Trading Glossary
Trading terms explained in plain language.
Introduction
Trading has a vocabulary problem, and a lot of it exists to make simple ideas sound complicated. This glossary translates it. Where a term deserves a fuller explanation, it links to one.
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Alphabetical index
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Pip
The smallest standard price increment in a currency pair, usually the fourth decimal place, or the second on pairs quoted against the yen.
Slippage
The difference between the price you expected and the price you received. Common around news releases and in thin liquidity.
Spread
The difference between the bid and the ask. On a commission free account, your primary cost of trading.
Stop Out
The automatic closure of positions once account equity falls below a defined threshold, to prevent losses running further.
Swap
The interest charge or credit applied to a position held past the daily rollover, reflecting the interest rate differential between the two instruments involved.
Volatility
The scale and speed of price movement. Higher volatility means larger opportunities and larger losses from the same position size.