Risk per trade
Theoretical maximum loss = capital × risk percentage. Example: €5,000 × 1% = €50 before fees and slippage.
Calculate size →Trading glossary
Understand the essential terms before trading
A reference page to clarify Forex, stock-market, derivatives and risk-management vocabulary. Definitions are educational and are not investment recommendations.
Remember before using these concepts
A term understood on paper still needs to be checked in live conditions: contract size, currency, fees, trading hours, liquidity, margin and regulation for your broker entity.
Quick glossary search
Filter definitions by keyword or family to find a concept quickly before using the calculators.
Quick calculation memo
Three practical references to connect the vocabulary with TradingParadiz calculators before moving to a real platform.
Pip value
Pip value = one-pip movement × position size, then converted if needed into the account currency.
Test a pip →Risk/reward ratio
Ratio = potential reward / potential loss. It is not enough alone: win rate, costs and execution also matter.
Check ratio →Risk management
Stop-loss
An order or planned exit level used to limit loss if a scenario is invalidated. It should account for volatility, spread and position size.
Risk/reward
The relationship between potential loss and potential gain in a plan. It helps compare scenarios, but does not guarantee the outcome.
Drawdown
A fall in capital or strategy equity from a previous high. Tracking drawdown helps size risk and avoid overexposure.
Margin
Capital set aside to open or maintain a leveraged position. Insufficient margin can trigger a margin call or forced liquidation.
Leverage
A mechanism that increases exposure compared with the capital posted. It also amplifies losses and must be handled carefully.
Position size
The volume committed to a trade: units, lots, contracts or shares. It connects stop-loss distance, capital and maximum accepted risk.
R multiple
A way to express a result compared with initial risk. +2R means twice the planned risk, while -1R is the planned loss.
Break-even win rate
The percentage of winning trades needed to cover losses and costs for a given risk/reward ratio. It does not measure execution quality by itself.
Trading plan
A written framework covering markets followed, entry conditions, invalidation, position size, trading hours, loss limits and review routine. It reduces improvised decisions but does not guarantee results.
Trading journal
A record of plans, executions, outcomes and observed mistakes. It is used to measure discipline and market conditions rather than justify a trade after the fact.
Backtest
A test of a rule or strategy on past data. A backtest can expose a weak idea, but it does not prove future conditions will repeat.
Forex & transaction costs
Pip
A price-movement unit commonly used in Forex pairs. Its value depends on the pair, lot size and account currency.
Lot
A standardised Forex position size. Depending on the broker, traders may use standard lots, mini lots, micro lots or fractional units.
Spread
The difference between bid and ask prices. It is an implicit cost that may widen during news, quiet periods or volatile markets.
Slippage
The difference between expected and executed price. It can be positive or negative, especially around gaps or high volatility.
Base / quote currency
In EUR/USD, the euro is the base currency and the dollar is the quote currency. This relationship determines how to read price and exposure.
Swap / rollover
An adjustment debited or credited when a Forex or CFD position is held across sessions. It depends on rates, broker policy and trade direction.
Major pair
A heavily watched Forex pair usually involving the US dollar, such as EUR/USD, GBP/USD or USD/JPY. Liquidity can still vary by session.
Products & markets
CFD
A contract for difference that gives exposure to an asset without owning it directly. CFDs carry high risk, especially with leverage.
ETF
An exchange-traded fund that usually tracks an index, asset basket or strategy. Fees, currency and replication method should be checked.
Futures
Standardised exchange-traded contracts with expiry, contract size and specific margin rules. They require operational understanding.
Volatility
The amplitude of price movements. Higher volatility can create more movement but also increases risk, gaps and slippage.
Stock index
A representative basket of shares or sectors, such as the S&P 500, Nasdaq 100, DAX or CAC 40. It may be traded through ETFs, futures or CFDs depending on the broker.
Bond / yield
A bond represents debt issued by a government or company; its yield moves with price, interest rates and perceived risk.
Policy rate
A rate set by a central bank. Expectations of hikes or cuts can influence currencies, indices, bonds and commodities.
Technical analysis & execution
Support
A price area where buyers reacted before or where a decline slowed. It is not a plan by itself: invalidation, size and context still matter.
Resistance
A price area where sellers reacted before or where an advance stalled. A breakout or rejection should be checked against volume, volatility and risk.
Timeframe
The chart interval: 5 minutes, 1 hour, daily, weekly and so on. Combining timeframes helps avoid isolated signals.
Limit order
An order placed at a specified price or better. It controls price but does not guarantee execution, especially in fast or thin markets.
Market order
An order executed immediately at the best available price. It prioritises execution but can suffer from wider spreads and slippage.
ATR
Average True Range: a volatility indicator that measures average movement range. It may help place a stop, but does not provide direction.
Gap
A price jump between two consecutive quotes, often around openings or news. It can create slippage beyond the planned risk.
Correlation
A measure of relationship between two assets or pairs. Highly correlated positions can multiply the same risk without being obvious trade by trade.