Forex Glossary
Explore clear and practical definitions of major forex, trading and financial-market terms.
Financial Markets Glossary
A practical reference for understanding commonly used terms across forex, trading and major financial markets.
Ask Price
The price at which you can buy an asset from the market.
The price at which a seller is willing to sell an instrument.
If EUR/USD shows 1.1052 / 1.1054, the ask is 1.1054.
You normally buy at the Ask.
Asset
Something that has economic or financial value.
Examples include currencies, shares, commodities, indices and cryptocurrencies.
Asset Class
A group of financial instruments with similar characteristics.
Major asset classes include Forex, Stocks/Equities, Indices, Commodities, Bonds/Fixed Income, Cryptocurrencies and Derivatives.
Ask
Another name for the Ask Price.
Average Loss
The average amount lost on losing trades over a selected period.
Average Win
The average amount gained on winning trades over a selected period.
Balance
The amount of money in a trading account excluding the effect of currently open positions.
Bear Market
A market experiencing a prolonged decline or generally negative sentiment.
Bear = falling market.
Bid Price
The price at which the market is willing to buy an asset from you.
You normally sell at the Bid.
Bitcoin
The first widely adopted decentralised cryptocurrency, operating on a blockchain network.
Its market symbol is BTC.
Blockchain
A distributed digital record system used to record transactions in a tamper-resistant manner.
Breakout
A price movement through an important level of support, resistance or market structure.
A breakout does not automatically mean the price will continue in that direction.
Bull Market
A market experiencing a prolonged rise or generally positive sentiment.
Bull = rising market.
Candlestick
A chart representation showing price movement during a specific period.
A candlestick can show Open, High, Low and Close.
Capital
Money or financial resources available for investment or trading.
CFD — Contract for Difference
A derivative that allows participants to speculate on the price movement of an underlying asset without necessarily owning the underlying asset.
CFDs involve significant risk and are not available in every jurisdiction.
Central Bank
An institution responsible for monetary policy and other functions within a country's financial system.
Examples include the Federal Reserve, European Central Bank and Bank of England.
Commission
A fee charged by a broker or service provider for executing or facilitating a transaction.
Commodity
A physical or standardised tradable resource.
Examples include Gold, Silver, Crude Oil, Natural Gas and Agricultural Products.
Correlation
A statistical relationship describing how two assets or markets tend to move in relation to each other.
Correlation does not mean one asset causes another to move.
Cryptocurrency
A digital asset that uses cryptographic technology and, in many cases, blockchain networks.
Examples include Bitcoin and Ethereum.
Day Trading
A trading approach in which positions are generally opened and closed within the same trading day.
Drawdown
A decline from an account or portfolio's previous peak to a subsequent low point.
Example: An account rises to $1,000 and later falls to $900. The drawdown is $100, or 10% from the peak.
Diversification
Spreading exposure across different assets or markets rather than concentrating everything in one place.
Economic Calendar
A schedule showing upcoming economic events and data releases that may influence financial markets.
Examples include interest-rate decisions, inflation data, employment reports and GDP releases.
Equity
The current value of a trading account after accounting for the unrealised profit or loss of open positions.
Equity = Balance + Floating Profit/Loss
Entry Price
The price at which a trading position is opened.
Exchange
A marketplace or system where financial instruments are bought and sold.
Federal Reserve — Fed
The central banking system of the United States.
Its decisions can significantly influence global financial markets.
Fibonacci Retracement
A technical-analysis tool used by some traders to identify potential areas where price may retrace before continuing or changing direction.
Common levels include 23.6%, 38.2%, 50%, 61.8% and 78.6%.
These levels are analytical tools, not guarantees of future price movement.
Floating Profit/Loss
The unrealised profit or loss on an open trading position.
Forex
Short for foreign exchange.
It is the global marketplace for exchanging one currency for another.
Fundamental Analysis
The study of economic, financial and other fundamental factors that may influence the value of an asset.
GDP — Gross Domestic Product
A measure of the economic output of a country or economy over a specified period.
Gold
A precious metal traded globally and commonly represented by XAU in financial markets.
A commonly traded pair is XAU/USD, representing gold priced in US dollars.
Gross Profit
The total profit from winning trades before deducting relevant losses, costs or other expenses, depending on the calculation method.
Hedging
A strategy used to reduce or manage exposure to an unwanted price movement.
Higher High
A market swing high that is higher than a previous relevant swing high.
It can be one indication of upward market structure.
Higher Low
A market swing low that is higher than a previous relevant swing low.
It can be one indication of upward market structure.
Index
A measurement representing the performance of a group or basket of assets.
Examples include S&P 500, Nasdaq-100, FTSE 100 and Dow Jones Industrial Average.
Inflation
A sustained increase in the general level of prices for goods and services.
Interest Rate
The cost of borrowing money or the return earned on lending or depositing money, expressed as a rate.
Interest-rate expectations can strongly influence currencies, bonds and other markets.
Leverage
A facility that allows a trader to control a larger market position with a smaller amount of capital.
Leverage can increase both potential gains and potential losses.
Limit Order
An order to buy or sell at a specified price or a more favourable price.
Liquidity
The ease with which an asset can be bought or sold without causing a significant price change.
Long Position
A position established with the expectation that the asset's price will rise.
Lot
A unit used to describe the size of a trade in certain markets, particularly forex.
The exact contract size depends on the instrument and broker.
Margin
The amount of funds required to open and maintain a leveraged trading position.
Margin is not the same as the total value of the position.
Margin Call
A broker notification or account condition indicating that available funds may be insufficient to maintain open positions.
Exact procedures vary by broker.
Market Capitalisation
The total market value of a company's outstanding shares or, in crypto, commonly the circulating supply multiplied by market price.
Market Order
An instruction to buy or sell an asset at the best available price under prevailing market conditions.
The final execution price can differ from the displayed price.
Market Structure
The way price forms successive highs, lows and other price relationships.
Traders may use it to assess whether a market is trending, ranging or changing direction.
MetaTrader
A popular electronic trading platform used by many traders and brokers.
Common versions include MetaTrader 4 and MetaTrader 5.
Monetary Policy
Actions taken by a central bank to influence money supply, interest rates and broader economic conditions.
Nasdaq
A major US stock-market exchange and the name commonly used for several Nasdaq-related indices.
Net Profit
Profit remaining after relevant losses and costs have been accounted for.
News Trading
A trading approach that attempts to take advantage of price movements associated with economic, political or corporate news.
News can also increase volatility and execution risk.
New York Session
One of the major periods of activity in the global forex market, associated with trading activity in North America.
Open Position
A trade that has been entered but has not yet been closed.
Opening Price
The price at which an asset begins trading during a specified period.
Order
An instruction submitted to buy or sell a financial instrument.
Pending Order
An order designed to execute only when specified conditions or prices are reached.
Common types include Buy Limit, Sell Limit, Buy Stop and Sell Stop.
Pip
A commonly used unit for measuring price movement in forex.
The exact pip value and decimal convention depend on the currency pair and quotation method.
Point
A unit of price movement used by a trading platform or market.
Its precise value depends on the instrument and platform specification.
Portfolio
A collection of investments or trading positions held by an individual or organisation.
Position
A trader's exposure to a financial instrument.
A position can be long or short.
Profit Factor
A performance statistic calculated by dividing gross profits by gross losses.
Profit Factor = Gross Profit ÷ Gross Loss
Quote Currency
In a currency pair, the second currency is the quote currency.
Example: In EUR/USD, USD is the quote currency.
Quantitative Easing — QE
A monetary-policy tool in which a central bank purchases financial assets to influence financial conditions and support economic activity.
Resistance
A price area where upward movement may encounter increased selling interest.
Resistance is an area, not necessarily an exact price.
Risk
The possibility that an outcome will differ negatively from what is expected, including the possibility of losing money.
Risk Management
The process of identifying, measuring and controlling financial risk.
Risk/Reward Ratio
A comparison between the potential loss and potential gain planned for a trade.
Example: Risking $10 to potentially make $20 represents a 1:2 risk/reward relationship.
Rollover
The process of carrying a position from one trading period to another.
Depending on the instrument and broker, charges or credits may apply.
Scalping
A short-term trading approach involving attempts to capture relatively small price movements, often through multiple trades.
Short Position
A position established with the expectation that an asset's price will decline.
Slippage
The difference between the expected execution price and the actual execution price.
Slippage can occur during fast-moving or low-liquidity conditions.
Spread
The difference between the Bid and Ask prices.
Spread = Ask − Bid
Stop Loss
An order or instruction intended to limit the loss on a position when price reaches a specified level.
Execution is not always guaranteed at the exact specified price, especially during volatile or illiquid conditions.
Stop Order
An order that becomes a market order, or otherwise activates according to the product's rules, when a specified trigger price is reached.
Support
A price area where downward movement may encounter increased buying interest.
Support is an area, not necessarily an exact price.
Swap
A financing adjustment that may be charged or credited when a leveraged position is held overnight, depending on the instrument and broker.
Swing Trading
A trading approach that seeks to capture price movements over a period ranging from several days to potentially weeks or longer.
Take Profit
An order designed to close a position when a specified profit target is reached.
Technical Analysis
The study of price, volume and market behaviour using charts and analytical tools to identify potential trading opportunities.
Time Frame
The period represented by each candle or bar on a chart.
Examples include 1 minute, 5 minutes, 15 minutes, 1 hour, 4 hours and Daily.
Trading Plan
A documented framework describing a trader's rules for analysis, entries, exits, risk management and trade review.
Trading Session
A period during which a particular financial centre or market is actively trading.
Trend
The general direction in which price is moving.
Common classifications include Uptrend, Downtrend and Sideways/Range.
Unrealised Profit/Loss
The profit or loss on an open position that has not yet been realised by closing the position.
US Dollar Index — DXY
An index that measures the value of the US dollar relative to a basket of major foreign currencies.
Volatility
The degree and speed at which an asset's price changes over time.
Higher volatility generally means larger and/or faster price movements.
Volume
The amount of an asset or number of contracts traded during a specified period.
The meaning and availability of volume data can vary by market.
Whipsaw
A situation in which price moves in one direction and then reverses sharply, potentially causing traders to experience repeated losses.
Withdrawal
The process of removing funds from a trading or investment account.
XAU/USD
A commonly traded financial instrument representing the price of gold relative to the US dollar.
XAG/USD
A commonly traded financial instrument representing the price of silver relative to the US dollar.
Yield
The income or return generated by an investment, often expressed as a percentage.
ZigZag Indicator
A technical-analysis indicator that filters smaller price movements to highlight significant swings.
It can help visualise market structure, but it should not be treated as a guaranteed predictive indicator.
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This glossary is provided for general educational and reference purposes. Definitions should be considered in the context of the relevant financial instrument, market and broker specifications.