Glossary (A-W)

Ask Price

The price at which a broker is willing to sell the quoted currency. It is usually shown as the right-hand side of a quote. For example, in an EUR/USD quote of 1.1656/1.1658, the ask price is 1.1658.

Automated Trading

The process of executing trading strategies automatically with computer programs. On the MT5 platform this is usually achieved through Expert Advisors (EAs), which can open, close and manage positions such as stop losses without constant human monitoring. LAKEFOX supports running EAs in live market conditions.

Base Currency

The first currency in a currency pair, expressing its value in terms of the second currency. For example, a USD/CHF quote of 1.6215 means 1 US dollar is worth 1.6215 Swiss francs.

Bid Price

The price at which a broker is willing to buy the quoted currency. It is usually shown as the left-hand side of a quote.

Broker

A financial services firm that acts as an intermediary, matching buyers and sellers and earning the spread or a commission. LAKEFOX CAPITAL LIMITED is a broker regulated by both ASIC and FSCA.

Carry Trade

A currency strategy that exploits the interest rate difference between two countries. The trader sells a low-yielding currency and buys a high-yielding one to earn the interest differential while holding the position.

CFD (Contract for Difference)

A financial derivative in which the two parties settle in cash the difference between the opening and closing prices of the contract, with no physical delivery of the underlying asset. Forex, precious metals, indices, commodities and cryptocurrencies can all be traded as CFDs. LAKEFOX offers CFDs across five major asset classes.

Chart

A graphical representation of price movements in a financial instrument and a fundamental tool of technical analysis. MT5 offers three chart types, bar, candlestick and line, and supports switching between many timeframes.

Deal

A buy or sell operation executed at the current market price, as opposed to a pending order. A deal can result from executing a market order or from a pending order being triggered.

Dealer

An individual or firm that acts as one side of a trade or as a market maker, profiting by becoming the counterparty and earning the spread.

Derivative

A financial contract whose value depends on the price of an underlying asset such as a currency, commodity or index. Both CFDs and options are derivatives.

Depth of Market

An MT5 feature that displays the distribution of buy and sell orders at various price levels. It is used to gauge market liquidity and supply-demand balance, helping traders identify the best execution price.

Expert Advisor (EA)

An automated trading program written in the MQL5 language that can carry out strategy analysis, order management and trade execution, running around the clock. LAKEFOX supports clients running automated EA strategies on the MT5 platform.

Economic Indicator

Data published by governments or authoritative institutions that reflect the state of the economy, such as GDP, employment, inflation and retail sales.

Fill or Kill (FOK)

A limit order that is executed only if it can be filled in full at the specified price; otherwise it is cancelled immediately.

Free Margin

The funds in an account available for opening new positions, equal to equity minus used margin.

Fundamental Analysis

A method of evaluating a financial instrument by analysing economic data, policy changes, geopolitical events and similar factors.

Gap

A situation in which the price of an instrument jumps from one level to another with no trading in between, usually caused by major news or events that occur while the market is closed.

Good Till Cancelled (GTC)

A type of pending order that remains active until it is filled or manually cancelled.

Head and Shoulders

A common bearish reversal pattern in technical analysis, formed by three peaks in which the middle peak (the head) is higher than the other two (the shoulders).

Hedging

A strategy of reducing or eliminating risk by opening a trade in the opposite direction to an existing position.

Initial Margin

The minimum amount of funds required in advance to open a trading position, equal to a certain percentage of the position's total value.

Islamic Account

A trading account that complies with Islamic finance principles and charges no overnight interest (swap-free), designed for Muslim clients. LAKEFOX offers a swap-free Islamic account option.

Leverage

A mechanism that allows traders to control a position with a larger notional value using a smaller amount of margin. Leverage amplifies potential profits and equally amplifies potential losses. LAKEFOX offers flexible leverage of up to 1:2000.

Limit Order

An order to buy or sell at a preset price better than the current market price. A buy limit sits below the current market price and a sell limit above it.

Liquidity

The ability of a market to execute orders quickly without significantly affecting the price. The more liquid a market, the tighter the spreads and the lower the trading costs.

Long Position

A trade that buys a financial instrument in expectation that its price will rise.

Major Currency Pairs

The most actively traded currency pairs, all of which include the US dollar, such as EUR/USD, GBP/USD and USD/JPY.

Margin

The minimum amount of funds required to open and maintain a leveraged position, acting as the credit guarantee of a trade. Margin is not a trading cost or fee but a percentage of the position's total value.

Margin Call

A notice from the broker asking the trader to add funds or close positions when account equity falls below the maintenance margin level, in order to avoid positions being forcefully closed.

Market Depth

A platform feature that displays the distribution of buy and sell orders at current price levels, used to assess market liquidity and supply-demand conditions.

Market Order

An order executed immediately at the current market price.

MetaTrader 5 (MT5)

A multi-asset trading platform developed by MetaQuotes, supporting the trading and analysis of forex, CFDs, futures and other instruments, with over 80 built-in technical indicators plus a wide range of chart types and timeframes. LAKEFOX provides MT5 to all clients free of charge on PC, iOS, Android and the web.

Netting System

A method of position accounting in which only one net position is allowed per instrument. Trades in the same direction are combined, while opposite trades offset each other.

Order

An instruction to a broker to buy or sell a financial instrument. The main types are market orders and pending orders.

OTC

Trading that takes place outside an exchange, the dominant model for the forex and CFD markets, in which the two parties negotiate directly.

Pip

The smallest unit of change in an exchange rate, usually 0.0001 (0.01 for JPY pairs).

Position

The quantity of a financial asset held by an investor, whether bought or sold, representing the current market exposure.

Profit/Loss

Closed positions produce realised profit or loss, while open positions show floating profit or loss.

Short Position

A trade that sells a financial instrument in expectation that its price will fall.

Spread

The difference between the bid and ask prices and one of the main costs of CFD trading. LAKEFOX offers raw spreads from as low as 0.0 pips, with no markups and no embellishment.

Stop Loss

A preset price level at which a position is automatically closed to limit losses.

STP (Straight Through Processing)

An execution model in which orders are routed electronically and directly to liquidity providers, with no manual dealer intervention. LAKEFOX uses STP direct execution, sending orders straight to top-tier global liquidity pools.

Support Level

A price level at which a falling price is expected to find support in technical analysis, used as a reference for identifying potential buying opportunities.

Take Profit

A preset price level at which a position is automatically closed to lock in profit.

Technical Analysis

A method of forecasting future price movements by analysing historical price data, chart patterns and technical indicators.

Trailing Stop

A stop loss that automatically follows the price as the market moves in your favour, protecting accumulated profit.

Trend

The dominant direction of price movement, including uptrends, downtrends and sideways ranges.

Volatility

The extent to which a price changes over a given period, a key measure of market activity and risk.

Wedge

A price pattern in technical analysis in which two trend lines converge, usually signalling that a breakout is approaching.