This trading glossary covers the vocabulary you will meet on forex, share and crypto platforms, from order types to wallet security. Each entry explains the term in a few sentences and, where it helps, links to the guide or calculator that goes deeper.
Trading glossary, A to Z
Terms are grouped alphabetically. Use the letter index to jump to a section. Where a term has a legal meaning that varies by country, such as a leverage cap or a client category, the definition gives the UK and EU position and the linked guide explains the differences.
- Address poisoning
- A crypto trick in which a thief sends a tiny transfer from an address that shares its first and last characters with one you use. The aim is that you later copy the fake address from your transaction history. Always take addresses from the original source. See USDT safety.
- Ask price
- The price at which a provider or the market will sell to you, so it is the price you pay to buy. It always sits above the bid, and closing a short position also happens at the ask.
- Base currency
- The first currency named in a pair. In GBP/USD the pound is the base, and the quote tells you how many US dollars one pound costs. Lot sizes are measured in units of the base currency.
- Bid price
- The price at which you can sell. When you close a long position you receive the bid, which is why a trade opened and closed immediately shows a small loss equal to the spread.
- Blockchain
- A ledger of transactions grouped into blocks, each linked to the previous one by a cryptographic fingerprint and copied across many independent computers. Altering an old record would break every later link, so tampering is easy to detect. See how crypto works.
- CFD (contract for difference)
- An agreement with a provider to exchange the change in an asset's price between opening and closing. You never own the share, coin or metal, positions are usually leveraged, and the provider is your counterparty. UK and EU retail CFDs carry leverage caps.
- Circulating supply
- The number of coins or tokens currently available to trade. It is usually lower than the total or maximum supply, because some tokens are locked, reserved for the project team or not yet created. See comparing crypto rankings.
- Clone firm
- A fraudulent operation that borrows the name, address and registration number of a genuine authorised company but supplies its own phone number, email or website. The defence is to contact firms only through details listed on the regulator's register. See scam checks.
- Commission
- A charge per trade, per lot or per share, usually quoted for each side of the trade, so opening and closing pays it twice. Accounts with commission typically offer narrower spreads. See trading fees explained.
- Custody
- Holding assets on someone else's behalf. A stockbroker usually holds shares in a nominee account; a crypto exchange holding your coins is also a custodian, and if it fails, your access depends on its records and the law where it operates.
- Dividend
- A payment of company profits to shareholders, declared per share, usually quarterly or twice a year. Companies can reduce or cancel dividends at any time, and holders of share CFDs receive a cash adjustment rather than a true dividend.
- Drawdown
- The fall in an account's value from its highest point to a later low, usually shown as a percentage. Funded-account programmes set maximum drawdown limits that close the account if breached. See funded accounts.
- ERC20
- The token standard used on the Ethereum network. ERC20 addresses begin with 0x, and sending tokens requires a small amount of ETH to pay the network fee. USDT exists as an ERC20 token among other versions.
- Fully diluted valuation
- A token's price multiplied by its maximum possible supply. Comparing it with market capitalisation shows how many tokens are still to be released, which can create selling pressure as they unlock.
- Gap
- A jump in price with no trading in between, most common when a market reopens after news or a weekend. A stop-loss caught in a gap fills at the next available price, which can be much worse than the level you set.
- Halving
- The automatic cut in Bitcoin's block reward that happens every 210,000 blocks, about every four years. The reward fell to 3.125 BTC in April 2024, and the next cut is expected around 2028. See Bitcoin explained.
- Index
- A number that tracks the combined value of a defined group of shares under published rules, such as the S&P 500, FTSE 100 or Nikkei 225. You cannot buy an index directly, but funds, futures and CFDs can follow one.
- KYC (know your customer)
- The identity checks regulated firms must carry out before and during a client relationship, usually photo ID, proof of address and questions about the source of funds. A platform that skips them entirely is unlikely to be properly regulated.
- Leverage
- Controlling a position larger than your deposit. At 30:1, $1,000 of margin supports a $30,000 position, so a 1% move changes your equity by $300. Leverage magnifies losses exactly as much as gains. See the margin calculator.
- Limit order
- An instruction to buy at or below, or sell at or above, a price you choose. It protects you from paying more than intended, but if the market never reaches your price, the order is not filled.
- Liquidity
- How easily something can be bought or sold without moving its price. Major currency pairs and large company shares are highly liquid; small tokens and exotic pairs are not, which shows up as wide spreads and slippage.
- Lot
- A standard unit of trade size. In forex, one standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. For many gold contracts, one lot is 100 ounces.
- Margin
- The part of your balance set aside to keep a leveraged position open. It works as a deposit, not a price, and it does not cap your loss, which is based on the full position size.
- Margin close-out
- The automatic closing of positions when your equity falls too far below the margin required. For UK and EU retail CFD clients this is triggered when equity drops to 50% of the required margin.
- Market capitalisation
- Price multiplied by the number of shares or coins in circulation. It measures the total market value of a company or crypto-asset, and crypto ranking tables are usually sorted by it.
- Market maker
- A firm that continuously quotes prices to buy and sell. A retail broker acting as market maker may take the other side of client trades, a conflict regulators address through best-execution and fair-pricing rules.
- Market order
- An instruction to buy or sell straight away at the best price available. It is filled quickly in liquid markets, but the fill can differ from the last price you saw, especially in fast conditions.
- Negative balance protection
- A safeguard that stops a retail client's losses exceeding the money in their account. It is required for retail CFD clients in the UK and EU but is not universal elsewhere or for professional clients.
- Overnight financing
- A daily charge or credit on leveraged positions still open after the provider's cut-off, also called a swap or rollover. For forex it reflects the interest-rate difference between the two currencies plus a markup. See trading fees.
- Pip
- The standard unit of movement in a currency price: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen. On one standard lot of a USD-quoted pair a pip is worth $10. See the pip calculator.
- Private key
- The secret number that signs transactions from a crypto address. Anyone who knows it can move the funds, and if it is lost with no backup, the funds are inaccessible for good.
- Proprietary trading firm
- A business that trades with its own capital. Retail-facing prop firms sell paid evaluations that lead to funded accounts with a profit split, and many are not regulated as financial services. See funded accounts.
- Quote currency
- The second currency in a pair, in which the price is expressed. In EUR/USD the quote currency is the US dollar, so pip values for that pair are naturally in dollars.
- Seed phrase
- A sequence of 12 or 24 words from which a wallet generates its private keys. It is the master backup of a self-custody wallet. Keep it offline and never type it into a website or share it with anyone.
- Slippage
- The difference between the price you expected and the price at which an order actually fills. It happens in fast or thin markets and can work for or against you, though it tends to hurt most when stops trigger.
- Spread
- The gap between the bid and ask prices. It is a cost on every trade, and it usually widens around news, at the daily rollover and when a market has just opened.
- Stablecoin
- A crypto token built to hold a steady value, usually one US dollar, through reserves held by an issuer. Holders rely on those reserves and on the issuer honouring redemptions. See what USDT is.
- Stop-loss
- An order that closes a position once the price reaches a chosen level, limiting losses under normal conditions. It is not guaranteed: in a gap it fills at the next available price. See the position size calculator.
- TRC20
- The token standard on the Tron network. TRC20 addresses begin with the letter T, and transfers use the network's own resources or TRX for fees. Sending TRC20 tokens to an address on another network can lose them.
- Volatility
- How widely and quickly a price moves over a period. Crypto-assets are typically far more volatile than major currency pairs or broad stock indices, which is why position sizes need to be smaller for the same risk.
Terms that are easily confused
Several pairs of words sound similar but mean quite different things, and mixing them up leads to expensive mistakes:
- Margin and loss. Margin is the deposit a leveraged trade ties up. Your loss is based on the full position, so it can far exceed the margin.
- Market cap and price. A low price per coin says nothing about value until you multiply it by supply.
- Exchange and broker. An exchange runs the marketplace; a broker gives you access to it and holds your account. Many crypto companies do both, which concentrates risk.
- Owning and trading a contract. Buying a share or coin gives you the asset; a CFD or futures position gives you only exposure to its price.
- Stop-loss and guaranteed stop. An ordinary stop can fill beyond its level in a gap. Some providers sell guaranteed stops, for a fee, that fill exactly at the level.
How to use the glossary when reading a provider's documents
Client agreements, key information documents and fee schedules use much of the vocabulary above, often without explanation. When reading one, look for four terms in particular: the name of the legal entity (who you contract with), the margin close-out level, whether negative balance protection applies, and how overnight financing is calculated. If any of those is missing or vague, ask the provider to confirm it in writing before you deposit. The same approach works for crypto platforms, where the key terms are custody, withdrawal fees and the networks supported for each token.
For how these ideas fit together in practice, start with financial markets explained or browse the short answers in our FAQ.