EducationFoundations~15 min read57 terms · 7 categoriesUpdated 26 September 2026
The short answer
This lesson is a reference, not a theory lesson. It collects every term used in Lessons 01–06 into one place, grouped into seven color-coded categories, with a one-line definition, a real-world example, and a link back to the lesson where each term was explained. Nothing here is new — it is the vocabulary to read every lesson that follows without stopping.
How to use this lesson
Do not read it linearly. Skim it once, then use the search bar. When you hit a term in Lessons 08–30 that does not click, come back here, type the term into the filter, and read the card. Every card links back to the lesson where the term was covered in depth.
If you can pass the quiz at the bottom cold, you have the vocabulary to read the next 23 lessons without friction.
T
Written by the Trade To The Top team|Reviewed 26 September 2026
Terminology verified against The Foreign Exchange Committee (Federal Reserve Bank of New York) publication Frequently Asked Questions about the Foreign Exchange Market, and cross-checked against MT4/MT5 platform documentation, cTrader platform documentation, and FCA/MiFID II disclosure standards.
Trading has a vocabulary problem. Every broker, platform, regulator, and educator uses a slightly different name for the same thing. "Leverage" and "margin" are not the same thing, but are used interchangeably on half the internet. "Pip" and "point" mean different things depending on the platform. This lesson is the Rosetta Stone.
Key takeaways
Trade lifecycle: prices → orders → size → risk → metrics. Every term maps to one of those five stages.
Prices: bid, ask, spread, mid. The spread is always the cost of crossing from one to the other.
Size units: standard lot (100,000), mini (10,000), micro (1,000), nano (100). Contract size is broker-defined.
Account math: balance, equity, margin, free margin, margin level. Five separate numbers, not interchangeable.
Order types: market, limit, stop, stop-limit, OCO, trailing stop. Each fires at a different moment.
Costs: spread, commission, swap, slippage. Four separate lines. All scale with lot size.
Metrics: R-multiple, win rate, expectancy, drawdown. The numbers that measure a strategy.
Prerequisite
Read Lessons 01 through 06 first. This lesson assumes you have already seen every term in context and needs only a reference.
How every term fits into one trade
Before the reference tables, here is the map. Every term in this lesson belongs to one of five layers of a trade. Once you see how the layers stack, the vocabulary stops feeling like a random list and starts feeling like a structure.
THE FIVE LAYERS OF A TRADE
Every term in this lesson belongs to exactly one layer
Find the layer a term belongs to and you will always remember what it does. Prices → Orders → Size → Risk → Metrics.
ONE TRADE · EVERY TERM ON THE CHART
EURUSD 4H · spread, pip, entry, stop-loss, take-profit, R and lot size
Every word in this lesson is a label on one chart. Learn them where they occur, not as a list.
The seven categories
Use the search bar and category chips below to jump to any term. The filter updates live.
No term matches that filter. Try a shorter query, or clear the search.
One-page cheat sheet · print and pin
SPREADAsk − BidPaid on entry. Both directions. EURUSD: 0.0–0.3 pips raw, 1.0–1.6 standard.
PIP VALUE (EURUSD, 1 LOT)$10 per pipScales linearly with lot size. 0.1 lots = $1 per pip.
POSITION SIZE(Account × Risk %) ÷ (Stop × Pip value)Calculated, never chosen. Round down to broker step.
MARGINNotional ÷ LeverageA refundable deposit. Not a fee. Returned on close.
MARGIN LEVEL(Equity ÷ Used margin) × 100Thresholds: 100% call, 50% stop-out on most brokers.
PIP / POINT0.0001 FX · 0.01 JPY · $0.01 goldOn MT5: 1 pip = 10 points. On indices: called a point.
LEVERAGESize multiplier, not risk multiplierControls margin locked. Does not change dollar risk.
SLIPPAGEExecuted − RequestedWorst at news, weekend gaps, thin liquidity.
SWAPOvernight financingTriple charge on Wednesday for FX. Scales with lots.
R-MULTIPLEP&L ÷ Initial risk+2R = profit of 2× the risk. Standard metric for every trade.
Common mistake 01 — margin vs leverage
Treating them as synonyms. Margin is the deposit required to hold a position. Leverage is the ratio that determines how much deposit is required. A trader with 1:500 leverage does not have "more margin" — they have less margin required. That is a different thing entirely.
Common mistake 02 — pip vs point
Confusing them on MT5. A "20-point stop" on a 5-digit EURUSD quote is 2 pips, not 20. Reading the wrong unit produces position sizing that is 10× wrong. The platform default is points; the industry default is pips.
Common mistake 03 — contract size assumptions
Assuming 1 lot is always 100,000 units. It is for FX majors at most brokers, but gold is typically 100 oz, indices are often 1 contract, and crypto is broker-defined. The contract size decides pip value. It must be confirmed per instrument, per broker.
Everything scales with lot size. Sizing controls everything else.
Need a term that is not here? The full glossary covers 40+ additional terms with links to the lesson where each one was covered in depth. Use it as a permanent reference while reading any lesson on the site.
5 questions · immediate feedback · retake any time
Question 01 of 05
What is the ask price?
Correct: B. The ask is the price at which the market will sell to you. If you are buying, this is the price you pay. The spread is the difference between ask and bid.
Question 02 of 05
How many units is a micro lot on EURUSD?
Correct: C. A micro lot is 1,000 units of the base currency. That is 0.01 standard lots, and the pip value on EURUSD is $0.10 per pip.
Question 03 of 05
What is margin level?
Correct: B. Margin level = (equity ÷ used margin) × 100. This is the number the broker watches for margin call and stop-out decisions.
Question 04 of 05
Which order type fires at the moment the price hits a trigger level but executes at whatever the market is at that moment?
Correct: A. A stop order becomes a market order once the trigger price is hit. It executes wherever the market is at that moment, which is why stop orders slip in fast markets.
Question 05 of 05
If you risk $100 on a trade and close it for +$250 profit, what is the R-multiple?
Correct: C. R-multiple = Profit ÷ Risk. $250 ÷ $100 = +2.5R. Every trade is measured against the initial risk, not against the account balance.