FAQ Section | Frequently Asked Questions
Leverage describes the ratio between the equity capital invested and the actual market volume moved. By using leverage, a larger position can be controlled with a comparatively small amount of capital. Leverage amplifies profits and losses in equal measure and has a direct effect on margin, equity and margin level.
Example / association: A trader uses leverage of 1:20 and invests €2,000 in equity. → He thus moves a market volume of € 40,000. A price movement of just 1% therefore already corresponds to a profit or loss of €400 - based on an invested equity capital of €2,000.
Loss aversion describes the psychological tendency to weight losses more heavily than gains of the same amount. In trading, this often leads to letting losses run too long and realizing gains too early - a structural disadvantage for performance.
Example / association: A trader closes a profit of € +150 immediately, but holds a loss of € -300 in the hope of a reversal. → Rationally, the opposite would be true - psychologically, the fear of "locking in" the loss dominates.
Liquidity describes how easily an instrument can be traded without significantly influencing the price. High liquidity leads to narrow spreads and stable execution, while low liquidity increases the risk of slippage and erratic price movements.
Example / association: A heavily traded index future can be traded at fair prices at almost any time. A second-line stock, on the other hand, shows erratic price movements even with small orders - a sign of low liquidity.
A limit order specifies a maximum purchase price or minimum selling price. The order is only executed if the market reaches or improves this price level. It offers price control, but no guarantee of execution.
Example / association: A share is quoted at €102. A trader sets a buy limit order at €100. → The order is only executed if the price falls to €100 or below.
In real trading, concepts have an operational rather than a theoretical effect. Whether balance, equity or margin - every concept has direct consequences for scope for action, risk and possible intervention by the broker. Explanations of terms are therefore not an academic accessory, but an instrument for risk control. Those who misunderstand terms not only make poor decisions, but often systematically underestimate the actual exposure of their own account.
If you discover a technical term on the platform that is not immediately obvious in its meaning or is explicitly explained via the navigation elements, please let us know.