FX Growth Names and terms used in trading
A glossary of the words you will hear every day: bid, ask, spread, leverage, margin and more.
Price terms
Bid — the price you can sell at. Ask — the price you can buy at. Spread — the difference between them, which is a cost of trading.
Long — a buy position. Short — a sell position. Volatility — how much and how fast price moves.
Account terms
Leverage — borrowing from the broker to control a larger position (e.g. 1:100). Margin — the deposit needed to open a leveraged trade.
Equity — balance plus or minus open profits/losses. Margin call — a warning that equity is too low to support open trades. Drawdown — the fall from a peak in account value.
Order terms
Market order — executes immediately at the current price. Limit order — executes at a better price you set. Stop order — executes once price breaks a level.
Stop loss (SL) closes a losing trade at a set level; take profit (TP) closes a winning trade at a set level. Slippage is when you are filled at a different price than expected.
Fund terms
PAMM — Percentage Allocation Management Module: investor capital is pooled and traded by a manager, with profits shared by percentage.
Principal — your initial deposit. Profit split — how gains are divided between investors and the manager.
Key takeaways
- The spread is your entry cost.
- Leverage magnifies both gains and losses.
- Always know your stop loss before entering.