Trading terms: a complete glossary for beginners (2026)

Trading terms are the basic vocabulary traders, brokers and platforms use to describe prices, orders, risk and account rules. Knowing what each one means saves you from expensive mistakes, like confusing a pip with a point or a micro contract with an E-mini. This trading glossary brings together 78 terms grouped by category, with short definitions and worked examples. Use the headings to jump to the section you need.

Trading terms for markets and prices

• Ask (offer): the price at which the market sells to you. If EUR/USD is quoted 1.08520 / 1.08530, you buy at 1.08530.
• Bid: the price at which the market buys from you. In the example above, if you sell, you sell at 1.08520.
• Bull and bear market: a bull market rises steadily; a bear market falls.
• Gap: a price jump with no trades in between, typical after news or at the Sunday futures open.
• Liquidity: how easily you can buy or sell without moving the price. ES, NQ and EUR/USD are highly liquid.
• Long: a buy position that profits if price rises.
• Session: a window of market activity: Asia, London and New York. In forex, liquidity usually peaks when London and New York overlap.
• Short: a sell position that profits if price falls.
• Spread: the difference between ask and bid. In the example, 1.08530 − 1.08520 = 1 pip, which costs $10 to enter with a standard lot.
• Volatility: the size of price moves over a given period.

Order types: execution vocabulary

• Bracket order: an entry with a stop loss and a take profit attached.
• DOM (Depth of Market): a vertical price ladder showing the resting orders at each level.
• Limit order: buys at a set price or better (lower), or sells at a set price or better (higher). It guarantees the price, not the fill.
• Market order: fills immediately at the best available price. It guarantees the fill, not the price.
• OCO (One Cancels the Other): two linked orders: when one fills, the other is canceled.
• Slippage: the difference between the price you asked for and the price you got. A stop at 6,000.00 on MES that fills at 5,999.50 slips 2 ticks: $2.50 per contract.
• Stop loss: an order that closes the position at a loss you defined in advance. With a 20-point stop on MNQ, the risk is 20 × $2 = $40 per contract.
• Stop order: becomes a market order when price touches the specified level.
• Take profit: an order that closes the position when it reaches your profit target.
• Trailing stop: a stop that follows price at a fixed distance when it moves in your favor and stays put when it moves against you. With a 15-pip distance and price 40 pips in your favor, the stop sits 25 pips above entry.

Risk management: margin, leverage and metrics

• Drawdown: the drop from an account high to a later low. If the account goes from 52,000 to 49,400, the drawdown is $2,600 (5%).
• Equity: balance plus or minus the result of open positions.
• Hedging: opening opposite positions in the same asset or in correlated assets to offset risk.
• Leverage: the ratio between your exposure and the capital needed to open it. At 1:100, one lot of EUR/USD (€100,000, about $108,500 with the pair at 1.0850) needs roughly $1,085 of margin.
• Margin: money set aside to keep a position open.
• Position size: the number of lots or contracts. It’s calculated as risk in dollars divided by (stop distance × point or pip value).
• Profit factor: gross profit divided by gross loss. With $6,000 won and $4,000 lost, the profit factor is 1.5.
• Risk per trade: the most you’re willing to lose on one trade, in dollars or as a percentage.
• Risk-reward ratio: a 10-point stop with a 20-point target is 1:2; at that ratio, winning more than 33% of the time keeps you from losing money (before costs).
• Stop out: the margin level at which the platform starts closing positions automatically to cap losses.

For more detail on each concept, see leverage in trading: pros and risks and what drawdown is and how to calculate it.

Technical analysis: terms you’ll see on charts

• ATR (Average True Range): J. Welles Wilder’s volatility indicator, which averages the true range of the last 14 candles by default. If the 5-minute ATR(14) on MES is 4 points, a 1.5 × ATR stop is 6 points ($30 per contract).
• Breakout: price moving out of a range, support or resistance, ideally on rising volume.
• Moving average: the average price over the last N candles. The simple (SMA) weights them all equally; the exponential (EMA) gives more weight to recent ones.
• POC (Point of Control): the price level with the most volume within the profile.
• Resistance: an area where supply tends to stall rallies.
• RSI (Relative Strength Index): an oscillator from 0 to 100, also by Wilder; above 70 or below 30 is considered extreme.
• Support: an area where demand tends to stall declines.
• Timeframe: the duration of each candle: 1 minute, 5 minutes, 1 hour, daily.
• Trend: the dominant direction of price: up with higher highs and higher lows, down with lower highs and lower lows, sideways if neither.
• Volume profile: a horizontal histogram showing how much traded at each price level over a period.
• VWAP (Volume-Weighted Average Price): the average price weighted by volume traded since the start of the session. It’s used as an intraday fair-value reference.

Futures terms: tick, contract and expiration

The full explanation is in what futures contracts are and how they work.

• Contract: the standardized trading unit. One WTI crude oil contract (CL) equals 1,000 barrels.
• Expiration: the contract’s last trading day. ES and NQ expire in March, June, September and December (codes H, M, U, Z), on the third Friday of the month.
• Micro and E-mini contracts: smaller versions of the index contracts. Micros (MES, MNQ) are worth one-tenth of the E-minis (ES, NQ) per point.
• Multiplier: the dollar value of one full point on the contract: $50 on ES, $5 on MES, $20 on NQ and $2 on MNQ.
• Notional value: price × multiplier. One MES with the index at 6,000 points represents $30,000 of exposure.
• Point: a move of one whole unit in price. On CME index futures, one point equals 4 ticks.
• Rollover: moving your trading from the expiring contract to the next one. It’s done in the days before expiration, as volume shifts.
• Settlement price: the official price the exchange publishes at the end of the session, used to calculate the daily result.
• Tick: the minimum price change allowed. On CME index futures it’s 0.25 points; on CL, $0.01 per barrel.
• Tick value: the money a contract makes or loses per tick: tick size × multiplier. On ES, 0.25 × $50 = $12.50.

Contract	Tick	Tick value	Value per point
E-mini S&P 500 (ES)	0.25	$12.50	$50
Micro E-mini S&P 500 (MES)	0.25	$1.25	$5
E-mini Nasdaq-100 (NQ)	0.25	$5.00	$20
Micro E-mini Nasdaq-100 (MNQ)	0.25	$0.50	$2
WTI crude oil (CL)	0.01	$10.00	$1,000 per dollar

Forex and CFD vocabulary: pip, pipette and lot

• CFD (contract for difference): a derivative that tracks an asset’s price without delivering the asset.
• Currency pair: the price of one currency against another. Buying EUR/USD means buying euros and selling dollars.
• Lot: the unit of size: standard = 100,000 units of the base currency, mini lot = 10,000, micro lot = 1,000.
• Majors: pairs that include the US dollar and another major currency, such as EUR/USD, GBP/USD or USD/JPY.
• Pip: the fourth decimal place on most pairs (0.0001) and the second on yen pairs (0.01). From 1.0850 to 1.0870 is 20 pips: $200 with one standard lot of EUR/USD.
• Pip value: what one pip is worth for a given size. On EUR/USD: $10 per standard lot, $1 per mini lot and $0.10 per micro lot.
• Pipette: one-tenth of a pip, the fifth decimal place (0.00001).
• Swap (overnight rollover): a charge or credit for holding a position open from one day to the next, based on the interest rate differential between the two currencies.

Step-by-step pip and lot calculations for other pairs are in pips and lots in forex: key concepts.

Prop firm terms

Every firm applies these rules with its own nuances: always read your account’s conditions.

• Consistency rule: limits how much of your total profit can come from a single day. With a 50% consistency rule and $3,000 of total profit, no single day should exceed $1,500.
• Copy trading: mirroring trades from one account to another. At Emerge Profit it’s allowed only between your own accounts.
• Daily loss limit: the most you can lose in a single session. If your limit is $1,000 and you lose $1,000 before the close, you’ve broken the rule even if your overall drawdown still has room.
• EOD (end-of-day) drawdown: a loss limit recalculated from each day’s closing balance, not from intraday peaks. On a 50,000 account with a $2,500 drawdown, the limit starts at 47,500; if you close the day at 51,000, it moves up to 48,500.
• Evaluation: the stage where you must hit a profit target without breaking the risk rules. It can have one or two phases.
• Instant Funding: a funded account you trade from day one, with no evaluation. See Instant Funding in 2026.
• Operational Consistency and Position Sizing Rule: prevents abrupt changes in size, such as jumping from micros to minis without a transition.
• Profit split: the percentage of rewards that goes to the trader and to the firm, for example 90/10.
• Profit target: the simulated profit you need to pass a phase. On Emerge Profit’s 50K Futures Evaluation it’s $2,500.
• Prop firm (proprietary trading firm): a company that evaluates traders on simulated accounts and pays them rewards based on their performance and its rules.
• Reward: the payment a trader receives for their performance on the simulated account, according to the agreed profit split.
• Simulated account: an account with virtual capital and live market prices. Emerge Profit accounts use simulated trading.
• Static drawdown: a fixed limit that doesn’t move with profits. In the same example, it stays at 47,500 even if the account reaches 55,000.
• Trailing drawdown (intraday): a limit that rises in real time with peak equity, including unrealized profits.

The differences between drawdown types, with charts and cases, are in EOD vs static drawdown.

Trading styles

• Algorithmic trading: execution through programmed rules.
• Day trading: opening and closing trades within the same session, with no overnight positions.
• News trading: trading around economic releases such as the jobs report (NFP) or CPI.
• Scalping: trades lasting seconds to a few minutes that aim for a few ticks or pips at a time, at high frequency.
• Swing trading: holding positions for several days to capture a leg of a trend.

To turn these concepts into a study plan, see trading for beginners.

Worked example: several terms in a single trade

Say you have a 50,000 account with a $1,000 daily loss limit and you decide to risk $200 per trade on MNQ:

1. Technical analysis: price pulls back to support that lines up with VWAP. The 5-minute ATR(14) is 16 points.
2. Stop loss: 1.5 × ATR = 24 points. Risk per contract: 24 × $2 = $48.
3. Position size: $200 ÷ $48 = 4.1, so 4 contracts ($192 of risk).
4. Take profit and bracket: a 48-point target (1:2), sent together with the stop as an OCO order.
5. Slippage: if the stop fills 2 ticks worse, each contract loses $1 more (2 × $0.50); with 4 contracts the loss goes from $192 to $196.
6. Daily loss limit: at $196 per stop, you can be wrong five times before you get close to the $1,000 limit.

How these terms apply at Emerge Profit

On Emerge Profit’s simulated trading accounts, futures are traded on Tradovate, NinjaTrader and TradingView, with EOD drawdown on the Evaluation and EOD or static on Instant Funding. EmergeFX uses cTrader and DXtrade, with static drawdown on both the Evaluation and Instant Funding and 1:30 or 1:100 margin depending on the account.

All accounts share a 10-second minimum trade duration, a ban on hedging and the Operational Consistency and Position Sizing Rule. Four ways to start:

• Futures Evaluation (from $60): EOD drawdown, 5 minimum trading days and no activation fee. Positions are closed before the end of each session.
• Futures Instant Funding (from $130): 5K to 250K accounts, Classic and Flex options, no time limit.
• EmergeFX Evaluation (from $68): 1-Step (10% target, 6% max drawdown) or 2-Step (8% and 5%, 10% max drawdown). Static drawdown and weekend holding allowed.
• EmergeFX Instant Funding (from $120): no evaluation, static drawdown and 1:100 equivalent margin.

Trading terms FAQ

Sources

• CME Group – Glossary (tick, expiration, limit order, performance bond; accessed November 2026).
• CME Group – Frequently Asked Questions: Micro E-mini Equity Index Futures (MES and MNQ multipliers and tick values; accessed November 2026).
• CME Group – Contract Specifications (WTI crude oil tick and tick value example; accessed November 2026).
• MetroTrade – E-mini S&P 500 Futures (ES) Contract Specifications (contract months and expiration; accessed November 2026).
• cTrader Help Centre – Trading glossary (pip, lot, spread, margin, stop out, trailing stop; accessed November 2026).
• StockCharts ChartSchool – Average True Range (ATR) and Volume-Weighted Average Price (VWAP) (accessed November 2026).
• Emerge Profit – Evaluation and Instant Funding rules published on emergeprofit.com (November 2026).

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