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CFDs and leveraged forex are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail accounts lose money when trading CFDs. Consider whether you understand how these products work and whether you can afford the high risk of losing your money.
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Forex Glossary
Ask price The ask is the price at which you can buy a currency pair. It is always higher than the bid, and the difference between… Base currency The base currency is the first currency in a pair. In EUR/USD it is the euro, and the price shows how many US dollars… Bid price The bid is the price at which you can sell a currency pair. It is always lower than the ask. CFD A contract for difference is an agreement to exchange the change in price of an asset between opening and closing a trade, without owning… Clone firm A clone firm is a fraudster that copies the name, licence number or address of a genuinely authorised firm to look legitimate, usually with… Commission A commission is a fixed fee per trade, usually quoted per standard lot and per side or round turn. Raw-spread accounts charge a commission… Compensation scheme A compensation scheme pays eligible clients, up to a limit, when a regulated firm fails and cannot return client assets. Whether one applies depends… Copy trading Copy trading automatically repeats another trader's positions in your account in proportion to the amount you allocate. You keep the profits and bear the… Dealing desk A dealing desk broker, or market maker, takes the other side of client trades itself and manages the resulting risk internally. Demo account A demo account lets you trade with virtual money on live or simulated prices. Execution on a demo account can be better than on… ECN An electronic communication network matches orders from several participants. Brokers use the label for accounts that pass orders to external liquidity at raw spreads… Equity Equity is your account balance plus or minus the result of your open positions. Margin calls and stop-outs are triggered by equity, not balance. Expert Advisor An Expert Advisor is a program that trades automatically on the MetaTrader platforms. Hedging Hedging means holding positions that offset each other, such as a buy and a sell in the same pair. It is not allowed within… Introducing broker An introducing broker refers clients to a broker and is paid for it, usually per traded lot or per funded account. This site is… Legal entity A legal entity is the specific company you sign a client agreement with. One broker brand usually operates several, each under a different regulator. Leverage Leverage lets you control a position larger than your deposit. At 30:1, a deposit of 1,000 controls a position of 30,000, and both gains… Liquidity provider A liquidity provider is a bank or trading firm that quotes prices at which a broker can offset client orders. Lot A standard lot is 100,000 units of the base currency. A mini lot is 10,000 units and a micro lot is 1,000 units. Margin Margin is the amount set aside from your account to keep a leveraged position open. It is a deposit, not a fee. Margin call A margin call is a warning that your equity has fallen close to the margin required for your open positions. Market maker A market maker quotes its own buy and sell prices and takes the other side of client trades. See dealing desk. Negative balance protection Negative balance protection means you cannot lose more than the money in your account. It is a legal requirement for retail clients in the… Offshore entity An offshore entity is a company licensed or registered in a jurisdiction with light financial regulation, such as Seychelles, Vanuatu or Belize. Pip A pip is the standard unit of price movement: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen. Quote currency The quote currency is the second currency in a pair. Profit and loss on a trade are first calculated in the quote currency. Raw spread A raw spread is the spread received from liquidity providers without a broker mark-up. Accounts with raw spreads charge a separate commission. Requote A requote happens when a broker cannot fill an order at the requested price and offers a new one. Retail client A retail client is an ordinary individual trader, as opposed to a professional client. Retail clients get the strongest regulatory protections and the lowest… Segregated account A segregated account keeps client money separate from the broker's own funds so that it is not available to the broker's creditors. Slippage Slippage is the difference between the price you expected and the price at which your order was filled. It can work for or against… Spread The spread is the difference between the bid and the ask price. It is the main trading cost on spread-only accounts. Stop-out A stop-out is the automatic closing of positions when equity falls below a set percentage of required margin. STP Straight-through processing means a broker passes client orders to liquidity providers without manual intervention. Swap A swap is the interest paid or charged for holding a position overnight, based on the interest rate difference between the two currencies plus… Trust Score Trust Score is this site's 1 to 99 measure of how well a broker is regulated for a given country. It is calculated by…