Social Trading Terminology
Here’s a list of terms that are often used within social trading and on this website. Please feel free to contact us if there’re other terms which you feel need clarification and we’ll add them to this terminology list.
This refers to the price that the market is prepared to sell a currency pair, commodity or index value. At this price, a trader can buy. It is highest of the 2 quotation numbers. For example, in the quote EURUSD 1.3105 1.3107, the ask price is 1.3107 which means traders pay 1.3107 EUR to buy 1 USD.
This normally refers to the technical solution which allows trades to be executed in your own trading account without your assistance. The signals for these trades may either come from automated robots (e.g. MetaTrader Expert Advisors) or from other traders as is the case with social trading networks.
This refers to the market price that traders are prepared to pay for a currency pair, commodity or index value. At this price, a trader can sell. It is lowest of the 2 quotation numbers. For example, in the quote EURUSD 1.3105 1.3107, the bid price is 1.3105 which means traders sell 1 USD for 1.3105 EUR.
A broker is the firm that arranges transactions between a buyer and a seller and gets a commission when the deal is executed. You need a broker account to execute the trading signals from traders you follow and copy on social trading networks.
EA – Expert Advisor:
This is a term related to the MetaTrader platform. It refers to an automated process or robot which traders can develop and use to execute trades when certain market conditions are met.
High Water Mark:
The High Water Mark is used by account managers to calculate their performance fees. It insures that they don’t get paid unless the overall profit of the account reaches a new high.
Lot size (micro, mini and standard):
The Lot Size you choose impacts the amount of risk you take per trade.
Micro lots are the smallest tradable lot size available. A micro lot is 1000 units of your account funding currency. E.g. if your account is funded in USD, a micro lot is $1000 worth of the base currency you want to trade. So if you’re trading a dollar based pair such as EURUSD, a 1 pip move in the currency would be equal to 10 dollar cents movement of your invested equity.
A mini lot is 10,000 units of your account funding currency. So a 1 pip move in a EURUSD trade would be about $1.
A standard lot is a 100,000 unit lot. So with a USD account, a movement of 1 pip in the EURUSD rate would be a $10 gain or loss in your account.
Please note that in forex trading and foreign exchange trading, the market can easily move 100 pips in a day and sometimes in a minute on certain news events. I.e. if you’d be trading standard lots you can lose $1000 quickly on a 100 pip move. Hence adjust the lot size to what you’re comfortable with and your account can handle.
This is a proprietary trading application. It needs to be installed and run on your Windows or Mac computer. Various brokers offer their customer to use MetaTrader on their brokerage platform. One of the key components is that users can create and run robots to execute trades automatically (EAs or Expert Advisors).
Overnight roll over / swap costs:
The fee that a broker charges on a position that is held in your account overnight
Most currency pairs have an exchange rate priced to four decimal places, e.g. EURUSD 1.3105. A change of one on the last decimal point is the equivalent of one pip. I.e. a movement of 1.3105 to 1.3115 is a 10 pip movement.
This is a short term trading strategy where the traders try to gain small profits (<10 pips) from market price movements.
This is the difference between the price at which a trade was executed in your account and the price the trade was execute in the account of the trader you followed/copied on the social trading network. This can be positive (i.e. you got a better price) or negative (i.e. you got a worse price). There’re several factors impacting slippage, including the time delay between the trade executions and broker spread (which can differ between your broker and their broker). Because the trader will normally trade in the direction of a trend, most of the time the slippage will be negative because the price will have moved in the direction of their buy or sell.
This is the name used to identify the traders you can follow and copy on the ZuluTrade social trading network and platform.
Aka “Broker Spread” or “Bid/Ask Spread” refers to the difference between the bid and ask price. For example, in the quote EURUSD 1.3105 1.3107, the spread is 2. This is basically the amount you will have to pay to your broker.
A Stop Loss is used by traders to limit the amount of loss on the trade. The trade will be exited at the Stop Loss price which the trader adds to the trade.
Target Profit / Limit:
A Target Profit (or Limit) is used by traders to lock-in profits on a trade. The trade will be exited at the Target Profit price which the trader adds to the trade.