Trading resources

Forex glossary

Clear explanations of the terms you encounter in forex, risk management and trading evaluations.

64 terms

A

Ask price #: The price at which a dealer offers to sell the base currency. A buyer normally enters at the ask.Basics

B

Base currency #: The first currency in a pair. In EUR/USD, EUR is the base and the quoted price is in US dollars per euro.Basics
Basis point #: One hundredth of a percentage point. A rate change from 4.00% to 4.25% is 25 basis points.Economics
Bear market #: A sustained period of falling prices. In forex, direction always refers to one currency relative to another.Analysis
Bid price #: The price at which a dealer offers to buy the base currency. A seller normally enters at the bid.Basics
Breakout #: A move beyond a previously observed price range or level. A breakout can reverse and does not guarantee continuation.Analysis
Broker #: A firm providing access to trading. Its execution model, legal entity, fees and customer protections matter.Basics
Bull market #: A sustained period of rising prices. A rising currency pair means its base currency has strengthened relative to its quote currency.Analysis

C

Candlestick #: A chart mark showing a period’s open, high, low and close. Its body and wicks describe the price range.Analysis
Carry trade #: A position intended to benefit from financing-rate differences between currencies. Currency moves and changing financing costs can outweigh the interest benefit.Economics
Central bank #: An institution responsible for monetary-policy functions, which may include policy rates, liquidity and currency issuance.Economics
Commission #: An explicit transaction fee. It is separate from the bid–ask spread and may be charged on entry, exit or both.Basics
Consumer price index (CPI) #: An index tracking changes in prices of a representative consumer basket. Headline and core measures cover different sets of prices.Economics
Contract for difference (CFD) #: A derivative that settles the change in an underlying price rather than delivering ownership of that underlying asset.Basics
Correlation #: A statistical description of how returns move together. Correlations can change and do not establish causation.Analysis
Currency pair #: Two currencies expressed as an exchange rate, such as EUR/USD. The first is the base and the second is the quote.Basics

D

Daily loss limit #: A programme’s maximum allowed daily loss, with a specified calculation and reset time. Equity, fees and open losses may count.Prop firms
Drawdown #: A decline from an earlier peak in balance or equity. A prop programme may instead define its limit against initial capital.Risk

E

Economic calendar #: A schedule of economic releases and policy events, often with previous, forecast and actual figures. Times and figures may be revised.Economics
Equity #: Account balance plus unrealised profit or loss, adjusted for charges according to the platform’s accounting.Risk
Exchange rate #: The amount of one currency represented by a unit of another. Different providers may quote different executable rates.Basics
Exposure #: The size and direction of the price risk carried by a position or portfolio. Notional exposure is not the same as deposited margin.Risk

F

Fill #: Execution of all or part of an order at a stated price and quantity. Orders can receive partial fills.Basics
Floating exchange rate #: An exchange-rate system in which the market largely determines value, although central banks may still intervene.Economics
Forex #: The foreign-exchange market, where currencies are exchanged. Retail forex products can differ from institutional spot transactions.Basics
Forward contract #: An agreement to exchange currencies on a future date at a rate fixed today, subject to its contractual terms.Basics
Free margin #: Equity remaining after used margin. The exact treatment of pending orders and offsets depends on the broker.Risk
Fundamental analysis #: Analysis of economic, policy and financial conditions that may influence currency values. It does not provide certain forecasts.Analysis
Futures #: Standardised exchange-traded contracts for future settlement. Contract sizes, tick values and expiry rules vary.Basics

G

Gross domestic product (GDP) #: A measure of the value of final goods and services produced within an economy over a period. Releases can be revised.Economics

H

Hedging #: Taking an offsetting exposure to reduce a particular risk. Hedges have costs and can introduce other risks.Risk

I

Inflation #: A sustained increase in a broad measure of prices. It reduces purchasing power when income does not keep pace.Economics

L

Leverage #: Exposure relative to capital or margin. Broker leverage determines initial collateral; it can amplify the effect of price changes on equity.Risk
Limit order #: An instruction to buy at a specified price or lower, or sell at a specified price or higher. Execution is not guaranteed.Basics
Liquidity #: The ability to trade without a large price impact. Liquidity can fall during market disruptions or outside active sessions.Basics
Long position #: An exposure that benefits from an increase in the quoted price, before costs. In forex this buys the base and sells the quote currency.Basics
Lot #: A trading unit. A standard forex lot commonly means 100,000 base units; contract specifications must be checked.Basics

M

Margin #: Collateral required to open or maintain a leveraged position. It is not a transaction fee or a maximum-loss guarantee.Risk
Margin call #: A broker request or platform warning concerning insufficient equity. A broker may liquidate positions under its close-out rules.Risk
Market order #: An instruction to execute promptly at available prices. The execution price can differ from the price visible when submitted.Basics
Maximum loss limit #: A programme’s overall loss threshold. The threshold may be static or trailing and may use balance or equity.Prop firms
Monetary policy #: Central-bank actions and communications intended to influence financial conditions and economic outcomes.Economics

N

Non-farm payrolls (NFP) #: A US employment measure covering payroll jobs outside farming and other excluded categories. Figures and earlier months can be revised.Economics
Notional value #: The face-value exposure represented by a position. For forex it is base units valued in a chosen currency.Risk

O

Over-the-counter (OTC) #: Trading through bilateral arrangements or dealer networks rather than a central exchange. Counterparty and execution terms matter.Basics

P

Pip #: A conventional forex price increment, often 0.0001, or 0.01 for JPY-quoted pairs. Some platforms display fractional pips.Basics
Pip value #: The money gained or lost for one pip at a particular position size. It depends on the pair, size and account-currency conversion.Risk
Profit factor #: Gross trading profit divided by gross trading loss over a sample. A small or selectively chosen sample can be misleading.Risk
Prop firm #: A proprietary trading business. Retail challenge programmes often involve paid evaluations and simulated accounts, with contractual reward rules.Prop firms
Purchasing managers’ index (PMI) #: A survey-based index of business conditions. In many PMI series, 50 separates expansion from contraction relative to the previous month.Economics

Q

Quote currency #: The second currency in a pair. EUR/USD states US dollars for one euro.Basics

R

Resistance #: A price region where upward moves have previously struggled. It is an observation, not a barrier that prices cannot cross.Analysis
Risk–reward ratio #: The relationship between planned loss and target profit. A 1:2 setup targets twice its planned risk before costs.Risk
Rollover / swap #: A financing credit or charge for holding some forex products overnight. Rates, booking days and exceptions vary.Basics

S

Short position #: An exposure that benefits from a fall in the quoted price, before costs. In forex this sells the base and buys the quote currency.Basics
Slippage #: The difference between an expected order price and the actual execution price. It can be favourable or unfavourable.Risk
Spread #: The difference between bid and ask. It is a trading cost and can widen when liquidity is scarce.Basics
Stop-loss order #: An order intended to close a position once a trigger is reached. Gaps and execution conditions can cause a different fill price.Risk
Support #: A price region where downward moves have previously met buying interest. It can fail during new market conditions.Analysis

T

Take-profit order #: An instruction to close a position at a favourable target under the broker’s execution rules.Basics
Technical analysis #: Using price, volume or other market-history patterns to inform decisions. Historical patterns do not guarantee future outcomes.Analysis
Trailing drawdown #: A loss threshold that rises as a specified reference balance or equity rises. Whether and where it stops trailing depends on the programme.Prop firms

V

Volatility #: The variability of price changes over a chosen period. High volatility can increase losses, slippage and margin pressure.Risk

W

Win rate #: Winning trades divided by total trades over a sample. Profitability also depends on average gains, losses and costs.Risk

Sources & scope

Definitions are original plain-language explanations. Broker contracts and programme rules can define terms differently. Reviewed 6 October 2026.

CFTC forex education · BLS CPI guide · Federal Reserve monetary policy · FTMO rule definitions