Reference

Glossary

Definitions used throughout this site, written for people who have been reading trading content online and still cannot tell what a "pip" is.

Instrument & price

XAUUSD: The spot gold pair against the US dollar. One "lot" of XAUUSD on most CFD platforms represents 100 troy ounces. Gold is quoted to two decimals, so a move from 2400.00 to 2401.00 is a $1.00 per ounce move, worth $100 on a 1.00-lot position.
Spot gold: Gold traded for immediate settlement rather than a future delivery date. XAUUSD is the spot market; most retail "gold accounts" are CFDs on that price rather than physical metal.
Pip: On gold, one pip is $0.01 per ounce, which equals $1.00 per 1.00 lot. A 50-pip move on XAUUSD is a $0.50 move in price — $50 per lot.
Tick: The smallest price increment. On gold this is normally $0.01, equal to one pip. Brokers offering 3-digit gold pricing use $0.001 ticks, which is a different quoting convention.
Spread: The difference between the ask (sell) price and the bid (buy) price. It is the broker's compensation and a real cost on every trade. On gold it typically widens around news and around the daily rollover.
Swap / rollover: The financing charge applied when a position is held overnight. On a long gold position it is usually a debit, but it can be a credit when rates and pricing favour the position — check your broker's schedule, as it changes.
Tick value: The money value of one pip on one lot. For XAUUSD at 100 ounces per lot, this is $1.00.

Position & account

Lot: The standard size of a position. 1.00 lot of XAUUSD = 100 troy ounces. A 0.01-lot position ("one cent lot" on some platforms) = 1 troy ounce.
Leverage: The ratio of position size to your margin. 1:100 leverage lets you control $100,000 of gold with $1,000. Leverage magnifies gains and losses equally, including the losses from a stop that gets slipped.
Margin: The money withheld against an open position. Margin is not a fee and it is not spent, but it is unavailable for other positions and it is what a margin call forcibly closes.
Margin call / stop out: The broker closing your position because the loss on it has eaten the margin backing it. On most retail accounts this happens automatically and at an unfavourable price.
Free margin: Equity minus the margin used by open positions. This is the number that determines how much you can still risk.
Equity vs balance: Balance is your closed-trade total. Equity is balance plus the floating P&L of open positions. Risk limits should be expressed against equity, not balance.
Liquidation level: The price at which the broker will force-close a position. It sits close to the margin call level and can be reached before your own stop if your stop is too wide or your lot size too large.

Strategy

Grid: A ladder of orders at fixed price intervals, in the direction of a price move. The strategy profits when price revisits the anchor. See our grid mechanics guide.
Martingale: Position sizing that increases the size of each successive trade — commonly doubling — after a loss. It does not improve expected return; it converts a series of small losses into a single large one.
Averaging in / DCA: Adding to a losing position at a lower price to lower the average entry. Reduces the distance needed for recovery while increasing the capital at risk.
Scale in: Adding to a position as it moves in your favour. Increases exposure without increasing directional risk per unit of capital.
Drawdown: The peak-to-trough decline in account equity. See how to read an equity curve.
Recovery factor: Net profit divided by maximum drawdown. Above 1.0 means the strategy earned back its worst loss and more.
Time under water: The time spent below a previous equity peak — how long it took to recover, not just how far it fell.
Profit factor: Gross profit divided by gross loss. Above 1.0 is necessary but far from sufficient; it says nothing about drawdown or the sequence of trades.
Sharpe ratio: Return per unit of volatility. Useful across comparable strategies, misleading on small samples or smoothed returns.
Overfitting / curve fitting: Choosing parameters because they produced the best historical result, rather than because they make economic sense. The usual cause of a strategy that looked perfect and then did not.
Walk-forward: Testing on one period, then trading on the next, rolling forward. It is the minimum defence against overfitting.
Monte Carlo: Reshuffling the sequence of past trades to produce alternative orderings, revealing how much of the result depends on the order the trades happened to arrive in.
Edge: The (usually small) structural advantage a strategy has. The job of position sizing is to survive long enough for the edge to pay.

Execution & platform

Slippage: The difference between the price you expected and the price you got. Almost always unfavourable, and worst during news or thin liquidity.
Requote: A broker refusing your requested price and offering a different one. Some platforms requote more aggressively in fast markets.
EA / Expert Advisor: An automated trading program. It will fail without warning — server outage, disconnection, or a platform update can all stop it, and you remain responsible for monitoring it.
VPS: A virtual private server. Running your EA on a VPS rather than your own machine means it keeps trading while your computer is off, and reconnects automatically after an outage.
Magic number: A number in an EA's order comment identifying which instance or strategy the order belongs to. Lets several systems run on one account without interfering with each other.