The above is the main glossary in Loco London Gold trading. Should you need to inquire any other relevant words, please contact our 24 hours online customer service at any time who will be happy to assist you.
Glossary of Trading Terms
Buy Sell Open a Position Lot Pip Minimum Tick Size Margin Margin Call Commission T+0 Contract Size Ounce Spread Overnight Interest Overnight Position Leverage Pending Order Stop-Loss Take-Profit
Buy, also known as “going long” or “Ask”, refers to buying some quantity of lots in anticipation that the price is going on an upward trajectory.
Sell, also known as “going short” or “Bid”, refers to selling some quantity of lots in anticipation that the price is going to head in a downward trajectory.
■ Open a Position
Opening a position, also known as placing a trade, refers to buying or selling some quantity of lots.
Lot refers to the amount of Loco London Gold/Silver traded in each transaction. 1 lot of Loco London Gold is 100 ounces while 1 lot of Loco London Silver is 5,000 ounces. It means 0.1 lot of Loco London Gold is 10 ounces calculated on a pro-rata basis.
A pip is defined as the smallest point by which a financial product could move. 1 pip refers to 0.01 USD for Loco London Gold/Silver. When the price of Loco London Gold/Silver goes up or down by 0.05 USD, the price movement is 5 pips.
■ Minimum Tick Size
Tick refers to a single price movement which can be either positive or negative. The minimum tick size for Loco London Gold/Silver is 1 pip, which means the price of Loco London Gold/Silver goes up or down by 0.01 USD.
In trading, margin is the funds required to open and maintain a leveraged position. The margin is 1,000 USD for 1 lot of Loco London Gold or 1 lot of Loco London Silver. The minimum lot size in a single transaction with us is 0.01 lots and hence the minimum margin for trading Loco London Gold/Silver is 10 USD.
■ Margin Call
Margin call is a broker's request to an investor using margin to deposit additional funds. Margin call occurs when an account's funds fall to a specific value calculated by the broker. When margin rate of an investor drops to 30% or below, the margin call will be triggered and we’ll have the discretionary right to begin closing client’s current open positions, starting from the most unprofitable until the margin rate gets back to above 30%. The margin call will be increased to 100% for a short time before market closing at weekends and after opening on Monday (company announcement shall prevail) during which attention should be paid to funds of open positions. Please note that overnight interest will be levied for open positions spanning weekends which should be considered also.
Commission refers to the charge levied by a broker in traditional trading model. Trading through online trading platform is free of commission.
T+0 refers to the ability to close a position on the same day of opening a position. T+1 refers to closing a position on the next day (one day later) that a position is open. The number behind T indicates how many days after opening a position that the position could be closed. The position opened on our platform can be closed immediately, therefore it is the T+0 trade. For example, stocks cannot be sold on the day of buying until the next day, which is a T+1 trade.
■ Contract Size
Contract size refers to the quantity of Loco London Gold/Silver traded in a single lot. The contract size of 1 lot Loco London Gold is 100 ounces whilst the contract size of 1 lot Loco London Silver is 5,000 ounces.
Ounce in Loco London Gold/Silver trade refers to troy ounce, which is used exclusively as a measurement unit for precious metals. 1 troy ounce is approximately 31.034768g.
Spread refers to the difference between Bid price and Ask price on the trading platform. It is the trading cost to open a position and we will charge spread when clients open a position. Standard spread for Loco London Gold is 0.5 USD/ounce while it is 0.03 USD/ounce for Loco London Silver.
■ Overnight Interest
Once an open position is not closed at the same day of opening and held till the next day, overnight interest is incurred. Whether a position is open or closed, overnight interest is settled according to the closing price of the day, corresponding interest rate and the number of nights the position is held. The overnight interest rates for opening and closing a position are -1.75% and -0.15%.
■ Overnight Position
Overnight does not mean after 12am. Overnight interest will only be incurred when the position is open and held after 3:29am on the next day. The time displayed on the system shall prevail.
Leverage allows traders to gain a large exposure with a relatively small outlay. This has the effect of amplifying profit or loss. Leverage = Actual Value/Amount Invested in. Assume that the price of Loco London Gold is 1,600 USD/ounce, then the value of 1 lot (corresponding to 100 ounces) is 160,000 USD. As the margin is fixed 1,000 USD, the leverage will be 160,000 USD/1,000 USD = 160 if client has full position, which means the actual value is 160 times of the amount invested in.
■ Pending Order
Pending order refers to setting an ideal trade price. When the latest price reaches that set by the client, the system will automatically open a position. Advantages of pending order is that client could select trading type, number of lots and target transaction price without paying attention to market conditions for a long time or keeping trading platform open.
An order placed to automatically close your position when the price reaches your specified stop-loss price. A stop-loss order is designed to limit a loss on a position. This is not always guaranteed, however, as market conditions may cause the trade to be exited at a slightly different price, due to market gapping or slippage. The stop-loss price needs to be set in the loss area of the price (which means the stop price for long positions should be set below the opening price, and the stop price for short positions should be set above the opening price). The criterion for placing a stop-loss for Loco London Gold is a minimum 200 pips and a maximum 9,000 pips from the current price. The criterion for placing a stop-loss for Loco London Silver is a minimum 20 pips and a maximum 9,000 pips from the current price.
An order placed to automatically close your position when the price reaches your specified take-profit price. Take-profit setting in MT4 platform is used to lock profit and prevent loss of profit gained due to reversal price movement. The take-profit price needs to be set in the profit area of the price (which means the take-profit price for long positions should be set above the opening price, and the take-profit price for short positions should be set below the opening price). The criterion for placing a take-profit for Loco London Gold is a minimum 200 pips and a maximum 9,000 pips from the current price. The criterion for placing a take-profit for Loco London Silver is a minimum 20 pips and a maximum 9,000 pips from the current price.