A short guide to the terms used most often in share and currency trading, in plain language, to help you read your account and reports with confidence.
General terms
- Security: a tradable instrument representing ownership or debt, such as a share or a bond.
- Share: a stake in the ownership of a company, carrying rights to its profits and to vote under its bylaws.
- Palestine Exchange ↗ (PEX): the official securities market in Palestine, where trades in listed shares are executed.
- Palestine Capital Market Authority ↗ (PCMA): the regulator that licenses brokerage firms and supervises their business.
- Portfolio: the total securities and cash an investor holds with the brokerage.
- Commission: the amount due on execution, covering the shares of the company, the exchange and the authority.
- Liquidity: how easily a security can be bought or sold without materially moving its price.
- Market capitalisation: share price multiplied by the number of shares issued.
- Diversification: spreading investment across instruments and sectors to limit the impact of any one failing.
Order types
- Market order: executed immediately at the best price available.
- Limit order: executed only at the price the client sets, or better.
- Stop loss: closes the position automatically at a set price to cap the loss.
- Take profit: closes the position automatically once a profit target is reached.
Currency and contract terms
- Currency pair: the price of one currency against another, such as EUR/USD — the first is the base currency, the second the quote currency.
- Pip: the smallest usual unit of change in a pair's price, used to measure profit and loss.
- Lot: the unit of trade size; a standard forex lot equals 100,000 units of the base currency.
- Spread: the difference between the bid and ask quoted at the same moment — an implicit cost on every trade.
- Leverage: the ability to open a position larger than your balance. Leverage magnifies profit and loss alike.
- Margin: the amount of your balance held to open a position and keep it open.
- Margin call: notice that your balance no longer covers your open positions, which may lead to automatic closure.
- Swap / rollover: carrying an open position into the next day, which may incur a charge or a credit depending on direction and instrument.
- CFD: a contract on the price difference of an asset between opening and closing, without owning the asset itself.
- Futures: a contract to buy or sell an asset at an agreed price on a set future date.
These definitions are for general information and are not investment advice. For any term relating to your own account, our client service team will be glad to help.
Margin and positions
- Long position: A trade that gains when the price rises and loses when it falls.
- Short position: A trade that gains when the price falls and loses when it rises.
- Balance: The cash balance of the account before the profit or loss of open positions is counted.
- Equity: Balance plus the profit of open positions, or minus their loss — the account's real value moment to moment.
- Used margin: The part of your account held against open positions; it cannot be used to open new ones.
- Free margin: What remains of equity after used margin is deducted — what you can open new positions with.
- Margin level: Equity as a percentage of used margin. The lower it falls, the closer the account is to a margin call.
- Hedging: Opening two opposite positions on the same instrument to limit the effect of price movement.
- Slippage: The difference between the price expected when an order is sent and the price it actually executes at; common around news and in volatile markets.
- Price gap: The market opening at a level materially different from the previous close, so a stop loss executes at the first available price rather than the level set.
Order execution and settlement
- Official order channels: The approved ways an order is accepted: the phone number on your file, your registered email, the company platform or app, and attending in person. An order arriving through any other channel is not acted on.
- Best execution: The policy applied to forex orders: quotes from liquidity providers are compared at the moment the order is received, ranked by price, then speed, then cost, then likelihood of execution, then market depth.
- Liquidity provider: A party quoting bid and ask prices at which currency orders execute, since currencies trade outside regulated exchanges.
- Over the counter (OTC): Trading conducted outside a regulated exchange through liquidity providers, as in the currency market.
- Market depth: The liquidity available at different price levels; it affects whether a large order can execute without moving the price.
- Order validity: How long your order stays live in the market before it expires if it has not executed.
- Price limits: The maximum a security's price may rise or fall during a session under exchange rules.
- Settlement: Transferring ownership of the security and its cash value between seller and buyer after a trade executes, under each market's rules.
- Clearing and Transfer Centre: The Palestine Exchange body where ownership of securities is held and where transfers, pledges and reservations are carried out.
- Custodian: An institution that holds securities on the investor's behalf and settles their trades.
Agreement and account terms
- The Agreement: The terms and conditions governing the contractual relationship between you and the company when using electronic trading services.
- First party: The company or bank — the licensed entity providing the service, including its branches and those acting on its behalf.
- Second party: The client — any natural or legal person who opens an account or uses the service, for themselves or as an authorised representative.
- The Service: The electronic trading system giving access to markets and allowing buy and sell orders to be executed.
- Power of attorney on an account: A written authorisation added to an account allowing another person to place orders on it; it can be withdrawn under the approved procedure.
Compliance and anti-money laundering
- Customer due diligence: Verifying the identity of the client and the beneficial owner before the account is opened, and updating their data periodically.
- Enhanced due diligence: Wider verification applied to categories classified as higher risk.
- Beneficial owner: The natural person who actually owns or controls the account, even if it is registered in another name.
- Risk classification: Classifying clients by degree of risk to set the level of due diligence required.
- Suspicious transactions: Unusual account activity that is monitored and reported to the competent authorities.
- Conflict of interest: Where the interest of the company or its staff crosses that of a client; it is managed so the client's interest is preserved. Orders of the company or its staff are never placed ahead of client orders.
- Third-party payments: Transfers arriving in a name other than the account holder's. These are not accepted; payments are accepted only through the company's published accounts and in the account holder's own name.
Types of risk
- Market risk: Prices moving up and down for economic or political reasons, or because of the issuer's performance — sometimes fast and without warning.
- Liquidity risk: Being unable to buy or sell an instrument at the price or time you want, especially in thinly traded instruments.
- Leverage and margin risk: Leverage magnifies gains and losses alike; a falling balance may trigger a margin call or automatic closing of positions without prior notice.
- Exchange rate risk: When trading in a currency other than your account currency, the final result is affected by the exchange rate regardless of how the instrument performed.
- Technical risk: An internet or platform failure preventing orders from being sent, changed or cancelled in time.
- Regulatory risk: Changes to the rules and instructions in the relevant markets affecting how trades execute or what they cost.
Licensing, supervision and complaints
- Licence number: The number issued by the Palestine Capital Market Authority evidencing the company's licence to act as a securities broker.
- External audit: Independent periodic review of financial and operational activity under the applicable accounting and regulatory standards.
- Complaint reference number: A number given to your complaint when it is logged, so you can follow its progress.
- Internal complaints committee: Where a complaint is escalated if you are not satisfied with the first response.
- Financial arbitration centre: A body that may be approached to settle financial disputes under the applicable rules, alongside the right to approach the regulator.
- Subscription (IPO): An offering of new securities to the public; applications can be submitted through the approved electronic subscription system.
This page is for explanation and simplicity. The legally binding definitions are those in the terms and conditions, the order execution policy and the risk statement.