Glossary of Terms

Search common forex trading terms and definitions from A to Z.

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Below is a glossary of terms that are used in the online trading industry. Select the first letter of the word you are seeking from the list above to jump to the appropriate section of the glossary.

Financial Instrument

What is a financial instrument?

In its most basic form, a financial instrument is any asset that can be bought, sold, or traded. Financial instruments can be currency, shares in a company or bonds. Financial instruments can also be derivatives, which are contracts whose values are based on underlying assets, and are determined by the rise and fall of that underlying asset.

How do financial instruments affect forex traders?

Financial instruments are the basis of stock markets, foreign currency exchanges, and CFD trading. Traders either trade actual possession of financial instruments, such as purchasing one currency for an equivalent (at the time) amount of a different currency, or shares of publicly traded companies. CFD traders do not take actual possession of the currencies or stocks, but rather trade against the projected price action.

Links related to financial instrument
Bond
Currency Pair
Derivative
Foreign Exchange

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 86.59% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.