Glossary of Terms
The status and trading activity of your account. This will show your cash balance, available equity as well as funds free for trading
With regard to forex, the Base Currency is the first named currency in a pair. For example EURUSD, EUR is the base currency and USD is the variable currency.
One basis point is 0.01 percentage point. For example, an interest rate cut of 100 basis points is equal to 1 %.
Sentiment that a market is going to decline.
The price at which you can sell a specified instrument.
A term used to describe the exchange rate between the UK British Pound vs the US Dollar.
Cash (spot price)
The cash price or can be known as spot, represents the current price of an asset for immediate delivery. For currencies, the settlement or value date is typically two days later.
The current value of cash funds in your account
This is short for Contract For Difference. Instead of owning any physical stock or commodity, you settle the difference in the opening and closing price of the contract.
The positions which were active and are now no longer. Positions are closed by placing a trade of an equal and opposite amount in the same CFD contract.
The price at which an open trade is closed resulting in a profit or loss.
A fixed commission or fee that is applied to a trade.
Instruments that are related to the exchange of actual physical substances such as oil, grains and metals. The price of these can be bought or sold.
For Fx trades this represents the notional value of the trade. For index and commodity trades, contract size is the unit in p+l for a point movement.
The part of a company’s profits distributed to shareholders. Some indices readjust after dividends are paid(ex-dividend). If you have a buy position, you are debited whereas if you have a sell position, you are credited the relevant amount. (See dividend example….)
The execution of any order.
For CFD positions held overnight, you will typically pay or receive financing based on whether they are long or short positions respectively. The amount depends on the value of the position held and the relevant exchange rates. For Forex positions, the financing amount is dependent on the short term interest rate differential between the currency pair traded.
Gap or gapping is used to describe a market situation where the subsequent price is larger than the normal pip movement for that market. This may happen in times of market volatility or when markets reopen.
Leverage(also known as gearing), allows you to hold a position greater in value than that of equity. For example, if you are required to have 0.5% of the value of a position, this would be 200 times leverage on your investment.
London Interbank offered Rate is the rate at which banks lend to each other.
An instruction for a trade entry at a specified level that is more favorable for you than the current price.
The valuation of existing positions to the current market prices.
The amount of capital that is required to be deposited with a broker before engaging in margin transactions.A margin transaction is the transaction in which the broker extends credit to the customer in a margin account.
One Cancels The other (OCO)
One cancels the other is a type of order, which allows you to place two separate instructions in the same market. When one is executed the other will automatically be cancelled.
To place a sell trade in anticipation of the instrument falling in value.
The difference between the fill price of a stop order and the level of the initial instruction. This may occur in volatile markets.
The spread is the difference between the bid and offer (ask) prices of a given instrument.
The actual security or commodity from which a futures price is derived.
Unrealized profit and loss (P&L)
The financial position of active open trades. The difference between the gain or loss of existing positions.