Trading Terminology
Learn the essential trading terms and concepts to enhance your trading knowledge
Bull Market
A market trend characterized by rising prices and investor optimism.
Bear Market
A market trend with falling prices and pessimistic sentiment.
Leverage
Using borrowed capital to increase potential returns on investment.
Margin
The amount of money required to open and maintain a trading position.
Spread
The difference between the bid and ask price of a financial instrument.
Pip
The smallest price movement in forex trading, typically 0.0001.
Stop Loss
An order to close a position at a predetermined price to limit losses.
Take Profit
An order to close a position at a target price to secure gains.
Long Position
Buying an asset with the expectation that its price will rise.
Short Position
Selling an asset with the expectation that its price will fall.
Volatility
The degree of variation in trading prices over time.
Liquidity
The ease with which an asset can be bought or sold without affecting price.
Order Book
A list of buy and sell orders for a security or instrument organized by price level.
Market Order
An order to buy or sell immediately at the best available current price.
Limit Order
An order to buy or sell at a specific price or better.
Day Trading
The practice of buying and selling financial instruments within the same trading day.
Swing Trading
A trading strategy that holds positions for several days to weeks to capture price swings.
Scalping
A trading strategy that involves making numerous small profits on minor price changes.
Drawdown
The peak-to-trough decline during a specific period of investment.
Risk/Reward Ratio
A measure used to assess the potential profit relative to the potential loss of a trade.