Trading Glossary

A

Allow equals

An option in Rise/Fall trades that pays out when the entry and exit spots are equal. It must be enabled before you open the position.

API token

A unique code issued by Deriv that grants access to specific actions on your account, such as viewing or trading. AI Binary Bots asks for a token with Read and Trade scopes. Connect your Deriv account

B

BankrollAI Binary Bots

The money you have set aside for trading. Deriv's glossary calls the money available for trading "capital". Staking strategies such as Percentage of bankroll and Kelly size the stake from it. Percentage staking

Barrier

The target price you set for the underlying asset on an options trade. It lets you predict whether the market ends above or below it, or touches it. Higher/Lower bots

Basket index

An index that measures one currency against a basket of five global currencies (EUR, GBP, JPY, AUD and USD), each weighted at 20%. Forex on Deriv

Boom and Crash indices

Synthetic indices designed to produce, on average, one price spike (Boom) or drop (Crash) per set number of ticks, such as 300, 500 or 1,000. Boom and Crash explained

C

Commodity

A basic raw material that can be bought, sold and traded on exchanges. On Deriv you predict price movements without owning the commodity. Commodities on Deriv

Contract duration

The time between opening a trade contract and its expiry. In AI Binary Bots you can set it in ticks, intraday or daily.

Cryptocurrency

A digital asset that can be bought and sold on cryptocurrency exchanges. Cryptocurrencies on Deriv

Currency pair

A quotation of two currencies, with one expressed in terms of the other, such as EUR/USD. Forex on Deriv

D

Demo account

A trading account that lets you practise using virtual funds. Demo and real accounts

Digits contractAI Binary Bots

A contract that predicts the last digit of the final tick. The three types are Over/Under, Even/Odd and Matches/Differs. Digits contracts compared

Drawdown

A measure of how risky an investment is, based on how far it falls from its highest value to its lowest. Trade analytics shows your maximum drawdown. Trade analytics explained

E

Energy

Commodities used to generate power, such as crude oil, natural gas and heating oil. Deriv offers Brent crude and West Texas Intermediate.

Entry spot

The market price when you open a position: the first tick at or after the start of your contract.

Exit spot

The market price when a position closes: the last tick at or before the end of your contract.

ExpectancyAI Binary Bots

Your average result per settled trade, worked out as net profit or loss divided by the number of trades. Trade analytics explained

Expiry

The moment a contract ends. Deriv calls it the end time: the time when a trade contract expires.

F

Forex

Short for foreign exchange: the trading of one currency for another. Forex on Deriv

G

Gross profit

Profit from a trade before fees, commissions and other costs.

L

Leverage

Lets you hold larger market positions than your initial capital would allow. It amplifies gains and losses.

M

Major pairs

The most traded forex pairs, made of currencies from the most developed economies, with high liquidity and narrow spreads.

Martingale

A strategy that raises the stake after each loss to recover past losses. It also increases potential losses. How Martingale works

Maximum stake

The largest amount you can stake to open an options contract.

Metals

Precious metals (gold, silver, platinum, palladium) and industrial metals (such as copper, aluminium, zinc and nickel).

Minimum stake

The smallest amount required to open an options contract.

Minor pairs

Forex pairs that exclude the US dollar and pair other major currencies. They trade less often and usually have wider spreads.

N

Net profit

The profit left after all costs, including fees and commissions, are deducted.

P

Payout

The amount you are paid if your prediction is correct: your initial stake plus profit.

Payout limit

The maximum profit you can earn from an options trade.

Pip

A standard unit for measuring how much an asset's value changes. For most forex pairs it is the fourth decimal place.

Profit

The amount you earn after deducting any associated costs from your trades.

Profit factor

A comparison of the total profit from winning trades with the total cost of losing trades. Below 1 means losses outweigh wins. Trade analytics explained

Progression strategyAI Binary Bots

A rule that sets your next stake from the result of earlier trades. Examples are Martingale, d'Alembert and Fibonacci. Also called a staking strategy. Compare all 15

R

Return

Profit or loss, usually shown as a percentage of the initial investment or stake.

Risk management

Identifying, assessing and reducing the risks that could cause financial losses, such as using stop loss limits and sizing positions. Stop loss and take profit

Risk-reward ratio

A measure of potential profit relative to potential loss, used to assess and manage risk.

S

Sell early option

Lets you close a contract before expiry when a fair market price can be established.

Spot price

The current market price of an underlying asset.

Stake

The amount you pay to open a trade. On options, you cannot lose more than your stake on a position.

Statement

A report summarising your trading activity over a set period. In AI Binary Bots it lists every Buy and Sell transaction. Statement and trade history

Stock index

A statistical measure that tracks the performance of a specific group of publicly traded companies. Stock indices on Deriv

Stop loss

A risk management feature that lets you set the maximum loss you are willing to tolerate. Stop loss and take profit

Symbol

A unique identifier for a tradable asset on a platform, such as 1HZ100V for Volatility 100 (1s) Index.

Synthetic indices

A category of Deriv's derived indices, available to trade 24/7. They simulate real-world markets but are not affected by global events or liquidity risks. Volatility Indices explained

T

Take profit

A feature that lets you set the level of profit you are aiming for. Stop loss and take profit

Tick

In trading, the minimum upward or downward movement in an asset's price. Volatility (1s) indices generate one tick per second. Digits contracts use the last digit of a tick.

Trading plan

A trader's documented strategy for approaching the market in a systematic way.

U

Underlying

The asset, security or index on which a derivative contract is based.

V

Volatility

The degree to which an asset's price fluctuates over time.

Volatility Indices

Simulated markets with a constant level of volatility. Versions marked (1s) generate one tick per second. Volatility Indices explained

W

Win rateAI Binary Bots

The share of settled trades that won: wins divided by total trades. A high win rate does not guarantee a profit. Trade analytics explained

Sources

• Deriv: Glossary of trading terms and definitions