CFD-Glossary

Account

A trader’s registered profile used to manage funds, execute trades, and track performance.

Account Balance

Total available funds in your account.

Appreciation

When the value of a currency or asset goes up.

Arbitrage

Earning from small price differences in different markets.

Ask / Offer

The amount a trader is willing to sell for.

Aussie

A common term for the Australian dollar (AUD).

Back Office

The part of a company that handles trade confirmations, records, and settlements.

Balance of Payments

Tracks what a country buys and sells internationally, including goods, services, and money flows.

Balance of Trade

Measures a country’s trade strength with other countries.

Bar Chart

A chart that shows an asset’s open, high, low, and close prices.

Base Currency

The currency used as the reference when quoting exchange rates.

Basis Point

One-hundredth of a percent (0.01%).

Bear

A trader who expects prices to fall.

Bear Market

A market trend where prices are falling for a sustained period.

Bid

The price at which a buyer is willing to purchase an asset.

Bonds

A bond is a type of loan made by investors to governments or companies. When you buy a bond, you’re lending them money, and in return, they pay you interest until the bond matures and the full amount is repaid.

Broker

A person or firm that connects buyers and sellers and executes trades on their behalf.

Buba

Sets and manages monetary policy in Germany and is a key player in the European Central Bank system.

Bull

A trader or investor who expects the market to go up.

Bull Market

A long period where prices are generally rising across a market.

Candlestick Chart

A type of price chart used in technical analysis that shows the open, high, low, and close for a given time period. Each “candlestick” visually highlights market sentiment and price direction.

Central Bank

The primary monetary authority in a country, responsible for issuing currency and managing interest rates and money supply.

Chartist

A trader or analyst who studies price charts to forecast future market movements.

Clearing

The process of finalizing a trade, including transferring funds and updating account records.

Closed Position

A trade that has been fully exited, meaning there is no longer any market exposure.

Commission

A fee charged by a broker.

Confirmation

A formal document or message that verifies the details of a completed trade.

Contract

The standardized unit used in trading to define the size of a position.

Counterparty

The other party in a financial transaction — typically a broker, bank, or institutional investor.

Cross Rate

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

Currency

Any official form of money issued by a central authority, typically a government or central bank.

Currency Pair

Two currencies quoted together to represent the value of one relative to the other — for example, EUR/USD.

Currency Risk

The risk that arises from fluctuations in exchange rates, especially when trading or holding foreign currencies.

Day Trading

A trading strategy where positions are opened and closed within the same trading day.

Dealer

A person or firm that buys and sells financial instruments for their own account, aiming to profit from the spread.

Deficit

A deficit occurs when a country spends or imports more than it earns or exports, resulting in a shortfall. It’s most commonly seen in trade or government accounts, reflecting an imbalance in economic flows.

Delivery

In trading, delivery refers to the actual exchange of assets between two parties. In currency markets, it means the physical or electronic transfer of funds at the end of a transaction.

Deposit

A deposit typically involves placing cash into a financial institution or lending it in the money market. The interest earned or paid is known as the deposit rate. Instruments like Certificates of Deposit (CDs) are structured forms of short-term lending.

Depreciation

Depreciation is the decline in a currency’s value relative to others, driven by market factors such as supply, demand, or economic outlook. It’s a natural adjustment, not triggered by official policy.

Derivative

A derivative is a financial contract whose value is tied to the price of an underlying asset, such as a currency, stock, or commodity. Rather than owning the asset itself, the trader gains exposure to its price movement. Derivatives are commonly used for hedging risk or speculating on future price changes. Options, futures, and swaps are all examples of derivative instruments.

Devaluation

Devaluation refers to an official reduction in a currency’s value by a government or central bank. Unlike depreciation, which happens naturally through market forces, devaluation is a deliberate policy move — typically aimed at boosting exports by making domestic goods cheaper for foreign buyers.

ECB – European Central Bank

The central bank responsible for monetary policy in the eurozone.

End of Day (Mark-to-Market)

A method of valuing open positions using market prices at the end of the trading day. Unlike accrual accounting, this approach records unrealized profit or loss daily, reflecting the trader’s true exposure. The new value becomes the basis for the next session, ensuring positions are always marked to current market conditions.

Euro

The official currency of the eurozone.

Execution Date

The official date when a transaction is executed.

Fed – Federal Reserve

The Federal Reserve serves as the central banking system of the United States, responsible for managing inflation, employment, and economic stability.

Fixed Exchange Rate (Representative Rate)

A fixed rate is set by monetary authorities to keep a currency trading within a narrow range.

Flat (Square, Balanced)

A trader is said to be flat when they hold no active positions in the market.

FOMC – Federal Open Market Committee

The FOMC is the policy-making body within the Federal Reserve that determines short-term interest rates and the direction of U.S. monetary policy.

Forex – Foreign Exchange

Forex refers to the global marketplace for buying and selling currencies, operating 24/5 without a centralized exchange.

Forward

A forward contract sets the terms for a currency exchange to take place at a future date, based on an agreed rate.

Forward Points

These are adjustments added to or subtracted from a spot rate to calculate the forward rate, based on interest rate differences.

FRA – Forward Rate Agreements

FRAs are contracts that let two parties agree on an interest rate to be applied at a future date.

Front and Back Office

The front office typically includes the trading room and core business functions tied to revenue generation, such as sales and client services. The back office, on the other hand, manages essential support areas like compliance, settlements, and recordkeeping.

Fundamental Analysis

A research method that examines economic indicators, geopolitical events, and corporate data to predict price direction.

Futures Contract

A futures contract obliges the buyer and seller to transact a specific asset at a predetermined price on a future date.

G5

A group of five major industrialized nations: the U.S., U.K., Germany, France, and Japan.

G7

An expanded version of the G5, adding Canada and Italy to the list of top developed economies.

GDP – Gross Domestic Product

The total value of all goods and services produced within a country’s borders during a specific period.

GNP – Gross National Product

The total economic output of a country, including income from citizens and companies abroad.

GTC – Good-Till-Cancelled

An order to buy or sell that stays active until it’s filled or manually cancelled.

Hedge

A strategy used to limit potential losses by offsetting risk in another position.

High/Low

The highest and lowest prices recorded for an asset during a trading session.

Inflation

A rise in the general level of prices, which reduces the purchasing power of money.

Initial Margin

The minimum amount of capital required to open a leveraged position.

Interbank Rates

The rates at which major banks trade currencies directly with one another.

Intervention

When a central bank enters the forex market to influence its currency’s value.

IRS – Interest Rate Swaps

A contract where two parties exchange interest payments — one fixed, one floating.

Kiwi

Trader slang for the New Zealand dollar (NZD).

Leading Indicators

Economic data points that help forecast future trends in business cycles and financial markets.

Leverage

The use of borrowed capital to increase exposure to the market.

Libor – London Interbank Offered Rate

The interest rate major global banks charge each other for short-term loans.

Liquidation

Closing out an open position by taking the opposite side of the trade.

Liquidity

The ease with which an asset can be bought or sold without affecting its price.

Long

A position that gains value when market prices increase.

Long Position

A trade where the investor has bought an asset and is exposed to upward price movements.

Loonie

A market nickname for the Canadian dollar (CAD).

Lot

A standardized unit size used to measure a trading volume.

Margin

The amount of capital required to open and maintain a leveraged position.

Market Maker

A financial firm or dealer that provides continuous bid and ask quotes.

Market Order

An instruction to execute a trade immediately at the best available price.

OCO – One Cancels the Other

A paired order setup where triggering one automatically cancels the other.

Open Order

A pending instruction to enter the market once a specific price is reached.

Open Position

A trade that is still active and subject to market movements.

Options

A financial contract giving the holder the right, but not the obligation, to buy or sell an asset at a fixed price before a certain date.

Order

A trader’s instruction to buy or sell an asset, either at market price or a specified level.

Overnight Position

A trade that remains open beyond the current trading day.

Points, Pips

A pip is the smallest price movement in most forex pairs, typically 0.0001 for major pairs.

Position

A trader’s exposure to the market through a buy or sell order.

Premium

The adjustment added to a spot rate to determine a forward price.

Profit/Loss (P&L)

The net result of trading activity — combining closed trades and current open ones.

Quote

The current bid or ask price for a financial instrument.

Rally

A strong upward movement in prices following a decline.

Range

The difference between an asset’s high and low prices during a specific time frame.

Rate

The price at which one currency is exchanged for another.

Repo – Repurchase Agreement

A short-term agreement to sell and later repurchase a security at a fixed price.

Resistance

A price level where upward movement tends to slow or reverse.

Risk Management

Strategies used to control exposure and limit potential losses.

Roll-Over

The extension of a forex position to the next trading day.

Settlement

The final step in a trade, where ownership and funds are exchanged.

Short

Selling an asset with the expectation that its price will decline.

Short Position

A market stance where a trader has sold an asset expecting it to fall in value.

Spot

A trade executed for near-immediate settlement, usually within two business days.

Spot Price

The current price at which an asset can be bought or sold.

Spread

The difference between the bid and ask prices.

Stop Loss Order

An order placed to automatically exit a trade at a certain price to limit loss.

Support Levels

A price area where a falling market tends to find buying interest.

Swap

Swap refers to the interest charged or credited when a position is held open overnight, as reflected on the Trading Platform.

Technical Analysis

A method of forecasting price movements by studying historical market data, such as charts, trends, and volume.

Tick

The smallest possible price movement in a given market.

Tomorrow Next (Tom/Next)

A forex strategy involving the simultaneous purchase and sale of a currency for settlement the next business day.

Two-Way Price

A quote that includes both the bid (buy) and ask (sell) prices.

US Prime Rate

The base interest rate banks charge their most creditworthy clients.

Value Date

The agreed date when a financial transaction is settled between counterparties.

Volatility

A measure of how much the price of a market or instrument fluctuates over time.

Volume

The total amount of an asset traded over a specific time period.