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Reference
Twenty-one terms you will meet in CFD trading. No unnecessary jargon on top.
Important: 80% of retail investor accounts lose money when trading CFDs with this provider.
Contract for Difference. A derivative whose value follows the price of an underlying asset. You enter a contract with the provider rather than buying the asset.
The asset whose price determines the value of a CFD — a share, currency pair or commodity. You do not own it when trading CFDs.
A position opened on an expected price rise. Profit arises if the underlying asset increases in price.
A position opened on an expected price fall. Profit arises if the underlying asset decreases in price.
The amount you must hold in the account to open and maintain a position. If margin falls below a set level, positions are closed automatically.
The smallest standard unit of price movement on a currency pair. On most pairs it corresponds to the fourth decimal place.
An account with virtual funds in a live market environment. Used to learn the platform without risking real money.
A mechanism allowing a position larger than the capital deposited. Profit and loss are calculated on the full exposure, not the deposit. Maximum leverage for retail clients is capped by regulation.
The total value of an open market position. Calculated as deposited capital multiplied by the leverage ratio.
The degree of price fluctuation over time. High volatility means larger swings — greater potential for both profit and loss.
The difference between the buy and sell price of an instrument. The main trading cost — a position starts slightly in loss by exactly the spread.
A charge for holding a position open overnight. Applied daily and significant on positions held long term.
Conversion of profit or loss into the account currency on instruments denominated in a foreign currency.
An order to close a position automatically at a defined loss level. A basic loss-limiting tool. During sharp moves it may not execute at exactly the requested level.
An order to close a position automatically at a defined profit level.
A variant of the stop-loss executed at exactly the set level regardless of market movement. Usually carries a premium in the form of a wider spread.
European Securities and Markets Authority. Sets the rules for offering CFDs to retail clients across the EU.
Cyprus Securities and Exchange Commission — the Cypriot financial markets regulator supervising Plus500CY Ltd.
Know Your Customer — the identity verification process a regulated provider must complete before opening an account.
A regulatory measure under which a retail client cannot lose more funds than are held in the account with a regulated provider.
A client category under MiFID II. Retail clients receive the highest level of protection, including leverage caps and negative balance protection.
Risk warningCFDs are complex instruments and carry a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you understand how CFDs work and whether you can afford the high risk of losing your money.