Glossary

Trading terms, in plain words.

One term per page, explained in under a minute.

D

DrawdownA decline from a previous peak in account value. If equity falls from 10,000 to 9,000, the drawdown is 10%. Check whether a reported figure includes open positions.

E

EquityThe current value of your trading account. In many leveraged accounts, it equals your balance plus unrealised profits and minus unrealised losses, with any relevant adjustments.

L

LeverageA way to control a larger market position with a smaller amount of capital. At 10:1 leverage, 100 can support 1,000 of exposure. Gains and losses reflect the larger position.LotA standardised unit of trade size. In spot forex, a standard lot commonly represents 100,000 units of the base currency. Lot sizes differ across products.

M

MarginThe funds or collateral required to support certain positions. In leveraged retail trading, it is often a fraction of your total exposure. Margin is not a trading fee or a maximum loss.Margin callA demand or notification that an account needs additional funds or reduced exposure to meet margin requirements. Providers may close positions without advance warning, depending on their rules.

S

Stop lossAn order intended to close or reduce a position when price moves against it to a specified level. A standard stop loss does not guarantee the execution price.Stop outThe automatic closure of positions when an account falls below a provider’s required margin threshold. The threshold, closure sequence, and execution process depend on the provider.

T

Take profitAn order intended to close or reduce a position at a specified favourable price. Whether it executes depends on market conditions, the relevant quote, and the provider’s order rules.