Trading Glossary

Available margin is the amount of money left in your trading account that can be used to open new trades or support existing positions.

It is the remaining balance after the required margin for open trades has been set aside.

Example

You have:

$1,000 in your trading account

You open a $10,000 GBP/USD trade using 1:100 leverage.

Margin required:

$10,000 ÷ 100 = $100

This means $100 is set aside to keep the trade open.

Available margin calculation:

$1,000 − $100 = $900 available margin

If your trade moves against you • available margin decreases.

If your trade moves in your favour • available margin increases.

A base rate is the interest rate set by a country's central bank.

It is one of the most important interest rates in an economy because it influences:

• Borrowing costs
• Savings rates
• Mortgage rates
• Currency values

Examples of central banks include:

• Bank of England
• Federal Reserve
• European Central Bank

Example

If the Bank of England increases the base rate from:

4.25% • 4.50%

Borrowing money may become:

More expensive

Saving money may become:

More attractive

As a result, the British Pound may strengthen because higher interest rates can make the currency more attractive to investors.

If the Bank of England reduces the base rate:

• Borrowing may become cheaper
• Spending may increase
• The British Pound may weaken

Why does it matter to traders?

Changes in the base rate can have a significant impact on financial markets, including:

• Forex
• Stocks
• Commodities
• Indices

This is because interest rate changes can influence:

• Economic growth
• Inflation
• Investor sentiment
• Currency demand

🔑 The base rate is the interest rate set by a country's central bank. Changes to the base rate can affect the economy, financial markets and the value of a currency, making it an important factor for traders to monitor.

A Bear Market occurs when prices are generally falling and investor confidence is weak.

During a Bear Market:

• Sellers are in control
• Demand is decreasing
• Prices tend to move lower over time

Traders in a Bear Market may look for selling opportunities.

Example

GBP/USD falls from:

1.3000 • 1.2500

This downward trend may be considered a Bear Market.

The name comes from how a bear swipes its paws downward.

A Bull Market occurs when prices are generally rising and investor confidence is strong.

During a Bull Market:

• Buyers are in control
• Demand is increasing
• Prices tend to move higher over time

Traders in a Bull Market may look for buying opportunities.

Example

GBP/USD rises from:

1.2500 • 1.3000

This upward trend may be considered a Bull Market.

The name comes from how a bull thrusts its horns upward.

Buy by Market means:

"I want to buy this asset RIGHT NOW at the current market price."

When you place a Buy by Market order, your broker immediately opens the trade at the best available buying price.

You are accepting the current market price because you want to enter instantly instead of waiting.

Example

Gold prices:

Sell by Market = $2,349
Buy by Market = $2,350

If you press:

"Buy by Market"

Your trade opens instantly at:

$2,350

You bought at the current market buying price.

A CFD is a trade where you make money or lose money from the movement of a price without owning the real asset.

CFDs also use leverage, meaning you can control a bigger trade with a smaller amount of money. This increases both profits and losses.

Example

You open a GBP/USD CFD at:

1.2500

Using leverage, you only need a small deposit to control a larger trade.

If GBP/USD rises to:

1.2550

You make a profit.

If GBP/USD falls to:

1.2450

You make a loss.

⚠ CFDs are high-risk products and can lead to significant losses.

A closed position is a trade that has been exited and is no longer active in the market.

Once a position is closed:

• Any profit or loss becomes realised
• The trade can no longer gain or lose value
• The final result is reflected in your account balance

A position can be closed:

• Manually by the trader
• Automatically by a Stop Loss
• Automatically by a Take Profit
• Automatically by the broker (e.g. due to a stop out)

Example

You open a:

Buy position on GBP/USD at 1.2500

The market rises to:

1.2550

You decide to close the trade.

Once the trade is closed:

• Your profit is realised
• The position is no longer active
• It is now considered a closed position

🔑 An open position is any trade that is currently active in the market. It remains open until it is closed by the trader or automatically by the broker.

Spread and commission are two ways brokers charge for trading.

Some brokers include their fee within the spread, while others charge a separate commission and offer a tighter spread.

The total cost of a trade depends on the broker's pricing model.

Example

You open 1 lot on GBP/USD:

Trade size = $100,000

Standard account (spread-only):

Sell by Market = 1.2500
Buy by Market = 1.2502

Spread:

2 pips

On 1 lot: 1 pip ≈ $10, so 2 pips ≈ $20

Your trading cost = approximately $20. No commission charged.

ECN account (commission):

Sell by Market = 1.2500
Buy by Market = 1.25005

Spread:

0.5 pips ≈ $5

Commission:

$3 open + $3 close = $6

Total trading cost = approximately $11

Advantages of a Standard account:

• No separate commission charges
• Simpler pricing structure
• Easier for new traders to understand

Advantages of an ECN account:

• Tighter spreads
• Transparent pricing
• More cost-effective for larger lot sizes

A currency pair is the value of one currency compared to another currency.

In Forex, currencies are always traded in pairs because when you buy one currency, you are automatically selling another.

The first currency is called the Base Currency.

The second currency is called the Quote Currency.

Example

GBP/USD = 1.2500

This means:

1 British Pound can be exchanged for 1.25 US Dollars.

If GBP/USD rises from:

1.2500 • 1.2600

The British Pound has become stronger against the US Dollar.

If GBP/USD falls from:

1.2500 • 1.2400

The British Pound has become weaker against the US Dollar.

A demo account is a practice trading account that allows you to trade using virtual funds instead of real money.

It is designed to help traders:

• Learn how trading works
• Practise using the trading platform
• Test trading strategies
• Become familiar with risk management

Because no real money is being used:

• Profits are not real
• Losses are not real

Advantages of a demo account:

• Allows you to practise without financial risk
• Helps you learn how the platform works
• Enables you to test strategies before using real money
• Allows you to understand leverage, margin, spreads and stop losses

Disadvantages of a demo account:

• Trading with virtual money can feel different from trading with real money
• Emotional factors such as fear and greed are often reduced
• Success on a demo account does not guarantee success on a live account

🔑 A demo account is a valuable learning tool that allows traders to gain experience and confidence before trading with real money. However, because no real money is at risk, trading behaviour and emotions may differ from those on a live account.

Equity is the current value of your trading account after taking into account any open profits or losses.

Equity changes constantly while your trades are open.

It is used to calculate:

• Available Margin
• Margin Level
• Margin Calls
• Stop Out Levels

Equity = Account Balance + Open Profit/Loss

Example 1 — Trade in profit

You have:

$1,000 account balance

Your trade is currently making:

$100 profit

Calculation:

$1,000 + $100

= $1,100 equity

Example 2 — Trade in loss

You have:

$1,000 account balance

Your trade is currently making:

$200 loss

Calculation:

$1,000 − $200

= $800 equity

🔑 Your balance only changes when a trade is closed. Your equity changes continuously as your open trades move between profit and loss.

An Expert Advisor (EA) is an automated trading program that runs on the MetaTrader 5 (MT5) platform.

It uses pre-defined rules and algorithms to:

• Analyse the markets
• Open trades
• Manage trades
• Close trades

Without requiring manual intervention from the trader.

EAs can operate 24 hours a day while the platform is running.

Example

A trader installs an EA on MT5 configured to trade:

GBP/USD

The EA is programmed to:

• Open a buy trade when certain conditions are met
• Set a Stop Loss and Take Profit automatically
• Close the trade when exit conditions are met

The EA performs these actions automatically without the trader placing orders manually.

Advantages:

• Can trade automatically without constant monitoring
• Removes emotional decision-making
• Can operate continuously while the platform is running

Disadvantages:

• Performance depends on the quality of its strategy
• May perform poorly in changing market conditions
• Cannot guarantee profits or eliminate trading risk

Floating Profit/Loss, also known as Unrealised Profit/Loss, is the amount of profit or loss on an open trade.

It is called "floating" because the trade is still open and the profit or loss can change as the market moves.

The profit or loss only becomes realised when the trade is closed.

Example 1 — Floating profit

You have:

$1,000 in your trading account

You open a:

Buy position on GBP/USD at 1.2500

GBP/USD rises to:

1.2550

Your trade is now showing:

$100 floating profit

If you close the trade:

The profit is added to your account balance.

Example 2 — Floating loss

GBP/USD falls to:

1.2450

Your trade is now showing:

$100 floating loss

If you close the trade:

The loss is deducted from your account balance.

Forex (Foreign Exchange) is the global market where currencies are bought and sold.

Forex trading involves exchanging one currency for another in order to profit from changes in currency prices.

It is the largest financial market in the world.

Example

You think the British Pound will become stronger than the US Dollar.

You buy:

GBP/USD at 1.2500

If GBP/USD rises to:

1.2600

You make a profit.

If GBP/USD falls to:

1.2400

You make a loss.

⚠ Forex trading can be high risk because prices can move very quickly.

Hedging is a risk management strategy used to reduce potential losses in trading.

A trader opens another trade to help protect themselves if the market moves against their original trade.

Hedging is commonly used during:

• High market volatility
• Important news events
• Uncertain market conditions

Example

You open a:

Buy position on GBP/USD at 1.2500

But you are worried the market could suddenly fall.

To reduce risk, you also open:

A smaller sell position on GBP/USD

If GBP/USD rises:

Your buy position may profit.

If GBP/USD falls:

Your sell position may help reduce some of the loss.

🔑 Hedging can reduce risk, but it can also reduce potential profits.

Leverage allows traders to control a larger trade with a smaller amount of money.

The broker provides extra trading power, which can increase both profits and losses.

Cynvest offers leverage up to 1:1000 on major forex pairs.

Example

You deposit:

$100

With 1:100 leverage, your $100 is multiplied by 100:

$100 × 100 = $10,000

This means you can open and control a trade worth:

$10,000 on GBP/USD

If the market moves in your favour:

Your profits can be larger.

If the market moves against you:

Your losses can also be larger.

⚠ Leverage increases risk and can lead to significant losses.

A Limit Order is an instruction to buy or sell an asset at a specific price or better.

Unlike a Market Order, a Limit Order is not executed immediately. It will only be triggered if the market reaches the price you have chosen.

Traders use Limit Orders when they want more control over the price at which they enter or exit a trade.

Example — Buy Limit

GBP/USD is currently at:

1.2500

You believe the price may fall before rising again, so you place a:

Buy Limit Order at 1.2450

If GBP/USD falls to:

1.2450

Your order is automatically triggered and a buy position opens.

If the price never reaches:

1.2450

The order remains pending and no trade is executed.

Advantages:

• Allows you to choose your desired entry price
• Can help achieve a better price than current market
• Useful when you cannot monitor the market continuously

Disadvantages:

• The order may never execute if the market does not reach your price
• You may miss an opportunity if the market moves away

A long position means buying a market because you believe the price will rise.

Traders open long positions when they expect the market to move upward.

If the price rises:

You make a profit.

If the price falls:

You make a loss.

Example

You open a:

Long position on GBP/USD at 1.2500

If GBP/USD rises to:

1.2600

You make a profit because the price increased.

If GBP/USD falls to:

1.2400

You make a loss because the price decreased.

⚠ Long positions can be high risk because markets can move against you.

A lot is the standard measurement used to describe the size of a Forex trade.

The larger the lot size:

• The more money you are trading
• The larger the potential profit or loss

Common lot sizes include:

Standard Lot = 100,000 units
Mini Lot = 10,000 units
Micro Lot = 1,000 units

Example

You open:

0.10 lots on GBP/USD

0.10 lots equals:

10,000 units worth of currency

On a mini lot (10,000 units): 1 pip on EUR/USD ≈ $1

On a standard lot (100,000 units): 1 pip ≈ $10

If GBP/USD moves in your favour:

You make a profit.

If GBP/USD moves against you:

You make a loss.

⚠ Choosing larger lot sizes increases trading risk.

Margin is the amount of money required in your account to open and maintain a leveraged trade.

It acts as a deposit held by the broker while the trade is open.

Margin is not a fee — it is part of your account balance set aside to support the trade.

The amount of margin required can vary depending on:

• The trade size
• The market being traded
• The leverage offered

Trade Size ÷ Leverage = Required Margin

Example

You have:

$1,000 in your trading account

You open a $10,000 GBP/USD trade using 1:100 leverage.

Margin calculation:

$10,000 ÷ 100 = $100 margin required

This means:

$100 from your account is set aside to keep the trade open.

A margin call happens when your trading account no longer has enough available funds to support your open trades.

This usually happens when the market moves against your position and your losses increase.

The broker may send a margin call alert asking you to:

• Deposit more money
• OR reduce your open positions

Example

You have:

$1,000 in your account

You open:

A $10,000 GBP/USD trade using 1:100 leverage

Margin required:

$10,000 ÷ 100 = $100

This means:

$100 of your $1,000 account balance is being used to keep the trade open.

You still have:

$900 remaining in your account

If the market moves against you and your losses increase, your account equity begins to fall.

When your equity falls to a critical level, the broker may start closing trades automatically.

If you have multiple open positions:

• The broker may close the trades with the biggest losses first
• OR the trades using the most margin first

A Market Order is an instruction to buy or sell an asset immediately at the best available price in the market.

When you place a market order, the trade is executed as soon as possible using the current market price.

Because prices can change quickly, the final execution price may be slightly different from the price displayed when the order is placed. This is known as slippage.

Example

GBP/USD prices:

Sell by Market = 1.2500
Buy by Market = 1.2502

You place a:

Market Buy Order

Your trade is executed immediately at:

1.2502

You place a:

Market Sell Order

Your trade is executed immediately at:

1.2500

Advantages:

• Executes the trade immediately
• Simple and easy to use
• Useful when entering or exiting the market quickly

Disadvantages:

• The execution price may differ slightly during volatile conditions
• Less control over the exact entry price
• Slippage may occur if the market is moving rapidly

MetaTrader 5 (MT5) is the professional trading platform used by Cynvest to provide clients with access to CFD trading.

On MT5, clients trade CFDs — meaning they are speculating on the price movement of an underlying asset rather than owning the asset itself.

MT5 allows clients to:

• View live market prices
• Analyse charts
• Place and manage trades
• Set Stop Losses and Take Profits
• Monitor their trading account in real time

🔑 When trading on MT5 through Cynvest, clients do not own the underlying assets they are trading. They are speculating on price movements through CFDs.

An open position is a trade that has been placed but has not yet been closed.

While a position is open, its value will change as the market price moves — it can show either a floating profit or a floating loss.

An open position remains active until:

• It is manually closed by the trader
• A Stop Loss is triggered
• A Take Profit is triggered
• It is automatically closed by the broker

Example

You open a:

Buy position on GBP/USD at 1.2500

The market then moves to:

1.2550

Your trade is still active and is showing a floating profit.

Because you have not closed the trade, it is considered:

An open position.

Once you close the trade, the position is no longer open and any profit or loss becomes realised.

A Pending Order is an instruction to automatically open a trade when the market reaches a price specified by the trader.

Unlike a Market Order, a Pending Order is not executed immediately. It remains inactive until the market reaches your chosen price.

The four main types of pending orders are:

Buy Limit
Sell Limit
Buy Stop
Sell Stop

Example

GBP/USD is currently at:

1.2500

You believe the price may fall to 1.2450 before rising again.

You place a:

Buy Limit Order at 1.2450

The order remains pending until GBP/USD reaches:

1.2450

If the price reaches your chosen level:

The trade is automatically opened.

If the price never reaches:

1.2450

The order remains pending and no trade is executed.

Advantages:

• Automatically executes trades at your chosen price
• Removes the need to monitor the market constantly
• Helps traders stick to their trading plan

Disadvantages:

• The order may never be triggered if the market does not reach your price
• Fast-moving markets may result in slippage once the order is activated

A pip (point in percentage) is the smallest standard movement in the price of a currency pair.

For most Forex pairs, a pip is the fourth number after the decimal point.

Traders use pips to measure:

• Price movement
• Profit
• Loss

For most currency pairs:

1 pip = 0.0001

Example

GBP/USD price:

1.2500

If the price moves to:

1.2501

The price has moved:

1 pip upward

If GBP/USD moves from:

1.2500 • 1.2510

That is:

10 pips upward

If GBP/USD moves from:

1.2500 • 1.2450

That is:

50 pips downward

The more pips the market moves, the bigger the potential profit or loss.

The Relative Strength Index (RSI) is a technical indicator used to measure the speed and strength of price movements.

RSI helps traders identify whether a market may be overbought or oversold.

The RSI is displayed as a line that moves between 0 and 100.

Generally:

• RSI above 70 may indicate the market is overbought
• RSI below 30 may indicate the market is oversold

An overbought market may have risen too quickly and could be due for a pullback.

An oversold market may have fallen too quickly and could be due for a recovery.

Example

You are analysing GBP/USD. The RSI is showing:

75

This may suggest that:

• GBP/USD is overbought
• Buying pressure has been strong
• The market could slow down or move lower

If the RSI is showing:

25

This may suggest that:

• GBP/USD is oversold
• Selling pressure has been strong
• The market could recover or move higher

⚠ An RSI above 70 does not guarantee the market will fall. An RSI below 30 does not guarantee the market will rise. Markets can remain overbought or oversold for extended periods.

Sell by Market means:

"I want to sell this asset IMMEDIATELY at the current market price."

When you place a Sell by Market order, your broker instantly opens the trade at the best available selling price.

You accept the current market price so the trade is executed immediately.

Example

Gold prices:

Sell by Market = $2,349
Buy by Market = $2,350

If you press:

"Sell by Market"

Your trade opens instantly at:

$2,349

You sold at the current market selling price.

A short position means selling a market because you believe the price will fall.

Traders open short positions when they expect the market to move downward.

If the price falls:

You make a profit.

If the price rises:

You make a loss.

Example

You open a:

Short position on GBP/USD at 1.2500

If GBP/USD falls to:

1.2400

You make a profit because the price decreased.

If GBP/USD rises to:

1.2600

You make a loss because the price increased.

⚠ Short positions can be high risk because markets can move against you.

Slippage occurs when a trade is executed at a different price than expected.

This usually happens when the market moves very quickly and the price changes before the broker can complete the order.

Slippage can be:

• Positive (better price)
• Negative (worse price)

It is more common during:

• Major news events
• High volatility
• Fast-moving markets

Example

You want to open a:

Buy position on GBP/USD at 1.2500

You press:

Buy by Market

At that exact moment, important economic news is released and the market moves very quickly.

By the time your order reaches the market, GBP/USD has already moved higher.

Your trade is opened at:

1.2504

Instead of:

1.2500

This means you received:

4 pips of negative slippage

You entered the trade at a worse price than expected because the market moved too quickly.

However, if the market had moved lower and your trade opened at:

1.2498

You would receive:

2 pips of positive slippage

Because you entered at a better price than expected.

The spread is the difference between the Sell by Market price and the Buy by Market price.

The spread is a trading cost paid when you open a trade.

Brokers make money by:

• Adding a mark-up to the spread
• OR charging commission

Example

GBP/USD prices:

Sell by Market = 1.2500
Buy by Market = 1.2502

Difference:

2 pips spread

If you open a:

Buy trade

Your trade opens at:

1.2502

This is because when buying, you enter at the:

Buy by Market price

If you closed the trade immediately, it would close at:

1.2500

This means you would instantly start:

2 pips down

The market would need to move from:

1.2502 • 1.2504

Before your trade begins making profit.

A Stop Loss is an instruction that automatically closes a trade when the market reaches a specified price to help limit potential losses.

It is a risk management tool used to protect traders from losing more money than they are willing to risk on a trade.

A Stop Loss does not guarantee losses will be avoided completely — slippage can occur during fast-moving market conditions.

Example

You open a:

Buy position on GBP/USD at 1.2500

You decide the maximum loss you are willing to accept is:

50 pips

You place a:

Stop Loss at 1.2450

If GBP/USD falls to:

1.2450

Your position automatically closes, helping to limit further losses.

If GBP/USD rises instead:

Your Stop Loss will not be triggered and your trade remains open.

Advantages:

• Helps limit potential losses
• Automatically closes trades without constant monitoring
• Encourages disciplined risk management
• Can reduce emotional decision-making

Disadvantages:

• The market may hit your Stop Loss then reverse in your favour
• Slippage may result in the trade closing at a slightly worse price
• Placing it too close may cause it to trigger on normal market fluctuations

A Stop Order is an instruction to buy or sell once the market reaches a specified price.

Unlike a Limit Order, a Stop Order is placed above the current price when buying (Buy Stop) or below when selling (Sell Stop).

It is often used to enter a trade when the market is showing momentum in a particular direction.

Once the stop price is reached, the order becomes a Market Order and executes at the best available price.

Example — Buy Stop

GBP/USD is currently at:

1.2500

You believe that if the price rises above 1.2550, it will continue moving higher.

You place a:

Buy Stop Order at 1.2550

If GBP/USD reaches:

1.2550

Your order is automatically triggered and a buy position opens.

If the price never reaches:

1.2550

The order remains pending and no trade is executed.

A stop out level is the point where a broker automatically starts closing your trades because your account no longer has enough money to support your open positions.

The broker closes trades to:

• Reduce further losses
• Help prevent your account balance from going negative

Stop out levels are usually shown as a percentage.

Margin Level = Equity ÷ Used Margin × 100

Example

You have:

$1,000 in your trading account

You open:

A $10,000 GBP/USD trade using 1:100 leverage

Margin used:

$10,000 ÷ 100 = $100

The market then moves heavily against your GBP/USD trade.

As your losses increase, your account equity begins to fall.

Your broker has a:

50% stop out level

If your account equity falls to:

$50

Then:

$50 ÷ $100 × 100 = 50% margin level

At this point the broker may automatically begin closing your trades.

If you have multiple trades open:

• The broker may close the biggest losing trades first
• OR the trades using the most margin first

A swap, also known as a rollover fee, is an interest charge or credit applied when a trading position is kept open overnight.

The amount depends on:

• The instrument being traded
• Whether the position is a buy or sell
• Current interest rates

A swap can be:

Positive (you receive money)
Negative (you pay money)

Example

You open a:

Buy CFD on GBP/USD

You decide to keep the position open overnight.

When you buy GBP/USD, you are:

• Buying British Pounds (GBP)
• Selling US Dollars (USD)

If the interest rate on GBP is lower than on USD, you may pay a swap charge.

For example:

Swap Long = −$2.50

$2.50 may be deducted from your account for each night the position remains open.

If you opened a Sell position and the platform showed:

Swap Short = +$1.20

$1.20 may be credited to your account for each night the position remains open.

Viewing swap rates in MT5:

• Right-click the currency pair in Market Watch
• Select Specification
• Scroll down to view Swap Long and Swap Short

A Take Profit is an instruction that automatically closes a trade when the market reaches a specified profit target.

It allows traders to lock in profits without having to monitor the market continuously.

Once the Take Profit level is reached, the trade closes automatically and the profit is credited to your account.

Example

You open a:

Buy position on GBP/USD at 1.2500

You want to take profit if the market rises by:

50 pips

You place a:

Take Profit at 1.2550

If GBP/USD rises to:

1.2550

Your trade closes automatically and your profit is secured.

If GBP/USD falls instead:

Your Take Profit will not be triggered and your trade remains open.

Advantages:

• Automatically locks in profits when your target is reached
• Removes the need to monitor the market
• Helps traders stick to their trading plan
• Reduces the impact of emotions such as greed

Disadvantages:

• The market may continue moving in your favour after the trade has closed
• Setting it too close may limit potential gains
• The target may never be reached, leaving the trade open

Technical Analysis is the process of analysing price charts and market data to identify potential trading opportunities.

Technical analysts believe that historical price movements can help indicate future market direction.

Instead of focusing on economic news or company performance, technical analysis focuses on:

• Price action
• Chart patterns
• Trends
• Indicators
• Support and resistance levels

Traders use technical analysis to help determine:

• When to enter a trade
• When to exit a trade
• Where to place stop losses
• Potential future price movements

Common technical analysis tools include:

• Trend lines
• Moving Averages
• Relative Strength Index (RSI)
• MACD
• Support and Resistance
• Candlestick Patterns

🔑 Technical analysis does not guarantee future market movements and is often used alongside other forms of analysis.

Volatility refers to the amount and speed of price movement in a market over a period of time.

A market is considered volatile when prices move significantly in a short period of time.

Volatility is commonly influenced by:

• Economic news releases
• Interest rate decisions
• Political events
• Unexpected market developments

Example

On a normal day, GBP/USD may move:

30 to 50 pips

However, during a major interest rate announcement, GBP/USD may move:

100 to 200 pips or more

This larger and faster price movement is known as:

High volatility

High volatility:

• Larger price movements
• Greater profit opportunities
• Greater risk of loss
• Increased chance of slippage

Low volatility:

• Smaller price movements
• Fewer trading opportunities
• Lower risk of sudden price swings

🔑 Volatility measures how much and how quickly prices move. Higher volatility creates both greater opportunities and greater risks.