Forex Glossary — 60+ Trading Terms Explained (Pip, Lot, Spread, Leverage, Margin…)

Ask: The price at which you can buy the base currency; the higher of the two quoted prices.
ATR: Average True Range — a volatility indicator measuring the average candle range over a period, used for stop placement.
Base currency: The first currency in a pair; the one being bought or sold.
Bid: The price at which you can sell the base currency.
BoE / BoJ / ECB / Fed / RBA / RBNZ / SNB / BoC: The central banks of the UK, Japan, eurozone, US, Australia, New Zealand, Switzerland and Canada.
Breakout: A move through a support or resistance level, often followed by increased volatility.
Cable: Nickname for GBP/USD.
Carry trade: Borrowing a low-interest currency to buy a high-interest one to earn the rate differential.
CFD: Contract for difference — a derivative that tracks a price without owning the asset; how most retail forex is traded.
CPI: Consumer Price Index — the main inflation gauge and a top-tier market mover.
Cross: A pair that does not include the US dollar, e.g. EUR/GBP.
Divergence: When price makes a new high/low but an oscillator (RSI, MACD) does not — a reversal warning.
Drawdown: The decline from an equity peak to a trough, expressed as a percentage.
DXY: The US Dollar Index — the dollar against a basket of six currencies.
EMA: Exponential Moving Average — a moving average that weights recent prices more heavily.
Equity: Account balance plus or minus open profit and loss.
Exotic: A pair with one emerging-market currency, e.g. USD/TRY; wide spreads.
Fiber: Nickname for EUR/USD.
Fill: The execution of an order.
FOMC: Federal Open Market Committee — the Fed's rate-setting body.
Fundamental analysis: Assessing currencies from economic data, policy and politics.
Gap: A jump in price with no trading in between, usually at the weekly open.
Hawkish / dovish: Central-bank language favouring higher / lower interest rates.
Hedge: A position taken to offset the risk of another.
Leverage: Trading a position larger than the deposit; 1:30 means 30 × the margin.
Limit order: An order to buy below or sell above the current price.
Liquidity: How easily a pair can be traded without moving the price; highest during London–New York.
Long: A buy position, profiting if price rises.
Lot: 100,000 units of base currency (standard); 10,000 (mini); 1,000 (micro).
MACD: Moving Average Convergence Divergence — a trend-momentum indicator.
Major: One of the seven most-traded USD pairs.
Margin: The deposit locked by the broker to hold a leveraged position.
Margin call: A broker warning that equity is approaching used margin.
Market order: An order executed immediately at the current price.
NFP: US Non-Farm Payrolls — the monthly jobs report, released the first Friday.
Pip: The standard unit of price change: 0.0001 on most pairs, 0.01 on JPY pairs.
Pipette: One tenth of a pip.
Pivot point: A level computed from the previous period's high, low and close.
Position sizing: Choosing lot size so a stop-out costs a fixed percentage of the account.
Quote currency: The second currency in a pair; profits and losses are measured in it.
Range: A sideways market between support and resistance.
Reward-to-risk: Potential profit divided by potential loss on a trade.
Risk-off / risk-on: Market moods favouring safe havens (JPY, CHF, USD, gold) or risk assets (AUD, NZD, equities).
RSI: Relative Strength Index — a momentum oscillator from 0 to 100.
Safe haven: An asset that gains in crises: USD, JPY, CHF, gold.
Scalping: Very short-term trading for a few pips per trade.
Short: A sell position, profiting if price falls.
Slippage: The difference between the expected and actual fill price.
Spread: The gap between bid and ask — the main cost of trading.
Stop-loss: An order that closes a position at a set loss.
Stop order: An order to buy above or sell below the current price, used for breakouts.
Swap / rollover: Interest paid or earned for holding a position overnight.
Swing trading: Holding positions for days to weeks, usually from 4H/daily charts.
Take-profit: An order that closes a position at a set profit.
Technical analysis: Assessing price from charts, levels and indicators.
Trend: A sustained directional move: higher highs and lows (up) or lower highs and lows (down).
Volatility: The size of price moves over time; measured by ATR.
Yield: The interest return on a bond; yield differentials drive currency pairs.
Yield curve: The plot of bond yields by maturity; inversions signal recession risk and affect the dollar.

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