Trading terms, decoded

The interest a bond has built up since its last payment but not yet paid out to the holder.

When one company takes control of another by buying it, a move that can affect its staff, customers and shareholders.

Trading that takes place outside a market's normal opening hours.

A return expressed as a yearly rate, so investments held for different lengths of time can be compared fairly.

The lowest price a seller will accept, also called the offer. When you buy, you pay the ask, which always sits a little above the bid.

Anything you can own or trade that holds value, from currencies and shares to gold and oil. If it can be bought and sold, it is an asset.

A group of assets that behave in similar ways and follow similar rules, such as forex, stocks, indices, commodities or crypto.

Software that places trades for you based on preset rules and algorithms, reacting faster than a human and removing emotion from the decision.

The typical length of time a trader keeps a position open before closing it.

The total cash in your trading account, before the profit or loss on any open trades is counted.

The interest rate a central bank charges commercial banks to borrow. It steers the cost of money across the whole economy.

A prolonged slide in prices and sinking confidence. When traders are bearish, they expect the market to keep falling.

The highest price a buyer is currently willing to pay. When you sell, you receive the bid.

Loans you make to a government or company in return for regular interest and your money back at the end of the term.

A stretch of rising prices and rising confidence. When traders are bullish, they expect the market to keep climbing.

An order to buy only at your chosen price or lower, used when you expect a dip before a move higher.

An order to buy only once the price rises to your chosen level or higher, used to catch upward momentum.

A price chart where each candle shows the open, high, low and close for a period, making trends and reversals easy to read at a glance.

The money in your account that is available to trade with.

The gain or loss on an investment measured against the amount you originally put in.

The institution that manages a country's money supply and interest rates, such as the Federal Reserve or Bank of England. Its decisions ripple through every market.

A trade you have exited, locking in whatever profit or loss it made.

Automatically mirroring the trades of an experienced trader in your own account, in real time.

What a company expects to turn into cash within a year, such as inventory and money owed to it.

The debts and bills a company must settle within a year.

A chart where each candle or bar represents one full day of price action, handy for seeing the bigger trend.

An order that stays active only for the trading day it was placed. If it does not fill, it expires at the close.

A trader who opens and closes positions within the same day, aiming to profit from short-term moves rather than holding overnight.

A ratio comparing how much a company funds itself with debt versus shareholder money. A higher figure means more reliance on borrowing.

A general fall in prices over time, often a sign that demand or the money supply is shrinking.

Spreading your money across different instruments so one bad move does less damage to your overall portfolio.

A share of a company's profits paid out to shareholders, usually in cash and often every quarter.

The drop in your account or investment from its peak to its lowest point before recovering.

A company's regular update on how much it earned over a period, closely watched by investors for surprises.

A schedule of upcoming data releases and events, from jobs reports to rate decisions, that can move markets.

The value of ownership in a company, roughly what is left for shareholders after debts. In a trading account, it is your balance adjusted for the profit or loss on open trades.

A regulated venue where instruments are bought and sold in a fair, orderly way, such as a stock exchange.

The price of one currency in terms of another, the number you see quoted for every forex pair.

The moment your order is filled and becomes a live trade in the market.

A service where the broker simply carries out your orders without giving advice. The decisions are all yours.

The stated, original value printed on a security such as a bond, separate from its current market price.

An estimate of what an asset is genuinely worth, based on the facts rather than its current market price.

A set of ratios drawn from the Fibonacci sequence, used to map likely support and resistance levels where price may pause or turn.

Any marketplace where assets are bought and sold, including forex, shares, commodities, indices and crypto. Prices move as buyers and sellers meet.

The broad risk of loss from shifting interest rates, credit conditions or market prices.

The 12-month period a company or government uses for accounting, which need not line up with the calendar year.

Investments such as bonds that pay a set, predictable return over time.

The global market for trading one currency against another, often shortened to forex or FX. It is the largest and most liquid market in the world.

The index of the 100 largest companies listed in London. FTSE stands for Financial Times Stock Exchange.

A professional who runs an investment fund, deciding what to buy and sell to meet the fund's goals.

Judging an asset's value by studying the real-world forces behind it, such as economic data, company earnings and interest rates.

The risk that a market reopens at a very different price from where it closed, jumping past your orders. Common after weekends or big news.

The British pound, the currency of the United Kingdom, often nicknamed cable when paired with the US dollar.

Buying an instrument because you expect its price to rise. You profit from the move up.

Selling an instrument you do not own because you expect its price to fall, aiming to buy it back cheaper later.

A bond issued by a government to fund spending. Backed by the state, these are seen as relatively low-risk investments.

What a company keeps from sales after the direct cost of making its product, shown as a percentage.

How quickly a figure such as GDP or revenue is rising or falling over a set period, shown as a percentage.

A candle with a small body and a long lower wick. After a fall, it can signal that buyers are stepping back in.

A candle with a small body and long lower wick that appears after a rise, hinting that sellers may be taking control.

Chart patterns built on Fibonacci ratios that traders use to spot potential turning points in price.

A record of an instrument's past prices, used to study how it has behaved and to test trading ideas.

The part of your return that comes from regular payments such as interest or dividends, rather than price changes.

Baskets that track a group of shares, such as the S&P 500 or FTSE 100, giving a snapshot of a whole market or sector.

The rate at which prices rise over time, which chips away at how much your money can buy.

The top tier of forex where major banks trade currencies directly with one another, setting the reference prices everyone else follows.

A pool of money from many investors, invested together across a spread of assets and run by professionals.

A seasonal tendency for share prices to rise in January, often linked to buying after year-end selling.

The classic candle format used on most charts, showing open, high, low and close. The body and wicks reveal the tug of war between buyers and sellers.

The Japanese yen, a major currency often treated as a safe haven in uncertain times.

Predicting future moves using experience, intuition and expert opinion rather than hard numbers alone.

A major, widely trusted currency used for global trade and held as a reserve, such as the US dollar.

The headline rate a central bank sets to guide the economy. Raising it cools things down; cutting it heats them up.

A sharp change of direction after price hits a new high or low, often flagged as a turning point.

A barrier option that only comes to life once the underlying price reaches a set level.

A barrier option that stops existing if the underlying price hits a set level, ending the contract early.

The identity checks a regulated broker must run before you can trade, keeping the platform secure and compliant.

An economic reading that tends to shift before the wider economy does, offering an early hint of what is coming.

Borrowed funds that let you control a larger position with a smaller deposit. It magnifies both profits and losses, so it cuts both ways.

The London Interbank Offered Rate, a benchmark that banks once used to price loans worldwide, now largely retired in favour of newer rates.

How easily an asset can be bought or sold without moving its price. Highly liquid markets are quick to trade and tight on spreads.

A bank or institution that continuously quotes buy and sell prices, keeping a market liquid and ready to trade.

The hours when London's markets are open, one of the busiest and most liquid windows in forex.

The standard unit for trade size. One standard lot equals 100,000 units of the base currency in forex.

A fee charged per lot traded, rather than as a percentage of the trade's value.

The deposit you need to open and hold a leveraged trade. It is set aside as a good-faith amount, not a fee.

A warning from your broker to add funds when your account can no longer support your open trades. Ignore it and positions may be closed.

The chance of losing money because the whole market moves against you. It cannot be removed by diversifying alone.

The overall mood of traders towards a market, whether optimistic or fearful, which can move prices as much as the facts do.

A trade size of 1,000 units of the base currency, one hundredth of a standard lot. A good size for testing the waters.

A trade size of 10,000 units of the base currency, one tenth of a standard lot.

How much your account grew or shrank over a month, allowing for any deposits or withdrawals made along the way.

A trade size of 100 units of the base currency, one tenth of a micro lot. About the smallest position you can take.

How fast a company's bottom-line profit is rising, usually measured year on year.

Your overall exposure in an instrument once opposing buy and sell trades are offset against each other.

The share of revenue a company keeps as profit once every cost, tax and expense is paid.

The difference between what a company owns and owes in the short term, a snapshot of its day-to-day financial health.

The hours when New York's markets are open. Its overlap with London is the most active period of the trading day.

One of the largest and most influential stock exchanges in the world, based on Wall Street.

Another word for the ask price, the level at which sellers are willing to sell.

A trade that is still live and exposed to price moves, with its profit or loss changing until you close it.

The profit a company makes from its core business, before one-off items, interest and tax.

An instruction to buy or sell an instrument. It can fill straight away at the current price or wait for conditions you set.

The rule that decides how and when your order fills, such as instant execution, a limit order or a stop order.

When a price has risen so far, so fast that a pullback or pause starts to look likely.

A trade held open past the end of the trading day into the next, which may incur a swap charge.

The interest rate at which banks lend to each other overnight, a key lever of monetary policy.

When a price has fallen so far, so fast that a bounce or pause starts to look likely.

An order that waits in the market until your price or condition is met, rather than filling immediately.

The smallest standard move in a currency pair's price, usually the fourth decimal place. Think of it as the penny of forex.

A live trade you hold in the market. Long means you profit if the price rises; short means you profit if it falls.

The period before a market officially opens, when traders position themselves and gauge the mood ahead of the session.

The P/E ratio compares a share's price to its earnings per share, a quick gauge of how cheap or expensive a stock looks.

Where brand-new securities are sold for the first time, straight from the issuer to investors.

The running tally of what a trade or account has made or lost, often shortened to P&L.

A short, temporary dip within a larger uptrend before the move higher continues.

How much of an instrument you are buying or selling, measured in lots.

A financial update companies publish every three months, showing revenue, profit and how the business is faring.

A test of whether a company can cover its short-term bills without leaning on selling inventory.

The current pair of prices for an instrument, showing the bid and the ask at which it can be traded right now.

A price level where selling tends to step in and cap a rise, acting like a ceiling over the market.

What you gain or lose on a trade or investment, usually shown as a percentage of what you put in.

Weighing up how much could go wrong with a trade or portfolio, and how likely it is, before committing.

The process of protecting your capital by planning position sizes, stop losses and exposure before you trade.

The steps you take to soften the impact of a risk, such as setting stops, hedging or trading smaller.

Where investors buy and sell existing securities among themselves, such as a stock exchange. Most day-to-day trading happens here.

An order to sell only at your chosen price or higher, used when you expect a rise before a move lower.

An order to sell only once the price drops to your chosen level or lower, often used to protect a position or trade a breakdown.

The final step of a trade, when ownership and funds actually change hands.

A unit of ownership in a company. Own a share and you own a small slice of the business.

The gap between the price you expected and the price you actually got, common when markets move fast or news hits.

The gap between the bid and ask price. It is the main cost of a trade, and tighter spreads mean cheaper trading.

An order that automatically closes a trade once it moves against you by a set amount, capping your loss.

The point where a broker automatically closes your positions because your margin has run too low to keep them open.

A price level where buying tends to step in and slow or stop a fall, acting like a floor under the market.

The interest paid or earned for holding a leveraged position overnight, based on the rate difference between the two currencies.

A style that holds positions for days or weeks to capture a larger price swing, sitting between day trading and long-term investing.

An order that automatically closes your trade once it reaches a set profit level, so you lock in gains without watching the screen.

Studying price charts, patterns and indicators to forecast where a market might head next, based on how it has behaved before.

The smallest possible price change an instrument can make. Every flicker on the chart is a tick.

The general direction a market is heading over time, whether up, down or sideways. Traders like to say the trend is your friend.

The profit or loss on trades you still hold. It is only on paper and can change until you close them.

The US dollar, the world's primary reserve currency and one side of most forex pairs.

How much and how fast a price moves. Higher volatility means bigger swings, which brings more opportunity and more risk.

How much of an instrument changes hands over a period. Strong volume shows conviction behind a price move.

Moving funds out of your trading account and back to you.

The income an investment produces, shown as a percentage of its price, such as the interest paid on a bond.