Forex glossary
The words every forex lesson assumes you know, defined in a sentence or two and linked to the lesson that covers them in full.
38 terms
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B
What is forex?Base currency
The base currency is the first currency in a currency pair, the one whose price is quoted.
How do you trade forex?Bid price
The bid price is the price at which you can sell a currency pair right now.
Forex rebatesBreakeven
Breakeven is the point at which a trade covers its own costs and closes at zero.
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F
I
L
Margin trading basicsLeverage
Leverage is the ratio between the size of a position and the margin needed to open it.
What is forex?Liquidity
Liquidity is how easily you can buy or sell an amount without moving the price much.
What is forex?Liquidity provider
Liquidity providers are banks and firms that quote buy and sell prices to a broker.
What is forex?Long and short positions
Long and short positions are the two directions a trade can take.
How do you trade forex?Lot
A lot is the standard unit of trade size in forex.
M
Margin trading basicsMargin
Margin is the part of your account set aside as a deposit for an open leveraged trade.
Margin trading basicsMargin call
A margin call is a warning that your margin level has hit the broker's threshold.
Margin trading basicsMargin level
Margin level is your equity divided by the margin used by open trades, times 100%.
How do you trade forex?Market order
A market order is an instruction to buy or sell straight away at the best price available.
P
How do you trade forex?Pending order
A pending order is an instruction to trade later, once price reaches a level you set.
How do you trade forex?Pip
A pip is the standard unit for measuring a change in a forex price.
How do you trade forex?Pip value
Pip value is the amount of money a one pip move adds to or takes from a position.
How do you trade forex?Pipette
A pipette is one tenth of a pip, shown as the extra last digit of most forex quotes.
S
Trading costsSlippage
Slippage is the gap between the price you asked for and the price you got.
How do you trade forex?Spread
The spread is the gap between the ask, where you buy, and the bid, where you sell.
How do you trade forex?Stop loss
A stop loss is an order that closes your trade at a set price to cap the loss.
Margin trading basicsStop out
Stop out is the margin level at which your broker starts closing your positions.
Trading costsSwap (overnight fee)
Swap is the interest you pay or earn for holding a position past the daily rollover.
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How do you trade forex?Take profit
A take profit is an order that closes your trade at a target price, locking in the gain.
Forex rebatesTrading bonus
A trading bonus is promotional credit a broker adds to your account.
When can you trade forex?Trading session
A trading session is one block of the 24-hour forex day, named after a financial centre.