Trading Glossary (A–Z Definitions)
Plain-English definitions of essential Forex, Gold (XAUUSD), Crypto, and risk management terms.
A
Altcoin
Any cryptocurrency other than Bitcoin, such as Ethereum or Solana.
Ask
The price a seller is willing to accept for an asset. It is always slightly higher than the bid price.
ATR (Average True Range)
A technical indicator that measures market volatility by decomposing the entire range of an asset price for that period.
B
Backtesting
Testing a trading strategy on historical price data to see how it would have performed. Past results do not guarantee future results.
Base Currency
The first currency appearing in a currency pair quotation (e.g., EUR in EUR/USD).
Bear Market
A market condition where prices are falling or are expected to fall.
Bid
The price a buyer is willing to pay for an asset. It is always slightly lower than the ask price.
Bollinger Bands
A volatility indicator made of a moving average with an upper and a lower band plotted a set number of standard deviations away from it.
Breakout
When a price moves outside a defined support or resistance level with increased volume.
Broker
A company that gives you access to a market and executes your orders, usually in return for a spread or a commission.
Bull Market
A market condition where prices are rising or are expected to rise.
C
Candlestick
A chart symbol that shows the open, high, low and close price of an asset for one time period.
CFD (Contract for Difference)
A derivative contract that lets you speculate on the price change of an asset without owning it. Losses can be large because CFDs are usually leveraged.
Commission
A fee a broker or exchange charges for opening or closing a trade.
Consolidation
A period when price moves sideways in a fairly narrow range instead of trending up or down.
Correlation
A statistical measure of how two assets or currency pairs move in relation to each other.
Cross Pair
A currency pair that does not include the US dollar, such as EUR/GBP or AUD/JPY.
Currency Pair
Two currencies quoted against each other. The price shows how much of the quote currency is needed to buy one unit of the base currency.
D
Day Trading
Opening and closing positions within the same trading day, without holding them overnight.
DCA (Dollar Cost Averaging)
An investment strategy where you divide the total amount to be invested across periodic purchases.
DeFi (Decentralized Finance)
Financial services such as lending and trading that run on blockchains through smart contracts, without a traditional intermediary.
Demo Account
A practice account that uses virtual money so you can try a platform or a strategy without risking real funds.
Divergence
A situation where price and an indicator move in opposite directions, which some traders read as a sign that the trend may be weakening.
Drawdown
The peak-to-trough decline during a specific record period of an investment or fund.
E
Equity
The current value of a trading account: the balance plus any floating profit or minus any floating loss on open positions.
Exotic Pair
A currency pair that combines a major currency with the currency of a smaller or emerging economy. Spreads are usually wider than on major pairs.
Expectancy
The average amount a strategy is expected to win or lose per trade: win rate x average win - loss rate x average loss.
F
Fiat Currency
Money issued by a government, such as the US dollar or the euro, that is not backed by a physical commodity.
Fibonacci Retracement
Horizontal lines that indicate where support and resistance are likely to occur, based on Fibonacci numbers.
Free Margin
The part of your equity that is not tied up as margin and is available to open new positions or absorb losses.
Funding Rate
Periodic payments made between longs and shorts in perpetual futures markets to keep the contract price close to the spot price.
G
Gas Fee
The fee paid to have a transaction processed on a blockchain such as Ethereum. It usually rises when the network is busy.
H
Halving
An event that cuts the block reward paid to miners in half. Bitcoin's halving happens roughly every four years, or every 210,000 blocks.
Hedging
Opening a position that is meant to offset the risk of another position or exposure.
L
Leverage
Using borrowed capital from a broker to increase the potential return of an investment.
Limit Order
An order to buy or sell at a specified price or better. It may not be filled if the market never reaches that price.
Liquidation
When an exchange forcefully closes a trader's leveraged position due to a partial or total loss of their initial margin.
Liquidity
How quickly and easily an asset can be bought or sold in the market without affecting its price.
Long
Buying an asset with the expectation that its price will rise.
Lot
The standardized unit size of a transaction. In forex, a standard lot is 100,000 units of the base currency.
M
MACD (Moving Average Convergence Divergence)
A momentum indicator that compares two moving averages of price to show changes in trend strength and direction.
Major Pair
A currency pair that includes the US dollar and another of the most traded currencies, such as EUR/USD or USD/JPY.
Margin
The amount of money required in your account to open and maintain a leveraged position.
Margin Call
A broker's demand that an investor deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.
Margin Level
Your equity divided by the margin in use, shown as a percentage. Brokers use it to decide when to issue a margin call or close positions.
Market Cap (Market Capitalization)
The total value of a cryptocurrency or company, calculated as the current price multiplied by the circulating supply or number of shares.
Market Order
An order to buy or sell immediately at the best price currently available.
Moving Average
The average closing price over a set number of periods, recalculated as new data arrives. It smooths price to make the trend easier to see.
O
Open Interest
The total number of futures or options contracts that are open and have not yet been closed or settled.
Order Book
A live list of buy and sell orders for an asset, organised by price level.
Overbought
A condition in which an asset may have risen too far too fast, according to an indicator such as RSI. Prices can stay overbought for a long time.
Oversold
A condition in which an asset may have fallen too far too fast, according to an indicator such as RSI. Prices can stay oversold for a long time.
P
Perpetual Futures
Futures contracts with no expiry date. Funding payments between longs and shorts keep their price close to the spot price.
Pip
Percentage in Point. The smallest price move that a given exchange rate makes based on market convention (usually the 4th decimal place).
Pivot Point
A technical indicator used to determine the overall trend of the market over different time frames, calculated from the previous day's high, low, and close.
Position Size
The amount you trade in one position, measured in lots, units or coins. It is usually set from your risk per trade and your stop loss distance.
Pullback
A temporary move against the prevailing trend, after which price may continue in the original direction.
Q
Quote Currency
The second currency in a currency pair (e.g., USD in EUR/USD).
R
Rebate
A partial refund of the spread or commission you paid, offered through some broker programmes.
Resistance
A price level where a rising asset finds it difficult to break through due to selling pressure.
Risk of Ruin
The estimated probability that a trader loses so much capital that they can no longer continue trading. It is a model, not a prediction.
Risk-Reward Ratio
A measure used by traders to compare the expected return of a trade to the amount of risk taken to realize that return.
RSI (Relative Strength Index)
A momentum indicator that moves between 0 and 100. Readings above 70 are often called overbought and readings below 30 oversold.
S
Scalping
A style of trading that aims for very small price moves, with trades that often last seconds or minutes.
Short
Selling an asset you don't own with the expectation that its price will fall, aiming to buy it back cheaper.
Slippage
The difference between the expected price of a trade and the price at which the trade is actually executed.
Stablecoin
A cryptocurrency designed to hold a steady value, usually by being tied to a currency such as the US dollar.
Stop Loss
An order placed with a broker to buy or sell once the stock reaches a certain price, designed to limit an investor's loss on a security position.
Support
A price level where a falling asset tends to stop falling and bounce back due to buying interest.
Swap
The interest paid or earned for holding a position overnight in forex trading.
Swing Trading
A style of trading that holds positions for several days or weeks to capture a larger price move.
T
Take Profit
An order specifying the exact price at which to close out an open position for a profit.
Trading Journal
A record of your trades, including entry, exit, reason for the trade and result, used to review and improve your decisions.
Trailing Stop
A stop loss that follows the price at a set distance as the trade moves in your favour, and stays in place if price reverses.
Trend
The general direction in which an asset's price is moving.
TVL (Total Value Locked)
The overall value of crypto assets deposited in a decentralized finance (DeFi) protocol.
V
Volatility
The rate at which the price of an asset increases or decreases for a given set of returns.
W
Win Rate
The percentage of your trades that are closed in profit.
Popular Trading Calculators
Position Size Calculator
Find the right lot size for your risk.
Pip Value Calculator
Value of one pip in USD and PKR.
Risk-Reward Calculator
Check a trade before you enter it.
Margin Calculator
Margin needed for any position size.
Leverage Calculator
Your real leverage and how far price can move against you.
Drawdown Recovery Calculator
How much you must gain to recover a loss.