Trading Glossary

Plain-English definitions of the trading terms that matter. Written by traders who trade live capital capital, not lifted from textbooks.

• Pip

  A pip is the smallest standard price move in a forex quote, usually the fourth decimal place.

• Spread

  The spread is the gap between bid and ask price. It is the main cost of trading a forex pair.

• Leverage

  Leverage lets you control a larger position with a smaller deposit. It amplifies both profit and loss.

• Margin

  Margin is the capital the broker locks to keep a leveraged position open. Falling below required margin triggers margin call or stop-out.

• Lot

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