Trading glossary A–Z.
Every term you'll run into on the charts, in the platform and in the community — explained briefly and without fluff. New to trading? Start with the learn to trade guide.
- Ask
- The price you pay when you buy. Always slightly above the bid — the gap between them is the spread.
- Bid
- The price you get when you sell.
- Breakout
- When price pushes through an established support or resistance level, often with increased speed and volume.
- Broker
- The company that routes your trades to the market and holds your account. Always choose a regulated broker.
- Bull / Bear
- A bull expects prices to rise; a bullish market is climbing. A bear is the opposite. From the bull striking upward and the bear swiping down.
- Candlestick
- The chart bar showing open, high, low and close for a time period. Green/white = closed higher, red = lower.
- CFDcontract for difference
- An instrument that lets you trade the price move without owning the underlying asset. The most common way for retail traders to trade indices, commodities and forex with leverage.
- Day trading
- Trading where positions are opened and closed the same day — nothing held overnight.
- Demo account
- A practice account with real market prices and play money. Where your first months should happen.
- Drawdown
- The decline from an account's peak to its trough, in percent. The measure of how deep a strategy (or trader) sinks before recovering.
- Edge
- Your statistical advantage — what makes your strategy profitable over many trades despite individual losses. Without an edge, trading is gambling.
- Entry
- The level where you enter a position. The opposite: exit.
- Fibonaccifib
- Levels (38.2%, 50%, 61.8% and others) used to find potential pullback and target levels within a trend.
- FOMOfear of missing out
- The fear of missing a move — which makes you chase price without a plan. One of the classic psychology traps.
- ForexFX
- The currency market — the world's largest market, open around the clock Monday to Friday.
- Fundamental analysisFA
- Analysis based on economic data, interest rates and news — as opposed to technical analysis, which starts from the chart.
- Gap
- A price jump with no trading in between, e.g. between Friday's close and Sunday's open.
- Indicator
- A mathematical calculation on price drawn on the chart — RSI, moving averages, MACD and others. Tools, not answers.
- Leverage
- Lets you control a position larger than your capital — magnifies both profit and loss. Full guide here.
- Liquidity
- How easily something can be bought or sold without moving the price. High liquidity = tight spreads and fast fills.
- Long
- A position that profits from rising prices — you buy first and sell later.
- Lot
- The standard unit of position size in forex: 1 lot = 100,000 units of the base currency. 0.1 lots is a mini, 0.01 a micro.
- Margin
- The capital your broker locks as collateral when you open a leveraged position.
- Margin call
- The warning when your equity no longer covers the margin requirements. The next step is a stop out.
- Momentum
- The strength and speed of a price move.
- NFPNon-Farm Payrolls
- The monthly US jobs number — the biggest market event of the month. Full guide here.
- Pip
- The smallest standard move in a currency pair — the fourth decimal on most pairs (0.0001), the second decimal on yen pairs.
- Position
- An open trade — long or short, with a size.
- Price action
- Reading the market directly from price moves and candlesticks, without (or with few) indicators.
- Rangeconsolidation
- When price moves sideways between support and resistance without a clear trend.
- Resistance
- A price level where rallies have historically stalled — a "ceiling" until it breaks.
- Risk/rewardR/R
- The ratio between what you risk and what you aim for. Risk $100 to make $300 and your R/R is 1:3.
- Scalping
- Very short-term trading — positions held for seconds to minutes. Puts the highest demands on low spreads and discipline.
- Short
- A position that profits from falling prices — you sell first and buy back cheaper.
- Slippage
- The difference between the price you requested and the price you actually got — common around news releases and low liquidity.
- Spread
- The difference between the buy and sell price — your cost in every trade. Full guide here.
- Stop lossSL
- An order that automatically closes the position at a given loss level. Your most important survival mechanism — and it should never be moved backwards.
- Stop out
- When the broker force-closes your positions because equity has fallen below the margin requirement.
- Support
- A price level where declines have historically stalled — a "floor" until it breaks.
- Swing trading
- Trading on a timescale of days to weeks — catches bigger swings, less screen time than day trading.
- Take profitTP
- An order that automatically closes the position at your profit target.
- Technical analysisTA
- Analysis based on the chart: trends, levels, patterns and indicators.
- Trend
- The market's overall direction — higher highs and lows (uptrend) or lower ones (downtrend).
- Volatility
- How much and how fast price moves. High volatility = bigger opportunities and bigger risk.
- Volume
- How much was traded during a period — confirms (or undercuts) the strength of a move.
- Whipsaw
- When price snaps hard in one direction and then reverses abruptly — classic around news releases.
The words are easy. The craft takes time.
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