Trading Glossary

The price at which a broker or market maker is willing to sell a currency pair. Also known as the offer price. This is the price you pay when opening a buy (long) position.

A technical indicator that measures market volatility by calculating the average range of price movement over a specified period, typically 14 periods.

The first currency listed in a currency pair. In EUR/USD, the euro (EUR) is the base currency. It represents the currency you are buying or selling.

The price at which a broker or market maker is willing to buy a currency pair from you. This is the price you receive when opening a sell (short) position.

A technical indicator consisting of a middle band (SMA) and two outer bands set at standard deviations above and below. Used to identify overbought/oversold conditions and volatility.

A chart element showing four price points for a time period: open, high, low, and close. The body represents the open-to-close range; wicks show the high and low.

Two currencies quoted against each other, showing how much of the quote currency is needed to buy one unit of the base currency. Example: EUR/USD = 1.1000 means 1 euro costs 1.10 US dollars.

A candlestick pattern where the open and close prices are virtually equal, creating a cross or plus sign shape. Signals market indecision.

The decline from a peak in account equity to a subsequent trough, expressed as a percentage. Maximum drawdown measures the largest peak-to-trough decline.

A system that connects market participants (banks, brokers, traders) directly, allowing them to trade without a traditional dealing desk intermediary.

The current value of your trading account, calculated as balance plus or minus unrealized profit/loss from open positions.

An automated trading program written in MQL5 for MetaTrader 5 that executes trades based on pre-defined rules without manual intervention.

A technical tool that uses horizontal lines at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 78.6%) to identify potential support and resistance levels.

An emotional state where a trader enters positions impulsively because they fear missing a profitable move. A common cause of poor entry timing and overtrading.

Opening a position in the opposite direction to an existing trade to reduce risk exposure. Can be a direct hedge (same pair) or a correlation hedge (correlated pair).

Borrowed capital from a broker that allows you to control a larger position than your account balance would normally allow. Expressed as a ratio (e.g., 1:100 means $1 controls $100).

The ease with which an asset can be bought or sold without significantly affecting its price. Major forex pairs like EUR/USD have very high liquidity.

A standardized unit of measurement for a forex trade. Standard lot = 100,000 units, mini lot = 10,000, micro lot = 1,000, nano lot = 100.

A momentum indicator showing the relationship between two EMAs (typically 12 and 26 period). Consists of the MACD line, signal line, and histogram.

The amount of money required in your account to open and maintain a leveraged position. It is not a fee but a portion of your equity set aside as collateral.

A notification from your broker that your account equity has fallen below the required margin level. May result in forced closure of positions if the margin level is not restored.

In smart money concepts, the last candle before a significant move that represents where institutional orders were placed. Used as a zone for potential entries.

The smallest standard unit of price movement in forex. For most pairs, 1 pip = 0.0001 (fourth decimal). For JPY pairs, 1 pip = 0.01 (second decimal).

The process of determining how many lots/units to trade based on your account size, risk tolerance, and the distance to your stop loss.

The second currency in a currency pair. In EUR/USD, the US dollar (USD) is the quote currency. It shows how much of this currency is needed to buy one unit of the base.

A price level where selling pressure historically prevents price from rising further. Acts as a ceiling that price struggles to break above.

A momentum oscillator ranging from 0 to 100 that measures the speed and magnitude of price movements. Readings above 70 suggest overbought; below 30 suggest oversold.

The difference between the bid (sell) and ask (buy) price of a currency pair. This is a primary cost of trading and a source of broker revenue.

An order placed to automatically close a losing position at a predetermined price level to limit potential losses.

A price level where buying pressure historically prevents price from falling further. Acts as a floor that price struggles to break below.

The interest rate differential between two currencies in a pair, charged or credited when holding a position overnight. Also called rollover.

An order placed to automatically close a profitable position at a predetermined price level to secure gains.

A statistical measure of the degree of price variation over time. High volatility means large price swings; low volatility means small, steady movements.