Glossary

Money glossary

78 terms in plain English. Tap any dotted word in a lesson to see its meaning without leaving the page.

• 1% rule: A common rule of thumb: plan to lose no more than 1% of your balance on any single trade.
• APR (annual percentage rate): The yearly cost of a loan or credit card, including interest and most fees, as a percentage.
• Ask price: The price you can buy at right now. It is always a little above the bid price.
• Bid price: The price you can sell at right now. It is always a little below the ask price.
• Bond yield: The yearly return a bond pays, shown as a percentage. Yields move when bond prices change.
• Break-even: Moving your stop-loss to your entry price, so the trade closes at about zero if the price returns.
• Broker: The company that gives you a trading account and platform, and carries out your orders.
• Budget: A plan for how your income will be spent and saved each month.
• Central bank: The institution that manages a country's money and interest rates, like the US Federal Reserve.
• CFD: A contract with a broker that pays you or charges you the change in an asset's price.
• Compound interest: Earning interest on your interest, so savings grow faster over time. It works against you on debt too.
• Contract size: How many units of a market one standard lot represents, for example 100 ounces of gold.
• Copy trading: A service that copies another trader's positions into your account automatically.
• CPI (Consumer Price Index): The main monthly measure of US consumer price inflation. Surprises can move gold within seconds.
• Currency pair: Two currencies priced against each other. EURUSD shows how many US dollars one euro costs.
• Demo account: A practice account with play money, so you can learn the platform without real risk.
• Deposit bonus: Extra credit added when you deposit. It usually comes with trading-volume conditions before you can withdraw.
• Diversification: Spreading your money across many investments, so one bad result does less damage.
• Drawdown: The drop from your highest account balance to where it is now, usually shown as a percentage.
• Economic calendar: A list of upcoming economic reports and decisions, with their dates, times and expected impact.
• Edge: A way of trading that makes money on average over many trades, after costs.
• Emergency fund: Savings kept for surprises like losing a job or a big repair, often three to six months of costs.
• Equity: Your balance plus or minus the profit or loss of trades that are still open.
• ETF (exchange-traded fund): A fund that holds many investments and trades on a stock exchange like a single share.
• Expert advisor (EA): A program that trades automatically on your platform, following coded rules.
• FOMC: The US Federal Reserve committee that sets interest rates. It meets 8 times a year.
• FOMO: Fear of missing out: the urge to jump into a move because it has already gone far.
• Guaranteed stop: A stop-loss the broker promises to fill at your exact level, even in a gap, usually for a fee.
• Index fund: A fund that copies a market index, such as a list of large companies, instead of picking winners.
• Inflation: The rise in prices over time, so each unit of money buys a little less.
• Interest rate: The price of borrowing money, or the reward for saving it, shown as a percentage per year.
• Leverage: Trading a position much bigger than your account, using a small deposit called margin.
• Limit order: An order to buy below or sell above the current price, at your price or better.
• Liquidity: How easily you can buy or sell without moving the price. More active traders usually means more liquidity.
• Long position: A buy trade. You profit if the price rises and lose if it falls.
• Losing streak: Several losing trades in a row. Even methods that make money over months have them.
• Lot: The unit for trade size. 1.00 is a standard lot, and many brokers allow steps of 0.01.
• Margin: The part of your money the broker sets aside as a deposit to keep a trade open.
• Margin call: A broker warning that your equity is low compared with your used margin. New trades are usually blocked.
• Margin level: Equity divided by used margin, times 100%. Brokers use it to trigger margin calls and stop-outs.
• Market order: An order to buy or sell immediately, at the best price available right now.
• Net worth: Everything you own minus everything you owe.
• NFP (Non-Farm Payrolls): The monthly US jobs report. One of the releases that most often moves gold and the dollar.
• Notional value: The full value of the position you control, not the margin you put aside.
• Opportunity cost: What you give up by choosing one option instead of the next best one.
• Pending order: An order that waits on the broker's server until the price reaches a level you set.
• Pip: The standard small price step in most currency pairs: 0.0001, or 0.01 in pairs with the yen.
• Point (price step): The smallest price step a platform shows. On many currency pairs it is one tenth of a pip.
• Position size: How big your trade is, in lots. Calculate it from your risk amount and the distance to your stop.
• Price gap: A jump where the price opens far from where it closed, with no trading in between.
• R multiple: A trade result measured in units of the risk you took. Risk $50 and win $100, and that is +2R.
• Real yield: An interest rate or bond yield minus expected inflation. It shows what money really earns.
• Rebate: Money a broker pays someone for every lot their referred clients trade.
• Referral link: A personal link that tells the broker who sent you, so that person can be paid.
• Retail trader: A private person trading their own money, not a bank, a fund or another professional firm.
• Revenge trading: Raising your size or taking unplanned trades to win back losses quickly. It usually makes them bigger.
• Risk per trade: The money you lose if the trade hits your stop-loss, often shown as a percentage of the account.
• Risk-reward ratio: The planned loss at your stop compared with the planned gain at your target, for example 1:2.
• Rollover: The end of the trading day, when the broker processes positions held overnight.
• Safe haven: An asset people buy when they fear crises, wars or bank trouble. Gold is the classic example.
• Short position: A trade that sells first. You profit if the price falls and lose if it rises.
• Signal channel: A chat group or channel that posts trade ideas, often for free, often with something to sell.
• Slippage: When your order fills at a worse price than you asked for, usually in a fast market.
• Spread: The gap between the buy price and the sell price. You pay it on every trade.
• Stop order: An order to buy above or sell below the current price, once that level is reached.
• Stop-loss: An order that closes your trade automatically at a price you chose in advance.
• Stop-out: When the broker closes your trades automatically because your margin level fell too low.
• Support and resistance: Price zones where the market has turned before: support below the price, resistance above it.
• Swap: A fee charged, or sometimes paid, for keeping a position open overnight.
• Take-profit: An order that closes your trade automatically when the price reaches your profit target.
• Track record: The full history of a trader's results, ideally verified by a third party they cannot edit.
• Trading journal: A record of every trade: date, market, entry, exit, size, reason and result.
• Trading plan: Written rules for what you trade, when you enter and exit, and how much you risk.
• Trading session: Part of the trading day named after the big financial centre open then: Asia, London, New York.
• Trading signal: A trade idea from someone else: buy or sell, at what price, with a target and a stop-loss.
• Volatility: How much and how fast a price moves. High volatility means bigger swings in both directions.
• Win rate: The share of trades that end in profit. On its own it says nothing about the total result.
• XAUUSD: The trading code for the price of one ounce of gold in US dollars.