Reference
Forex Glossary
Every trading term you need to know — clearly defined, with practical context.
A
B
Base Currency
The first currency in a pair. In EUR/USD, EUR is the base currency.
Bear Flag
A continuation chart pattern that forms after a strong downward move.
Bear Market
A market condition characterised by falling prices and negative sentiment.
Bearish
A view or signal suggesting that price is likely to fall.
Bearish Engulfing
A bearish candlestick pattern where the current candle fully covers the previous candle's body.
Bid Price
The price at which the market (or broker) will buy from you.
Break of Structure
A move beyond a key technical level that may confirm a trend change or continuation.
Breakeven Win Rate
The minimum win rate needed to avoid losing money for a given risk/reward profile.
Breakout Trade
A trade entered when price moves beyond an important support or resistance level.
Bull Flag
A continuation chart pattern that forms after a strong upward move.
Bull Market
A market condition characterised by rising prices and positive sentiment.
Bullish
A view or signal suggesting that price is likely to rise.
Bullish Engulfing
A bullish candlestick pattern where the current candle fully covers the previous candle's body.
Buy Limit
A pending order to buy below the current market price.
Buy Stop
A pending order to buy above the current market price.
C
CFD (Contract for Difference)
A derivative that lets traders speculate on price movements without owning the underlying asset.
Cable
A popular forex nickname for the GBP/USD currency pair.
Candlestick
A chart type showing open, high, low, and close prices for a given time period.
Candlestick Chart
A chart style showing open, high, low, and close using candle bodies and wicks.
Carry Trade
A strategy that seeks to profit from interest-rate differentials between two currencies.
Central Bank
The institution responsible for monetary policy and interest-rate decisions in a country.
Central Bank
A national institution that manages monetary policy, interest rates, and currency stability.
Correlation Risk
The risk of holding positions in markets that tend to move together.
Cross Currency Pair
A currency pair that excludes USD, such as EUR/GBP or GBP/JPY.
Currency Pair
Two currencies quoted together, such as EUR/USD, showing the exchange rate between them.
D
Descending Triangle
A continuation pattern with falling highs and flat support, usually bearish.
Discipline
The ability to follow a trading plan and risk rules consistently.
Discretionary Trading
Making trading decisions based partly on judgment rather than fixed rules.
Divergence
When price makes a new high or low but the indicator does not confirm it, suggesting weakening momentum.
Doji
A candlestick where the open and close are the same or very close, signaling indecision.
Double Bottom
A bullish reversal chart pattern shaped like the letter W.
Double Top
A bearish reversal chart pattern shaped like the letter M.
Dovish
A central bank stance favoring lower interest rates or looser monetary policy.
Drawdown
The peak-to-trough decline in account value over a specific period.
Drawdown
The decline from a peak to a trough in account equity, measuring risk exposure.
E
ECN
Electronic Communications Network — a type of broker that provides direct market access.
ECN (Electronic Communication Network)
A trading system that connects buyers and sellers directly, providing tighter spreads.
Economic Data Release
Scheduled publication of economic statistics such as inflation, GDP, or employment.
Edge
A statistical advantage that gives a trading strategy positive expectancy over time.
Entry Price
The price at which a position is opened.
Event Risk
The risk from scheduled or unexpected events that can move markets sharply.
Exchange Rate
The price of one currency expressed in terms of another.
Execution
The process of placing and filling a trade order.
Exit Price
The price at which a position is closed.
Exotic Pair
A less commonly traded pair, often involving an emerging-market currency.
Exposure
The total risk from an open position or group of positions.
F
Fakeout
When price briefly moves beyond a key level then reverses, trapping breakout traders.
Fear
An emotion that can cause hesitation, early exits, or refusal to take valid setups.
Fiber
A forex nickname for the EUR/USD currency pair.
Fibonacci Retracement
A tool using key ratios (23.6%, 38.2%, 50%, 61.8%) to identify pullback and reversal levels.
Forex / FX
The foreign exchange market where currencies are bought and sold against each other.
Frankfurt Session
The European session preceding London's full activity, relevant for EUR pairs.
G
H
I
K
L
Leverage
Borrowed buying power that allows a trader to control a larger position with less capital.
Leverage
Allows traders to control larger positions with less capital, expressed as a ratio like 1:100.
Liquidity
How easily an instrument can be bought or sold without causing major price disruption.
Liquidity
The ease with which an asset can be bought or sold without affecting its price.
Liquidity Window
A period when trading volume is high and price action is generally more efficient.
London Session
One of the most liquid and active forex trading sessions globally.
Long / Going Long
Buying a market with the expectation that price will rise.
Loonie
A forex nickname for the USD/CAD currency pair.
Lot
A standardised contract size in forex trading.
Lot
A standardized unit of measurement in forex — a standard lot equals 100,000 units.
M
Major Pairs
The most actively traded currency pairs, usually involving the USD.
Margin
The amount of capital set aside to open and maintain a leveraged trade.
Margin
The capital required to open and maintain a leveraged position, acting as collateral.
Margin Call
A warning that account equity is getting too low relative to margin requirements.
Margin Call
A broker's demand to deposit additional funds when account equity falls below the required margin.
Margin Level
A key account metric comparing equity to used margin, expressed as a percentage.
Market Hours
Forex is open 24 hours a day during the business week, rotating through global sessions.
Market Order
An order executed immediately at the best available market price.
Market Sentiment
How traders collectively feel or position around future market direction.
Micro Lot
A trade size of 1,000 units of the base currency.
Mini Lot
A trade size of 10,000 units of the base currency.
Minor Pairs
Currency pairs that do not include the USD, generally with less liquidity than majors.
Monetary Policy
The process of setting interest rates and managing money supply by a central bank.
Moving Average
A technical indicator that smooths price data by averaging prices over a set period.
Moving Average (MA)
An indicator that calculates the average price over a selected period to smooth price data.
Moving Average Crossover
A signal created when a fast moving average crosses above or below a slow moving average.
N
NFP (Non-Farm Payrolls)
A key US economic report measuring jobs added excluding farm workers, released monthly.
Negative Carry
When interest paid on a position exceeds the interest received.
New York Session
A major trading session with heavy USD activity and high liquidity.
News Trading
Trading around economic announcements or headline-driven events.
Non-Farm Payrolls (NFP)
A major US employment data release watched closely by forex traders.
O
P
Pair Personality
The typical behavior of a currency pair, including its volatility, spread profile, and session tendencies.
Patience
Waiting for valid setups instead of forcing trades out of boredom or emotion.
Pip
The smallest standard unit of price movement in forex, typically 0.0001 for most pairs.
Pip
The smallest price move a currency pair makes based on market convention.
Pip Value
The monetary value of a one-pip move, based on pair, lot size, and account currency.
Point
A price increment, sometimes used differently depending on platform or instrument.
Position Size
The size of the trade you open, usually measured in lots or units.
Position Sizing
The process of determining how large a trade to take based on account size and risk tolerance.
Positive Carry
When interest received on a position exceeds the interest paid.
Price Action
Analyzing raw price movement without relying heavily on technical indicators.
Q
R
RSI (Relative Strength Index)
A momentum oscillator used to identify overbought and oversold market conditions.
RSI (Relative Strength Index)
A momentum oscillator measuring the speed and change of price movements on a 0-100 scale.
Resistance
A price zone where selling interest may appear, potentially halting a rise.
Resistance
A price level where selling pressure is strong enough to prevent further advance.
Retail Trader
An individual trader using personal funds, usually through an online broker.
Revenge Trading
Trying to win back losses impulsively by taking poor-quality trades.
Risk Per Trade
The percentage or dollar amount of capital put at risk on a single trade.
Risk-Reward Ratio
The ratio between potential loss and potential gain of a trade, e.g. 1:2 means risking $1 to make $2.
Risk/Reward Ratio
A comparison of potential profit to potential loss on a trade.
Rollover
The process of carrying a position into the next trading day or futures contract period.
S
STP
Straight Through Processing — orders routed directly to liquidity providers.
Scalping
A trading strategy that profits from very small price changes, holding positions for seconds to minutes.
Sell Limit
A pending order to sell above the current market price.
Sell Stop
A pending order to sell below the current market price.
Session Overlap
When two major forex sessions are open simultaneously, often creating higher liquidity and cleaner moves.
Shooting Star
A small-body candle with a long upper wick near the top of an uptrend, signaling potential reversal.
Short / Going Short
Selling a market with the expectation that price will fall.
Slippage
The difference between expected and actual execution price of a trade.
Slippage
The difference between expected and actual fill price, common during volatile markets.
Spread
The difference between the bid and ask price of a currency pair — usually a trading cost.
Spread
The difference between the bid and ask price — the broker's fee for executing a trade.
Standard Lot
A trade size of 100,000 units of the base currency.
Stop Loss
A predetermined price level used to cap losses on a trade.
Stop Loss
An order that automatically closes a trade at a preset level to limit losses.
Stop Out
Forced closing of positions by the broker when equity falls below the required margin level.
Support
A price zone where buying interest may appear, potentially halting a decline.
Support
A price level where buying demand is strong enough to prevent further decline.
Swap
An overnight financing adjustment applied to positions held past the trading day close.
Swap
The interest paid or earned for holding a position overnight, based on interest rate differentials.
Swing Trading
A style that captures gains over days to weeks by riding momentum in price swings.
Swissy
A forex nickname for the USD/CHF currency pair.
Sydney Session
The first major forex session of the trading day, opening the global cycle.
Systematic Trading
Following predefined rules for entries, exits, and risk management.
T
Take Profit
A predetermined price level used to lock in gains on a trade.
Take Profit
An order that automatically closes a trade when a specified profit target is reached.
Tick
The smallest price change recorded in the market.
Tokyo Session
The Asian trading session, often important for JPY and AUD pairs.
Trendline
A line drawn on a chart connecting rising lows or falling highs to identify trend direction.