Glossary of trading terms

A change in the direction of a price trend.

The various factors or events that could lead to a loss of capital.

A measure of how much risk you are willing to take in your trading activities to achieve higher potential returns.

The process of identifying, assessing, and mitigating potential risks that could result in financial losses. This includes strategies like setting stop loss orders in option trading and determining optimal position sizing.

A metric used to measure the potential profit in relation to the potential loss, enabling you to assess and effectively manage risk.

The level of risk you are willing to endure in your trading decisions.

The process of extending the settlement date of an open position in a financial instrument to a future date.

A trading technique that involves making multiple trades within a short time. The scalping trading strategy usually lasts from a few seconds to a few minutes to profit from small price movements.

Financial instruments representing ownership or creditorship in public trading companies or organisations. For example, stocks and options.

A risk management tool you can use to control the amount of money and time you spend trading on Deriv. This is to promote responsible trading and prevent potential financial losses due to emotional trading decisions.

The act of disposing of financial instruments such as stocks, bonds, or commodities through a sell order if you expect its value to decrease in the future. This strategy can involve both short selling and long selling.

A pending order to sell an asset at a price higher than the current market price.

The price at which a seller is willing to sell an asset. Also known as the ask price, it is typically displayed on the right-hand side of a quote.

A pending order to sell an asset at a price lower than the current market price.

A conditional order that combines the features of a sell stop order and a sell limit order.

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When a sell stop limit order is placed, it will only become a sell limit order once the specified stop price is reached or breached. Once the stop price is reached, the sell limit order becomes active and is executed at the limit price or better.

A financial metric used to assess the return of a trading strategy in relation to its risk.

A type of financial risk that occurs when an investment portfolio or asset fails to meet anticipated performance, leading to a shortfall risk in the expected returns.

A trading position where a trader sells a financial instrument that they have borrowed in the expectation that its value will decrease.

A type of moving average that shows the average price of an asset over a specified period. SMA is calculated by adding up the closing prices of an asset over a given time and dividing the sum by the number of periods.

The difference between the expected trade price and the price at which the trade is actually executed.

A measure of the total value of a company's outstanding shares of stock and refers to companies with a market capitalisation between 300 USD million and 2 USD billion.

The act of taking positions in derivative markets to make profits based on expectations of future price movements.

The current market price of an underlying asset.

The difference between the bid price and ask price.

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A variable spread refers to a spread that changes with the market conditions, while a fixed spread is where the spread is unaffected by market conditions but could be altered by the broker.

The time when our servers process and start your trade contract.

An account statement is a report that provides a summary of your trading activitities during a specific period of time.

A statistical measure that tracks the performance of a specific group of publicly traded companies or a particular segment of the stock market.

Stocks, also known as shares or equities, represent the ownership of a fraction of the issuing corporation. Stock trading on Deriv doesn't require the buying or owning of the underlying stocks.

A risk management feature that allows you to set the maximum level of potential loss you are willing to tolerate if the market moves against your prediction. When the market value falls to the set stop loss level, your trade will be automatically closed.

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It's important to consider slippage when setting the stop loss level, as prices may fluctuate during execution.

A stop order, or stop-loss order, is a type of order that is placed by a trader to buy or sell an asset once it reaches a certain price level, known as the stop price. The stop price is set at a level that is worse than the current market price for a sell order, and better than the current market price for a buy order.

A margin call that occurs when the value of your account falls below the minimum margin requirement we have set to maintain the open positions.

A predetermined margin level at which we will automatically close your open positions.

A term used in technical analysis to refer to a price level where the downward movement of an asset is expected to stop or reverse due to buying pressure. Support level is the opposite of resistance.

A trading tool to estimate the swap rate required to keep positions open overnight.

The swap rate associated with holding a long position (or buy position) in a financial instrument overnight.

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A fee adjustment applied to your trading account to compensate for the cost of keeping overnight positions.

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The swap rate associated with holding a short position (or sell position) in a financial instrument overnight.

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A trading strategy in which positions are held for several days to weeks taking advantage of price swings in the market.

A unique identifier used to represent a particular trading asset or instrument on a trading platform.

A category of our derived indices that's available for trading 24/7. They simulate real-world markets but aren't affected by global events and liquidity risks.

A feature that allows you to set your targetted level of profit to maximise in the event the market moves in your favour. When the market value reaches the set amount, the trade will be closed automatically and the earnings will be deposited into your account.

The expected difference between the bid price and the ask price of a financial instrument.

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Understanding the target spread is important for assessing trading costs, evaluating profitability, and managing risk effectively. To learn more, check out our trading specifications.

Technical analysis in trading is a method of evaluating and predicting price movements in financial markets by analysing historical market data. It is often used in combination with fundamental analysis.

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For more information, check out this blog article.

Tick in trading refers to the minimum upward or downward movement in the asset price.

A comprehensive dashboard that integrates all of Deriv's trading platforms, enabling you to easily manage and conduct trades across them.

An essential tool that tracks and documents trading activities you have executed to measure your overall trading performance.

This refers to the different types of trades you can choose on Deriv. On Deriv, you can trade CFDs, options, and multipliers on various financial instruments without buying the underlying instrument.

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Options trading is unavailable to clients residing within the EU.

An account created by a trader to engage in trading activities on Deriv's trading platforms. Deriv allows you to have multiple trading accounts, with different account currencies, trade types, and jurisdictions for the use of options, multipliers, and CFD trading.

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Options trading is unavailable to clients residing within the EU.

The fixed limits placed on a trading account to control the amount of risk you can take and the extent of your market exposure, including open positions. These limits can apply to various trading activities, and helps you manage your investments within defined boundaries.

A trader's strategy to systematise their approach to trading.

A detailed description of the specific parameters and requirements for executing trades on a particular trading platform.

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For more information, check out our trading specifications.

Trading times refer to the specific time periods during which a particular trading instrument is available for trading.Knowing the trading hours is vital to plan your trading activities effectively, take advantage of market opportunities, and manage risk. For more information, check out our trading specifications.

The action of transferring money from between our trading platforms.

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You can perform the transfer through your cashier here.

The general direction of an asset's price movement over a certain period of time. You can use trend analysis to identify chart patterns and potential opportunities for profit.

A trendline is a line drawn on a price chart that connects two or more price points, used to identify the direction of a trend and potential support/resistance levels.

A security feature that requires you to provide two forms of verification before accesssing your trading account or executing transactions. 2FA involves inputting a password or PIN and using a code from a mobile app like Authy or Google Authenticator to reduce the risk of unauthorized access.

The Financial Times Stock Exchange 100 Index (the "Footsie"). It tracks the stock performance of the top 100 companies on the London Stock Exchange based on their market capitalisation.

This refers to the asset, security or index on which a derivative contract is based.

A market condition where an asset's price is consistently increasing over a period of time.

The S&P 500 Index (SPX). It tracks the stock performance of the 500 largest publicly traded companies on the New York Stock Exchange (NYSE) and NASDAQ.

Also known as the NASDAQ 100. It tracks the performance of the 100 largest non-financial companies on the NASDAQ stock exchange in the United States.

Value at risk is the statistical measure used to estimate the maximum potential loss on a trading portfolio of financial instruments over a specific time period, at a particular level of confidence.

Also referred to as market volatility, it is the degree to which the asset's price fluctuates over time.

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High volatility means that the price of an asset is fluctuating rapidly, while low volatility means that the price is relatively stable.

Volatility indices represent simulated markets that exhibit consistent levels of volatility, ranging from 50% to 100%. For indices marked with "(1s)", a single tick is generated every second.

The volume of trade refers to the number of units of a particular trading instrument that you wish to buy or sell in a trade.

The maximum amount of a particular trade instrument that you're allowed to trade across all your open and pending orders.

Also known as the Dow Jones Industrial Average. It tracks the stock performance of the 30 largest publicly traded companies on the New York Stock Exchange (NYSE) and NASDAQ.

A situation where a trader makes a profit on a trade. This can occur when the asset's price moves in the direction of the trader's position, resulting in a higher value of trade than when it was opened.

The action of transferring money from the main trading account to your preferred payment account.

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You can make a withdrawal through your cashier here.

The return on investment generated by a trading strategy or portfolio of financial instruments. It is usually expressed as a percentage of the amount invested or the current market value of the investment.