Ask Price: The price at which you can buy a CFD asset. It is typically higher than the bid price due to the spread.
Bid Price: The price at which you can sell a CFD asset. This is set by the broker and is always slightly lower than the ask price.
Spread: The difference between the bid and ask prices, representing the broker's profit. A tighter spread means lower costs for the trader.
Leverage: Borrowed funds from the broker that allow you to trade larger positions than your account balance. For example, with 1:100 leverage, you can control $10,000 worth of assets with just $100.
Margin: The capital required in your account to open and hold a leveraged position. It ensures you have enough funds to cover potential losses.
Pip: The smallest price movement in a currency pair, often equal to 0.0001 for most pairs. For example, if EUR/USD moves from 1.1000 to 1.1001, it has moved 1 pip.
Lot: A standardized unit of measurement for the size of a trade, typically 100,000 units of the base currency in forex CFD trading. There are also mini lots (10,000 units), micro lots (1,000 units), and nano lots (100 units).
Equity: The total value of your CFD trading account, including both your initial deposit and any unrealized profits or losses from open positions.
Free Margin: The funds available in your account to open new positions, calculated as Equity – Margin used.
Stop Loss: An order to close a trade at a predetermined price to limit potential losses. This helps manage risk by automatically closing a trade if the market moves against you.
Take Profit: An order to close a trade at a predetermined price to secure profits. This ensures that you lock in profits when the market reaches your desired price level.
Order: An instruction from the trader to the broker to execute a trade, either buying or selling an asset. Orders can be market orders or pending orders.
Currency Pair: Two currencies paired together for trading, such as EUR/USD or GBP/JPY. The first currency is the base currency, and the second is the quote currency.
Base Currency: The first currency in a currency pair, such as EUR in EUR/USD. It represents how much of the quote currency is needed to buy 1 unit of the base currency.
Quote Currency: The second currency in a currency pair, such as USD in EUR/USD. It represents the value of one unit of the base currency.
Market Order: An order that is executed immediately at the current market price. This type of order guarantees execution but not the price.
Pending Order: An order that is executed only when certain price conditions are met. Types of pending orders include limit orders, stop orders, and stop limit orders.
Hedged Order: Orders placed in opposite directions for the same asset, such as buying and selling the same currency CFD pair. This strategy can limit losses or lock in profits.
Order Execution: How an order is carried out, either immediately at the market price (market execution) or at a specific price requested by the trader (instant execution).
Order Volume: The size or quantity of the asset being traded, often measured in lots. Larger volumes can lead to greater profits or losses.
Balance: The total amount of money in your CFD trading account, including all deposits, withdrawals, and closed trades. It does not include unrealized profits or losses.
Margin Level: The ratio of Equity ÷ Margin × 100%, expressed as a percentage. A higher margin level indicates a healthier account. A higher margin level indicates a healthier account. If the margin level falls too low, you may receive a margin call.
Stop Out: The automatic closing of orders when the margin level falls to a certain point to prevent further losses.
Swap: The interest charged or credited for holding a position overnight, depending on the interest rate differential between the two currencies.
Risk Management: Strategies used to limit potential losses, such as SL/TP, diversification, and proper position sizing. Effective risk management is crucial for long-term trading success.