L — Trading Terms Starting With L
Explore trading terms beginning with L, with clear definitions covering market structure, execution, risk, instruments, analysis, psychology, and performance concepts used by traders.
Trading terms beginning with L
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Leverage
Leverage allows traders to control a larger position using a smaller amount of capital. It increases both potential profit and potential loss and can create rapid drawdown or liquidation risk.
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A limit order instructs a broker to buy or sell only at a specified price or better. It provides price control but does not guarantee execution.
Read full definitionLiquidity
Liquidity describes how easily an asset can be bought or sold without causing a large price change. Highly liquid markets generally have tighter spreads, deeper order books, and more reliable execution.
Read full definitionLiquidation
Liquidation occurs when a leveraged position is forcibly closed because account equity falls below required margin levels or the trader fails to meet account obligations.
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A long position is opened when a trader buys an asset expecting its price to rise. Profit occurs when the asset is later sold above the entry price, while loss occurs if price falls.
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The low of day is the lowest price reached by an asset during the current trading session. Traders may use it as support, a breakdown level, or an intraday risk reference.
Read full definitionLot Size
Lot size is the standardized quantity used to trade an instrument. In forex, one standard lot commonly represents 100,000 units of the base currency, though contract sizes vary by market.
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Loss aversion is the tendency to feel the pain of a loss more strongly than the satisfaction of an equal gain. It can cause early profit-taking, delayed loss acceptance, and inconsistent risk decisions.
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Limit up and limit down are maximum permitted price movements during a trading session. Exchanges use these limits to control extreme volatility and disorderly trading.
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