Glossary

Plain definitions of the words you meet on a trading platform and in market news. Every term has its own link, so you can bookmark or share exactly the one you need.

Definitions are general and describe common industry usage. Figures that depend on the account, such as margin-call levels, swaps and trading hours, are set out in the account terms and contract specifications.

A

Account currency: Platform and account; The currency in which the balance, margin and profit or loss are shown. Results on instruments quoted in other currencies are converted into it.
Ask: Forex basics; The price at which you can buy. It is the higher of the two prices shown, and the gap between bid and ask is the spread.
Average True Range (ATR): Technical analysis; A volatility indicator that averages the full range of each period, including gaps. It is often used to decide how far away to place a stop.

B

Balance: Risk and margin; The account's cash value from deposits, withdrawals and closed trades, not counting open positions.
Base currency: Forex basics; The first currency in a pair. Buying the pair means buying the base currency and selling the quote currency.
Bid: Forex basics; The price at which you can sell. It is the lower of the two prices shown for an instrument.
Bollinger Bands: Technical analysis; A moving average with bands set a number of standard deviations above and below it. The bands widen when volatility rises and narrow when it falls.
Breakout: Technical analysis; A move through a support, a resistance or the edge of a pattern. Many breakouts fail and return inside the range, which is called a false breakout.
Buy limit: Orders and execution; A pending order to buy if price falls to a set level below the current market price.
Buy stop: Orders and execution; A pending order to buy if price rises to a set level above the current market price.

C

Candlestick: Technical analysis; A chart bar that shows the open, high, low and close for one period. The body spans the open and close; the wicks mark the extremes.
Central bank: Fundamental and economic; The institution that sets monetary policy for a country or currency area, such as the US Federal Reserve or the European Central Bank. Its interest-rate decisions are among the strongest drivers of currencies.
Commodity: Instruments; A raw material traded in standard grades, such as oil, gold, natural gas or wheat. Commodity CFDs usually follow a spot or futures price.
Consensus forecast: Fundamental and economic; The average or median of economists' forecasts for a data release. Markets tend to react to the gap between the actual figure and the consensus more than to the figure itself.
Consumer Price Index (CPI): Fundamental and economic; A measure of the change in prices households pay for a basket of goods and services. It is the most closely followed inflation release.
Contract for difference (CFD): Instruments; A contract to exchange the difference in an asset's price between opening and closing a position, without owning the asset. CFDs are leveraged and carry a high risk of losing money quickly.
Contract size: Instruments; The quantity of the underlying asset in one lot, such as 100,000 units of a currency or a set number of ounces of gold. The contract specification states it for each instrument.
Contract specification: Instruments; The published details of an instrument: contract size, minimum trade, tick size, trading hours, margin and swap rules. Read it before trading an instrument for the first time.
Correlation: Risk and margin; How closely two instruments tend to move together. Holding several highly correlated positions can concentrate risk rather than spread it.
Cross pairs: Forex basics; Currency pairs that do not include the US dollar, such as EUR/GBP or AUD/JPY.
Crude oil: Instruments; Unrefined oil, most often traded through the WTI and Brent benchmarks. Its price reacts to production decisions, inventory data and global demand.
Currency pair: Forex basics; Two currencies quoted against each other, such as EUR/USD. The price shows how many units of the second currency buy one unit of the first.

D

Data revision: Fundamental and economic; A later change to a previously published figure. A large revision can change the meaning of a release as much as the new number does.
Demo account: Platform and account; A practice account funded with virtual money on live or near-live prices. Demo results can differ from live trading, where execution conditions and emotions are real.
Divergence: Technical analysis; When price and an indicator move in different directions, such as a new price high without a new RSI high. It can warn that momentum is fading.
Dividend adjustment: Instruments; A cash credit or debit applied to open share or index CFD positions when the underlying shares pay a dividend. Buy positions are usually credited and sell positions debited.
Doji: Technical analysis; A candle whose open and close are almost equal, showing indecision between buyers and sellers during that period.
Dovish: Fundamental and economic; Describes a stance that leans towards lower interest rates or looser policy to support growth. A dovish surprise tends to weigh on the currency.
Drawdown: Risk and margin; The fall in account value from a peak to a later low, usually shown as a percentage. It measures how much a strategy lost along the way.

E

Economic calendar: Fundamental and economic; A schedule of upcoming data releases and central bank events, usually showing the previous figure, the consensus forecast and the actual result.
Engulfing pattern: Technical analysis; A two-candle pattern in which the second body completely covers the first and closes in the opposite direction. It is read as a possible reversal, more so at an important level.
Equity: Risk and margin; The balance plus or minus the unrealised profit or loss on open positions. It changes with every price move.
Exchange rate: Forex basics; The price of one currency expressed in another. It changes continuously while the market is open.
Exotic pairs: Forex basics; Pairs that combine a major currency with the currency of a smaller or emerging economy. They tend to have wider spreads and sharper moves.
Expert Advisor (EA): Platform and account; An automated trading program that runs inside MetaTrader and follows coded rules. It can lose money as fast as a person can, and past results do not predict future ones.
Exponential moving average (EMA): Technical analysis; A moving average that gives more weight to recent prices, so it reacts faster than a simple average of the same length.

F

Fibonacci retracement: Technical analysis; Horizontal levels at ratios such as 38.2%, 50% and 61.8% of a previous move, used to mark where a pullback might pause.
Forex (FX): Instruments; The global market for exchanging currencies. It trades over the counter, without a single central exchange, from the Monday open in Asia to the Friday close in New York.
Free margin: Risk and margin; Equity minus used margin. It is the amount available to open new positions or to absorb losses on open ones.
Fundamental analysis: Fundamental and economic; Assessing a market through the economic, financial and political forces behind it, such as growth, inflation and interest rates.
Futures contract: Instruments; An exchange-traded agreement to buy or sell an asset at a set price on a future date. Unlike most spot CFDs, futures have fixed expiry dates.

G

Gap: Orders and execution; A jump from one price to the next with no trading in between, common at the weekly open or after major news. Stop orders that fall inside a gap are filled at the next available price.
Gross Domestic Product (GDP): Fundamental and economic; The total value of goods and services an economy produces over a period. It is the broadest measure of growth and is often revised after its first release.

H

Hammer: Technical analysis; A candle with a small body near the top and a long lower wick, formed after a decline. It shows that sellers pushed price down and buyers brought it back up.
Hawkish: Fundamental and economic; Describes a central bank stance that leans towards higher interest rates to contain inflation. A hawkish surprise tends to support the currency.
Head and shoulders: Technical analysis; A chart pattern of three peaks with the middle one highest. A break below the line joining the lows, called the neckline, is read as a possible end to an uptrend.
Hedging: Risk and margin; Opening a position that offsets the risk of another, such as a sell against an existing buy. It reduces exposure but adds costs such as spreads and swaps.
Hedging account: Platform and account; A MetaTrader 5 account mode that allows several positions on the same instrument at once, including positions in opposite directions.

I

Index CFD: Instruments; A CFD that follows a stock market index, such as a benchmark of a country's largest companies. It gives exposure to the whole basket through a single position.
Inflation: Fundamental and economic; The rate at which the general level of prices rises over time. Central banks watch it closely when setting interest rates.
Instant execution: Orders and execution; An execution mode in which an order is filled at the requested price or not at all. If the price has moved, a requote may be returned.
Interest rate decision: Fundamental and economic; A central bank's announcement of its policy rate. Markets react to the decision and often more strongly to what the statement suggests about future moves.

K

Know Your Customer (KYC): Platform and account; The identity and address checks a financial firm must carry out before opening an account, as part of anti-money-laundering rules.

L

Leverage: Risk and margin; Exposure that lets you control a position larger than the margin you put up. At 1:30, for example, a margin of 1 controls a position worth 30, and gains and losses are calculated on the full position.
Limit order: Orders and execution; A pending order to buy below or sell above the current price. It is designed to fill only at your price or better.
Liquidity: Forex basics; How easily an instrument can be bought or sold without moving its price much. Higher liquidity usually means tighter spreads and fewer price jumps.
Live account: Platform and account; A trading account funded with real money, where gains and losses are real.
Long position: Forex basics; A position opened by buying. It gains if the price rises and loses if it falls.
Lot: Forex basics; A standardised trade size. In forex one standard lot is usually 100,000 units of the base currency; for other instruments the contract specification defines it.

M

MACD: Technical analysis; Moving Average Convergence Divergence: the gap between two exponential moving averages, plotted with a signal line. Its crossovers and divergences are used to read momentum.
Major pairs: Forex basics; The most heavily traded currency pairs, each including the US dollar, such as EUR/USD, USD/JPY and GBP/USD. They usually have the deepest liquidity.
Margin: Risk and margin; The part of your account set aside to open and hold a leveraged position. It is not a fee, and a losing trade can cost more than the margin it used.
Margin call: Risk and margin; A warning that the margin level has fallen to a threshold set in the account terms. It means positions may soon be closed unless losses reverse or funds are added.
Margin level: Risk and margin; Equity divided by used margin, shown as a percentage. The lower it falls, the closer the account is to a margin call or stop out.
Market execution: Orders and execution; An execution mode in which orders are filled at the price available when they reach the server, without requotes. The fill may differ from the price on screen.
Market order: Orders and execution; An instruction to buy or sell immediately at the best available price. It puts getting filled ahead of the exact price.
Market Watch: Platform and account; The MetaTrader window that lists instruments with their current bid and ask prices. From it you can open a chart, place an order or view an instrument's specification.
MetaTrader 5: Platform and account; A trading platform developed by MetaQuotes for forex, CFDs and other markets, available on desktop, web and mobile. Brokers provide access to it; the software itself belongs to MetaQuotes.
Micro lot: Forex basics; One hundredth of a standard lot, usually 1,000 units of the base currency, entered as 0.01. It is a common size for learning with small amounts at risk.
Mini lot: Forex basics; One tenth of a standard lot, usually 10,000 units of the base currency, entered as 0.10 on most platforms.
Monetary policy: Fundamental and economic; How a central bank manages interest rates and the supply of money to pursue goals such as stable prices and employment.
Moving average: Technical analysis; The average closing price over a set number of periods, recalculated with each new candle. It smooths price action and lags behind it.

N

Negative balance protection: Risk and margin; A policy under which a broker resets an account to zero if losses take it below zero, so the client does not owe the deficit. Whether it applies depends on the broker's terms and jurisdiction.
Netting account: Platform and account; A MetaTrader 5 account mode that keeps one net position per instrument. A new order in the opposite direction reduces, closes or reverses it.
Non-Farm Payrolls (NFP): Fundamental and economic; The monthly change in US employment outside farming, published with the unemployment rate, usually on the first Friday of the month. It often moves the US dollar sharply.
Notional value: Risk and margin; The full market value of a position: its size multiplied by the price. With leverage the notional value is far larger than the margin.

O

One-click trading: Platform and account; A platform setting that sends orders with a single click and no confirmation step. Orders go faster, and so do mistakes.
Order expiry: Orders and execution; The time limit on a pending order. Common choices are good till cancelled, end of day, or a specific date and time.
Overbought: Technical analysis; A condition in which an indicator suggests price has risen quickly relative to its recent range. In a strong uptrend price can stay overbought for a long time.
Oversold: Technical analysis; A condition in which an indicator suggests price has fallen quickly relative to its recent range. In a strong downtrend price can stay oversold for a long time.

P

Partial fill: Orders and execution; When only part of an order's volume is executed at the requested price because not enough volume was available.
Pending order: Orders and execution; An order that waits until price reaches a level you set before it opens a position. Limit orders and stop orders are both pending orders.
Pip: Forex basics; The standard unit for measuring a change in an exchange rate. For most currency pairs a pip is the fourth decimal place (0.0001); for pairs quoted in Japanese yen it is the second decimal place (0.01).
Pip value: Forex basics; The amount gained or lost when price moves one pip on a given trade size. It depends on the pair and the size of the position, and is converted into the account currency.
Pipette: Forex basics; One tenth of a pip. Platforms that quote five decimal places, or three for yen pairs, show the pipette as the last digit.
Position sizing: Risk and margin; Choosing a trade size so that a loss at the stop would cost a set share of the account. Many traders start from a fixed small percentage of equity per trade.
Precious metals: Instruments; Gold, silver, platinum and palladium. Gold and silver are usually quoted against the US dollar as XAU/USD and XAG/USD.
Pullback: Technical analysis; A temporary move against the prevailing trend, before the trend either resumes or ends.
Purchasing Managers' Index (PMI): Fundamental and economic; A survey-based indicator of business conditions in manufacturing or services. A reading above 50 signals expansion and below 50 contraction.

Q

Quantitative easing (QE): Fundamental and economic; A policy in which a central bank buys bonds or other assets on a large scale to lower long-term borrowing costs and add money to the financial system.
Quote currency: Forex basics; The second currency in a pair, in which the price is expressed. Profit and loss on the pair is first calculated in this currency.

R

Relative Strength Index (RSI): Technical analysis; A momentum oscillator from 0 to 100 that compares recent gains with recent losses. Readings above 70 or below 30 are commonly read as overbought or oversold.
Requote: Orders and execution; A response under instant execution when the requested price is no longer available and a new price is offered, which you can accept or decline.
Resistance: Technical analysis; A price area where selling has previously stopped a rise. A clear break above it is often watched as a sign of strength.
Retail sales: Fundamental and economic; A monthly measure of spending in shops and online, used as a guide to consumer demand.
Risk-on, risk-off: Fundamental and economic; Shorthand for market mood. In risk-on periods investors favour shares and higher-yielding currencies; in risk-off periods they move towards safe havens.
Risk-reward ratio: Risk and margin; The distance to your stop loss compared with the distance to your target. A ratio of 1:2 risks one unit to aim for two; it says nothing about how often the target is reached.

S

Safe haven: Fundamental and economic; An asset that investors tend to buy in times of stress, such as gold, the Japanese yen or the Swiss franc. The pattern is common but not guaranteed.
Sell limit: Orders and execution; A pending order to sell if price rises to a set level above the current market price.
Sell stop: Orders and execution; A pending order to sell if price falls to a set level below the current market price.
Server time: Platform and account; The clock the trading server runs on. It sets candle times and the daily rollover, and may differ from your local time.
Share CFD: Instruments; A CFD on a single company's share price. It carries no ownership or voting rights, and dividends appear as cash adjustments to the position.
Short position: Forex basics; A position opened by selling. It gains if the price falls and loses if it rises; with CFDs you can sell without owning the underlying asset.
Slippage: Orders and execution; The difference between the price you expected and the price at which an order was filled. It is most common in fast markets and around news, and can be in your favour or against you.
Spot price: Instruments; The current price for immediate delivery of an asset, as opposed to a futures price for a later date.
Spread: Forex basics; The difference between the bid and the ask. It is a cost of every trade, and it can widen when liquidity is thin or around major news.
Stochastic oscillator: Technical analysis; A momentum indicator that shows where the latest close sits within the high-low range of a set number of periods, on a scale of 0 to 100.
Stop loss: Orders and execution; An order attached to a position that closes it if price moves against you to a set level. It limits the loss in normal conditions, but in a fast market or a gap it can be filled at a worse price.
Stop order: Orders and execution; A pending order to buy above or sell below the current price, often used to enter when price breaks a level. Once triggered it becomes a market order, so the fill can differ from the level set.
Stop out: Risk and margin; The margin level at which the platform starts closing positions automatically, typically the largest losing position first, to stop the account falling further.
Support: Technical analysis; A price area where buying has previously stopped a decline. It can break, and a broken support level sometimes becomes resistance.
Swap: Risk and margin; A charge or credit applied to positions held past the daily rollover time. It reflects the interest-rate difference between two currencies or the financing cost of an instrument, and is often charged three times on one weekday to cover the weekend.

T

Take profit: Orders and execution; An order attached to a position that closes it when price reaches a set level in your favour.
Technical analysis: Technical analysis; Studying price charts, patterns and indicators to judge likely direction and important levels. It describes probabilities, not certainties.
Tick size: Instruments; The smallest price change an instrument can make. The value of one tick depends on the contract size.
Timeframe: Technical analysis; The period each candle or bar represents, from one minute to one month. The same market can trend on one timeframe and move sideways on another.
Trade balance: Fundamental and economic; The difference between the value of a country's exports and its imports. A surplus means exports are larger; a deficit means imports are.
Trade history: Platform and account; The record of closed positions, orders, deposits and withdrawals in an account. Reviewing it regularly is one of the simplest ways to learn from your own trading.
Trading hours: Platform and account; The times an instrument can be traded on the platform. They vary by instrument and can change around public holidays.
Trading session: Forex basics; The hours when a major financial centre such as Sydney, Tokyo, London or New York is active. Activity and liquidity in currency pairs change as sessions open and overlap.
Trailing stop: Orders and execution; A stop loss that follows price at a set distance as the trade moves in your favour, and stays put when price turns. In MetaTrader 5 it is managed by the terminal, so it works only while the platform is running.
Trend: Technical analysis; The general direction of price over a period: higher highs and higher lows in an uptrend, lower highs and lower lows in a downtrend.
Trendline: Technical analysis; A line drawn across successive lows in an uptrend, or highs in a downtrend, to show the slope of the move and where it might fail.

U

Underlying asset: Instruments; The currency, index, commodity or share whose price a derivative such as a CFD follows.
Unemployment rate: Fundamental and economic; The share of the labour force that is looking for work but does not have a job.
Unrealised profit or loss: Risk and margin; The gain or loss on a position that is still open. It becomes realised only when the position is closed.
Used margin: Risk and margin; The total margin currently held against all open positions.

V

Volatility: Forex basics; How far and how fast a price moves over a period. High volatility enlarges potential gains and losses alike.

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