This trading glossary collects the terms that appear across our long reads on currencies, shares and crypto. Definitions are deliberately brief; where a word needs more room, it links to the guide that explains it properly.
- Ask
- The price at which you can buy. It is always above the bid; the gap is the spread.
- Base currency
- The first currency in a pair. In GBP/USD, the pound is the base and the price shows how many dollars one pound costs.
- Bid
- The price at which you can sell. It sits below the ask.
- Blockchain
- A shared ledger, kept in sync by many computers, in which transactions are grouped into linked blocks. See how crypto works.
- Break-even price
- The price at which a trade returns exactly the money put in once fees are included. The crypto profit calculator shows how to find it.
- CFD
- Contract for difference: an agreement with a provider to exchange the change in an asset's price, without owning the asset. Usually leveraged.
- Clone firm
- A fraudulent business that copies the name, licence number or website of a genuine regulated firm. See scam warning signs.
- Custody
- Who holds an asset on your behalf, and under what rules. Central to the difference between shares, forex and crypto.
- Dividend
- A cash payment a company makes to its shareholders out of profit. Never guaranteed.
- Dividend yield
- The yearly dividend divided by the share price, as a percentage.
- ECN
- Electronic communication network. In retail trading, a marketing label for accounts that route orders to outside liquidity for a commission plus a thin spread.
- ERC20
- The token standard on Ethereum. USDT on this network uses addresses starting with 0x.
- Expert advisor (EA)
- An automated trading program that runs inside MetaTrader. See our guide to trading robots.
- Gap
- A jump in price between one trading session's close and the next session's open, caused by news while the market was shut.
- Halving
- The scheduled cut in Bitcoin's block reward every 210,000 blocks, roughly every four years. See what is Bitcoin.
- Index
- A number that tracks the combined value of a basket of shares, such as the S&P 500 or FTSE 100.
- Leverage
- Controlling a position larger than your deposit. At 30:1, $1,000 of margin supports a $30,000 position.
- Limit order
- An order to buy or sell only at a set price or better.
- Liquidity
- How easily something can be bought or sold without moving its price. Liquid markets have tight spreads.
- Lot
- A standard trade size. One standard forex lot is 100,000 units of the base currency; one gold lot is commonly 100 ounces.
- Margin
- The deposit set aside to hold a leveraged position open. Calculate it with the margin calculator.
- Margin level
- Account equity divided by margin in use, as a percentage. UK and EU brokers must begin closing retail positions at 50%.
- Market capitalisation
- The total market value of a company or coin: price multiplied by the number of shares or units.
- Market maker
- A firm that quotes its own buying and selling prices and takes the other side of client trades.
- MetaTrader
- Widely licensed trading software (MT4 and MT5) used by many brokers. See MT4 brokers.
- Negative balance protection
- A rule for UK and EU retail CFD clients that stops account losses going below zero.
- Nominee account
- A structure in which a broker's nominee company holds shares on your behalf, separate from the broker's own assets.
- Pip
- The standard unit of price movement in forex: 0.0001 for most pairs, 0.01 for yen pairs. See the pip calculator.
- Price-to-earnings ratio
- A share price divided by the company's earnings per share; a rough measure of how much investors pay for each unit of profit.
- Private key
- The secret number that proves control of crypto at an address. Whoever has it can move the funds.
- Proof of work
- The method Bitcoin uses to agree on new blocks: miners spend computing power to find a valid block.
- Recovery phrase
- A list of 12 or 24 words that encodes a crypto wallet's keys. Never share it with anyone.
- Rollover
- The daily moment, 17:00 New York time in forex, when open positions are carried to the next day and financing is applied.
- Slippage
- The difference between the expected price of an order and the price at which it is actually filled.
- Spread
- The gap between the bid and the ask; the basic cost of every trade. See trading fees explained.
- Stablecoin
- A crypto token designed to hold a fixed value, usually one US dollar, such as USDT.
- Stop-loss
- An order that closes a position once the price reaches a set level, to limit losses. It can fill at a worse price in fast markets.
- Swap
- The overnight financing charge or credit on a leveraged position, set by interest-rate differences plus the broker's mark-up.
- T+1
- Settlement one business day after the trade date, the cycle used for US shares since May 2024.
- TRC20
- The token standard on the Tron network. USDT on Tron uses addresses starting with T.