Plain-language definitions of 104 forex and CFD trading terms, from ask price to zero-spread account. Each entry links to the lesson or calculator that explains it in more depth.
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Most searched: Pip Spread Leverage Margin Free margin Stop-loss Lot Swap Long position Short position Base currency Slippage
A
- Appreciation
- A rise in a currency's value against another currency.Example: EUR/USD moving from 1.0800 to 1.1000 means the euro appreciated against the dollar.
- Arbitrage
- Simultaneously buying and selling the same or related instruments to profit from a price difference. In retail forex, true arbitrage opportunities are rare and brokers generally prohibit exploiting stale prices.
- Ask price
- The price at which you can buy a currency pair from the broker. Also called the offer. It is always higher than the bid.Example: EUR/USD 1.08500 / 1.08510: you buy at 1.08510.Learn more →
- ATR (Average True Range)
- A volatility indicator measuring the average size of each period's price range, including gaps. Often used to set stop distances.Example: A 14-day ATR of 60 pips means the pair has typically moved about 60 pips a day recently.Learn more →
B
- Balance
- Account money from deposits, withdrawals and closed trades. It ignores floating profit or loss on open positions.Learn more →
- Base currency
- The first currency in a pair; the one you are buying (long) or selling (short). The quote tells you how much of the second currency one unit of it costs.Example: In EUR/USD = 1.0850, EUR is the base: 1 euro costs 1.0850 dollars.Learn more →
- Basis point
- One hundredth of one percent (0.01%). Used for interest rates.Example: A central bank raising rates from 4.00% to 4.25% is a 25-basis-point hike.
- Bear / bearish
- Expecting prices to fall. A bear market is a sustained decline.Example: Being bearish on USD/JPY means expecting the dollar to weaken against the yen.
- Bid price
- The price at which you can sell a currency pair to the broker. It is always lower than the ask.Example: EUR/USD 1.08500 / 1.08510: you sell at 1.08500.Learn more →
- Big figure
- The leading digits of a price that change rarely; also called the handle.Example: In EUR/USD 1.0850 the big figure is 1.08.Learn more →
- Breakout
- A move through a support or resistance level or out of a trading range.Learn more →
- Bull / bullish
- Expecting prices to rise. A bull market is a sustained advance.
C
- Cable
- Nickname for GBP/USD, from the transatlantic telegraph cable used to send the exchange rate.Learn more →
- Candlestick
- A chart bar showing open, high, low and close for a period, with a body between open and close and wicks to the high and low.Learn more →
- Carry trade
- Holding a long position in a higher-interest currency funded by a lower-interest currency to earn the interest-rate difference through positive swap. Exchange-rate moves can easily outweigh the interest earned.
- Central bank
- The institution that sets a currency's monetary policy and interest rates, such as the Federal Reserve, ECB, Bank of England or Bank of Japan.
- CFD (contract for difference)
- A derivative that pays the difference in an asset's price between opening and closing, without owning the asset. Most retail forex outside the US is traded as CFDs or rolling spot contracts.Learn more →
- Commission
- A fee per trade or per lot charged on some account types, usually alongside tighter spreads.Learn more →
- Contract size
- The number of base-currency units in one lot, normally 100,000 for forex.Learn more →
- Correlation
- How closely two pairs move together, from +1 (same direction) to −1 (opposite). Correlated positions add to each other's risk.Example: EUR/USD and GBP/USD are often positively correlated.Learn more →
- Counter currency
- Another name for the quote currency.
- Credit
- Funds credited by a broker (e.g. a bonus) that count towards equity but cannot be withdrawn.Learn more →
- Cross pair
- A currency pair that does not include the US dollar.Example: EUR/GBP, EUR/JPY, AUD/NZD.Learn more →
D
- Day trading
- Opening and closing positions within the same day, avoiding overnight swap and gap risk.
- Demo account
- A practice account with virtual money and live or delayed prices. Fills on demo can be better than on a live account.Learn more →
- Depreciation
- A fall in a currency's value against another currency.
- Digits
- The number of decimal places in a quote. Most brokers quote 5 digits (3 for JPY pairs).Learn more →
- Divergence
- When price and an indicator such as RSI move in different directions, e.g. price makes a higher high but RSI a lower high.Learn more →
- Drawdown
- The decline from a peak in account equity to a subsequent low, usually in percent.Example: Equity falling from $10,000 to $8,500 is a 15% drawdown.Learn more →
E
- ECN (electronic communication network)
- An execution model in which orders are matched with prices from several liquidity providers; usually raw spreads plus commission.Learn more →
- Economic calendar
- A schedule of upcoming data releases and central bank decisions, with times and previous values.Learn more →
- Equity
- Balance plus or minus the floating profit/loss of open positions.Example: Balance $10,000 with a $500 open loss = equity $9,500.Learn more →
- Exotic pair
- A pair combining a major currency with that of a smaller or emerging economy; usually wider spreads and larger gaps.Example: USD/TRY, USD/ZAR, USD/MXN.Learn more →
- Expectancy
- Average profit or loss per trade: win rate × average win − loss rate × average loss.Learn more →
F
- Fiber
- Nickname for EUR/USD.Learn more →
- Fibonacci retracement
- Horizontal levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a prior move, used to mark possible pullback areas.Learn more →
- Fill
- The execution of an order, and the price at which it was executed.Learn more →
- Floating P/L
- Unrealised profit or loss on open positions; it becomes realised when the position is closed.Learn more →
- FOMC
- The US Federal Open Market Committee, which sets the Federal Reserve's policy rate. Its decisions are major events for USD pairs.
- Free margin
- Equity minus used margin: what is available to open new trades or absorb losses.Learn more →
- Fundamental analysis
- Analysing currencies through economic data, interest rates, policy and politics rather than price charts.Learn more →
G
- Gap
- A jump in price between one quote and the next with no trading in between, typically at the weekly open or after major news. Stops can fill at the gap price.Learn more →
- Going long / short
- Buying (long) or selling (short) the base currency of a pair.Learn more →
H
- Hedging
- Opening a position to offset the risk of another, e.g. a business locking in an exchange rate. In the US, retail accounts cannot hold opposite positions in the same pair (FIFO rules).
I
- Interbank market
- The wholesale market where banks and large institutions trade currencies with each other.Learn more →
- Interest rate differential
- The difference between two currencies' interest rates; it drives swap credits and charges.
L
- Leverage
- The ratio between position size and the margin needed to open it. 30:1 means $1 of margin controls $30 of position. It magnifies both gains and losses.Example: With 30:1, a $30,000 position requires $1,000 margin.Learn more →
- Limit order
- A pending order to buy below or sell above the current price, filled at that price or better.Learn more →
- Liquidity
- How easily a pair can be traded without moving the price; high liquidity usually means tight spreads.Learn more →
- Long position
- A position that profits if the pair's price rises: you bought the base currency and sold the quote currency.Example: Long EUR/USD from 1.0850 profits if the price climbs to 1.0900.Learn more →
- Lot
- The standard trade size. Standard lot = 100,000 units; mini = 10,000 (0.1); micro = 1,000 (0.01); nano = 100 (0.001, only at some brokers).Learn more →
M
- Major pair
- One of the most traded pairs, each containing the US dollar: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD.Learn more →
- Margin
- The deposit held by the broker while a leveraged position is open: position value ÷ leverage.Example: 1 lot EUR/USD at 1.1000 with 30:1 leverage needs $3,666.67 margin.Learn more →
- Margin call
- A warning that equity has fallen to a set percentage of used margin (often 100%); new positions are usually blocked.Learn more →
- Margin level
- Equity ÷ used margin × 100%.Learn more →
- Market maker
- A broker that quotes prices and takes the other side of client trades (dealing desk), managing its net exposure.Learn more →
- Market order
- An order to buy or sell immediately at the best available price.Learn more →
- Minor pair
- Another name for a cross pair of two major currencies without the US dollar, such as EUR/GBP.Learn more →
- Moving average
- The average closing price over a set number of periods, plotted as a line. SMA weights all periods equally; EMA weights recent prices more.Learn more →
N
- Negative balance protection
- A guarantee that a retail client cannot lose more than the money in the account. Required for retail CFD clients in the EU, UK and Australia.Learn more →
- NFP (non-farm payrolls)
- The monthly US employment report, published by the Bureau of Labor Statistics, usually on the first Friday of the month at 8:30 am New York time.Learn more →
O
- OCO (one-cancels-the-other)
- Two linked orders where execution of one cancels the other, e.g. a stop-loss and a take-profit.Learn more →
- Order book
- The list of resting buy and sell orders at each price. Retail forex brokers rarely show a full book because the market is decentralised.
- Overnight / rollover
- The daily cut-off (commonly 5 pm New York time) when open positions are rolled to the next value date and swap is applied.
P
- Pip
- The conventional unit of price change: 0.0001 for most pairs, 0.01 for JPY-quoted pairs. Pip value depends on position size and currencies.Example: EUR/USD from 1.0850 to 1.0851 = 1 pip.Learn more →
- Pipette
- One tenth of a pip — the fifth decimal on most pairs (third on JPY pairs). Also called a point.Learn more →
- Pivot point
- A level calculated from the previous period's high, low and close, with derived support (S1–S3) and resistance (R1–R3) levels.Example: Classic P = (H + L + C) ÷ 3.Learn more →
- Point
- The smallest price increment on a quote (0.00001 for 5-digit pairs). Platform distances such as stops level are measured in points.Learn more →
- Position size
- The amount traded, in units or lots. Sized correctly, a stop-loss loses only the amount you chose to risk.Learn more →
- Price action
- Trading decisions based on raw price movement and chart structure rather than indicators.Learn more →
Q
- Quote currency
- The second currency in a pair; prices and profit/loss are expressed in it before conversion to your account currency.Example: In USD/JPY the quote currency is the yen.Learn more →
R
- Range
- A sideways market moving between support and resistance; also the distance between a period's high and low.Learn more →
- Requote
- A broker offering a new price because the requested price is no longer available, typical of instant execution.Learn more →
- Resistance
- A price area where selling has repeatedly stopped advances.Learn more →
- Retail forex
- Speculative currency trading by individuals through brokers, usually with leverage.Learn more →
- Risk-off / risk-on
- Market moods favouring safe-haven currencies (risk-off) or higher-yielding, growth-sensitive currencies (risk-on).Learn more →
- Risk-reward ratio
- Distance to the stop-loss compared with distance to the target, e.g. 30 pips risk for 60 pips target = 1:2.Learn more →
- Rollover
- See swap. The process of extending an open spot position to the next value date.
- RSI (Relative Strength Index)
- A momentum oscillator from 0 to 100; readings above 70 and below 30 are commonly called overbought and oversold.Learn more →
S
- Scalping
- Very short-term trading aiming for a few pips per trade; trading costs weigh heavily.
- Short position
- A position that profits if the pair's price falls: you sold the base currency and bought the quote currency.Example: Short GBP/USD at 1.2650 profits if the price drops to 1.2550.Learn more →
- Slippage
- The difference between the expected price of an order and the price at which it fills. It can be negative or positive.Example: A stop at 1.0800 filling at 1.0795 during news = 5 pips of slippage.Learn more →
- Spot market
- The market for immediate currency exchange, conventionally settled two business days later (T+2) for most pairs; USD/CAD settles T+1.Learn more →
- Spread
- The difference between the ask and the bid price — a built-in trading cost.Example: Bid 1.08500, ask 1.08510 = 1.0 pip spread.Learn more →
- Stop order
- A pending order to buy above or sell below the current price, triggering a market order when reached.Learn more →
- Stop-loss
- An order that closes a position at a set price to limit the loss. It becomes a market order when triggered and can slip in fast markets.Learn more →
- Stop-out
- The margin level at which the broker starts closing positions automatically. 50% of initial margin for EU/UK retail CFD accounts.Learn more →
- Stops level
- The minimum distance in points between the market price and a new stop-loss, take-profit or pending order.Learn more →
- Support
- A price area where buying has repeatedly stopped declines.Learn more →
- Swap
- The overnight interest adjustment credited or charged on positions held past rollover, based on the two currencies' interest rates plus broker markup.Learn more →
- Swing trading
- Holding positions for several days to weeks to capture a market swing.
T
- Take-profit
- An order that closes a position at a set profit target.Learn more →
- Technical analysis
- Studying price charts, patterns and indicators to judge probable price behaviour.Learn more →
- Tick
- The smallest recorded price change, or a single price update.Learn more →
- Tick value
- Profit or loss per lot for a one-tick move, in the account currency.Learn more →
- Trailing stop
- A stop-loss that follows price at a fixed distance as the trade moves in your favour and never moves back.Learn more →
- Trend
- The general direction of price: higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend).Learn more →
U
- Unit
- One unit of the base currency. 100,000 units = 1 standard lot.Learn more →
V
- Value date
- The date on which the two currencies of a trade are actually exchanged (settled).
- Volatility
- How much and how quickly price moves; often measured with ATR or standard deviation.Learn more →
W
- Whipsaw
- A sharp move in one direction followed quickly by a reversal, often stopping traders out on both sides.
Y
- Yard
- Trading slang for one billion units of currency.Learn more →
- Yield
- The return on an investment, especially a bond's interest return; yield differences between countries influence currencies.
Z
- Zero-spread account
- An account type advertising no spread on some pairs, usually in exchange for a commission per lot. Compare total cost, not the headline.Learn more →
Looking for something else?
- Nicknames such as cable, fiber, loonie or UJ: forex pair nicknames and slang.
- Platform fields such as digits, stops level or tick value: symbol specification explained.
- Balance, equity, free margin and margin level: account terms explained.
- The complete beginner path: Forex 101.
Spotted a missing or unclear term? Email [email protected].
Last reviewed: October 4, 2026