Forex glossary

A

Ask

The price you can buy at. It's slightly higher than the bid.

B

Base currency

The first currency in a pair. In EUR/USD, it's the euro.

Bearish

Expecting or showing falling prices.

Bid

The price you can sell at.

Breakout

When price moves through a support or resistance level. Learn more →

Bullish

Expecting or showing rising prices.

C

CPI

Consumer Price Index. Measures inflation: how fast prices are rising. Learn more →

Candlestick

A chart bar showing open, high, low and close for one time period. Learn more →

Central bank

The bank that sets a country's interest rates, like the Federal Reserve (US) or ECB (Eurozone). Its decisions move currencies.

D

Daily loss limit

At a prop firm, the most you can lose in one day. Learn more →

Drawdown

How far an account has fallen from a previous high. Learn more →

E

Economic calendar

A schedule of upcoming economic reports and events. Learn more →

Equity

Your balance plus or minus the profit or loss on open trades.

F

Fakeout

A breakout that quickly reverses. Learn more →

Funded account

A prop firm account you get after passing a challenge. Learn more →

G

Gap

A jump in price with no trading in between, often at the Sunday open.

L

Leverage

Controlling a big position with a small deposit, like 1:100. Learn more →

Limit order

An order to buy or sell at a price you choose, or better. For example, a buy limit sits below the current price.

Long

A buy trade. You profit if price rises.

Lot

A trade size. 1 standard lot = 100,000 units; 0.01 = a micro lot. Learn more →

M

Margin

Money set aside to keep a leveraged trade open. Learn more →

Margin call

A broker warning that your equity is close to the margin in use. Learn more →

Market order

An order to buy or sell right now at the current price.

N

NFP

Non-Farm Payrolls: the monthly US jobs report, one of the biggest market movers. Learn more →

P

Pip

The standard unit of price movement: 0.0001 for most pairs, 0.01 for yen pairs. Learn more →

Pipette

One-tenth of a pip. Learn more →

Profit split

The share of profits a prop firm pays you. Learn more →

Profit target

The gain you must reach to pass a prop firm challenge. Learn more →

Prop firm

A company that lets traders use its capital after passing an evaluation. Learn more →

Q

Quote currency

The second currency in a pair. In EUR/USD, it's the US dollar.

R

Resistance

A price level where rising prices keep stopping. Learn more →

Risk-reward ratio

How much you could win compared to how much you risk. Risking $50 to make $100 is 1:2.

S

Session

The trading hours of a major market, like London or New York. Learn more →

Short

A sell trade. You profit if price falls.

Slippage

When your order fills at a worse price than you asked for, common during news.

Spread

The gap between the bid and ask price. It's a cost of every trade.

Stop loss

An order that closes your trade at a set loss. Learn more →

Support

A price level where falling prices keep stopping. Learn more →

Swap

A small fee or credit for holding a trade overnight, based on interest rates.

T

Take profit

An order that closes your trade at a set profit.

Trailing drawdown

A max loss limit that moves up as your account makes new highs. Learn more →

V

Volatility

How much and how fast price moves.