Glossary

Glossary of CFD Trading Terms

A

Account – A record detailing all transactions within a trading account.

Account Balance – The total amount of funds available in an account.

Appreciation – When an asset increases in value due to market demand.

Arbitrage – Buying and selling the same asset in different markets to take advantage of price differences.

Ask/Offer – The price at which a seller is willing to sell an asset.

Aussie – A common term referring to the Australian Dollar (AUD).

B

Back Office – The administrative division handling transaction processing, confirmations, and settlements.

Balance of Payments – A record of all economic transactions between the residents of a country and the rest of the world.

Balance of Trade – The difference between a country’s exports and imports.

Bar Chart – A visual representation of an asset’s price movement over time.

Base Currency – The first currency in a currency pair, used as a reference for quotes.

Basis Point – One-hundredth of a percentage point (0.01%).

Bear Market – A prolonged period of declining prices.

Bid – The price a buyer is willing to pay for an asset.

Bonds – Debt instruments issued by governments or corporations to raise capital.

Broker – An entity that facilitates transactions between buyers and sellers.

Bull Market – A market experiencing sustained price increases.

C

Candlestick Chart – A chart showing price movements, including opening, closing, high, and low prices.

Central Bank – An institution managing a country’s monetary policy and currency issuance.

Clearing – The process of finalizing financial transactions.

Closed Position – A completed trade with no remaining exposure.

Commission – A fee charged by brokers for executing trades.

Contract – The basic trading unit in CFD markets.

Cross Rate – An exchange rate between two currencies that does not include the domestic currency.

Currency Pair – Two currencies forming an exchange rate, such as EUR/USD.

D

Day Trading – Opening and closing positions within the same trading session.

Dealer – An entity that assumes financial risk by acting as a principal in trades.

Deficit – When liabilities exceed assets in trade or financial transactions.

Delivery – The exchange of ownership of traded currencies.

Depreciation – A decrease in a currency’s value due to market factors.

Derivative – A financial instrument deriving its value from an underlying asset.

Devaluation – A deliberate reduction in a currency’s value by an official announcement.

E – F

ECB (European Central Bank) – The central bank governing monetary policy for the Eurozone.

End of Day (Mark-to-Market) – Adjusting the value of open positions based on current market prices.

Federal Reserve (Fed) – The central bank of the United States.

Flat (Square, Balanced) – A position where no outstanding trades exist.

Forex (Foreign Exchange) – The global market for trading currencies.

Forward Contract – A financial agreement to buy or sell an asset at a predetermined price in the future.

Fundamental Analysis – Evaluating economic and financial data to assess market trends.

Futures Contract – A standardized contract to buy or sell an asset at a set price in the future.

G – H

GDP (Gross Domestic Product) – The total value of goods and services produced within a country.

GTC (Good-Till-Cancelled) – An order that remains active until executed or manually canceled.

Hedge – A strategy to reduce financial risk through offsetting positions.

High/Low – The highest and lowest prices of an asset within a specific period.

I – L

Inflation – A rise in the overall price of goods and services, reducing purchasing power.

Initial Margin – The minimum amount required to open a leveraged position.

Kiwi – A common term for the New Zealand Dollar (NZD).

Leverage – The ratio between the amount used in a trade and the required margin deposit.

Liquidity – The ease with which an asset can be bought or sold.

Long Position – Buying an asset with the expectation that its price will rise.

Loonie – A term for the Canadian Dollar (CAD).

Lot – A unit to measure trade volume.

M – O

Margin – The collateral required to maintain a leveraged position.

Market Maker – An institution providing bid and ask prices to facilitate trading.

Market Order – A request to buy or sell an asset at the best available price.

OCO (One Cancels the Other) – A pair of linked orders where the execution of one cancels the other.

Open Position – An active trade yet to be closed.

Options – Financial contracts granting the right (but not obligation) to buy or sell an asset at a fixed price.

Overnight Position – A trade that remains open into the next trading day.

P – R

Pips – The smallest price movement in Forex trading, usually 0.0001.

Position – A trading stance reflected by buying or selling an asset.

Quote – The current bid and ask prices for a security.

Rally – A temporary price recovery after a decline.

Rate – The price of one currency in terms of another.

Resistance – A price level where an asset repeatedly struggles to rise above.

Risk Management – Strategies used to minimize potential losses in trading.

Roll-Over – Extending the settlement of a trade to the next trading day.

S – T

Settlement – The finalization of a trade by recording it in the accounts of both parties.

Short Position – Selling an asset without owning it, expecting to repurchase it at a lower price.

Spot Price – The current market price of an asset.

Spread – The difference between the bid and ask prices.

Stop-Loss Order – An order set to close a position at a predefined level to limit risk.

Support Levels – A price level where an asset typically finds buying interest, preventing further decline.

Swap – Refers to the interest credited or debited for maintaining an open position overnight, as outlined on the Trading Platform.

Technical Analysis – Using historical price data and chart patterns to forecast market movements.

Tick – The smallest possible price movement of an asset.

U – Z

US Prime Rate – The interest rate banks charge their most creditworthy clients.

Value Date – The agreed-upon date when a financial transaction is settled.

Volume – The total number or value of assets traded in a specific period.

This glossary provides an essential reference for trading CFDs with Market10. Understanding these terms can help navigate markets with confidence.