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In trading, a position represents your investment in a particular asset. There are two types of positions:
Long position: You buy an asset, hoping its price will rise.
Short position: You sell an asset you do not own, expecting its price to fall.

If a position is still active, it is called an open position. Once the trade has been completed, it is referred to as a closed position.

Margin or leveraged trading only requires a percentage of the total trade value. The rest is financed by the broker. Leverage allows larger exposure with smaller capital but also magnifies losses.

For example, with 10:1 leverage, £1,000 allows you to control £10,000.

A pending order is an instruction to buy or sell an asset at a specific price that differs from the current market price. It has not yet been executed, so it is not considered an actual trade. The purpose of a pending order is for it to be executed automatically once the market price reaches the level you have set, allowing you to enter the market under predefined conditions without needing to monitor the price constantly.

A stop-loss order and a take-profit order are both tools for risk management you can use when it comes to trading. They are instructions that you can attach to an open position to automatically close it at a specific price.
Stop-loss order: Closes your position at a predetermined price if the market moves against you, helping to minimise potential losses.
Take-profit order: Closes your position at a set price to secure profits before the market reverses.

When you trade with leverage, only a percentage of the total trade value is required by the broker. The rest of the trade is financed by the broker or financial institution. The leverage ratio indicates how much larger your position is compared to your margin.

This allows traders to potentially gain higher returns with a smaller initial investment. However, losses are also magnified. If the trade moves against you, your losses could exceed your initial margin, potentially leading to a margin call.

For example, if you have a leverage of 10:1, this means you can obtain a position worth 10 times your actual investment. With a margin of £1,000, you could trade a position worth £10,000.

For retail accounts, maximum leverage is up to 30:1 when trading on a CFD or spreadbet with us. You should therefore manage your risk accordingly and only ever trade using risk capital.