This trading glossary defines the terms used across ZentraTrader, with a link to the guide where each one is explained in context. Definitions describe how the terms are commonly used; individual platforms sometimes use them slightly differently, so always check a platform's own documents when money is involved.
How to use this trading glossary
Terms are listed alphabetically; use the letter links to jump. Where a definition includes a figure, such as a leverage cap or a settlement cycle, it reflects rules in force at the time of our last review, and the linked guide names the source. Three families of words recur throughout the site and are worth learning together: the vocabulary of prices (bid, ask, spread, pip, slippage), the vocabulary of leverage (margin, leverage, margin close-out, liquidation, negative balance protection) and the vocabulary of custody (private key, recovery phrase, custody, cold wallet). Most expensive mistakes involve misunderstanding a word from one of those three groups.
- Ask price
- The price at which you can buy, also called the offer. It is always above the bid; the gap between them is the spread. On a thin market or outside main trading hours the ask can sit well above the last traded price. When you close a short position, you buy back at the ask.
- Attestation
- A report by an accounting firm confirming the assets an issuer reported at a specific date. Stablecoin issuers such as Tether publish attestations of their reserves. It is narrower than a full audit, which also examines controls over a period. Check the date and the asset breakdown whenever you read one. See USDT explained.
- Base currency
- The first currency in a pair. In EUR/USD the euro is the base, and the price tells you how many US dollars one euro costs. Lot sizes are counted in units of the base currency, which is why margin depends on its dollar value.
- Bid price
- The price at which you can sell. Long positions are closed at the bid, so a widening spread can move a long position closer to its stop even when the mid price has not changed.
- Block explorer
- A website that displays the public records of a blockchain. Entering a transaction ID shows whether a transfer is pending or confirmed, the fee paid and the addresses involved. It is the first place to look when a deposit has not arrived. Use one you reach through a trusted bookmark, since fake explorers exist too.
- Block reward
- The new coins plus transaction fees a miner or validator receives for adding a block. For Bitcoin, the new-coin part has been 3.125 BTC since the April 2024 halving. See what Bitcoin is.
- Blockchain
- A ledger of transactions grouped into blocks, each linked to the one before by a cryptographic fingerprint. Copies are kept by many independent computers, so changing past entries is either very costly or immediately visible. See how crypto works. Different blockchains use different rules for agreeing on new blocks, which affects their speed, fees and security.
- CFD (contract for difference)
- A contract that pays the difference in an asset's price between opening and closing, without ownership of the asset. CFDs are usually leveraged and carry overnight financing. UK and EU rules cap retail leverage and ban bonuses on them. Most retail CFD accounts lose money, and providers in the UK and EU must publish the percentage of their clients who do.
- Clone firm
- A fraudulent business that copies the name, registration number, logo or address of a genuine regulated firm. Contact details that differ from the regulator's register are the usual giveaway. See how to spot trading scams.
- Cold wallet
- A wallet whose private keys are kept offline, for example on a hardware device or in an offline setup. It is harder to hack remotely than a hot wallet, but losing the device and its recovery phrase means losing the coins. A hot wallet, by contrast, keeps keys on an internet-connected device for convenience.
- Confirmation
- Each block added after the one containing your transaction counts as one confirmation. More confirmations make a transaction harder to reverse. Platforms set how many they require before crediting a deposit. The number varies by network and by platform, which is why deposits of the same coin can take different times to appear.
- Custody
- Who holds an asset on your behalf. A broker holds shares in a nominee account; a crypto exchange holds coins in wallets it controls. With self-custody you hold the keys yourself. Custody decides what happens if a firm fails. It is usually described in the terms of service rather than in marketing, so that is where to look.
- Drawdown
- The fall in an account's value from a peak to a subsequent low, usually expressed as a percentage. Prop firm evaluations often set daily and maximum drawdown limits that end the account if breached. See prop firm forex.
- ERC20
- The token standard on Ethereum. USDT on Ethereum is an ERC20 token, sent to addresses starting with 0x, and its fees are paid in ether as gas.
- ETF (exchange-traded fund)
- A fund whose shares trade on a stock exchange like a single company's shares. Many ETFs track an index, giving broad exposure in one purchase. Ongoing charges are deducted from the fund's value. Some products that trade like ETFs are structured differently, for example as notes, so read the product documents.
- Funding rate
- A periodic payment between holders of long and short positions in perpetual futures, designed to keep the contract price near the spot price. It can be positive or negative and becomes costly when positioning is one-sided. Rates are published in advance by each venue and can differ between venues for the same coin.
- Gas
- The fee for processing a transaction on Ethereum and similar networks, paid in the network's native coin. A wallet holding only tokens such as USDT cannot send them without enough of the native coin for gas.
- Halving
- The scheduled cut in Bitcoin's block subsidy every 210,000 blocks, roughly every four years. The most recent was in April 2024, reducing the reward to 3.125 BTC; the next is expected around 2028. It changes how many new coins are created, not the number already in circulation.
- Index
- A number tracking a defined basket of shares, such as the S&P 500, the FTSE 100 or the Nikkei 225. Weighting methods differ: some use market value, others use share price. See the stock market guide.
- Leverage
- Borrowed exposure that lets a deposit control a larger position. At 30:1, $1 of margin controls $30 of position. Gains and losses are both calculated on the full position. Try the margin calculator. Regulators cap retail leverage by asset class because it is the main way small price moves become large losses.
- Limit order
- An instruction to buy at or below, or sell at or above, a set price. It controls price but may not be filled. On crypto exchanges a resting limit order usually pays the lower maker fee. Limit orders can also be set to expire at the end of a day or remain until cancelled.
- Liquidation
- The forced closure of a leveraged position when its losses consume the required margin. On crypto derivatives venues, liquidation can happen within minutes during sharp moves and may include an extra fee. Liquidation prices are shown on most derivatives platforms before you open a position; checking yours is essential.
- Lot
- A standard unit of trade 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. Gold is commonly traded in lots of 100 ounces. See the pip calculator.
- Maker and taker fees
- Exchange fees that depend on whether your order adds liquidity to the order book (maker) or removes it by matching an existing order (taker). Taker fees are usually higher. Many exchanges cut both rates as monthly trading volume rises.
- Margin
- Collateral a broker holds while a leveraged position is open, equal to position value divided by leverage. It is a deposit, not a cost, but it is not the limit of what you can lose. Brokers can raise margin requirements at short notice, for example ahead of weekends or major events.
- Margin close-out
- Automatic closing of positions when account equity falls to a set share of the required margin. For retail CFD clients in the UK and EU, the level is 50%. Also called a stop-out.
- Market order
- An instruction to buy or sell immediately at the best available price. It fills quickly but can suffer slippage in a fast or thin market. Large market orders can also move through several price levels in the order book before being completely filled.
- Negative balance protection
- A rule that stops a retail client's account from going below zero, so losses cannot exceed the money deposited. It applies to retail CFD clients in the UK and EU but not everywhere.
- Pip
- The standard unit of price movement in forex: 0.0001 for most pairs and 0.01 for yen pairs. On one standard lot of a dollar-quoted pair, a pip is worth $10. See how forex trading works.
- Private key
- The secret number that authorises spending from a crypto address. Whoever holds it controls the coins. Wallets usually derive keys from a recovery phrase. Keys should never be shared, typed into websites or stored in plain text on an internet-connected device.
- Prop firm
- A proprietary trading firm. In retail marketing, usually a company that sells evaluation challenges and pays a share of profits made on funded accounts, often simulated. See prop firm forex.
- Recovery phrase
- A list of 12 or 24 words from which a wallet regenerates its private keys. Anyone with the phrase has full control of the funds. No legitimate service will ever ask for it. Anyone who asks for it, however official they appear, should be treated as attempting theft.
- Slippage
- The difference between the price you expected and the price at which your order was filled. It happens in fast markets, around news and in gaps, and can occasionally work in your favour.
- Spread
- The difference between the bid and ask price, and the most basic trading cost. It is paid on every round trip, including on accounts advertised as commission-free. It is usually quoted in pips for currencies and in percent or price points for crypto and shares.
- Stablecoin
- A crypto token designed to hold a steady value, usually one US dollar, backed by reserves or maintained by other mechanisms. It is not a bank deposit and can trade away from its target. USDT is the largest example; see what USDT is.
- Stop-loss order
- An order that closes a position once the price reaches a set level, to limit losses. In a gap the fill can be worse than the stop price. Size positions with the position size calculator.
- Swap (overnight financing)
- The interest charged or paid for holding a leveraged forex or CFD position past the daily rollover at 17:00 New York time. Most brokers apply three days' worth on Wednesday night.
- T+1
- Settlement one business day after the trade date, the standard for US shares since May 2024. Until settlement, the clearing system guarantees the trade. Many other markets use T+2, so settlement timing can differ when you trade shares abroad.
- TRC20
- The token standard on the Tron blockchain. USDT on Tron is a TRC20 token, sent to addresses starting with T, with fees paid through Tron's own resources. See USDT explained.
- Volatility
- How much and how quickly a price moves, often measured by the standard deviation of returns. Higher volatility means larger swings in both directions and wider stops for the same trade idea. Volatility itself changes over time, often rising sharply when prices fall.
Which terms are most often confused?
- Margin and leverage. Leverage is the ratio; margin is the money set aside because of it. Doubling leverage halves the margin but leaves the position's risk unchanged.
- Swap and funding rate. Both are holding costs. A swap is charged by a forex or CFD broker once a day at rollover; a funding rate passes between traders of perpetual futures at set intervals and can be paid or received.
- Wallet and recovery phrase. The wallet is replaceable software; the phrase is the thing that actually controls the funds. Losing a phone is an inconvenience; losing the phrase can be permanent.
- Attestation and audit. An attestation checks reported assets on a date; an audit examines financial statements and controls over a period.
- Regulated and registered. Any company can register with a business registry. Only a financial regulator can authorise a firm to offer investments.
- Stop-loss and guaranteed stop. An ordinary stop becomes a market order when triggered and can fill at a worse price in a gap. Some providers sell guaranteed stops, usually for a premium, that fill exactly at the stated level.
Missing a term? Suggest it through our contact page, or look for it in the frequently asked questions.