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Glossary

FX trading glossary

Short definitions of terms used in the broker and platform directories. Each entry names the page it was taken from and the date that page was checked.

This glossary is for education and reference only. It is not financial, investment, tax, or trading advice, and it does not rank firms or products.

Clear

78 terms

A

Ask

  • Market basics

The ask is the price at which a buy deal is priced in MetaTrader 5's description of a deal.

B

Backtesting

  • Platforms and APIs

Backtesting is running a trading rule against historical prices to see how that rule would have behaved.

Balance

  • Risk

Balance, in MetaTrader 5, is the money on the account. The result of open positions is not included.

Base currency

  • Market basics

The base currency is the currency being priced, written first in a pair.

Best execution

  • Broker and execution models

Best execution is the FCA duty to take all sufficient steps to get the best possible result for a client when executing an order.

Bid

  • Market basics

The bid is the price at which a sell deal is priced in MetaTrader 5's description of a deal.

Book or cancel

  • Order types

Book or cancel adds an order to the book only if it would not trade immediately. Otherwise it is cancelled.

C

Client money

  • Regulation

Client money is money a firm receives or holds for a client in the course of business covered by the FCA's client-money rules.

Contract for difference

  • Regulation

A contract for difference pays the difference between the open price and the close price of an underlying, without transferring the underlying.

Contract size

  • Market basics

Contract size is the number of units of the asset in one lot, as set on the symbol.

cTrader

  • Platforms and APIs

cTrader is Spotware's trading platform for FX and CFDs, offered through brokers that use it.

cTrader Open API

  • Platforms and APIs

cTrader Open API is Spotware's interface for programs that send and receive messages with the cTrader backend.

Currency pair

  • Market basics

A currency pair names the two currencies in a foreign-exchange price.

D

Deal

  • Market basics

A deal is the buy or sell that results when an order is executed.

Direct market access

  • Broker and execution models

Direct market access is the part of direct electronic access in which a client uses a member's systems to send orders to a trading venue.

Drawdown

  • Risk

Drawdown, on a MetaTrader 5 report, is the drop in equity from a local maximum, shown as a percentage.

E

Electronic communication network

  • Broker and execution models

In US securities rules, an ECN is an electronic system that automatically matches buy and sell orders at specified prices.

Equity

  • Risk

Equity is the account value once floating profit or loss is included. MetaTrader 5 publishes the formula.

Expert Advisor

  • Platforms and APIs

An Expert Advisor is a program, written in MQL4 or MQL5, that can send orders when prices change.

F

Fill or kill

  • Order types

Fill or kill means the whole order must be filled immediately, or none of it is.

FIX protocol

  • Platforms and APIs

FIX is an open messaging standard for trading information, maintained by the FIX Trading Community.

Free margin

  • Risk

Free margin is equity minus margin. It is the amount MetaTrader 5 says can be used to open further positions.

G

Good till cancelled

  • Order types

A good-till-cancelled order stays working until it is filled or cancelled, on the venues that define it that way.

H

Hedging

  • Risk

Hedging, in MetaTrader 5, is the accounting method that allows more than one position in the same symbol, including opposite positions.

I

Immediate or cancel

  • Order types

Immediate or cancel fills what is available at once and cancels the rest.

L

Leverage

  • Market basics

Leverage is the ratio of exposure to the margin posted. UK retail CFD rules cap it by the underlying.

Limit order

  • Order types

A limit order deals at the stated price or better. In MetaTrader 5 it is a pending order placed on the favourable side of the current quote.

Long position

  • Market basics

A long position is a position opened by buying. MetaTrader 5 describes it as a purchase made in the expectation that the price will rise.

Lot

  • Market basics

A lot is a quantity of the asset. In MetaTrader 5, one lot is the symbol's contract size.

M

Major currency pair

  • Market basics

Under FCA rules, a major foreign-exchange pair is any two different currencies from a list of six.

Margin

  • Market basics

Margin is the money that has to be posted to open or keep a position, not the amount that can be lost.

Margin call

  • Risk

A margin call is a demand for more margin. On MetaTrader 5 it is also a state the account line can show.

Margin close-out

  • Regulation

Margin close-out is the FCA rule that a retail client's net equity must not stay below half of the margin required to keep the open positions.

Margin level

  • Risk

Margin level is equity divided by margin, expressed as a percentage.

Market maker

  • Broker and execution models

A market maker, in the FCA glossary, is someone who continuously offers to buy and sell on their own account at prices they set.

Market order

  • Order types

A market order is an instruction to buy or sell now. The fill price depends on the execution mode.

MetaTrader 4

  • Platforms and APIs

MetaTrader 4 is MetaQuotes' trading platform for forex and futures, with charts, Expert Advisors and a trailing stop.

MetaTrader 5

  • Platforms and APIs

MetaTrader 5 is MetaQuotes' multi-asset platform, with hedging and netting accounts, MQL5 robots and exchange-style order handling.

MiFID II

  • Regulation

MiFID II is Directive 2014/65/EU, the EU directive on markets in financial instruments.

Minor currency pair

  • Market basics

A minor foreign-exchange pair is any traded currency pair that is not a major pair under the FCA definition.

Model Context Protocol

  • Platforms and APIs

MCP is an open standard for connecting an AI application to external data sources, tools and workflows.

MQL4

  • Platforms and APIs

MQL4 is MetaQuotes Language 4, the language used to program MetaTrader 4.

MQL5

  • Platforms and APIs

MQL5 is MetaQuotes Language 5, the language used for every trading application on MetaTrader 5.

N

Negative balance protection

  • Regulation

Negative balance protection caps a retail client's loss on the covered products at the funds in the trading account.

Netting

  • Risk

Netting is the MetaTrader 5 accounting method that keeps one position per symbol.

O

Order

  • Market basics

An order is an instruction to a broker to buy or sell. MetaTrader 5 splits orders into market orders and pending orders, plus stop loss and take profit.

P

Pending order

  • Order types

A pending order waits for a price condition. It does not deal immediately.

Pip

  • Market basics

A pip is the usual unit for a change in a currency quote. IG describes it as one point in percentage.

Pipette

  • Market basics

A pipette is the extra decimal some platforms add beyond a pip. IG also calls it a fractional pip or micro pip.

Position

  • Market basics

A position is the open long or short exposure that remains after a deal.

Professional client

  • Regulation

A professional client is either a per se professional client or an elective professional client, as COBS 3.5 sets out.

Q

QuickFIX/n

  • Platforms and APIs

QuickFIX/n is an open-source .NET implementation of the FIX protocol, maintained by Connamara Systems.

Quote currency

  • Market basics

The quote currency is the currency in which one unit of the base currency is priced.

R

Requote

  • Broker and execution models

A requote is the new price a broker returns when it will not fill an instant-execution order at the price on the order.

REST

  • Platforms and APIs

REST is a set of design constraints for networked software. A broker's REST API is usually an HTTP service, and it may not meet every constraint.

Restricted speculative investment

  • Regulation

A restricted speculative investment is the FCA's group name for the leveraged products covered by the retail CFD rules.

Retail client

  • Regulation

A retail client, in the FCA's COBS glossary, is a client who is neither a professional client nor an eligible counterparty.

Risk warning

  • Regulation

A risk warning, in COBS 22.5, is the standardised wording a firm must show when it markets leveraged CFDs, spread bets or rolling spot FX to retail clients.

S

Short position

  • Market basics

A short position is a position opened by selling. MetaTrader 5 describes it as a sale made in the expectation that the price will fall.

Spot FX

  • Market basics

Spot FX is the purchase of one currency for another, with delivery usually two business days later, at a price agreed on the trade date.

Spread

  • Market basics

The spread is the gap between the bid and the ask, and MetaTrader 5 shows it in points.

Spread betting

  • Regulation

In the FCA glossary a spread bet is a contract for difference that is a gaming contract. UK tax treatment is a separate question and is not advice from this page.

Stop loss

  • Order types

A stop loss is an order attached to a position that closes the whole position if the price reaches a chosen level.

Stop order

  • Order types

A stop order waits until the market reaches a trigger price, and then becomes a deal or a resting order.

Stop out

  • Risk

Stop out is the forced closing of positions when an account's margin state reaches the level set for it.

Stop-limit order

  • Order types

A stop-limit order uses a trigger to place a limit order. It will not fill beyond the limit price.

Straight-through processing

  • Broker and execution models

Straight-through processing is automated handling so that trade data is entered once and then reused, without rekeying.

Swap

  • Market basics

A swap, often called rollover, is the financing adjustment when a position is carried to the next trading day.

T

Take profit

  • Order types

A take profit closes the whole position when the price reaches a chosen level in profit.

Tick

  • Market basics

A tick is the minimum price step of a symbol. MetaTrader 5 calls that step the tick size.

TradingView

  • Platforms and APIs

TradingView describes itself as a charting platform and social network for following markets.

Trailing stop

  • Order types

A trailing stop moves the stop loss as a position moves into profit. In MetaTrader 5 it runs on the terminal, not on the server.

V

Virtual private server

  • Platforms and APIs

A trading VPS is a virtual server hired to keep a trading platform running when the trader's own computer is off.

W

WebSocket

  • Platforms and APIs

WebSocket is the IETF protocol for a two-way connection between a client and a server, after an opening handshake, over TCP.