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Market Terms

Understanding trading terminologies that could bring you closer to being on a pro level.

Market Terms

Why Market Terms Matter

If you are new to trading, understanding a few basic market terms will make every chart, quote, and order ticket on AvaTrade much clearer – and help you feel more in control.

Start with five essentials you will see on your platform every day: the asset you trade, the bid and ask prices, the spread between them, and the leverage that can magnify both gains and losses across forex and CFD markets.

Think of this trading glossary as your quick-reference guide: learn what each term means, see a simple example, and then spot it on the platform before you place a trade.

A small investment of time in the language of the markets can prevent costly misunderstandings later.

New to these concepts? Explore the basic terms below and then practise them risk-free in an AvaTrade demo account.

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Key Trading Terms at a Glance

  • Asset – The instrument you trade, such as a currency pair, stock, index, commodity, or cryptocurrency.
    Example: EUR/USD, Gold, or Apple shares – each is a different asset you can select in the AvaTrade platform.
  • Bid price – The price at which the market (and your broker) is willing to buy the asset from you, if you want to sell.
    Example: If EUR/USD shows 1.1049 / 1.1051, the bid is 1.1049 – this is what you receive if you hit “Sell”.
  • Ask price – The price at which the market (and your broker) is willing to sell the asset to you, if you want to buy.
    Example: In 1.1049 / 1.1051, the ask is 1.1051 – this is what you pay if you hit “Buy”.
  • Spread – The difference between the bid and ask price, usually measured in pips. It is one of your basic trading costs.
    Example: A quote of 1.1049 / 1.1051 has a 0.0002 spread – that is a 2-pip spread on EUR/USD.
  • Leverage – A tool that lets you open larger positions with a smaller amount of capital, magnifying both potential profits and potential losses.
    Example: With 1:20 leverage, £500 margin allows you to control a £10,000 position in a CFD – gains and losses are based on the full £10,000.

How to Study a Market Term

To get real value from each definition, treat it as something you can use on the platform, not just memorise. A simple approach:

  1. Look it up – Read the term’s definition in a dedicated guide.
  2. Note the “formula” – Understand how it is calculated or shown (for example, spread = ask − bid).
  3. See it on the platform – Find where it appears in the AvaTrade trading screen or quote panel.
  4. Practise on demo – Place a small trade in a free demo account and watch how the term behaves in real time.
  5. Journal one takeaway – Write down one thing you noticed, so it sticks the next time you trade.

Before you place any live order, always double-check that you understand the key terms on your ticket – small misunderstandings can lead to bigger-than-expected losses.

Ready to turn these definitions into skills? Practise them in an AvaTrade demo account, explore more market terms, and then open a real account when you feel confident.

Register Now Or Try Free Demo