Trading terms, explained plainly

160 terms

A-bookBrokers & accountsAlso: A-booking

A risk-management term for client trades that a broker passes on to external liquidity providers, so its income comes mainly from spreads and commissions rather than from client losses. Many brokers use a mix of A-book and B-book handling, and the mix is rarely visible to clients.See also: B-book, No dealing desk

Active clientIB & partnershipsAlso: active trader

A referred client who meets a broker's definition of activity in a period, for example placing at least a set number of trades. Partner programmes often use active-client counts to decide tiers, CPA eligibility or payouts, and each broker defines activity differently.See also: Tier, Cost per acquisition, Partner portal

AffiliateIB & partnershipsAlso: affiliate partner

A marketing partner who is usually paid for generating leads or sign-ups, often on a CPA basis, and typically has little ongoing contact with clients. An IB more often keeps a continuing relationship with clients and earns on their trading over time, although the two roles overlap in practice.See also: Introducing broker, Cost per acquisition, Referral link

Anti-money launderingBrokers & accountsAlso: AML

The laws and controls that require financial firms to detect and report suspicious transactions and to check where client money comes from. These rules are why brokers may ask for proof of funds and usually return withdrawals to the payment method you deposited with.See also: Know your customer, Regulator

AskBasicsAlso: offer, ask price

The price at which you can buy a currency pair from your broker at that moment. It sits slightly above the bid, and the gap between the two is the spread. You pay the ask when you open a long position and when you close a short one.See also: Bid, Spread, Long position

Average true rangeTechnical analysisAlso: ATR

An indicator that measures volatility as the average size of each period's price range, including any gap from the previous close, usually over 14 periods. It shows how much price typically moves but not in which direction, and is often used to set stop distances.See also: Volatility, Stop-loss order

B-bookBrokers & accountsAlso: B-booking

A risk-management term for client trades a broker keeps in-house, acting as the counterparty itself. This is legal and common, but it means the broker can gain when clients lose, so regulated firms must manage that conflict and treat clients fairly. It is not in itself a sign of wrongdoing.See also: A-book, Market maker, Conflict of interest

BacktestingTechnical analysisAlso: back-testing, historical testing

Testing a trading strategy on historical price data to see how it would have performed. It can reveal flaws cheaply, but results are easily flattered by hindsight, curve-fitting and unrealistic costs. Strong backtest results do not mean a strategy will work in live markets.See also: Expectancy, Maximum drawdown, Trading journal, Demo account

BalanceRisk & money managementAlso: account balance

The money in your account from deposits, withdrawals and closed trades, not counting open positions. It changes when trades are closed, when money moves in or out and when certain charges are booked. Compare it with equity to see how your open trades are doing.See also: Equity, Floating profit and loss

BarrelOther marketsAlso: bbl

The standard unit for quoting crude oil, equal to 42 US gallons, or about 159 litres. Oil CFDs and futures are priced per barrel, although the number of barrels in one lot depends on the broker's contract specification.See also: Brent, WTI

Base currencyBasics

The first currency in a pair, such as EUR in EUR/USD. A quote tells you how many units of the second currency one unit of the base currency costs. Lot sizes are measured in the base currency, so one standard lot of EUR/USD is 100,000 euros.See also: Quote currency, Currency pair, Lot

BidBasicsAlso: bid price

The price at which you can sell a currency pair to your broker at that moment. It is always slightly below the ask. Long positions are closed at the bid, which is why every new trade starts with a small loss equal to the spread.See also: Ask, Spread, Short position

BitcoinOther marketsAlso: BTC

The first and largest cryptocurrency by market value, launched in 2009, with a supply capped at 21 million coins. It trades around the clock, including weekends, and is known for very large price swings. Crypto CFDs are restricted or banned for retail clients in some jurisdictions.See also: Cryptocurrency, Stablecoin, Volatility

Bollinger BandsTechnical analysis

A volatility indicator made of three lines: a moving average, usually of 20 periods, with bands a set number of standard deviations, usually two, above and below it. The bands widen when volatility rises and narrow when it falls. Price touching a band is not a signal by itself.See also: Volatility, Moving average

Break-even stopOrders & executionAlso: move to break-even

Moving the stop-loss to the entry price once a trade has moved some distance in your favour, so that if price returns the position closes at roughly no gain or loss. Costs and slippage can still leave a small loss, and a tight move can stop you out of a trade that later works.See also: Stop-loss order, Trailing stop

BreakoutTechnical analysis

A move of price through a support or resistance level, or out of a range, often with a pick-up in momentum. Some traders enter breakouts with stop orders. Many breakouts fail and reverse, so confirmation and risk control matter.See also: False breakout, Support, Resistance, Range, Stop order

BrentOther marketsAlso: Brent crude

A benchmark grade of crude oil from the North Sea, used to price a large share of the world's oil. It is quoted in US dollars per barrel and is often traded as a CFD based on futures. Brent and WTI usually move together but trade at different prices.See also: WTI, Barrel, Futures contract

CandlestickTechnical analysisAlso: candle, Japanese candlestick

A way of drawing one period of price that shows its open, high, low and close. The body spans the open and close, and the thin wicks mark the extremes. Candles are usually coloured to show whether the period closed higher or lower than it opened.See also: Doji, Engulfing pattern, Pin bar, Timeframe

Carry tradeFundamental analysisAlso: carry

A strategy of buying a currency with a higher interest rate against one with a lower rate, aiming to earn the difference through positive swaps. It is exposed to sharp losses if the higher-yielding currency falls, which often happens quickly in risk-off periods.See also: Swap, Interest rate differential, Risk-off

Central bankFundamental analysis

The institution responsible for a country's or region's monetary policy, such as the US Federal Reserve, the European Central Bank, the Bank of England or the Central Bank of the UAE. Its decisions on interest rates and money supply are among the strongest long-term drivers of currencies.See also: Interest rate decision, Hawkish, Dovish, Forward guidance

ClawbackIB & partnershipsAlso: commission reversal

A clause that lets a broker reclaim commission already paid to a partner, for example if a referred client's activity turns out to be fraudulent, abusive or reversed. Read clawback terms carefully before relying on any commission figure.See also: Partner portal, Cost per acquisition

Clone firmBrokers & accountsAlso: cloned firm

A fraudulent operation that copies the name, address or registration details of a genuine authorised firm to look legitimate. Protect yourself by finding the firm on the regulator's own register, reached by typing its address yourself, and checking that the website, email and phone details match.See also: Regulator

CommissionBrokers & accountsAlso: trading commission

A fee charged by a broker per trade or per lot, usually on raw-spread accounts, on top of the spread. It may be quoted per round turn, covering opening and closing, or per side, so compare costs on the same basis when choosing between account types.See also: Spread, ECN

CommodityOther marketsAlso: commodities

A raw material or primary product traded in standardised form, such as gold, oil, natural gas, wheat or copper. Commodity prices respond to supply, demand, the US dollar and geopolitical events, and some currencies, such as the Canadian and Australian dollars, are closely linked to them.See also: XAU, Brent, WTI, Futures contract

Conflict of interestIB & partnerships

A situation in which someone's own financial interest could influence the advice or information they give. An IB paid per lot, for example, benefits when clients trade more, whether or not that is good for them. Conflicts should be disclosed and managed, never hidden.See also: Per-lot commission, Spread mark-up, B-book

Consensus forecastFundamental analysisAlso: consensus, market forecast

The average or median of economists' predictions for an economic release, published on most economic calendars. Prices often move on the gap between the actual figure and the consensus rather than on whether the number is good or bad in absolute terms.See also: Economic calendar, Gross domestic product

Consumer price indexFundamental analysisAlso: CPI

A measure of the average change in prices paid by households for a basket of goods and services, and the most widely watched inflation gauge. A higher reading than expected can raise expectations of tighter policy from the central bank, which often moves the currency.See also: Inflation, Central bank, Economic calendar

Contract for differenceBrokers & accountsAlso: CFD

A derivative in which you exchange the difference in an asset's price between opening and closing the trade, without owning the asset. CFDs are usually traded on margin, which magnifies both gains and losses, and most retail CFD accounts lose money.See also: Leverage, Margin, Index CFD, Share CFD

CorrelationRisk & money management

A measure of how closely two instruments move together, from plus one (in step) to minus one (in opposite directions). Holding several highly correlated positions, such as long EUR/USD and long GBP/USD, can add up to one larger bet on the same idea.See also: Hedging, Risk per trade

Cost per acquisitionIB & partnershipsAlso: CPA

A one-off payment a broker makes to a partner for each referred client who meets set conditions, such as completing verification, making a minimum deposit and placing a minimum number of trades. Conditions vary widely, and many referrals do not qualify.See also: Revenue share, Hybrid deal, Active client, Affiliate

Cross pairsBasicsAlso: crosses, minor pairs

Currency pairs that do not include the US dollar, such as EUR/GBP, EUR/JPY or AUD/NZD. Crosses involving the euro, yen or pound are widely traded, but their spreads are often a little wider than those on the major pairs.See also: Major pairs, Exotic pairs

CryptocurrencyOther marketsAlso: crypto, digital asset

A digital asset recorded on a blockchain, a shared ledger maintained by a network of computers rather than a central authority. Cryptocurrencies are highly volatile, trade every day of the week and, depending on the jurisdiction, may come with limited investor protection.See also: Bitcoin, Stablecoin

Currency pairBasicsAlso: pair, FX pair

Two currencies quoted against each other, written as BASE/QUOTE, for example GBP/USD. Trading a pair means buying one currency and selling the other at the same time, so you are always taking a view on their relative value rather than on one currency alone.See also: Base currency, Quote currency, Major pairs

Dealing deskBrokers & accountsAlso: DD

A broker set-up in which the firm's own desk handles client orders and may act as the counterparty to them, as a market maker does. Its opposite is the no-dealing-desk model, in which orders are passed on to external liquidity providers.See also: Market maker, No dealing desk, B-book

Demo accountBrokers & accountsAlso: practice account, paper trading

A practice account funded with virtual money that uses live or near-live prices. It is a sensible place to learn a platform and test a plan without risking money, but fills, slippage and especially emotions can differ from live trading.See also: Live account, Trading journal, Backtesting

DivergenceTechnical analysisAlso: bearish divergence, bullish divergence

When price and an oscillator such as RSI or MACD disagree, for example when price makes a higher high while the indicator makes a lower high. It can warn that momentum is fading, but divergence can last a long time before price turns, if it turns at all.See also: Relative strength index, MACD

Dividend adjustmentOther marketsAlso: dividend payment adjustment

A cash adjustment a CFD broker makes to share or index positions when a company pays a dividend: long positions are typically credited and short positions debited. It offsets the expected fall in the share price on the ex-dividend date.See also: Share CFD, Index CFD

DojiTechnical analysis

A candlestick whose open and close are at or very near the same price, leaving a tiny body with wicks on one or both sides. It signals indecision during that period. On its own a doji says little; its location, such as at support or resistance, matters far more.See also: Candlestick, Engulfing pattern, Pin bar

DovishFundamental analysisAlso: dove

Describes a central bank or policymaker leaning towards looser policy, such as lower interest rates or asset purchases, usually to support growth or employment. A more dovish message than expected tends to weigh on the currency concerned.See also: Hawkish, Central bank, Quantitative easing

DrawdownRisk & money management

The fall in account value from a peak to a later low, usually expressed as a percentage. If an account grows to 10,000 USD and then falls to 8,500 USD, the drawdown is 15%. Recovering takes a bigger percentage gain: 1,500 divided by 8,500 is about 17.6%.See also: Maximum drawdown, Risk of ruin, Risk per trade

ECNBrokers & accountsAlso: electronic communication network

Electronic communication network: a system that matches orders from many participants, such as banks and other liquidity providers. An ECN-style account usually offers raw spreads plus a separate commission. The term is used loosely in marketing, so check how a broker actually handles orders.See also: STP, No dealing desk, Commission

Economic calendarFundamental analysisAlso: economic events calendar

A schedule of upcoming economic releases and central bank events, usually showing the time, expected impact, previous figure and consensus forecast. Traders use it to know when volatility is likely, and to avoid being caught in a position, or a wide spread, at a major release.See also: Consensus forecast, Non-farm payrolls, Interest rate decision

Engulfing patternTechnical analysisAlso: bullish engulfing, bearish engulfing

A two-candle pattern in which the second candle's body completely covers the body of the first and closes in the opposite direction. A bullish engulfing appears after a decline and a bearish engulfing after a rise. It means more at a key level than in the middle of a range.See also: Candlestick, Doji, Support, Resistance

EquityRisk & money managementAlso: account equity

Your account balance plus or minus the floating profit or loss on open positions. Equity is the real-time value of the account and the figure brokers use to calculate margin level. If every position were closed at current prices, your balance would become roughly equal to your equity.See also: Balance, Floating profit and loss, Margin level

Exotic pairsBasicsAlso: exotics

Pairs that combine a major currency with the currency of a smaller or emerging economy, such as USD/TRY, USD/ZAR or EUR/PLN. They tend to have wider spreads, higher swap costs and sharper moves, and liquidity can be thin outside local trading hours.See also: Major pairs, Cross pairs, Swap

ExpectancyRisk & money managementAlso: edge

The average amount a strategy wins or loses per trade over many trades: win rate times average win, minus loss rate times average loss. A positive figure from past results does not promise future performance, but a negative one is a clear warning.See also: Win rate, Risk-reward ratio, Backtesting

Exponential moving averageTechnical analysisAlso: EMA

A moving average that gives more weight to recent prices, so it responds faster to new moves than a simple moving average of the same length. The trade-off is that it also reacts more to short-lived noise.See also: Moving average, Simple moving average, MACD

False breakoutTechnical analysisAlso: fakeout, failed breakout

A move through a level that quickly reverses back inside the previous range, catching traders who entered on the break. False breakouts are common, especially around news and in quiet markets, which is why many traders wait for a close beyond the level or a retest.See also: Breakout, Range, Support, Resistance

Fibonacci retracementTechnical analysisAlso: Fib levels, Fibonacci levels

A drawing tool that marks levels at set percentages of a prior move, commonly 23.6%, 38.2%, 50%, 61.8% and 78.6%, where some traders watch for a pullback to pause. The 50% level is not a Fibonacci ratio but is usually included. The levels are guides, not predictions.See also: Support, Resistance, Trend

FillOrders & executionAlso: execution price, partial fill

The completion of an order at a specific price and size. A partial fill means only part of the requested size was executed. Your fill price, not the price you saw when you clicked, decides the cost and outcome of the trade.See also: Slippage, Market order

Financial promotionIB & partnershipsAlso: finfluencer content

Any communication that invites or encourages someone to engage in investment activity, including social media posts and videos about trading. In many jurisdictions, including the UAE, financial promotions are regulated, so IBs should confirm their obligations with the relevant regulator or a qualified adviser.See also: Introducing broker, Regulator, Conflict of interest

Floating profit and lossRisk & money managementAlso: floating P&L, unrealised P&L, open P&L

The unrealised profit or loss on positions that are still open, calculated at current prices. It changes with every tick and only becomes part of your balance when the position is closed. Large floating losses reduce both equity and free margin.See also: Equity, Balance, Free margin

Forward guidanceFundamental analysis

Communication by a central bank about the likely future path of policy, for example signalling that rates will stay on hold for some time. Because markets trade expectations, a change in guidance can move a currency as much as an actual change in rates.See also: Central bank, Interest rate decision, Hawkish, Dovish

Free marginRisk & money managementAlso: usable margin, available margin

The part of your equity not tied up as margin for open positions, available to open new trades or absorb losses. It equals equity minus used margin. When losses push free margin towards zero, you are close to a margin call.See also: Margin, Equity, Margin call

Futures contractOther marketsAlso: futures

An exchange-traded agreement to buy or sell a set quantity of an asset at an agreed price on a future date. Many oil, metal and index CFDs are priced from futures, which is why some CFDs have expiry dates or are rolled over to the next contract.See also: Spot price, Brent, WTI, Index

GapOrders & executionAlso: price gap, weekend gap

A jump in price from one trade to the next with no trading in between, visible as an empty space on the chart. Gaps are most common at the weekly open after weekend news. Stop orders inside a gap are usually filled at the first available price, which can be much worse than planned.See also: Slippage, Stop-loss order, Negative balance protection

Good till cancelledOrders & executionAlso: GTC, good 'til cancelled

An order duration setting that keeps a pending order active until it is filled or you cancel it. The alternative is an order that expires at a set time, such as the end of the day. Forgotten good-till-cancelled orders can open trades you no longer want.See also: Pending order, Limit order, Stop order

Gross domestic productFundamental analysisAlso: GDP

The total value of goods and services an economy produces over a period, usually reported quarterly. It is the broadest measure of economic growth. Markets react mainly to the gap between the actual figure and the forecast, and to revisions of earlier readings.See also: Consensus forecast, Economic calendar

HawkishFundamental analysisAlso: hawk

Describes a central bank or policymaker leaning towards tighter policy, such as higher interest rates, usually to fight inflation. A more hawkish tone than expected tends to support the currency concerned, although markets react to the surprise rather than to the tone alone.See also: Dovish, Central bank, Inflation

HedgingRisk & money managementAlso: hedge

Opening a position intended to offset the risk of another, for example to reduce exposure ahead of an event. Holding a buy and a sell on the same pair at once freezes the floating result but still costs spreads and swaps, and you still have to decide how to exit.See also: Correlation, Swap

Hybrid dealIB & partnershipsAlso: hybrid commission

A partner agreement that combines a one-off CPA payment with an ongoing revenue share or per-lot rebate, usually at lower rates than either model alone. As with any IB arrangement, actual payments depend on qualifying client activity and can be zero.See also: Cost per acquisition, Revenue share, Per-lot commission

IndexOther marketsAlso: stock index, stock market index

A number that tracks the combined value of a group of shares, such as the S&P 500, the FTSE 100 or the DAX. An index cannot be bought directly; traders gain exposure through futures, exchange-traded funds or CFDs. Its level depends on which companies are included and how they are weighted.See also: Index CFD, Futures contract

Index CFDOther marketsAlso: CFD on indices

A contract for difference that tracks a stock index, letting you trade its movements with leverage without owning the shares in it. Index CFDs can gap at the cash market open, carry overnight financing and may be adjusted when constituent companies pay dividends.See also: Index, Contract for difference, Dividend adjustment, Gap

InflationFundamental analysis

The rate at which the general level of prices rises over time, reducing what money can buy. Many central banks aim to keep it near a target, often around 2%, and tend to tighten policy when it runs high. Inflation data such as CPI can move currencies sharply.See also: Consumer price index, Hawkish, Central bank

Instant executionOrders & execution

An execution model in which the broker tries to fill your order at the exact price you requested. If the price has moved, you receive a requote instead of a fill. It gives price certainty when it works but can delay entries in fast markets.See also: Market execution, Requote

Interest rate decisionFundamental analysisAlso: rate decision, monetary policy decision

A scheduled announcement in which a central bank sets its main policy rate. Markets usually price in an expected outcome beforehand, so the reaction depends on how the decision and statement compare with expectations. Spreads can widen and prices can jump at the release.See also: Central bank, Forward guidance, Economic calendar

Interest rate differentialFundamental analysisAlso: rate differential

The difference between the interest rates of the two currencies in a pair. It largely determines the overnight swap you pay or receive, and changes in expected differentials are a major driver of exchange rates over time.See also: Swap, Carry trade, Central bank

Introducing brokerIB & partnershipsAlso: IB, introducer

A person or business that refers clients to a broker in return for a share of the revenue those clients generate, or another agreed payment. The broker holds the account and executes the trades. Whether an IB needs a licence or authorisation depends on the jurisdiction, so check with the relevant regulator.See also: Sub-IB, Master IB, Affiliate, Financial promotion

Know your customerBrokers & accountsAlso: KYC

The identity and suitability checks a regulated firm carries out before opening an account, such as verifying your identity and address and asking about your experience and finances. A broker that asks for none of this is a warning sign, not a convenience.See also: Anti-money laundering, Regulator

LeverageRisk & money managementAlso: gearing

Borrowed exposure that lets you control a position larger than the money you put up. At 30:1 leverage, 1,000 USD of margin controls a 30,000 USD position. Leverage magnifies losses exactly as much as gains, and maximum levels are set by brokers and, in many jurisdictions, capped by regulators.See also: Margin, Notional value, Margin call

Limit orderOrders & executionAlso: buy limit, sell limit

A pending order to buy below the current price or sell above it, at your chosen price or better. It controls the entry price but may never be filled if the market does not reach your level. Take-profit orders work in the same way.See also: Stop order, Pending order, Take-profit order

LiquidityBasics

How easily an instrument can be bought or sold without moving its price much. Liquid markets, such as EUR/USD during the London session, usually have tight spreads and little slippage. Liquidity falls at quiet hours, before holidays and around the weekly open, which can widen spreads.See also: Spread, Slippage, Session overlap

Live accountBrokers & accountsAlso: real account

A trading account funded with real money. Moving from demo to live is a big step: start with small sizes, such as micro lots, and expect the pressure of real losses to affect your decisions in ways a demo account cannot show.See also: Demo account, Micro lot, Risk per trade

Long positionBasicsAlso: going long, buy position

A trade that gains if the price of the instrument rises. In a currency pair, going long means buying the base currency and selling the quote currency. You open a long position at the ask and close it at the bid.See also: Short position, Ask, Bid

LotBasicsAlso: contract size

The unit used to size a trade. In forex a standard lot is 100,000 units of the base currency, a mini lot is 10,000 and a micro lot is 1,000. The lot size you choose, together with your stop distance, decides how much money each pip is worth to you.See also: Standard lot, Mini lot, Micro lot, Position sizing

MACDTechnical analysisAlso: moving average convergence divergence

Moving average convergence divergence: an indicator built from the difference between two exponential moving averages, typically of 12 and 26 periods, with a 9-period signal line. Crossovers and its histogram are used to judge momentum, but like any moving-average tool it lags price.See also: Exponential moving average, Divergence

Major pairsBasicsAlso: majors

The most heavily traded currency pairs, each including the US dollar: EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD and NZD/USD. They usually have deep liquidity and the tightest spreads, although spreads can still widen around news and at quiet hours.See also: Cross pairs, Exotic pairs, Liquidity

MarginRisk & money managementAlso: required margin, used margin

The amount of your own money a broker sets aside as a deposit to open and hold a leveraged position. Required margin equals notional value divided by leverage: a 100,000 USD position at 50:1 needs 100,000 divided by 50, which is 2,000 USD. It is a deposit, not a fee.See also: Leverage, Free margin, Margin level

Margin callRisk & money management

A warning that your margin level has fallen to the broker's threshold, meaning your equity barely covers the margin on open positions. You may need to add funds or reduce positions. If losses continue, the broker may close positions automatically at the stop-out level.See also: Stop-out, Margin level, Leverage

Margin levelRisk & money management

Equity divided by used margin, shown as a percentage. With equity of 3,000 USD and used margin of 1,000 USD, the margin level is 300%. Brokers trigger margin calls and stop-outs when it falls to set thresholds, which vary by broker and account type.See also: Margin call, Stop-out, Equity

Market executionOrders & execution

An execution model in which your order is filled at the next available market price rather than the exact price you clicked. There are no requotes, but the fill can differ from the screen price, especially in fast markets.See also: Instant execution, Requote, Slippage

Market makerBrokers & accounts

A firm that quotes both a buy and a sell price and takes the other side of client trades, rather than passing every order to the wider market. It is a normal, regulated business model, but it creates a potential conflict of interest that regulators require firms to manage.See also: Dealing desk, B-book, Conflict of interest

Market orderOrders & execution

An instruction to buy or sell immediately at the best price available. It puts getting filled ahead of getting a particular price, so in fast or thin markets the fill can differ from the price you saw on screen.See also: Slippage, Limit order, Market execution

Master IBIB & partnershipsAlso: MIB, master introducing broker

An introducing broker who recruits and manages other IBs (sub-IBs) and earns commission both on their own clients and on a share of the activity of their sub-IBs' clients. It brings extra responsibility for how the whole network markets itself.See also: Sub-IB, Tier, Introducing broker

Maximum drawdownRisk & money managementAlso: max drawdown, MDD

The largest peak-to-trough fall an account or strategy has suffered over a period. It shows the worst losing stretch you would have had to sit through, and is a useful test of whether a strategy's risk is something you could actually tolerate.See also: Drawdown, Backtesting

Micro lotBasics

A trade size of 1,000 units of the base currency, shown as 0.01 lot. On a pair quoted in US dollars one pip is worth 0.10 USD, so micro lots let beginners trade live with small amounts while they practise position sizing.See also: Lot, Mini lot, Standard lot, Live account

Mini lotBasics

A trade size of 10,000 units of the base currency, shown as 0.10 lot on most platforms. On a pair quoted in US dollars, one pip on a mini lot is worth 1 USD, which makes it a common size for smaller accounts.See also: Lot, Standard lot, Micro lot, Pip value

Moving averageTechnical analysisAlso: MA

An indicator that smooths price by averaging it over a set number of periods, such as 20 or 200. It helps show trend direction and is often watched as dynamic support or resistance. Because it is built from past prices, it always lags the market.See also: Simple moving average, Exponential moving average, Trend

Negative balance protectionBrokers & accountsAlso: NBP

A safeguard that stops a retail client losing more than the money in their trading account: if a sharp move pushes the balance below zero, the broker resets it to zero. It is required for retail clients in some jurisdictions and optional in others, so check the terms.See also: Stop-out, Gap, Regulator

No dealing deskBrokers & accountsAlso: NDD

A broker model in which client orders are passed to external liquidity providers instead of being handled by an internal dealing desk. STP and ECN accounts are usually described this way. It reduces one type of conflict but does not on its own make a broker better or safer.See also: Dealing desk, STP, ECN, A-book

Non-farm payrollsFundamental analysisAlso: NFP, payrolls

A monthly US report on the number of jobs added or lost outside farming, released with the unemployment rate and wage data, usually on the first Friday of the month. It is one of the most market-moving releases for the US dollar, and sharp moves and wide spreads are common.See also: Unemployment rate, Economic calendar, Consensus forecast

Notional valueBasicsAlso: contract value, position value

The full market value of a position before leverage. One standard lot of EUR/USD has a notional value of 100,000 euros, whatever margin your broker requires. Required margin, exposure and several trading costs are calculated from this figure.See also: Margin, Leverage, Lot

OCO orderOrders & executionAlso: one-cancels-the-other

Short for one-cancels-the-other: two linked pending orders where filling one automatically cancels the other. A trader might, for example, place a buy stop above a range and a sell stop below it, so that only the side price breaks towards is triggered.See also: Pending order, Stop order, Range, Breakout

Order execution policyBrokers & accountsAlso: best execution policy

A document in which a broker explains how it executes client orders: where orders are sent, how prices are formed and what happens in fast markets. Many regulated brokers are required to publish one, and reading it is a good way to see past labels such as ECN or STP.See also: STP, ECN, Slippage

Over-tradingRisk & money managementAlso: overtrading

Taking more trades, or larger ones, than your plan justifies, often after a loss or out of boredom. It raises costs, increases exposure to mistakes and is a common reason accounts shrink. A written plan with a daily limit on trades or losses helps prevent it.See also: Trading journal, Risk per trade

Overbought and oversoldTechnical analysisAlso: overbought, oversold

Labels for conditions where an oscillator suggests price has risen (overbought) or fallen (oversold) a long way in a short time. They describe stretched momentum, not a reversal signal: in a strong trend, readings can stay overbought or oversold for an extended period.See also: Relative strength index, Stochastic oscillator, Trend

Partner portalIB & partnershipsAlso: IB portal, partner dashboard

The online dashboard a broker gives its IBs and affiliates to view referral links, registrations, client activity reports and commission statements. It is the partner's main record of what has been earned and why.See also: Referral link, Active client, Introducing broker

Pending orderOrders & executionAlso: entry order

Any order that waits until price reaches a level you have set, such as a limit or stop order. Pending orders let you plan entries in advance, but check that they still make sense as conditions change and cancel them when your idea no longer applies.See also: Limit order, Stop order, Good till cancelled

Per-lot commissionIB & partnershipsAlso: lot-based commission

An IB payment calculated as a fixed amount for each standard lot that referred clients trade. Illustratively, at 5 USD per lot, clients trading 20 lots in a month would generate 5 times 20, or 100 USD. Real amounts depend on client trading and broker terms, and can be zero.See also: Rebate, Revenue share, Standard lot

Pin barTechnical analysisAlso: rejection candle

A candle with a small body and one long wick, showing that price moved strongly in one direction during the period but was pushed back. A long lower wick suggests rejection of lower prices and a long upper wick rejection of higher prices. Context decides whether it matters.See also: Candlestick, Doji, Support

PipBasicsAlso: percentage in point, price interest point

The standard unit of price movement in a currency pair. For most pairs a pip is 0.0001, the fourth decimal place; for pairs quoted in Japanese yen it is 0.01, the second decimal place. Spreads, stop distances and profit or loss are usually measured in pips.See also: Pipette, Pip value, Spread

Pip valueBasicsAlso: value per pip

The amount of money one pip is worth for a given trade size. For pairs quoted in US dollars it is 10 USD per standard lot, 1 USD per mini lot and 0.10 USD per micro lot. For other quote currencies the value is converted at the current exchange rate.See also: Pip, Lot, Position sizing

PipetteBasicsAlso: fractional pip, point

A tenth of a pip, shown as the fifth decimal place on most pairs or the third on yen pairs. Many brokers quote prices to pipettes, so in an example quote of 1.10005 the final 5 is half a pip above 1.1000.See also: Pip

Pivot pointsTechnical analysisAlso: pivot levels

Price levels calculated from the previous period's high, low and close. The central pivot is the average of those three prices, with support and resistance levels derived above and below it. Many short-term traders watch daily pivots, which is partly why price sometimes reacts near them.See also: Support, Resistance

Position sizingRisk & money managementAlso: trade sizing

Choosing how large a trade to place so that, if your stop-loss is hit, you lose only a planned amount. Risk amount equals account size times risk percentage; position size in lots equals risk amount divided by stop distance in pips times pip value per lot.See also: Risk per trade, Pip value, Stop-loss order, Lot

Professional clientBrokers & accountsAlso: elective professional

A client category that, in some jurisdictions, allows higher leverage and fewer restrictions in exchange for giving up certain retail protections, such as negative balance protection or compensation-scheme cover. It usually requires passing tests of trading experience, portfolio size or professional background.See also: Negative balance protection, Leverage, Regulator

Purchasing managers' indexFundamental analysisAlso: PMI

A monthly survey of business conditions in manufacturing or services. A reading above 50 indicates expansion compared with the previous month and below 50 indicates contraction. Because it is published early, it is watched as a timely signal of where the economy is heading.See also: Gross domestic product, Economic calendar

Quantitative easingFundamental analysisAlso: QE

A policy in which a central bank buys large amounts of government bonds or other assets to push down longer-term interest rates and support the economy. It adds money to the financial system and, all else being equal, tends to weigh on the currency.See also: Quantitative tightening, Central bank, Dovish

Quantitative tighteningFundamental analysisAlso: QT

The reverse of quantitative easing: a central bank reduces its holdings of bonds, either by selling them or by letting them mature without reinvesting. It withdraws money from the financial system and is generally seen as tightening financial conditions.See also: Quantitative easing, Central bank, Hawkish

Quote currencyBasicsAlso: counter currency, terms currency

The second currency in a pair, such as USD in EUR/USD. The price shows how much quote currency one unit of the base currency buys, and profit or loss on the pair is first calculated in the quote currency before any conversion to your account currency.See also: Base currency, Currency pair, Pip value

RangeTechnical analysisAlso: trading range, consolidation

A period in which price moves sideways between fairly clear support and resistance instead of trending. Range traders look for entries near the edges; the main risk is a breakout that turns the range into a trend. The word also means the distance between a period's high and low.See also: Support, Resistance, Breakout, Trend

RebateIB & partnershipsAlso: cashback, volume rebate

A payment that returns part of the trading cost, usually per lot traded, either to an IB or passed back to the client. A rebate does not change how the market behaves, and the offer of one should never be a reason to trade more than your plan says.See also: Per-lot commission, Over-trading, Introducing broker

Referral linkIB & partnershipsAlso: tracking link, affiliate link, partner link

A tracked link or code that tells a broker which partner introduced a client, so that commission can be attributed correctly. Clearly disclosing that you may be paid when someone signs up through your link is good practice and, in many jurisdictions, a legal requirement.See also: Introducing broker, Affiliate, Partner portal

RegulatorBrokers & accountsAlso: financial regulator, supervisor

A public body that authorises and supervises financial firms in its jurisdiction, such as the FCA in the UK, CySEC in Cyprus, ASIC in Australia, the DFSA in the DIFC, the FSRA in ADGM and the Capital Market Authority (CMA, formerly the SCA) onshore in the UAE. Check firms on the regulator's own register.See also: Clone firm, Segregated accounts, Negative balance protection

Relative strength indexTechnical analysisAlso: RSI

A momentum oscillator, usually calculated over 14 periods, that moves between 0 and 100. Readings above 70 are commonly called overbought and below 30 oversold, but in strong trends it can stay at extremes for a long time, so those labels are not signals on their own.See also: Overbought and oversold, Divergence, Stochastic oscillator

RequoteOrders & execution

A message from the broker saying the price you asked for is no longer available and offering a new one, which you can accept or reject. Requotes occur with instant execution in fast markets; market execution fills at the next available price instead, with possible slippage.See also: Instant execution, Market execution, Slippage

ResistanceTechnical analysisAlso: resistance level

A price area where rising prices have repeatedly stalled or turned lower, suggesting sellers have been active there. Like support, it is better treated as a zone than a single price, and a level that breaks can later act as support.See also: Support, Breakout, False breakout

Revenue shareIB & partnershipsAlso: rev share

A partner arrangement in which the IB or affiliate receives an agreed percentage of the revenue the broker earns from referred clients, often for as long as those clients trade. Earnings depend entirely on real client activity and the broker's terms, and can be zero.See also: Cost per acquisition, Hybrid deal, Per-lot commission

Risk of ruinRisk & money management

The probability that a trader loses so much of their account that they can no longer continue, given their win rate, risk-reward ratio and risk per trade. Risking a large share of the account on each trade raises it sharply, even for a strategy that wins more often than it loses.See also: Risk per trade, Win rate, Drawdown

Risk per tradeRisk & money managementAlso: risk percentage

The share of your account you are prepared to lose if a single trade hits its stop-loss. Many educators suggest 1% to 2%, so on a 5,000 USD account 1% is 50 USD. Keeping it small and consistent helps an account survive the losing streaks every strategy has.See also: Position sizing, Risk of ruin, Drawdown

Risk-offFundamental analysisAlso: risk aversion

A market mood in which investors cut exposure to riskier assets and move towards perceived safety, often during economic or geopolitical stress. Safe havens such as the Japanese yen, Swiss franc, US dollar and gold have often benefited, though not in every episode.See also: Risk-on, Safe haven, Carry trade

Risk-onFundamental analysisAlso: risk appetite

A market mood in which investors are confident and more willing to buy riskier assets, such as shares and higher-yielding or commodity-linked currencies. In risk-on periods, safe-haven assets often lag. The label describes a broad tendency, not a fixed rule.See also: Risk-off, Safe haven, Carry trade

Risk-reward ratioRisk & money managementAlso: reward-to-risk ratio, R:R

The planned loss on a trade compared with its planned gain. A trade with a 20-pip stop and a 40-pip target has a risk-reward ratio of 1:2. A favourable ratio only helps if the win rate is high enough, so the two must be judged together.See also: Expectancy, Win rate, Stop-loss order, Take-profit order

Safe havenFundamental analysisAlso: safe-haven asset

An asset that investors tend to buy in times of market stress because they expect it to hold its value. The Japanese yen, Swiss franc, US government bonds and gold are commonly described this way. Safe-haven behaviour is a historical tendency, not something to rely on in every crisis.See also: Risk-off, XAU

Segregated accountsBrokers & accountsAlso: client money segregation, segregated funds

Bank accounts in which a broker holds client money separately from its own funds, so that client money is not used for the firm's business and is better protected if the firm fails. Rules on segregation and on any compensation scheme vary from one regulator to another.See also: Regulator, Negative balance protection

Session overlapBasicsAlso: London-New York overlap

A period when two major trading sessions are open at the same time. The London and New York overlap is usually the busiest part of the day for many major pairs, with higher volume and tighter spreads, although it also tends to bring larger moves.See also: Trading session, Liquidity, Volatility

Share CFDOther marketsAlso: stock CFD, equity CFD

A contract for difference based on the price of a single company's shares. It lets you go long or short with leverage but gives no ownership or voting rights, and no actual dividends, although positions are usually adjusted when the company pays one.See also: Contract for difference, Dividend adjustment, Index CFD

Short positionBasicsAlso: going short, sell position

A trade that gains if the price falls. In a currency pair, going short means selling the base currency and buying the quote currency. Short positions are opened at the bid and closed at the ask, and losses grow as long as price keeps rising.See also: Long position, Bid, Ask

Simple moving averageTechnical analysisAlso: SMA

A moving average in which every price in the period has equal weight: a 10-period SMA adds the last ten closing prices and divides by ten. It is smooth and easy to read but reacts more slowly to new moves than an exponential moving average.See also: Moving average, Exponential moving average

SlippageOrders & execution

The difference between the price you expected and the price at which your order was actually filled. It can work against you or in your favour and is most common around major news, at the weekly open and in thin markets. Market and stop orders are the most exposed.See also: Market order, Gap, Requote, Fill

Spot priceOther marketsAlso: spot

The price for immediate settlement of an asset, as opposed to a futures price for delivery later. Spot forex and spot gold CFDs are based on spot prices, with overnight swaps applied to positions held past the daily rollover.See also: Futures contract, Swap, XAU

SpreadBasicsAlso: bid-ask spread

The difference between the bid and the ask, usually measured in pips. It is a built-in trading cost: every position starts slightly negative by the spread. Spreads can be fixed or variable, and variable spreads often widen around news releases, at the daily rollover and in thin markets.See also: Bid, Ask, Spread mark-up, Liquidity

Spread mark-upIB & partnershipsAlso: mark-up, spread markup

An arrangement in which an IB's commission comes from widening the spread a referred client pays above the broker's standard spread. It directly raises the client's trading cost, so it should be clearly disclosed and kept reasonable.See also: Spread, Introducing broker, Conflict of interest

StablecoinOther markets

A cryptocurrency designed to hold a steady value, usually by tracking a currency such as the US dollar, and backed by reserves or other mechanisms. Stablecoins can still lose their peg, and the quality of their backing varies, so they are not the same as cash in a bank.See also: Cryptocurrency, Bitcoin

Standard lotBasics

A trade size of 100,000 units of the base currency, shown as 1.00 lot on most platforms. For pairs quoted in US dollars, such as EUR/USD, one pip on a standard lot is worth 10 USD.See also: Lot, Mini lot, Micro lot, Pip value

Stochastic oscillatorTechnical analysisAlso: stochastics

A momentum indicator that compares the latest close with the high-low range over a set number of periods, plotted between 0 and 100. Readings above 80 are commonly treated as overbought and below 20 as oversold, with the same caution as for RSI.See also: Relative strength index, Overbought and oversold

Stop orderOrders & executionAlso: buy stop, sell stop, stop entry order

A pending order to buy above the current price or sell below it, triggered once price trades through your level. It is often used to enter breakouts. Once triggered it becomes a market order, so the fill can slip, especially across a gap.See also: Limit order, Pending order, Breakout, Gap

Stop-loss orderOrders & executionAlso: stop loss, SL

An order attached to a position that closes it if price moves against you to a set level, limiting the planned loss. A standard stop-loss does not fix your exit price: in a gap or a very fast market it can be filled at a noticeably worse level.See also: Take-profit order, Slippage, Gap, Position sizing

Stop-outRisk & money managementAlso: stop-out level

The margin level at which a broker starts closing your open positions automatically, often beginning with the largest losing trade, to stop the account falling further. Stop-out levels differ between brokers and regulators, so check yours before trading with leverage.See also: Margin call, Margin level, Negative balance protection

STPBrokers & accountsAlso: straight-through processing

Straight-through processing: an execution model in which a broker passes client orders on to one or more liquidity providers without a dealing desk intervening, usually earning from a spread mark-up or commission. As with ECN, the label alone tells you little; read the broker's order execution policy.See also: ECN, No dealing desk, Order execution policy

Sub-IBIB & partnershipsAlso: sub-introducer, sub-affiliate

An introducing broker who works under another IB, usually a master IB, and receives part of the commission that the upper-level partner earns from the broker. How the commission is split is set in the agreement between the two partners.See also: Master IB, Introducing broker, Tier

SupportTechnical analysisAlso: support level

A price area where falling prices have repeatedly stopped or reversed, suggesting buyers have been active there. Support is better treated as a zone than an exact line, and once clearly broken it often acts as resistance afterwards. It describes a tendency, not a floor.See also: Resistance, Breakout, Range

SwapBrokers & accountsAlso: rollover, overnight financing, swap rate

The overnight interest adjustment charged or paid on a position held past the broker's daily rollover time, based mainly on the interest rate differential between the two currencies plus a broker mark-up. Many brokers apply a triple swap once a week, often on Wednesday, to cover the weekend.See also: Interest rate differential, Carry trade, Swap-free account

Swap-free accountBrokers & accountsAlso: Islamic account

An account type that does not charge or pay overnight swaps, often offered to clients who need to avoid interest for religious reasons and sometimes called an Islamic account. Brokers may replace swaps with a fixed administration fee or limit how long positions can be held, so read the terms.See also: Swap, Commission

Take-profit orderOrders & executionAlso: take profit, TP

An order that closes a position once price reaches a chosen profit target. It works like a limit order, filling at your level or better if price gets there and doing nothing if it does not. Setting it in advance helps you stick to a planned risk-reward ratio.See also: Stop-loss order, Limit order, Risk-reward ratio

TierIB & partnershipsAlso: partner level

A level in a partner programme or in an IB network. Programme tiers usually set commission rates based on referred volume or client numbers; network tiers describe how many layers sit between a sub-IB and the master IB. A higher tier rate is worth nothing without real client activity.See also: Master IB, Sub-IB, Active client

TimeframeTechnical analysisAlso: chart period

The period each bar or candle represents on a chart, such as one minute, one hour, four hours or one day. Signals on higher timeframes usually carry more weight, and many traders check a higher timeframe for the trend before looking for entries on a lower one.See also: Candlestick, Trend

Trading journalRisk & money managementAlso: trade log

A record of every trade you take: the setup, entry, stop, target, size and result, plus your reasoning and emotions at the time. Reviewing it regularly is one of the most reliable ways to spot repeated mistakes and check whether a strategy works as you think it does.See also: Backtesting, Over-trading, Demo account

Trading platformBrokers & accountsAlso: trading terminal

The software you use to view charts, place orders and manage positions, such as a broker's web or mobile app or a third-party desktop platform. The platform is only the interface: the legal entity holding your account and how it is regulated are what protect you.See also: Regulator, Demo account

Trading sessionBasicsAlso: market session

The business hours of a major financial centre during which most of its local trading happens. Forex is commonly divided into the Sydney, Tokyo, London and New York sessions, and liquidity, spreads and typical volatility change as each one opens and closes.See also: Session overlap, Liquidity

Trailing stopOrders & executionAlso: trailing stop-loss

A stop-loss that follows price at a set distance as a trade moves in your favour but stays where it is when price moves against you. It can protect part of an open gain while leaving room for a trend. On some platforms it only works while the trading terminal is running.See also: Stop-loss order, Trend, Break-even stop

TrendTechnical analysisAlso: uptrend, downtrend

The general direction of price over a chosen timeframe. An uptrend shows a series of higher highs and higher lows; a downtrend shows lower highs and lower lows. Trends can change without warning, and a pair can trend on one timeframe while ranging on another.See also: Trendline, Moving average, Range, Timeframe

TrendlineTechnical analysisAlso: trend line

A straight line on a chart connecting at least two swing lows in an uptrend or two swing highs in a downtrend. It helps show the slope of a trend and possible areas of support or resistance, although where exactly to draw it is partly subjective.See also: Trend, Support, Resistance

Troy ounceOther marketsAlso: ozt, oz t

The unit used to price precious metals such as gold and silver, equal to about 31.1 grams, which is heavier than the ordinary ounce of about 28.35 grams. A gold quote such as XAU/USD shows the price of one troy ounce in US dollars.See also: XAU, XAG

Unemployment rateFundamental analysisAlso: jobless rate

The share of the labour force that is looking for work but does not have a job. Rising unemployment can push a central bank towards easier policy, while a tight labour market can add to inflation pressure. In the US it is released alongside non-farm payrolls.See also: Non-farm payrolls, Central bank, Inflation

VolatilityBasics

How much and how quickly a price moves over a period. Higher volatility means bigger swings, which bring opportunity but also larger and faster losses. Traders often measure it with tools such as the average true range or Bollinger Bands and adjust stop distance and position size to match.See also: Average true range, Bollinger Bands, Position sizing

Win rateRisk & money managementAlso: hit rate, strike rate

The percentage of trades that end in profit. A high win rate does not mean a strategy makes money: if average losses are much bigger than average wins, it can still lose overall. Judge it alongside the risk-reward ratio and expectancy.See also: Expectancy, Risk-reward ratio

WTIOther marketsAlso: West Texas Intermediate, US crude

West Texas Intermediate: the main US crude oil benchmark, priced in US dollars per barrel, with its futures settled by delivery at Cushing, Oklahoma. It is commonly traded as a CFD, and its price can move sharply on inventory data, producer decisions and geopolitical news.See also: Brent, Barrel, Futures contract

XAGOther marketsAlso: silver, XAG/USD

The standard code for silver, as in XAG/USD, the price of one troy ounce of silver in US dollars. Silver is often more volatile than gold in percentage terms, and contract sizes vary between brokers, so check the specification before trading.See also: Troy ounce, XAU, Commodity

XAUOther marketsAlso: gold, XAU/USD

The standard code for gold, used in quotes such as XAU/USD, which shows the price of one troy ounce of gold in US dollars. On many platforms one lot of gold is 100 troy ounces, but contract sizes differ between brokers, so check the specification.See also: Troy ounce, XAG, Safe haven