Ask Price
The price at which a trader can buy an asset. Also known as the offer price. It is always higher than the bid price.
Bid Price
The price at which a trader can sell an asset. The difference between the bid and ask price is known as the spread.
CFD (Contract for Difference)
A financial derivative that allows traders to speculate on price movements without owning the underlying asset. Profits or losses are based on the difference between entry and exit prices.
Leverage
The use of borrowed capital to increase the potential return of an investment. For example, 1:100 leverage means you can control $100,000 with just $1,000.
Lot
A standardized unit of measurement in forex trading. A standard lot is 100,000 units of the base currency. Mini lots (10,000) and micro lots (1,000) are also available.
Margin
The amount of money required to open and maintain a leveraged position. It acts as collateral for the borrowed funds.
Margin Call
A notification from your broker that your account equity has fallen below the required margin level. Additional funds must be deposited to maintain open positions.
Pip
The smallest price movement in a currency pair. For most pairs, a pip is 0.0001 (the fourth decimal place). For JPY pairs, it is 0.01.
Spread
The difference between the bid (sell) and ask (buy) price of an asset. Tighter spreads mean lower trading costs.
Stop Loss
An order placed to automatically close a position at a specified price to limit potential losses.
Take Profit
An order placed to automatically close a position at a specified price to lock in profits.
Swap
The interest fee charged or earned for holding a position overnight. Also known as rollover. The amount depends on the interest rate differential between the two currencies.
Volatility
A statistical measure of the dispersion of returns for a given security. Higher volatility means the price can change dramatically in a short period.