Trading terms, in plain English
The words you'll meet when choosing a broker — defined honestly, with the risk made clear where it matters.
CFD
Contract for Difference — a leveraged derivative that tracks an asset's price. You don't own the underlying asset and can lose more than you deposit.
Commission
A flat per-trade fee, common on raw/ECN accounts that show tighter spreads. Always compare spread + commission together as the all-in cost.
ECN account
Electronic Communication Network — an account that routes orders to a liquidity pool, typically offering raw spreads plus a per-lot commission.
Leverage
Borrowed exposure that multiplies both gains and losses. 30:1 means $1 of yours controls $30 in the market. Higher leverage means faster, larger losses.
Lot
A standardised trade size. One standard forex lot equals 100,000 units of the base currency; mini and micro lots are 10,000 and 1,000.
Margin
The deposit required to open and maintain a leveraged position. If losses eat into it, you may face a margin call or have positions closed automatically.
Negative-balance protection
A safeguard that stops your account going below zero, so you can't end up owing the broker more than you deposited. Mandatory for retail clients in some regions.
Pip
The smallest standard price move in a currency pair — usually the 4th decimal place (0.0001). Spreads and some costs are quoted in pips.
Regulation
Oversight by a financial authority (e.g. FCA, ASIC). Tier-1 regulators enforce capital rules, fund segregation and compensation schemes; offshore licences offer far less protection.
Segregated funds
Client money held in bank accounts kept separate from the broker's own funds, so it isn't used to run the business and is easier to return if the firm fails.
Slippage
The difference between the price you expected and the price your order actually fills at. Common in fast-moving markets; can help or hurt you.
Spread
The gap between the buy (ask) and sell (bid) price. It's a core trading cost — tighter spreads are cheaper for you.
Swap (overnight fee)
A financing charge (or occasionally credit) for holding a leveraged position past the daily cut-off. Also called rollover. It adds up on longer holds.
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Educational content only — not financial advice. Trading carries risk. Read the risk guide.