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Forex Glossary
Every forex term you need to know, explained in plain English — from pip and lot to leverage, margin, and drawdown.
B
Balance
The cash in your account not counting open trade profit or loss.
Base Currency
The first currency in a pair — the one you buy or sell.
Bear Market
A sustained period of falling prices and pessimism.
Bid and Ask
The two prices quoted for every currency pair.
Bollinger Bands
Bands around price that expand and contract with volatility.
Bonus
Extra credit a broker offers to attract or reward deposits.
Breakout
When price pushes beyond a key support or resistance level.
Broker
The firm that gives you access to the forex market.
Bull Market
A sustained period of rising prices and optimism.
C
Candlestick
A chart symbol showing the open, high, low, and close of a period.
Carry Trade
Earning the interest-rate gap between two currencies.
Central Bank
The institution that sets a country’s interest rates and money policy.
CFD
A contract to trade price moves without owning the asset.
Commission
A per-trade fee some brokers charge alongside a tight spread.
Copy Trading
Automatically mirroring the trades of another trader.
Correlation
How closely two pairs move in relation to each other.
Cross Rate
An exchange rate between two currencies, neither being the US dollar.
Currency Pair
Two currencies quoted against each other, like EUR/USD.
D
Day Trading
Opening and closing all trades within the same day.
Dealing Desk
A broker desk that can take the other side of client trades.
Demo Account
A practice account that trades with virtual money.
Deposit
Adding money to your trading account to start trading.
Divergence
When price and an indicator move in opposite directions.
Downtrend
A market moving broadly downward with lower highs and lower lows.
Drawdown
The drop from an account's peak to its lowest point.
E
ECN
A broker model that routes orders to a network of liquidity providers.
Economic Calendar
A schedule of upcoming data releases that move markets.
Equity
The live value of your account including open trade profit or loss.
Execution
How quickly and reliably your order is filled by the broker.
Exotic Pairs
A major currency paired with an emerging-market currency.
Expert Advisor (EA)
An automated program that trades for you on MetaTrader.
F
I
Indicator
A calculation plotted on a chart to read trend or momentum.
Inflation
The rate at which prices rise, shaping central-bank policy.
Interest Rate
The rate set by a central bank that drives currency value.
Islamic Account (Swap-Free)
An account with no overnight swap interest, for Sharia compliance.
L
M
MACD
A trend-and-momentum indicator built from moving averages.
Major Pairs
The most traded pairs, all involving the US dollar.
Margin
The deposit required to open a leveraged position.
Margin Call
A warning that your account no longer has enough margin.
Market Maker
A broker that sets its own prices and often takes the other side of your trade.
Market Order
An order to buy or sell immediately at the current price.
Market Sentiment
The overall mood of traders toward a market.
MetaTrader
The most widely used retail forex trading platform.
Minor Pairs
Actively traded pairs that do not include the US dollar.
Momentum
The speed and strength behind a price move.
Moving Average
A smoothed average of price used to see the trend.
N
O
P
Pending Order
An order set to trigger later at a price you choose.
Pip
The standard smallest price move of a currency pair.
Pip Value
How much money one pip of movement is worth for your trade.
Position Sizing
Choosing trade size so one loss stays small and planned.
Pullback
A temporary move against the main trend.
Q
R
Recession
A sustained decline in economic activity.
Regulation
Oversight by a financial authority that protects traders.
Requote
When a broker offers a new price instead of filling your order.
Revenge Trading
Trying to win back a loss with rushed, emotional trades.
Risk Management
Controlling how much you can lose on any trade or overall.
Risk-On / Risk-Off
The market’s swing between seeking risk and seeking safety.
Risk-Reward Ratio
How much you risk compared with how much you aim to gain.
RSI
A momentum indicator showing if a market is overbought or oversold.
S
Safe Haven
A currency investors buy when markets get fearful.
Scalping
A style of taking many tiny, very short trades.
Segregated Account
Client funds kept separate from the broker’s own money.
Short
Selling a pair because you expect it to fall.
Slippage
When a trade fills at a different price than expected.
Spread
The gap between the bid and ask price — a built-in cost of trading.
Spread Betting
A tax-favoured way to bet on price moves, mainly in the UK.
Stop Loss
An order that closes a trade automatically to cap a loss.
STP
A broker that passes your orders straight through to liquidity providers.
Support and Resistance
Price levels where a move tends to stall or reverse.
Swap (Rollover)
The interest paid or earned for holding a position overnight.
Swing Trading
Holding trades for several days to catch a larger move.
T
Take Profit
An order that closes a trade automatically to lock in a gain.
Technical Analysis
Forecasting price from charts, patterns, and indicators.
Trading Journal
A record of your trades used to learn and improve.
Trading Plan
A written set of rules for how and when you trade.
Trading Sessions
The main regional windows when the forex market is active.
Trailing Stop
A stop-loss that follows price to lock in gains.
Trend
The general direction price is moving over a period.