Trading dictionary

What the words mean, in plain language. Every term below is one that changes what happens to a real position — not jargon for its own sake.

Ask

The price at which you can buy. It is the higher of the two prices quoted; the difference between it and the bid is the spread.

Balance

The cash in a trading account from closed positions only. It does not move while a position is open — equity does.

Base currency

The first currency in a pair. In EUR/USD the base is the euro, and the price says how many US dollars one euro buys.

Bid

The price at which you can sell. It is the lower of the two prices quoted.

CFD

A contract for difference: an agreement to exchange the difference in an instrument's price between opening and closing, without owning the instrument. It is how gold, indices, oil and shares are traded on MetaTrader.

Currency pair

Two currencies quoted against each other, such as EUR/USD or USD/IQD. Buying the pair means buying the base currency and selling the quote currency.

Drawdown

The fall from an account's peak value to its lowest point afterwards, usually given as a percentage. It measures how much was given back, not how much was lost overall.

Equity

Balance plus or minus the profit and loss of everything currently open. Equity is the live value of the account; balance is the settled value.

Execution

How an order is filled. Market execution fills at the price available when the order reaches the server, which may differ from the price on screen when markets move quickly.

Expert Advisor

An automated strategy that runs inside MetaTrader and places orders according to its own rules. Permitted on TNFX accounts under clause 33 of the client agreement. More on expert advisor.

Free margin

Equity minus the margin currently tied up in open positions. It is what is available to open something new or to absorb a loss.

Gap

A jump from one price to another with nothing traded in between, most often at a weekend open or on a major news release. Orders inside a gap fill at the first available price on the other side, not at the requested one.

Hedging

Holding a long and a short position in the same instrument at the same time, so the two offset. Permitted on TNFX accounts, subject to the abusive-trading clauses of the client agreement. More on hedging.

Leverage

The ratio between position size and the margin required to hold it. Leverage of 1:100 means $1,000 of margin supports a $100,000 position. It multiplies gains and losses equally. More on leverage.

Liquidity

How easily an instrument can be traded without moving its price. Major currency pairs are highly liquid; spreads widen on less liquid instruments and outside main market hours.

Long

A position that profits if the price rises. Buying opens a long.

Lot

The standard unit of trade size. One standard lot is 100,000 units of the base currency; a mini lot is 10,000 and a micro lot is 1,000.

Margin

The deposit required to open and hold a position. It is not a cost — it is reserved from free margin and released when the position closes.

Margin call

A warning that equity has fallen close to the margin required to keep positions open. It is a signal to add funds or reduce exposure, not an automatic closure. More on margin call.

Margin level

Equity divided by used margin, as a percentage. It is the number that triggers a margin call and then a stop out.

MetaTrader 4 / MetaTrader 5

The two trading platforms TNFX operates. MT5 is the newer platform with more timeframes and instrument types; MT4 remains widely used for its Expert Advisor ecosystem. More on metatrader 4 / metatrader 5.

Pip

The smallest conventional price increment of a currency pair — the fourth decimal place for most pairs, the second for those quoted in Japanese yen. It is the unit profit, loss and spread are usually counted in.

Quote currency

The second currency in a pair — the one the price is expressed in. In EUR/USD the quote currency is the US dollar.

Scalping

Trading very short-term movements, often holding positions for seconds or minutes. Permitted on TNFX accounts, subject to the abusive-trading clauses of the client agreement. More on scalping.

Short

A position that profits if the price falls. Selling opens a short.

Slippage

The difference between the price requested and the price filled. It occurs when the market moves between the order being sent and reaching the server, and can fall either way.

Spread

The gap between the bid and the ask, and the main cost of opening a position. It widens when liquidity thins — overnight, at news releases and at the weekend open. More on spread.

Stop loss

An instruction to close a position once it reaches a chosen losing price. It caps loss under normal conditions, but a gap can carry the market past it. More on stop loss.

Stop out

The automatic closure of positions when margin level falls below the platform's threshold. It protects the account from going further into deficit once a margin call has not been answered.

Swap

The interest adjustment applied for holding a position overnight, positive or negative depending on the interest-rate difference between the two currencies. Swap-free accounts are available on request. More on swap.

Swap-free account

An account on which no overnight swap is charged or paid, offered for clients who cannot receive or pay interest. Available on any TNFX account type on request, applied per account. More on swap-free account.

Take profit

An instruction to close a position once it reaches a chosen profitable price. More on take profit.

Technical analysis

Reading price history — trend, support and resistance, chart patterns and indicators — to judge what price may do next, as distinct from fundamental analysis, which reads the underlying economics. More on technical analysis.

Volatility

How much and how fast a price moves. Higher volatility means larger opportunities and larger risk, and usually wider spreads.