Trading Glossary

Hello Deriv community,

Please find below a few trading terms and their definitions to provide you with more clarity and insight.


The asking price or an offer refers to the lowest amount of money that the seller of a stock is willing to accept for a share of that stock.


Balance is a financial summary of all funds deposited and withdrawn from the trader’s account inclusive of all closed positions in the account.

Base Currency

Base Currency is the currency standing first in the currency pair. For example, EURUSD rate is 1.08196. Thus, EUR is the base currency and 1 EUR is worth 1.08196 USD.


A bid refers to the highest amount of money that a potential buyer for a stock is willing to pay for a share of that stock. If there are multiple buyers for a stock, a bid taken between buyers ends when one buyer places a bid that the other buyers cannot or do not wish to match.

Buy Limit

Buy Limit is an order used by a trader if he/she wishes to buy an asset at or below a set price. Thus, a trader predicts that the price will rebound after dropping to the set price.

Buy Stop

A buy stop order is an order to purchase an asset only once its price reaches the specified level set above the current market price. It’s placed with the prediction that the asset price will keep increasing.


A call option is the right to buy an asset at a specific price by an expiration date.


A commodity is generally a product that is derived from agriculture or a raw resource that can be bought or sold, e.g. copper, silver, gold, oil.

Contract for difference (CFD)

A contract for differences (CFD) is an agreement between an investor and a CFD broker to exchange the difference in the value of a financial product (securities or derivatives) between the time the contract opens and closes.


The consumer price index monitors the general fluctuation in prices for a standard basket of products and services consumed by an ordinary consumer throughout the years. The CPI is the most widely used indicator of inflation.


Cryptocurrency is a cryptographic-based digital currency. It is not issued by any authority or a financial institution.

Currency Pair

This notion stands for the exchange of one currency unit against another currency unit.


A derivative is a financial instrument whose price depends upon or is derived from one or more underlying assets. Among common derivatives there are futures, warrants and options.

Dividend Adjustment

When a share reaches its ex-dividend date (inclusive of ex-dates of any special dividend) on the underlying stock exchange, an adjustment is made. Only applicable to certain assets in the Financial Market.


The term refers to the net worth in the customer’s CFD account. It’s counted as per the formula: Equity = Balance + PnL (profit and losses)

Expert Advisor

Expert Advisor actually signifies a trading robot. It’s a piece of code or a programme that allows to execute trades and manage positions automatically in accordance with the strategy set.

Fill or Kill

Fill or Kill type means that the order is to be executed immediately and in its integrity. If it can’t be executed, the order gets canceled.


The term stands for Foreign Exchange. This electronic marketplace is meant for trading currencies and has no physical location. It gets prices and liquidity from banks and interbank deals.

Free margin

Free Margin means the equity in a trader’s account that is not engaged in margin for already open positions and thus can be used to place new orders. Therefore, Free Margin = Equity – Margin.

Intraday trading

The notion refers to buying and selling of assets within the same day. It can be also referred as Day Trading.


When you use leverage, you borrow capital from your broker to increase profits (and your capital gains taxes). It’s one way to potentially increase gains — but it also increases losses. Don’t take leverage lightly.

Limit order

Limit order is a pending order that is intended to buy or sell an asset at a defined price or better.


Liquidity signifies how easily a financial asset can be purchased or sold without affecting its price at the market.

When there is a high demand and a high supply for a security or an asset, it means that the liquidity is high and there will always be buyers and sellers. When the market gets more liquid, the spread between ask and bid price is narrower; on the contrary when the market is illiquid, a trader faces widening of the spread.


Margin is the money borrowed from a broker to purchase an investment and is the difference between the total value of an investment and the loan amount. Margin trading refers to the practice of using borrowed funds from a broker to trade a financial asset, which forms the collateral for the loan from the broker.

Margin Call

If your margin level drops below Deriv’s margin call level, you’ll get a margin call, which is a warning that your account is approaching the stop out level.

Margin Level

Margin Level is the percentage ratio of your equity to your currently used margin.

Market execution

Market execution of an order means a mode where an order is executed at a price offered by a broker. With this mode there are no requotes.

MetaTrader 5

MetaTrader 5 or most commonly referred to as MT5 is an online trading platform that allows trading in all financial markets along with Derived Markets. It proposes an extensive number of tools for technical and fundamental analysis as well as the possibility of using robots, expert advisors, etc. MT5 is a product of Metaquotes, Deriv acts as a broker (Make this sentence more appealing.

Modify order

Modify is an electronic instruction to change modify/ cancel a pending order or to adjust Stop Loss/Take Profit for an open position or to modify the volume of an open position.

Open position

Open position is a contract for purchasing or selling a financial instrument obliging a trader to conduct a counter transaction. The contract is executed with the margin requirements set by Deriv and the obligation to maintain a sufficient margin/equity ratio.


A put option is the right to sell an asset at a specific price by an expiration date.

Quote Currency

It is the currency used as reference and standing second in the currency pair. For example, in EURUSD pair USD is the quote currency.


A tradable financial instrument such as stocks, bonds, rights to ownership as represented by an option.

Sell Limit

Sell Limit is an instruction to sell an asset at the limit price or higher with the prediction that the price will start dropping after having grown to the limit price.

Sell Stop

A sell stop order is an order to sell an asset only once its price reaches the specified level set below the current market price. It’s placed with the prediction that the asset price will keep decreasing.


Specifications are trading conditions and requirements via Meta Trader 5 set by Deriv. Primarily used in CFDs Platforms.


In the market, there is a difference between the bid and ask price, with the bid generally being lower than the asking price. This difference is known as the ask-bid spread or spread which is primarily determined by the demand and supply.


Stake (aka a premium) is the amount of money paid by a trader as a fee to enter a contract on binary options.

Stop Loss

A Stop Loss order is used to limit potential losses in the market. It gets triggered when an asset reaches a certain level determined by a trader based on his risk management.

Synthetic indices

Deriv’s proprietary synthetics simulate real-world market movements. These indices are available to trade 24/7 and are unaffected by regular market hours, global events, or market and liquidity risks.


The interest earned or paid for keeping a trade open overnight is known as swap. Swap rates can be checked in Specification for each asset in MetaTrader 5 or in Trading Specification on Deriv site.

Take Profit

Once the market hits a predetermined profit level, a Take Profit order instructs the broker to close out the position. If this price isn’t reached, the Take Profit order isn’t triggered.

Trading Account

A trading account is an online account that allows a customer to access trading platforms and thus carry out trading activities. Deriv offers different types of accounts: CFD accounts and those for trading via Multipliers and Binary options. All of them are possible to create in Trader’s Hub.

Trailing Stop

An advanced version of a stop order, the Trailing Stop automatically changes its stop level according to the open positions trend.


Volatility refers to the rate of price fluctuations of a share. A highly volatile stock experiences daily up and down movements in its price. Some traders profit off the risks involved in highly volatile stocks, while others prefer investing in less volatile stocks for the long run. These indices correspond to simulated markets with constant volatilities of 10%, 25%, 50%, 75%, 100%, 150%, and 250%.


The volume of trade refers to the total number of shares or contracts exchanged between buyers and sellers of a security during trading hours on a given day. The volume of trade is a measure of the market’s activity and liquidity during a set period of time.

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