Forex & Trading Glossary

ASIC Australian Securities and Investments Commission. Ask The price at which the market (broker) will sell to you — the price you buy at.

Base Currency The first currency in a quote pair (e.g. EUR in EUR/USD). Bid The price at which the market (broker) will buy from you — the price you sell at. Break of Structure (BOS) Price breaking a prior swing point in the trend direction. Break-Even Stop Moving the stop-loss to the entry price after price moves favourably. Breakout Price moving decisively beyond a defined range or level.

Candlestick A chart bar showing open, high, low, close for a time period. Cashback A per-lot rebate paid back to the trader from broker IB commission. Central Bank The institution responsible for monetary policy. CFD Contract for Difference — a derivative paying the difference between entry and exit. CFTC Commodity Futures Trading Commission — US. Change of Character (CHoCH) Price breaking a prior swing point against the existing trend. Commission A per-lot fee charged on raw / ECN accounts. Compounding Reinvesting gains so each period's base is larger. Consistency Rule A prop-firm rule capping how much of total profit can come from a single day or trade. Correlation The degree to which two instruments move together. CPI Consumer Price Index — primary inflation measure. cTrader Alternative retail trading platform, common at ECN brokers. CySEC Cyprus Securities and Exchange Commission.

Daily Loss Limit A maximum loss allowed in a single trading day. Day Trading Opening and closing positions within the same trading day. Doji A candlestick with near-equal open and close — indecision. Drawdown Decline from a previous equity high.

ECN Electronic Communications Network — pricing model passing institutional liquidity to retail. Engulfing Pattern A candle whose body fully engulfs the prior candle's body. Exotic Pairs Pairs involving an emerging-market currency. Expectancy The average outcome per trade: (Win% × AvgWin) − (Loss% × AvgLoss). Expert Advisor (EA) An automated trading robot for MT4 / MT5.

Fair Value Gap (FVG) An imbalance left by a rapid price move that price often revisits. FCA Financial Conduct Authority — the UK financial regulator. Fibonacci Retracement Levels (38.2%, 50%, 61.8%) used to anticipate retracements within a trend. FOMC Federal Open Market Committee — sets US monetary policy. Forex The foreign exchange market — buying one currency against another. Free Margin Equity minus used margin — the buffer available for new positions or adverse moves. FSCA Financial Sector Conduct Authority — South Africa.

Gap A price discontinuity between close and next open. Gharar Islamic finance term for excessive uncertainty in contracts.

Hammer A candle with a small body and long lower wick — potential bullish rejection. Hedge Holding offsetting positions to neutralise some directional risk. Higher High (HH) A swing high above the previous swing high — uptrend signal.

Introducing Broker (IB) A partner that refers traders to a broker for commission.

Leverage The ratio of position size to required margin (e.g. 1:100 = 1% margin). Limit Order An order to buy below or sell above current price. Liquidity How easily a market can absorb orders without moving price significantly. Liquidity Pool An area of price likely to contain resting orders / stops. Long Position A position that profits when price rises. Lot The unit of forex position size. 1 standard lot = 100,000 units of the base currency. Lower Low (LL) A swing low below the previous swing low — downtrend signal.

MACD Moving Average Convergence Divergence — momentum indicator. Major Pairs The most-traded forex pairs, all involving USD. Margin Capital locked by an open position, calculated from leverage and position size. Margin Call Broker warning when margin level drops to a defined threshold. Margin Level Equity divided by used margin, expressed as a percentage. Market Maker Broker model where the broker may take the other side of trades internally. Market Order An order filled at the current available price. Minor Pairs / Crosses Currency pairs not involving USD. Moving Average (MA) A smoothed average of price over a defined period. MQL4 Programming language for MT4 indicators and EAs. MQL5 Programming language for MT5 indicators and EAs. MT4 (MetaTrader 4) Long-standing retail trading platform. MT5 (MetaTrader 5) Successor platform to MT4 with additional features.

News Trading A strategy or risk concern around scheduled high-impact economic releases. NFA National Futures Association — US regulator for retail forex / futures. NFP (Non-Farm Payrolls) Monthly US employment report — historically high-impact for FX and gold.

Order Block A candle range from which a strong directional move originated. Order Book / DOM A view of resting limit orders by price.

Pip The standard unit of price movement in forex (typically 4th decimal, or 2nd for JPY pairs). Pip Value Dollar value of a 1-pip move at a given lot size. Pipette A fractional pip — one-tenth of a standard pip. Position Size The lot size of a trade, calculated from risk and stop distance. Position Trading Holding positions for weeks to months based on macro views. Profit Split The portion of trading profits paid to a funded trader. Profit Target (Prop) A profit threshold required to pass a prop-firm evaluation.

Qabd Islamic finance term for possession / settlement of an asset. Qimar / Maysir Islamic finance terms for gambling-like speculation. Quote Currency The second currency in a quote pair.

R-Multiple Trade outcome expressed in units of risk (R). Real Yield Nominal bond yield minus inflation expectations. Rebate Synonym for cashback in the IB context. Regulator A government or quasi-government authority licensing financial firms. Resistance A price level where sellers historically defended price. Riba Islamic finance term for interest / usury, considered impermissible. Risk / Reward Ratio Ratio of planned reward to planned risk on a trade. Risk-On / Risk-Off Market regimes describing appetite for riskier assets. Rollover The daily process of charging or crediting swap on open positions. Round-Turn A complete buy + sell (or sell + buy) cycle, used for commission quoting. RSI (Relative Strength Index) A momentum oscillator between 0 and 100.

Safe Haven Assets bought in risk-off conditions. Scalping A short-timeframe trading style aiming for many small profits. Shooting Star Inverted hammer near highs — potential bearish rejection. Short Position A position that profits when price falls. Slippage The difference between expected and executed price. Spread The difference between bid and ask prices. Stop Order An order to buy above or sell below current price (breakout style). Stop Out The margin level at which the broker forcibly closes positions to prevent insolvency. Stop-Loss A pre-set order to close a position at a defined loss limit. STP Straight Through Processing — broker routes orders to liquidity providers without dealing-desk intervention. Support A price level where buyers historically defended price. Swap Overnight financing charge or credit based on interest-rate differentials. Swap-Free Account A broker account that does not charge or pay overnight swap. Swing Trading Holding positions for several days to weeks.

Take-Profit A pre-set order to close a position at a defined profit target. Trailing Drawdown A loss limit (used by prop firms) that follows the highest equity reached. Trailing Stop A stop-loss that follows price in your favour by a set distance. Trend A persistent directional bias in price.

VIX Equity-volatility index — proxy for fear. Volatility The magnitude of price movement over a given period. Volume The number of contracts / units traded over a period.

XAUUSD Gold against the US dollar.