Understand the fundamentals of trading forex and other instruments with this glossary of key Exness trading terms.
Term index
Ask price · Balance · Base currency · Bid price · Contract size · Cross pair · Currency pair · Equity · Free margin · Leverage · Limit order · Lot · Margin · Margin call · Margin level · Market order · Pending order · Pip · Pip size · Pip value · Point · Profit and loss · Quote currency · Spread · Stop order · Stop out
Glossary
| Term | Short Exness-specific definition | Where it applies | Related article |
|---|---|---|---|
| Ask price | The price at which the base currency is sold by the broker and bought by the trader. | Order execution (buy side) | Full explanation |
| Balance | The total of all completed transactions on an account, including deposits and withdrawals. Doesn't change while orders are open. | Trading account funds | Full explanation |
| Base currency | The first currency listed in a currency pair. | Currency pairs | Full explanation |
| Bid price | The price at which the base currency is bought by the broker and sold by the trader. | Order execution (sell side) | Full explanation |
| Contract size | The fixed amount of the underlying asset represented by one lot. | All instruments | Full explanation |
| Cross pair | A currency pair that does not contain USD. | Non-USD currency pairs | Full explanation |
| Currency pair | Two currencies combined for trading, e.g. EURUSD, GBPJPY. | All forex trading | Full explanation |
| Equity | Balance plus or minus floating profit/loss and swaps. | Trading account funds (open orders) | Full explanation |
| Free margin | Account funds not held as margin and available for new orders. | Opening new orders | Full explanation |
| Leverage | The ratio of equity to loan capital; higher leverage lowers the margin required. | Margin-based trading accounts | Unlimited leverage |
| Limit order | A pending order where the client's requested price is better than the current market price. | Pending orders | Available order types |
| Lot | The unit in which order size is counted; standard lot size varies by instrument. | All instruments (order sizing) | Full explanation |
| Margin | The funds a broker withholds to open and keep an order open, calculated in the account currency. | All leveraged trading | Account currency |
| Margin call | An alert sent when margin level drops to a set threshold, warning that funds are needed or orders should be closed to avoid a stop out. | Account risk monitoring | Margin call and stop levels by account type |
| Margin level | The ratio of equity to margin, shown as a percentage: (Equity / Margin) × 100. | Account risk monitoring | Full explanation |
| Market order | An order executed immediately on activation; buy and sell are the primary market order types. | Immediate execution | Available order types |
| Pending order | An order that executes automatically once a set price or level is reached. | Automated/triggered orders | Available order types |
| Pip | A price change measured at the 4th decimal place in most forex instruments. | Most forex instruments | Trading calculator |
| Pip size | The decimal position of the pip in an instrument's price, e.g. 0.0001 for a price of 1.11115. | Forex price formatting | Trading calculator |
| Pip value | The money earned or lost per 1-pip price move: Number of Lots × Contract size × Pip size. | Profit/loss calculations | Trading calculator |
| Point | The minimum price change value, measured at the 5th decimal place. 1 pip = 10 points. | Most forex instruments | Trading calculator |
| Profit and loss | The difference between an order's opening and closing price, in pips, multiplied by pip value. | Closed and open orders | Calculating profit and loss |
| Quote currency | The second currency listed in a currency pair. | Currency pairs | Full explanation |
| Spread | The difference between an instrument's bid and ask price; the main profit source for market maker brokers. | All instruments | About spreads |
| Stop order | A pending order where the client's requested price is worse than the current market price. | Pending orders | Available order types |
| Stop out | Automatic closing of orders, including hedged orders, when margin level drops to the stop out level (0%). | Automatic order closure | Hedged orders |
Spreads, margin requirements, leverage limits, and order behavior can vary by account type and instrument. Confirm current values on the trading platform or in the linked articles above.
Detailed explanations
Currency basics
Currency pair
Two countries' currencies combined to trade. Some examples of currency pairs include EURUSD, GBPJPY, NZDCAD, etc.
Base currency
The first currency of a currency pair.
Quote currency
The second currency of a currency pair.
Cross pair
A currency pair that does not contain USD is known as a cross pair.
Bid price and ask price
Bid price
The price at which the base currency is bought by a broker and sold by a trader.
Ask price
The price at which the base currency is sold by a broker and bought by a trader.
Buy orders open at the ask price and close at the bid price. Sell orders open at the bid price and close at the ask price.
Spread
The spread is the difference between a trading instrument's bid and ask prices, and it is commonly the main source of profit for market maker brokers.
The value of spread is usually set in pips, but on MetaTrader platforms, it is shown in points. Read more about spreads and how dynamic and stable spreads differ.
Pip, point, pip size, and pip value
Pip
In most forex instruments, a pip represents a price change value at the 4th decimal place.
Point
The minimum price change value, at the 5th decimal place.
1 pip = 10 points. If a price changes from 1.11115 to 1.11135, it is measured as 2 pips or 20 points.
Pip size
Pip size highlights the pip's position in an instrument's price. For example, if the price is 1.11115, the pip size is 0.0001 because it is the fourth decimal.
Pip value
The pip value is how much money will be earned or lost if the price changes by 1 pip. To calculate the pip value:
Pip Value = Number of Lots x Contract size x Pip size.
The following table summarizes the pip sizes for trading instruments with different price formats.
| Category | Instrument(s) | Pip size | Price format |
|---|---|---|---|
| Cryptocurrencies | BTCUSD, ETHUSD | 0.1 | 82150.67 |
| BCXAU | 0.0001 | 26.12345 | |
| BTCXAG | 0.01 | 2589.123 | |
| BTCTHB, BTCZAR, BTCJPY | 10 | 123456 | |
| BTCAUD, BTCCNH | 1 | 12345.6 | |
| Energies | UKOIL, USOIL | 0.01 | 61.645 |
| XNGUSD | 0.001 | 4.1345 | |
| Metals | XAU, XAG, XALUSD, XCU, XNI, XPB, XZN | 0.01 | 1934.567 |
| XPDUSD, XPTUSD | 0.1 | 2134.54 | |
| Indices | AUS200, FR40, USTEC, US500, STOXX50, UK100 | 0.1 | 3456.72 |
| US30, DE30, HK50, JP225 | 1 | 34567.8 | |
| Stocks | All stocks | 0.1 | 123.45 |
| Forex | DXY | 0.01 | 102.345 |
| Most forex pairs (e.g., EURUSD) | 0.0001 | 1.21568 | |
| Forex pairs with JPY | 0.01 | 135.672 |
Try out our trading calculator which can calculate these values for you.
Lot and contract size
Lot
The quantity at which orders are counted. The size of a standard lot varies depending on the type of instrument you trade.
Contract size
The fixed amount of the underlying asset represented by one lot.
| Instrument type | Contract size (1 lot) |
|---|---|
| Forex pairs |
100,000 units of the base currency DXY (US Dollar Index): 1000 contracts |
| Metals |
Gold (XAU): 100 troy ounces Silver (XAG): 5,000 troy ounces Platinum (XPT): 100 troy ounces Palladium (XPD): 100 troy ounces |
| Cryptocurrencies | 1 coin |
| Indices | 1 contract |
| Stocks | 100 shares |
| Energies |
UKOIL, USOIL: 1,000 barrels (BBL) XNGUSD: 10,000 MMBtu |
Margin and leverage
Margin
The amount of funds a broker withholds to open and keep an order open, calculated in the trading account currency.
Leverage
The ratio of equity to loan capital, which impacts the margin held when an order is opened. Exness offers unlimited leverage on some trading instruments for trading accounts that meet the equity criteria. It is essential to understand how unlimited leverage works before using this feature.
The higher the leverage, the lesser the margin required.
Read more on how leverage impacts margin requirements.
Balance, equity, and free margin
Balance
The calculated total of all completed transactions on a trading account, including deposits and withdrawals. It can be the amount of funds you have before opening orders or after closing all open orders; the balance does not change while orders are open.
Equity
The balance of a trading account plus or minus total rolling profit or loss and swap charges.
Equity = Balance +/- Floating Profit/Loss + Swaps
Free margin
While the broker holds a margin for open orders, free margin is the funds remaining in the trading account that are not held and are free to use for new orders.
Equity = Margin + Free Margin
Profit and loss
Profit or loss is the difference between an order's closing and opening price. Learn how to calculate profit and loss.
Profit/Loss = difference of closing and opening price (in pips) x Pip Value
- Buy orders make a profit when the closing price (bid) is higher than the opening price (ask). If the closing price is lower than the opening price, the buy order suffers a loss.
- Sell orders make a profit when the closing price (ask) is lower than the opening price (bid). If the closing price is higher than the opening price, the sell order suffers a loss.
Margin level, margin call, and stop out
Margin level
The ratio of equity to margin, denoted in %.
Margin level = (Equity / Margin) x 100
Margin call
An alert sent to a trading platform warning that it may be necessary to deposit funds or close a few order(s) to avoid a stop out. This notification is sent once the margin level drops to a certain amount, known as the margin call level.
Stop out
Stop out is the automatic closing of orders, even hedged orders, when the margin level drops to the stop out level (0%).
At Exness, margin call and stop levels are based on trading account types.
Pending and market orders
Order types are divided into market orders and pending orders.
Market order
Executed immediately as it is activated. Buy and sell are the primary market order types.
- Buy: Opens with the ask price and closes at the bid price.
- Sell: Opens with the bid price and closes at the ask price.
In volatile markets, slippage may significantly affect filled orders, where prices can be either higher or lower than the intended market price in the terminal window.
Pending order
Used to automate trading. When a certain price or level is reached, pending orders execute automatically. Both opening and closing orders may be pending. There are two types of pending orders: stop orders and limit orders.
Limit order
A pending order where the client's requested price is better than the current market price.
Stop order
A pending order where the client's requested price is worse than the current market price.
MT5 terminal has additional order types Buy stop limit and Sell stop limit, where a stop order triggers a limit order. Refer to the available order types to learn about order and execution types in detail.
A note on risk
Trading in the financial markets carries a high level of risk and may not be suitable for all investors. Research and understand these markets before trading, invest only what you can afford to lose, and use sound risk management techniques while regularly monitoring your positions.