currency pairs during the London and New York overlap, have narrow spreads and deep order books; illiquid ones can move sharply on small orders.
- Lot
- A standard unit of position 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. In gold a standard lot is commonly 100 troy ounces, though providers can differ.
- Margin
- The deposit a provider holds to keep a leveraged position open. It is collateral, not a fee, and is returned when the position closes, adjusted for any profit or loss. Required margin equals position value divided by leverage. Try the margin calculator.
- Margin call
- A warning that your account equity has fallen close to the level needed to keep positions open. If losses continue, the provider closes positions automatically, usually starting with the largest losing one, whether or not you respond.
- Margin level
- Account equity divided by margin in use, shown as a percentage. At 100%, equity exactly covers the margin. For UK and EU retail CFD clients, providers must start closing positions when the margin level falls to 50%.
- Market maker
- A firm that quotes both buy and sell prices and takes the other side of its clients' trades. It earns from the spread and, where client positions are not hedged, from client losses, which is why disclosures about conflicts of interest matter.
- Negative balance protection
- A rule for UK and EU retail CFD clients that stops losses exceeding the money in the account. If a sharp gap takes an account below zero, the provider absorbs the shortfall. It limits the worst outcome but does not prevent the loss of the whole balance.
- Nominee account
- An account in which a broker holds shares on behalf of its clients. The client is the beneficial owner and the shares are kept separate from the broker's own assets, which is what protects them if the broker fails.
- Order book
- The live list of buy and sell orders waiting at each price on an exchange or trading platform. The best bid and best ask sit at the top; the depth below them shows how much could be traded before the price moves.
- Pip
- The standard unit of movement in a currency pair: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen. On one standard lot of a dollar-quoted pair it is worth $10. Use the pip calculator to value it for any pair.
- Proof of work
- A way of securing a blockchain in which miners spend computing power, and so electricity, to add each block. Rewriting past blocks would mean redoing that work faster than the rest of the network, which makes attacks extremely costly. Bitcoin uses it.
- Quote currency
- The second currency in a pair, in which the price and your profit or loss are expressed. In EUR/USD it is the US dollar, so a pip on a standard lot is always $10 whatever the exchange rate.
- Rollover
- The daily moment, 17:00 New York time in forex, when open positions are carried forward to the next value date and overnight financing is charged or credited. Because of settlement conventions, the Wednesday rollover usually carries three days of financing.
- Settlement
- The actual exchange of cash and asset after a trade. US shares have settled one business day after the trade (T+1) since May 2024. A crypto transfer settles on the blockchain once it is confirmed, usually within minutes.
- Slippage
- The difference between the price you requested and the price you received. It is common in fast or thin markets and around news releases. Slippage can go in your favour as well as against you; a fair provider applies it both ways.
- Spread
- The gap between the bid and ask prices, and the first cost of every trade. It is usually measured in pips for currencies and in cents for gold, and it widens when liquidity is thin. See trading fees explained.
- Stablecoin
- A crypto token designed to hold a steady value, usually one US dollar. Most do this by holding reserves such as cash and short-term government debt. Their stability depends on those reserves and on the issuer. USDT is the largest example.
- Stop-loss order
- An instruction to close a position once the price reaches a set level, limiting the planned loss. Once triggered it becomes a market order, so in a gap or fast market it can fill at a worse price than the level you chose.
- Swap
- The overnight financing charge or credit on a leveraged position, based on the interest-rate difference between the two currencies plus the provider's margin. It applies to the full value of the position, so over weeks it can exceed the spread.
- Volatility
- How much and how quickly a price moves, often measured as the standard deviation of returns. Higher volatility means a wider range of possible outcomes in both directions, and it usually calls for smaller positions or wider stops.
- Wallet
- Software or a physical device that stores the private keys used to sign crypto transactions. The coins themselves stay on the blockchain. Anyone with a wallet's recovery phrase can move its coins, so the phrase must never be shared.
- Whipsaw
- A sharp move in one direction quickly reversed by a move in the other, which can trigger a stop-loss just before the price returns. It is common in choppy markets and around data releases, and is a hazard for rules-based strategies.
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