CFD-Glossary

Q: How is an account balance defined?

A: It is the total value available in a trader's account, including deposits and closed trade results, excluding open trade exposure.

Q: What does bid price mean?

A: The bid is the price a buyer is currently prepared to pay to acquire an asset.

Q: What is the ask price?

A: The ask is the price a seller is willing to accept when selling an asset.

Q: What is the spread in trading?

A: The spread is the difference between the buying price and the selling price shown on a quote.

Q: What is a market order?

A: A market order is an instruction to trade immediately at the best available market price.

Q: What is a limit order?

A: A limit order is an instruction to trade at a set price or better, waiting until the market reaches that level.

Q: What is a stop-loss?

A: A stop-loss is a protective instruction to close a trade if the market reaches a chosen level, limiting losses.

Q: What does it mean to go long?

A: Going long means buying an asset in expectation that its price will increase.

Q: What does it mean to go short?

A: Going short means selling an asset first with the aim of buying it back later at a lower price.

Q: What is leverage?

A: Leverage allows traders to control a larger market exposure than the funds they deposit, magnifying gains and losses.

Q: What is margin?

A: Margin is the minimum amount of money required to open and maintain a leveraged trade.

Q: What is a margin call?

A: A margin call is a request from the broker for additional funds when account equity falls below a required threshold.

Q: What is fundamental analysis?

A: Fundamental analysis evaluates an asset by using economic, political, and financial information.

Q: What is technical analysis?

A: Technical analysis studies price history, chart structure, and indicators to anticipate possible future moves.

Q: What are support and resistance levels?

A: Support is a price level where downward moves tend to slow, while resistance is a level where upward moves often pause.

Q: What is a candlestick chart?

A: A candlestick chart displays the open, high, low, and close of price for a selected timeframe in a visual format.

Q: What is a currency pair?

A: A currency pair quotes one currency against another, such as EUR/USD, showing how much of one is needed to buy the other.

Q: What are major, minor, and exotic pairs?

A: Major pairs are the most traded and include the USD. Minor pairs exclude the USD, while exotic pairs include currencies from emerging markets.

Q: What is a CFD?

A: A Contract for Difference is a derivative that lets traders speculate on price changes without owning the underlying asset.

Q: What is a swap in CFD trading?

A: A swap is an overnight financing adjustment applied while holding a CFD position overnight.