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To help you navigate this dynamic market, we present Forex Terminology, your ultimate guide to understanding the language of currency trading.
  • Short for "foreign exchange," it refers to the global decentralized market where currencies are bought, sold, exchanged, and speculated upon.
  • Two currencies traded against each other in the Forex market, represented in a three-letter code, such as EUR/USD (Euro/US Dollar).
  • The smallest price movement in a currency pair, usually the fourth decimal place in most currency pairs (except for JPY pairs, where it's the second decimal place).
  • A standardized trading size representing a set quantity of a currency. Standard lots are typically 100,000 units, mini lots are 10,000 units, and micro lots are 1,000 units.
  • The price at which the market is willing to buy a currency pair.
  • The price at which the market is willing to sell a currency pair.
  • The difference between the bid and ask price of a currency pair, representing the cost of trading.
  • Buying a currency pair with the expectation that its value will rise.
  • Selling a currency pair with the expectation that its value will decrease.
  • The ability to control larger positions in the market with a smaller amount of capital. It magnifies both gains and losses.
  • The collateral required by a broker to open and maintain positions.
  • A notification from the broker that additional funds are required to maintain open positions due to insufficient margin.
  • An order placed to automatically close a trade at a specific price to limit potential losses.
  • An order placed to automatically close a trade at a specific price to secure profits.
  • An order to buy or sell a currency pair at the current market price.
  • An order to buy or sell a currency pair at a specific price or better.
  • An order placed to open a position at a specific price level in the future.
  • The study of historical price charts and patterns to predict future price movements.
  • The analysis of economic, political, and social factors that may influence currency values.
  • The ease with which an asset can be bought or sold without causing a significant price change.
  • The measure of price fluctuations over a given period of time.
  • The process of extending the settlement date of an open position to the next trading day.
  • A strategy to minimize risk by opening a position that offsets an existing position.
  • The difference between the bid and ask price, representing the broker's profit.
  • The first currency listed in a currency pair that determines the value of the trade.
  • The second currency listed in a currency pair, representing the value needed to buy one unit of the base currency.
  • An offer made by a broker to a trader to execute an order at a new price due to changes in the market.
  • The peak-to-trough decline during a specific period of trading, indicating the maximum loss experienced.
  • The relationship between two or more currency pairs, often used to diversify risk.
  • A strategy where a trader borrows funds in a currency with low-interest rates to invest in a currency with higher interest rates.
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