BrokerForexReviews

Forex and CFD Glossary

Plain language definitions of the terms you will meet when you research forex and CFD brokers. Regulation, costs, platforms and order types, explained without jargon. Jump to a letter below.

ABCDEFLMNOPRSVW

A

ASIC
Australian Securities and Investments Commission, the financial regulator for forex and CFD brokers operating in Australia.
Asking Price
The price at which a broker will sell an asset to you, also called the offer price.

B

Bid Price
The price at which a broker will buy an asset from you.

C

CTrader
A trading platform used by some forex and CFD brokers as an alternative to MetaTrader.
CySEC
Cyprus Securities and Exchange Commission, a regulatory body that licenses and oversees forex and CFD brokers in Cyprus.

D

Drawdown
The peak-to-trough decline in account value from a previous high point, typically expressed as a percentage.

E

ECN
Electronic Communication Network, a broker type that connects traders directly to liquidity providers and other market participants.
Execution Risk
The risk that an order may be executed at a different price than expected due to market conditions or broker delays.

F

FCA
Financial Conduct Authority, the primary financial regulator for forex and CFD brokers operating in the United Kingdom.
Fixed Spread
A bid-ask spread that remains constant regardless of market conditions or volatility.
Floating Spread
A bid-ask spread that varies based on market liquidity and volatility conditions.

L

Leverage
The ability to control a large position with a small amount of capital by borrowing funds from the broker.
Liquidity Provider
A financial institution or market maker that supplies liquidity to a broker so trades can be executed.
Lot
A standardized unit of currency or commodity traded on forex and CFD markets, commonly 100,000 units for forex.

M

Margin
The amount of capital required to open and maintain a position with leverage.
Margin Call
A demand from the broker to deposit additional funds when account equity falls below the required margin level.
MetaTrader 4
A widely-used trading platform provided by many forex and CFD brokers for technical analysis and order execution.
MetaTrader 5
The newer version of MetaTrader that offers additional features and asset classes compared to MT4.

N

Negative Balance Protection
A safeguard that prevents a trader's account balance from going below zero, limiting losses to their deposited funds.

O

Overnight Financing
A fee or credit applied to positions held past the daily market close, also called swap or overnight charge.

P

Pip
The smallest price movement in a forex pair, typically 0.0001 for most currency pairs.

R

Regulated Broker
A forex or CFD broker that is licensed and overseen by a recognized financial regulatory authority.

S

Scalping
A trading strategy that aims to profit from small price movements by opening and closing positions very quickly.
Segregated Funds
Client deposits held in separate bank accounts kept distinct from a broker's operational funds for added protection.
Slippage
The difference between the expected execution price and the actual price at which a trade is filled.
Spread
The difference between the bid price and the asking price of an asset, representing the broker's main source of profit.
STP
Straight Through Processing, a broker model that routes client orders directly to liquidity providers without dealing desk intervention.
Swap
An overnight financing charge or credit applied when holding a position past the market close.

V

Variable Leverage
A broker offering structure where maximum leverage available to clients can be adjusted or reduced based on account size or risk.

W

Withdrawal Request
A formal request by a trader to remove funds from their trading account back to their personal bank account.