Forex & Crypto Glossary
Clear, plain-language definitions of the trading terms you'll run into most often on broker websites and in our reviews.
- Altcoin
- Any cryptocurrency other than Bitcoin — for example Ethereum, Solana, or XRP.
- Ask (Offer) Price
- The price at which you can buy an instrument. Always slightly higher than the bid price.
- Balance
- The total cash in your trading account, not counting the profit or loss of any open positions.
- Bid Price
- The price at which you can sell an instrument. Always slightly lower than the ask price.
- Blockchain
- A distributed, tamper-resistant ledger that records transactions across many computers — the underlying technology behind Bitcoin and most cryptocurrencies.
- CFD (Contract for Difference)
- A derivative contract that lets you trade on the price movement of an asset without owning it. Profit or loss is based on the difference between the opening and closing price.
- Cold Wallet
- A cryptocurrency wallet kept offline (e.g. a hardware device), used for safer long-term storage since it isn't exposed to internet-based attacks.
- Drawdown
- The drop from a peak in account equity to a subsequent low, usually expressed as a percentage — a key measure of risk exposure.
- ECN (Electronic Communication Network)
- A trading model that matches buy and sell orders directly between market participants, typically offering tighter spreads plus a separate commission.
- Equity
- Your account balance adjusted for the floating profit or loss of any currently open positions.
- Hedging
- Opening a position to offset the risk of an existing one — for example holding both a long and short position on the same instrument.
- Hot Wallet
- A cryptocurrency wallet connected to the internet, convenient for active trading but more exposed to hacking risk than a cold wallet.
- Leverage
- Borrowed capital from a broker that lets you control a larger position than your deposit alone would allow — for example 1:100 leverage lets $100 control a $10,000 position. Leverage amplifies both gains and losses.
- Limit Order
- An order to buy or sell only at a specified price or better, rather than at the current market price.
- Liquidity
- How easily an asset can be bought or sold without significantly moving its price. Highly liquid markets (like major forex pairs) tend to have tighter spreads.
- Lot
- A standardized trade size. A standard lot is 100,000 units of the base currency; a mini lot is 10,000; a micro lot is 1,000.
- Margin
- The amount of your own funds a broker sets aside as collateral to open and hold a leveraged position.
- Margin Call
- A warning from your broker that your account equity has fallen close to the required margin level, meaning you need to deposit more funds or reduce positions to avoid a stop out.
- Market Maker
- A broker model where the broker takes the other side of client trades internally, rather than routing orders to external liquidity providers.
- Market Order
- An order to buy or sell immediately at the current available market price.
- MetaTrader (MT4/MT5)
- The most widely used third-party trading platforms in retail forex, offering charting, automated trading (EAs), and a common interface across many brokers.
- Overnight / Swap Fee (Rollover)
- A fee or credit applied when a leveraged position is held open past the daily market close, reflecting the interest rate differential between the two currencies traded.
- Pip
- The smallest standardized price movement for a currency pair, usually the fourth decimal place (or second, for pairs involving the Japanese yen).
- Regulator
- A government or independent authority (such as the FCA, ASIC, or CySEC) that licenses and supervises brokers to protect client funds and enforce fair conduct.
- Scalping
- A short-term trading style aiming to profit from small price movements, typically holding positions for seconds to minutes and placing many trades per day.
- Slippage
- The difference between the price you expected an order to fill at and the price it actually filled at, usually caused by fast-moving markets or low liquidity.
- Spread
- The difference between the bid and ask price of an instrument — one of the main ways brokers charge for trades.
- Stablecoin
- A cryptocurrency designed to hold a stable value, usually pegged 1:1 to a fiat currency like the US dollar (e.g. USDT, USDC).
- Staking
- Locking up cryptocurrency to help secure a proof-of-stake network, in exchange for rewards paid in that same cryptocurrency.
- Stop Loss
- An order that automatically closes a position once the price reaches a specified level, used to limit potential losses.
- Stop Out Level
- The margin level at which a broker will automatically start closing a trader's open positions to prevent the account balance from going negative.
- STP (Straight Through Processing)
- A broker model that routes client orders directly to external liquidity providers without a dealing desk in between.
- Take Profit
- An order that automatically closes a position once the price reaches a specified profit target.
- Volatility
- How much and how quickly the price of an asset moves over a given period — higher volatility means larger, faster price swings.
- Volume
- The total amount of an asset traded over a given period, often used as an indicator of market interest or liquidity.