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63 of 63 terms

Askoffer

The lowest price a seller is currently willing to accept. When you buy at market, you normally pay the ask.

Bid

The highest price a buyer is currently willing to pay. When you sell at market, you normally receive the bid.

Spread

The gap between the bid and the ask. It is a cost of trading: you start every trade slightly behind by the spread.

Pippips

A standard unit of price movement in foreign exchange, usually the fourth decimal place (0.0001) for most pairs and the second for yen pairs.

Lotlots

A standard quantity of an instrument. In forex, a standard lot is 100,000 units of the base currency; mini and micro lots are smaller.

Leverage

Borrowed exposure that lets you control a larger position than your own money alone would allow. It magnifies losses as well as gains and is a common reason beginners lose their capital quickly.

Marginmargin requirement

The deposit a broker requires to hold a leveraged position. It is not a fee, but you can lose more than the margin on some products.

Margin callstop out

A demand or automatic action from a broker when your account equity falls too low to support your open positions, often closing trades at a loss.

Stop lossstop, SL

An order placed to close a trade automatically at a chosen price to cap the loss if the market moves against you. It can slip in fast markets. Learn more

Take profittarget, TP

An order that closes a trade automatically at a chosen profit target. Learn more

Market order

An order to buy or sell immediately at the best available price. It guarantees execution, not the price.

Limit order

An order to buy or sell only at a specified price or better. It controls price, but may never fill.

Stop order

An order that becomes a market order once price reaches a trigger level. It is used for entries on breakouts and for stop losses.

Slippage

The difference between the price you expected and the price you actually got, most common in fast or thin markets.

Timeframe

The period each candle represents, such as 5 minutes, 1 hour or 1 day. Higher timeframes show the bigger picture; lower ones show detail and more noise. Learn more

Candlestickcandle

A chart symbol showing the open, high, low and close for one period. The body spans open to close and the wicks show the extremes. Learn more

Wickshadow, tail

The thin line above or below a candle's body showing how far price travelled beyond the open and close before pulling back. Learn more

Trend

A sustained directional move. An uptrend is a series of higher highs and higher lows; a downtrend is lower highs and lower lows. Learn more

Rangeconsolidation, sideways market

A period where price moves sideways between a fairly stable high and low rather than trending. Learn more

Swing high

A peak in price with lower highs on either side. The reference points used to describe market structure. Learn more

Swing low

A trough in price with higher lows on either side. Learn more

Higher highHH

A swing high that is above the previous swing high. Together with higher lows, it defines an uptrend. Learn more

Higher lowHL

A swing low that is above the previous swing low. Learn more

Lower highLH

A swing high that is below the previous swing high. Together with lower lows, it defines a downtrend. Learn more

Lower lowLL

A swing low that is below the previous swing low. Learn more

Support

A price area where buying interest has previously been strong enough to halt a decline. Best drawn as a zone, not a single line. Learn more

Resistance

A price area where selling interest has previously been strong enough to halt a rise. Best drawn as a zone. Learn more

Break of structureBOS

Price closing beyond a prior swing point in the direction of the existing trend, suggesting continuation. It is context, not a trade signal on its own. Learn more

Change of characterCHoCH, CHOCH, change of character

The first break against the prevailing structure, such as a close below the last higher low in an uptrend. It is an early warning of a possible shift, not confirmation. Learn more

Fair value gapFVG, imbalance

A three-candle pattern in which the first candle's high and the third candle's low do not overlap, leaving an untraded range. Traders treat it as a zone price may revisit. Learn more

Liquidity

Resting orders in the market, such as stop losses and pending orders, which tend to cluster around obvious highs and lows. Learn more

Liquidity sweepsweep, stop hunt, liquidity grab

A move that briefly trades beyond an obvious high or low, triggering the orders resting there, before price reverses or continues. Learn more

Equal highsequal lows

Two or more swing highs at nearly the same price, where stop orders are likely to rest above. Equal lows are the mirror image. Learn more

Breakout

Price moving beyond a defined support, resistance or range boundary. Many breakouts fail, so traders plan for that. Learn more

False breakoutfakeout

A breakout that quickly reverses back into the prior range. Learn more

Pullbackretracement, retrace

A temporary move against the trend before it resumes. Learn more

Volatility

How much and how fast price moves. Higher volatility means larger swings, so wider stops and smaller positions.

Volume

The amount traded in a period. On centralised exchanges it is a useful gauge of participation; in spot forex it is only an estimate.

Drawdown

The fall from a peak in account equity to a subsequent low, usually shown as a percentage. Learn more

Risk per trade

The amount you are prepared to lose if a trade hits its stop, usually expressed as a percentage of account equity. Learn more

Position sizing

Choosing how many units to trade so that a stop-out costs only your chosen risk per trade. Learn more

Risk-to-rewardR:R, RR, reward to risk

The ratio of what you stand to lose (distance to stop) to what you aim to gain (distance to target). A ratio alone says nothing about whether a strategy works. Learn more

R-multipleR

A trade result expressed in multiples of the amount risked. +2R means you made twice your risk; -1R means you lost it. Learn more

Win rate

The percentage of trades that are winners. It is meaningless without the average win and average loss. Learn more

Expectancy

The average amount you expect to make or lose per trade, based on win rate and average win and loss. Positive expectancy over a large sample is the goal of a strategy. Learn more

Break-evenbreakeven

Moving a stop to the entry price after a trade has moved in your favour, so it can no longer lose. It also reduces the chance of a winner running. Learn more

Trailing stop

A stop that follows price as it moves in your favour, locking in progress while allowing a trend to run. Learn more

Backtesting

Applying a set of strategy rules to past market data to see how it would have performed. Results are optimistic if the rules were fitted to that data. Learn more

Forward testing

Trading a strategy's rules on live data in real time, usually on a demo account or with very small size, to check it works outside the data it was designed on. Learn more

Overfittingcurve fitting

Tuning a strategy so closely to past data that it captures noise rather than a repeatable edge, then failing on new data. Learn more

Confluence

Several independent reasons pointing to the same area or direction. More factors do not guarantee success, and too many can mean a vague plan. Learn more

Trading plan

A written set of rules covering what you trade, when, how you enter, where you exit, how much you risk and how you review. Learn more

Trading journaljournal

A record of every trade with the plan, the result, and how you followed your rules and felt. The raw material for improvement. Learn more

Revenge trading

Taking impulsive trades to win back a loss quickly. It usually increases size and breaks rules. Learn more

FOMOfear of missing out

Fear of missing out: entering a trade because price is moving, not because your plan says so. Learn more

Overtrading

Trading too often or too large, usually driven by boredom, excitement or the urge to recover losses. Learn more

Demo accountpaper trading

A practice account that uses simulated money. Good for learning platform mechanics, but it does not reproduce the pressure of real money. Learn more

Broker

The firm that gives you access to the market and executes your orders. Check that it is regulated in your country. Learn more

CFDcontract for difference

Contract for difference: a leveraged derivative that tracks a market price without owning the underlying asset. A high proportion of retail CFD accounts lose money.

Scalping

A style that aims for many small gains over seconds or minutes. Costs such as spread matter enormously.

Day trading

Opening and closing positions within the same day, with nothing held overnight.

Swing trading

Holding positions for days to weeks to capture a larger move than a single day offers.

Price gapgap

A space on the chart where no trading occurred between two consecutive candles, often after news or a weekend close. Not the same as a fair value gap.