Trading and algo trading terms beginners should know

Trading software is easier to understand when the basic terms are clear. This glossary explains common words you will see around MT5, automated trading, broker platforms, and performance reporting.

Glossary | Trading terms | 9 min read

Trading software is easier to understand when the basic terms are clear. This glossary explains common words you will see around MT5, automated trading, broker platforms, and performance reporting.

Prices and execution terms

Bid

The price at which the market or broker is quoting to buy from you. If you sell, the bid is usually the relevant price.

Ask

The price at which the market or broker is quoting to sell to you. If you buy, the ask is usually the relevant price.

Spread

The difference between bid and ask. It is a direct trading cost and can widen during volatility or low liquidity.

Slippage

The difference between the expected execution price and the actual execution price. It can happen during fast markets or thin liquidity.

Account and risk terms

Balance

Account value excluding open position profit or loss.

Equity

Account value including open position profit or loss.

Margin

Funds set aside by the broker to support open leveraged positions.

Leverage

Using borrowed exposure so a smaller amount of capital controls a larger market position. It can magnify gains and losses.

Drawdown

A decline from a previous equity or balance high. It is a key risk measure for strategies.

Costs and holding terms

Swap

An overnight financing adjustment for holding a position beyond a specified time. It can be charged or credited depending on the product and direction.

Commission

A direct fee charged by some brokers per trade or per volume.

Rollover

The process of carrying a position into the next trading day, often connected with swap or financing adjustments.

Automation terms

Algorithm

A defined set of rules or steps that software follows.

Engine

In TSS Hub, an engine is a selected trading logic type, such as Trend, Range, or Structure.

VPS

A virtual private server. Traders use VPS environments to keep trading software running more reliably than a personal laptop.

Backtest

A test of strategy logic using historical data. Backtests can be useful, but they are not guarantees of live performance.