This trading glossary collects the terms that come up most often across our guides. Each entry explains the idea in everyday language first and adds the practical point a beginner is most likely to need. Jump to a letter, or use your browser's find function.
Five terms to learn first
If you are brand new, start with spread, leverage, custody, seed phrase and market capitalisation. Between them they explain why a trade starts slightly negative, why small price moves can cause large losses, who is really holding your assets, how crypto wallets are lost or stolen, and why the price of a single coin says little about its size. Most expensive beginner mistakes trace back to misunderstanding one of these five.
Many words also change meaning slightly between markets. "Exchange" means a regulated market operator in shares but usually a private company in crypto; "swap" is an overnight financing charge in forex but a token trade on a decentralised exchange. Where that happens, the entry below gives the sense used on this site.
A to Z
- Address
- A string of characters that identifies where crypto can be sent, similar to an account number. Addresses differ by network: USDT on Tron starts with T, while Ethereum-style addresses start with 0x. Always paste addresses rather than typing them, and check the first and last characters after pasting. See USDT explained.
- Address poisoning
- A scam in which a criminal sends a tiny transfer from an address that looks almost identical to one you use, hoping you will later copy the fake address from your transaction history and send real funds to it. The defence is to copy addresses only from the original source, never from past transactions.
- Ask
- The price at which a market or platform will sell to you, and therefore the price you pay when you buy. It is always higher than the bid; the gap between them is the spread, the first cost of any trade.
- Base currency
- The first currency in a forex pair. In EUR/USD the euro is the base, and the quoted price tells you how many US dollars one euro costs. Buying the pair means buying the base currency. See how forex trading works.
- Bear market
- A long period of falling prices, often described as a drop of 20% or more from a recent high in shares, and much deeper in crypto. Bear markets can last months or years and test whether an investor sized positions sensibly. They also expose weak platforms and projects that looked healthy while prices were rising.
- Bid
- The price at which a market or platform will buy from you, so the price you receive when you sell. It sits below the ask. A wide difference between bid and ask usually signals a less liquid market.
- Blockchain
- A shared ledger made of blocks of transactions, each linked to the one before by a cryptographic fingerprint. Thousands of computers keep copies and check new blocks against the same rules, which makes quietly rewriting the record extremely difficult. See how crypto works.
- Bull market
- A long period of rising prices and optimism. Bull markets can encourage risky behaviour such as heavy leverage or buying assets simply because they have gone up, which is how a bubble can form.
- CFD (contract for difference)
- An agreement with a provider to exchange the difference in an asset's price between opening and closing a position. You do not own the underlying asset, CFDs are usually leveraged, and retail leverage on them is capped in the UK, EU and Australia.
- Clone firm
- A fraudulent business that copies the name, registration number or address of a genuine authorised firm to appear legitimate. Checking contact details against the regulator's own register entry, rather than the website you were given, exposes most clones. See spotting scams.
- Cold wallet
- A crypto wallet whose private keys are kept offline, for example on a hardware device or paper backup. It is harder to hack remotely than a hot wallet but must be stored and backed up carefully. Platforms also use cold wallets for the bulk of customer coins, keeping only what they need for daily withdrawals online.
- Custody
- Who actually holds an asset on your behalf. A share broker holds shares in a nominee account; a crypto platform usually holds coins in its own wallets. Self-custody means you hold the private keys yourself.
- Dividend
- A cash payment a company makes to shareholders out of its profits, usually quarterly or twice a year. Dividends are not guaranteed and can be cut or cancelled. The dividend yield divides the yearly dividend by the share price. See the stock market for beginners.
- Exchange
- A venue where buyers and sellers are matched. Stock exchanges are regulated market operators; crypto exchanges are companies that run order books and often hold customers' coins as well, combining roles that are kept separate in traditional markets. PyxelTrade is not an exchange.
- Fully diluted valuation
- A token's price multiplied by its maximum possible supply, rather than by the coins circulating today. A large gap between market capitalisation and fully diluted valuation can mean many tokens are still to be released. See comparing coins.
- Halving
- The scheduled cut, every 210,000 blocks, in the number of new bitcoins paid to miners for each block. The most recent halving in April 2024 reduced the reward to 3.125 BTC. See what Bitcoin is.
- Hot wallet
- A wallet connected to the internet, such as a phone app or a platform's online wallet. Convenient for frequent use, but more exposed to hacking and phishing than a cold wallet. A common habit is to keep only spending money in a hot wallet, much like cash in a pocket.
- Index
- A number that tracks the combined value of a basket of shares, such as the S&P 500 or FTSE 100. It gives a quick reading of how a whole market moved and is the basis for index funds. See how to read the stock market.
- KYC (know your customer)
- The identity checks regulated firms must perform before opening an account, usually a photo ID and proof of address. A platform that skips them entirely is often operating outside the rules. Upload documents only through the official site or app, never by sending them to someone who contacted you.
- Leverage
- Using borrowed money to control a position larger than your deposit, expressed as a ratio such as 30:1. It magnifies gains and losses equally. Retail caps apply in many countries; see the margin calculator.
- Limit order
- An instruction to buy or sell only at a chosen price or better. It gives you control over the price but may not be filled if the market never reaches it. On crypto platforms, resting limit orders often pay the lower maker fee.
- Liquidation
- The forced closing of a leveraged position when the collateral is no longer enough to cover losses. In crypto futures, liquidation can happen after a modest price move if leverage is high. Waves of liquidations can feed on themselves, as forced selling pushes prices down and triggers further closures.
- Liquidity
- How easily an asset can be bought or sold without moving its price much. Highly liquid markets have tight spreads and deep order books; illiquid tokens can be impossible to sell at the displayed price.
- Lot
- The standard unit of size in forex. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. In gold, one lot is commonly 100 troy ounces.
- Maker and taker fees
- Two crypto fee rates. A maker adds an order to the book that waits to be filled; a taker fills immediately against an existing order. Taker fees are often higher. See trading fees explained.
- Margin
- The deposit a provider sets aside as collateral for a leveraged position. Required margin equals position value divided by leverage. It is not the maximum you can lose.
- Margin call
- A warning that your account equity is close to the minimum needed to keep positions open. In the UK and EU, retail positions are closed automatically when the margin level falls to 50%.
- Market capitalisation
- The total market value of a company or coin: price multiplied by the number of shares or coins in circulation. It is a better guide to size than the price of a single unit. A company with 200 million shares at $60, for example, has a market capitalisation of $12 billion.
- Negative balance protection
- A rule, mandatory for retail CFD clients in the UK and EU, that stops losses exceeding the money in your account. It does not protect you from losing that money.
- Pip
- The standard unit of price movement in forex: 0.0001 for most pairs and 0.01 for pairs involving the Japanese yen. On one standard lot of a USD-quoted pair, a pip is worth $10. Try the pip calculator.
- Private key
- The secret number that authorises spending from a crypto address. Whoever holds it controls the funds. It is usually backed up as a seed phrase and must never be shared.
- Proof of reserves
- A report by a crypto platform intended to show it holds enough assets to cover customer balances. Its value depends on whether liabilities are included and who checked it; a snapshot does not prove ongoing solvency.
- Quote currency
- The second currency in a forex pair, the one in which the price is expressed. In USD/JPY the yen is the quote currency, which is why the pip value comes out in yen before conversion.
- Seed phrase
- A list of 12 or 24 words that can restore a crypto wallet and all its keys. Anyone with the words controls the funds. No legitimate platform, support agent or website will ever ask for it.
- Slippage
- The difference between the price you expected and the price at which your order was actually filled. It is common in fast markets, around news and on thin order books. Limit orders avoid negative slippage on entry, at the cost of possibly not being filled at all.
- Spread
- The gap between the bid and the ask price. It is a cost paid on every trade, even when no separate commission is shown. Spreads tend to widen when markets are quiet, around the daily forex rollover and during major announcements, so the advertised minimum is rarely what you pay at every moment.
- Stablecoin
- A crypto token designed to keep a steady value, usually one US dollar, typically backed by reserves held by the issuer. USDT is the largest example. Stablecoins are not bank deposits and can lose their peg.
- Stop-loss
- An order that closes a position once the price reaches a set level, to limit a loss. In a sudden gap the fill can be worse than the stop price. Use the position size calculator to size trades around it.
- Swap (overnight financing)
- The charge or credit applied to leveraged forex and CFD positions held past the daily rollover at 17:00 New York time. A triple swap is usually applied on Wednesday to cover the weekend.
- Volatility
- How widely and quickly a price moves. Crypto is generally far more volatile than major currencies or large-company shares, which means both larger swings and a greater chance of deep losses. Higher volatility calls for smaller position sizes if the money at risk is to stay the same.