This trading glossary collects the terms used across the FeroxTrader knowledge base. Definitions are kept short on purpose; where a term needs more room, the definition links to the full entry. Jump to a letter below.
How to use this glossary
Terms are listed alphabetically, with abbreviations spelled out in brackets. Each definition tries to answer two questions: what the word means, and why it matters when you are reading a quote, a fee schedule or a wallet screen. Where a definition links to another entry, that entry covers the idea in more depth, usually with a worked example.
Same word, different market
Some words shift meaning depending on where you meet them, which trips up people moving between crypto, forex and shares:
- Swap is an overnight financing charge at a forex broker, but on a crypto app it usually means exchanging one token for another.
- Exchange is a tightly supervised venue for shares, a loosely defined kind of business in crypto, and barely applies to spot forex, which trades between dealers.
- Margin is collateral for a leveraged position; in company accounts, profit margin means profit as a share of revenue.
- Settlement takes a business day or two for shares and forex, but a crypto transfer settles on-chain within minutes and cannot be reversed.
- Wallet in crypto stores keys, not money; in a payments app it usually means a balance held by the company.
Where a term below could be read either way, the definition says which market it refers to.
Terms from A to Z
- Address
- A string of characters that identifies where crypto can be sent on a particular blockchain. Tron addresses start with T and Ethereum addresses with 0x. An address only works on its own network, which is why USDT transfers must use matching networks on both sides.
- Ask price
- The lowest price at which someone is currently willing to sell. When you buy at market, you pay the ask. It is always above the bid, and the gap between them is the spread. On an app with a single buy button, the ask may already include a markup, so compare it with the exchange's own order book.
- Base currency
- The first currency in a pair. In GBP/USD, the pound is the base; the price tells you how many dollars one pound costs. Buying the pair means buying the base currency. Pip values are simplest when the dollar is the quote currency rather than the base.
- Bid price
- The highest price someone is currently willing to pay. When you sell at market, you receive the bid. Watching the bid and ask together shows how wide the spread is at any moment. In thin markets the bid can sit well below the last traded price, so a quick sale may fetch less than the chart suggests.
- Block reward
- New coins paid to the miner or validator that adds a block. On Bitcoin the reward halves roughly every four years; since April 2024 it has been 3.125 BTC per block.
- Blockchain
- A shared ledger copied across many computers, in which transactions are grouped into blocks and each block is linked to the one before. Changing old records would require redoing all later blocks, which is what makes the history hard to alter. See how crypto works.
- CFD (contract for difference)
- A contract with a provider that pays the difference between the opening and closing price of an asset, without you owning the asset. CFDs are usually leveraged, and retail leverage on them is capped in the UK, EU and Australia. Because you never own the asset, you get no shareholder rights, and holding a CFD overnight usually incurs financing charges.
- Clone firm
- A fraudulent business that copies the name, address or authorisation number of a genuine regulated firm. Checking contact details against the regulator's register is the main defence, as the broker checklist explains.
- Cold wallet
- A wallet whose private keys are kept offline, for example on a hardware device or on paper. It is harder to hack remotely than an internet-connected wallet, but losing the backup can mean losing the funds. A hot wallet, by contrast, stays connected to the internet and suits smaller balances you use often.
- Custody
- Who actually holds an asset. With a stockbroker, shares sit in a nominee account; on most crypto exchanges, the platform holds the coins; in self-custody, you hold the keys yourself. Custody decides what happens if a provider fails, which is why it deserves as much attention as price or fees.
- Dividend
- A cash payment a company makes to shareholders out of its profits, usually quarterly or twice a year. Dividends can be cut or stopped at any time. See the stock market entry. Buy on or after the ex-dividend date and the next payment goes to the seller instead of you.
- ECN (electronic communication network)
- A system that matches orders against prices from multiple liquidity providers. ECN-style accounts typically offer tight spreads plus a commission per lot. See how markets fit together.
- Funding rate
- Regular payments exchanged between long and short holders of crypto perpetual futures to keep the contract close to the spot price. It can be a significant cost on a leveraged position held for days. Payments are usually made every few hours and flip direction depending on whether long or short positions dominate.
- Gas fee
- The fee paid to process a transaction on Ethereum and similar networks, set in the network's own coin. It rises when the network is busy. If a transaction fails, the fee spent trying to process it is usually not refunded.
- Halving
- The scheduled cut in Bitcoin's block reward every 210,000 blocks, roughly every four years. Halvings took place in 2012, 2016, 2020 and April 2024. See what is Bitcoin.
- Hash rate
- The total computing power miners devote to a proof-of-work network, measured in hashes per second. A higher hash rate makes attacking the network more expensive. See crypto mining. It also shows how crowded mining has become, since each miner's share of the rewards falls as the total rises.
- Index
- A number that tracks the combined value of a basket of shares, such as the S&P 500, FTSE 100 or Nikkei 225. Rules for choosing and weighting members differ from index to index. You cannot buy an index itself; you buy a fund, futures contract or CFD that tracks it.
- KYC (know your customer)
- Identity checks that regulated financial firms must carry out before letting you trade or withdraw. A request for documents is normal; a demand for a fee to 'verify' a withdrawal is not. Expect to provide photo ID and proof of address, and possibly to explain the source of your funds later on.
- Leverage
- Borrowed exposure that lets a small deposit control a larger position. At 30:1, $1,000 of margin supports a $30,000 position. It magnifies losses exactly as much as gains; see the margin calculator.
- Limit order
- An instruction to buy or sell only at a set price or better. It protects you from a bad fill but may not be executed if the market never reaches your price.
- Liquidity
- How easily an asset can be bought or sold without moving its price. Liquid markets have tight spreads and deep order books; illiquid ones can jump on small orders. It varies by time of day: major currency pairs are most liquid when London and New York are open together.
- Lot
- The standard unit of size in forex: one standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. For gold, one lot is commonly 100 ounces. Most platforms allow sizes down to 0.01 lots, which is 1,000 units of currency.
- Maker and taker fees
- Crypto exchange fees that depend on how your order trades. A maker order rests on the order book and usually pays less; a taker order fills immediately and usually pays more. See trading fees explained.
- Margin
- The deposit a broker holds as collateral while a leveraged position is open. It is not a fee, but if losses shrink your equity too far, positions are closed automatically.
- Margin call
- A warning that your equity is falling towards the level at which positions will be closed. In the UK and EU, retail CFD positions must start being closed when the margin level reaches 50%.
- Market order
- An instruction to buy or sell immediately at the best available price. It fills quickly, but in a fast or thin market the price may differ from the one you saw. Many crypto apps use market orders by default, so check the order type before confirming.
- MetaTrader
- Trading software made by MetaQuotes and licensed to many brokers. MetaTrader 4 and MetaTrader 5 are platforms, not brokers; see the MetaTrader 5 entry.
- Negative balance protection
- A rule that stops a retail client's account from falling below zero, so losses cannot exceed the money deposited. It applies to retail CFD clients in the UK and EU. Without it, a sharp gap in prices could leave a trader owing the provider money.
- Order book
- The live list of buy and sell orders at each price on an exchange. Its depth shows how much can be traded near the current price. A thin book with few orders near the price warns you that a large order will suffer slippage.
- Pip
- The standard unit of movement in a currency price: 0.0001 for most pairs and 0.01 for yen pairs. On a USD-quoted pair, one pip on one standard lot 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, and nobody legitimate will ever ask you for it. It is usually derived from your seed phrase, so protecting the phrase protects every key in the wallet.
- Proof of work
- A consensus method in which miners compete to solve a computational puzzle to add the next block. Bitcoin uses it; it is secure but consumes a great deal of electricity. The main alternative, proof of stake, secures a network with coins locked up as collateral instead of computing power.
- Quote currency
- The second currency in a pair, in which the price is expressed. In EUR/USD, the dollar is the quote currency, so pip values on that pair are in dollars.
- Seed phrase
- A list of 12 or 24 words from which a wallet's keys can be rebuilt. It is the master backup for a self-custody wallet: store it offline and never type it into a website.
- Settlement
- The legal transfer of an asset and payment after a trade. US shares settle one business day after the trade date (T+1); spot forex conventionally settles two business days later.
- Slippage
- The difference between the price you expected and the price at which your order was actually filled. It is usually worse in fast-moving or illiquid markets. A limit order prevents a worse fill, at the cost of possibly not being filled at all.
- Spread
- The gap between the bid and ask prices, and the first cost of any trade. On a USD-quoted currency pair, a 1-pip spread on one standard lot costs $10.
- Stablecoin
- A crypto token designed to hold a steady value, usually one US dollar, typically backed by reserves held by its issuer. USDT is the largest; see what is USDT.
- Swap (overnight financing)
- A charge or credit for holding a leveraged position past the daily rollover at 17:00 New York time. Many providers charge three days' worth on Wednesday night.
- Volatility
- How much and how quickly a price moves. Crypto is typically far more volatile than major currencies or large-company shares, which makes position size especially important. It is often measured as the standard deviation of returns over a period, and it tends to jump during sell-offs.