Trading glossary

255 terms in plain language. Search for a word or filter by topic.

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Account BalanceBeginner

The cash value in a trading account before unrealized open-position profit or loss is fully reflected.

If you deposit $2,000 and have no open trades, your account balance is $2,000.

Account CurrencyBeginner

The base currency used to value your deposits, withdrawals, fees, margin, and reports.

A USD account trading EUR/JPY will still show profit, loss, and margin converted into USD.

Account DeficitIntermediate

A negative account state where losses exceed available funds, usually after fast markets, gaps, or excessive leverage.

A weekend price gap can push an overleveraged account below zero before a stop can execute.

AccumulationIntermediate

A market phase where stronger buyers gradually absorb supply, often before an advance.

Sideways price action with rising volume near support may suggest accumulation.

Algorithmic TradingIntermediate

Trading decisions or order execution handled by coded rules instead of manual clicks.

An algorithm may buy when a moving average crossover occurs and risk is within limits.

AlphaAdvanced

Return generated above a benchmark or expected risk-adjusted return.

A strategy that earns 12% while its benchmark earns 8% has positive alpha before costs.

AltcoinBeginner

Any cryptocurrency other than Bitcoin, often with distinct technology, token economics, or risk profile.

Ethereum, Solana, and Litecoin are commonly classified as altcoins.

ArbitrageAdvanced

Attempting to profit from price differences for the same or similar asset across venues or instruments.

If gold futures and spot gold temporarily diverge beyond costs, arbitrageurs may trade the spread.

Ask PriceBeginner

The lowest price currently available to buy an instrument from sellers.

If EUR/USD is quoted 1.0849/1.0851, 1.0851 is the ask.

Also called: Offer Price

Asset ClassBeginner

A broad group of instruments with similar economic characteristics, such as forex, equities, indices, commodities, bonds, or crypto.

Gold and crude oil belong to commodities; EUR/USD belongs to forex.

At the MoneyIntermediate

An option whose strike price is close to the current price of the underlying asset.

A 100 call is at the money when the stock trades around 100.

AussieBeginner

Trader shorthand for the Australian dollar, especially the AUD/USD currency pair.

A trader saying “Aussie is strong” often means AUD/USD is rising.

Average True RangeIntermediate

A volatility indicator that estimates the average size of recent price ranges.

A trader may place wider stops when ATR rises.

BacktestingIntermediate

Testing a trading idea on historical data to estimate how it might have performed.

A scalping strategy can be backtested across the last three years of EUR/USD data.

Balance of PaymentsIntermediate

A record of a country’s transactions with the rest of the world, including trade, investment flows, and reserves.

Persistent external deficits may influence currency sentiment.

Bar ChartBeginner

A chart type that displays open, high, low, and close prices for each period.

Daily bars show the trading range and close for every market day.

Base CurrencyBeginner

The first currency in a pair; it is the currency being bought or sold against the quote currency.

In EUR/USD, EUR is the base currency.

Basis PointBeginner

One hundredth of one percentage point, commonly used for interest rates and yields.

A rate increase from 5.00% to 5.25% is a 25-basis-point move.

Bear MarketBeginner

A sustained period of falling prices and negative sentiment.

Equity indices declining more than 20% from highs are often described as being in a bear market.

Bear TrapIntermediate

A false downside break that lures short sellers before price reverses upward.

Price breaks support, attracts shorts, then closes strongly back above support.

BetaIntermediate

A measure of how much an asset tends to move relative to a benchmark.

A stock with beta of 1.5 has historically moved more than the market.

Bid PriceBeginner

The highest price currently available to sell an instrument to buyers.

If GBP/USD is 1.2700/1.2702, 1.2700 is the bid.

Blue-Chip StockBeginner

Shares of a large, established company with a long operating history and strong market recognition.

Major global banks, technology firms, and consumer companies are often considered blue chips.

Bollinger BandsIntermediate

A volatility envelope built around a moving average, often used to identify expansion, contraction, or stretched prices.

A band squeeze may precede a larger directional move.

BondBeginner

A loan to a government or company that pays interest and returns the amount lent on a fixed date.

A ten-year government bond pays interest each year and repays the loan after ten years.

BreakoutBeginner

A move beyond a defined support, resistance, range, or chart pattern boundary.

A close above 1.1000 resistance on EUR/USD may be treated as a breakout.

BrokerBeginner

A firm that provides access to markets or derivatives platforms and executes or routes client orders.

Retail traders typically access forex, CFDs, or shares through a broker.

Bull MarketBeginner

A sustained period of rising prices and positive sentiment.

An index making higher highs for months may be in a bull market.

Buy Limit OrderBeginner

An instruction to buy below the current market price at a specified level or better.

If EUR/USD trades at 1.0900, a buy limit at 1.0850 waits for a pullback.

Buy Stop OrderBeginner

An instruction to buy above the current market price, usually to enter on upside momentum.

A trader may place a buy stop above resistance to join a breakout.

CableBeginner

Trader nickname for GBP/USD, originating from historical transatlantic communications.

“Cable is bid” means GBP/USD is attracting buyers.

CandlestickBeginner

A price bar that visually shows open, high, low, and close, often used for pattern recognition.

A long lower wick can show rejection of lower prices.

Carry TradeIntermediate

Borrowing or selling a lower-yielding currency to buy a higher-yielding currency, seeking interest-rate differential gains.

A trader may buy a higher-yielding currency if volatility is low and the trend supports it.

Cash IndexBeginner

A spot-style quote for an equity index, distinct from futures contracts on that index.

The cash DAX reflects the current value of the German benchmark index.

Central BankBeginner

An institution responsible for monetary policy, interest rates, currency stability, and often banking-system oversight.

The Federal Reserve and European Central Bank are central banks watched by traders.

CFDBeginner

A contract for difference that lets traders speculate on price movement without owning the underlying asset.

A CFD on gold tracks gold price changes but does not give ownership of physical gold.

ChannelIntermediate

A price structure formed by parallel support and resistance lines.

A rising channel shows price trending upward within defined boundaries.

CommissionBeginner

A fee charged by a broker for executing a trade, separate from spread or financing.

A stock CFD trade may have both spread cost and commission.

CommodityBeginner

A raw material or primary product traded in markets, such as oil, gold, copper, wheat, or natural gas.

Gold often reacts to real yields, the dollar, and risk sentiment.

Consumer Price IndexBeginner

A measure of the change in prices paid by consumers for a basket of goods and services; the most watched measure of inflation.

A rise in the index of three percent over a year means that basket costs three percent more.

Also called: CPI

Contract SizeBeginner

The notional quantity represented by one contract or lot.

One standard forex lot represents 100,000 units of the base currency.

CorrelationIntermediate

The degree to which two instruments move together or opposite each other.

EUR/USD and GBP/USD often show positive correlation during broad dollar moves.

Cross Currency PairBeginner

A forex pair that does not include the US dollar.

EUR/GBP and AUD/JPY are cross currency pairs.

CryptocurrencyBeginner

A digital asset secured by cryptography and typically transferred on a blockchain network.

Bitcoin is the largest cryptocurrency by market recognition.

Currency PairBeginner

A quotation showing the exchange rate between two currencies.

USD/JPY tells how many yen one US dollar can buy.

Daily Loss LimitBeginner

A preset loss for one day after which the trader stops trading until the next day.

With a limit of three R, a trader who has lost three R closes the platform for the day.

Day TradingBeginner

Opening and closing positions within the same trading day to avoid overnight exposure.

A day trader may close all positions before the New York session ends.

Dead Cat BounceIntermediate

A temporary rebound during a broader downtrend that does not reverse the main bearish structure.

After a sharp sell-off, price may bounce briefly before falling again.

DealerIntermediate

A market participant or firm that quotes prices and may take the other side of client trades.

Some brokers operate dealer models while others route orders externally.

DeltaIntermediate

An option Greek measuring how much an option price may change for a one-unit move in the underlying.

A call with 0.50 delta may gain about $0.50 if the stock rises $1, all else equal.

Demo AccountBeginner

A practice account using simulated funds to test platforms, orders, and strategies without real capital risk.

New traders often use demo accounts before trading live.

DerivativeBeginner

A financial instrument whose value is based on an underlying asset, rate, index, or event.

Futures, options, and CFDs are derivatives.

DivergenceIntermediate

A disagreement between price movement and an indicator, often watched as a warning of momentum change.

Price makes a higher high while RSI makes a lower high, creating bearish divergence.

DividendBeginner

A distribution of company earnings to shareholders, usually paid in cash or additional shares.

A stock index CFD may be adjusted when index constituents go ex-dividend.

DojiBeginner

A candle whose open and close are almost the same, showing that neither buyers nor sellers finished in control.

After a strong rise, a doji shows the buying has paused for that period.

Dollar IndexIntermediate

An index measuring the US dollar against a basket of major currencies.

A rising dollar index can pressure commodities priced in dollars.

Also called: US Dollar Index

DovishBeginner

Policy language or action suggesting easier monetary policy, lower rates or concern about weak growth.

A central bank that says rate cuts are likely soon is described as dovish.

DrawdownBeginner

The decline from an account or strategy peak to a later low.

A strategy falling from $10,000 to $8,500 has a 15% drawdown.

ECNIntermediate

An electronic communication network that matches buy and sell orders from market participants.

An ECN-style venue can show raw spreads plus commission.

Economic CalendarBeginner

A schedule of macroeconomic releases, central-bank events, and other market-moving data.

Traders check the calendar before CPI, NFP, and rate decisions.

Effective LeverageIntermediate

Actual exposure relative to account equity, regardless of maximum leverage offered by the broker.

A $50,000 position on $5,000 equity equals 10:1 effective leverage.

Elliott WaveAdvanced

A technical-analysis framework that interprets trends and corrections as recurring wave structures.

A trader may label five waves up and three corrective waves down.

Engulfing PatternBeginner

A candle whose body completely covers the body of the candle before it, in the opposite direction.

A small falling candle followed by a large rising candle that covers it is a bullish engulfing pattern.

Entry TriggerBeginner

The specific event that turns a valid setup into an order.

A candle closing back above the support zone is the trigger.

EquityBeginner

Account value including balance plus or minus unrealized profit or loss.

If your balance is $2,000 and open losses are $150, equity is $1,850.

ETFBeginner

An exchange-traded fund that holds a basket of securities or tracks an index, sector, commodity, or strategy.

A gold ETF may track gold exposure without trading futures directly.

Exchange RateBeginner

The price of one currency expressed in terms of another currency.

If EUR/USD is 1.1000, one euro equals 1.10 US dollars.

ExecutionBeginner

The process by which an order is filled in the market or by a broker.

Fast execution matters during high-volatility news releases.

Exotic PairBeginner

A pair that combines a major currency with the currency of a smaller or developing economy, usually with wider spreads.

The US dollar against the Turkish lira is an exotic pair.

ExpectancyBeginner

The average result per trade over many trades, combining how often a method wins with how large its wins and losses are.

Four wins of two R and six losses of one R give plus two R over ten trades, or plus zero point two R per trade.

Expert AdvisorIntermediate

An automated trading program commonly used on MetaTrader platforms.

An EA can manage entries, exits, and position sizing based on coded rules.

Exponential Moving AverageIntermediate

A moving average that gives recent prices more weight, so it reacts faster than a simple moving average.

After a sharp move, the exponential average turns before the simple average of the same length.

Also called: EMA

ExposureBeginner

The amount of market risk a trader has through open positions.

Holding long EUR/USD and long GBP/USD creates exposure to US dollar weakness.

Fair Value GapAdvanced

A price imbalance where rapid movement leaves a zone that some traders expect price may revisit.

ICT-style traders may watch a fair value gap as a possible retracement area.

Federal ReserveBeginner

The central bank of the United States, closely watched for monetary policy and dollar impact.

Fed rate decisions can move USD pairs, gold, indices, and bonds.

Fibonacci RetracementIntermediate

Horizontal levels based on Fibonacci ratios used to estimate potential pullback zones.

A trader may watch the 38.2% and 61.8% retracement levels after a rally.

FillBeginner

The completed execution of an order, either fully or partially.

A large order may receive several partial fills at nearby prices.

Financial InstrumentBeginner

A tradable contract or asset such as a currency pair, stock, index, commodity, bond, ETF, option, future, or CFD.

EUR/USD, Apple shares, and crude oil futures are financial instruments.

Financing ChargeIntermediate

A cost or credit applied for holding leveraged or derivative positions beyond a specified time.

A CFD position kept overnight may incur financing.

Also called: Holding Cost

Floating Profit and LossBeginner

Unrealized gain or loss on open positions before they are closed.

A long gold trade up $80 shows floating profit until closed.

Also called: Unrealized Profit and Loss

FOMCIntermediate

The Federal Open Market Committee, the Fed body that sets US monetary policy.

FOMC statements can trigger sharp moves in USD and US indices.

FOMOBeginner

Fear of missing out: the urge to enter a trade late because price is already moving.

Buying after a long run of rising candles because it feels like the move will leave without you.

ForexBeginner

The global foreign exchange market where currencies are traded in pairs.

EUR/USD, USD/JPY, and GBP/USD are popular forex markets.

Forward ContractIntermediate

A customized agreement to exchange an asset or currency at a future date and price.

A company may use FX forwards to hedge future currency payments.

Forward TestingIntermediate

Trading a set of rules in real time, usually on a demo account or at very small size, to see whether they can be followed as written.

After a backtest, the same rules are applied to live prices on a demo account for two months.

Free MarginBeginner

Account equity not currently locked as margin for open positions.

If equity is $3,000 and used margin is $1,000, free margin is $2,000.

Fundamental AnalysisBeginner

Evaluating markets through economic data, earnings, policy, valuation, supply-demand, and news drivers.

A currency trader may study inflation and interest-rate expectations.

Futures ContractIntermediate

A standardized exchange-traded agreement to buy or sell an asset at a future date.

Crude oil futures specify contract size, delivery month, and exchange rules.

GammaAdvanced

An option Greek measuring how quickly delta changes as the underlying price moves.

High gamma options can become more sensitive near expiry.

GapBeginner

A price jump between trading sessions or candles where little or no trading occurred.

A stock may gap up after better-than-expected earnings.

GDPBeginner

Gross domestic product, a broad measure of economic output.

GDP surprises can affect currency and equity-index expectations.

Good Till CancelledBeginner

An order instruction that remains active until filled, cancelled, or expired under broker rules.

A trader may leave a GTC limit order at a major support level.

Gross ExposureIntermediate

The total absolute value of all open positions before netting longs and shorts.

Long $50,000 EUR/USD and short $30,000 GBP/USD creates $80,000 gross exposure.

Guaranteed StopIntermediate

A stop order that guarantees the exit price, usually for an additional premium and subject to broker rules.

A guaranteed stop can protect against gap risk where available.

HammerBeginner

A candle with a small body near the top and a long lower wick, showing that lower prices were rejected during the period.

Price falls sharply during the hour, then recovers to close near where it opened.

HawkishBeginner

Policy language or action suggesting tighter monetary policy, higher rates, or inflation concern.

A hawkish central-bank statement can strengthen a currency.

Head and ShouldersIntermediate

A reversal chart pattern with a peak, higher peak, and lower peak around a neckline.

A break below the neckline may confirm a bearish head-and-shoulders pattern.

HedgeIntermediate

A position intended to reduce or offset risk in another position or portfolio.

An exporter may hedge currency exposure with forward contracts.

Heikin AshiIntermediate

A candle-style chart that smooths price action to make trends easier to visualize.

A series of Heikin Ashi candles with no lower wicks may show strong uptrend momentum.

High-Frequency TradingAdvanced

Automated trading that uses speed, infrastructure, and algorithms to execute many orders very quickly.

HFT firms may compete to capture tiny pricing inefficiencies.

Hit the BidIntermediate

Selling immediately at the current bid price.

A trader who needs instant exit may hit the bid instead of waiting with a limit order.

Ichimoku CloudIntermediate

A multi-line indicator used to assess trend, support, resistance, and momentum.

Price above the cloud is often interpreted as a bullish environment.

Illiquid MarketIntermediate

A market with limited buyers and sellers, often causing wider spreads and more slippage.

Minor exotic FX pairs can become illiquid outside active sessions.

Implied VolatilityAdvanced

The market’s expected future volatility implied by option prices.

Option premiums often rise before major earnings or central-bank events.

In the MoneyIntermediate

An option with intrinsic value: calls below the underlying price or puts above it.

A 95 call is in the money when the stock trades at 100.

IndexBeginner

A benchmark that tracks the performance of a group of securities.

The S&P 500 tracks large US-listed companies.

InflationBeginner

A sustained rise in the general price level of goods and services.

Higher-than-expected CPI can shift interest-rate expectations.

Initial MarginBeginner

The amount required to open a leveraged position.

Opening a CFD trade may require 5% initial margin.

Inside BarBeginner

A candle whose high and low both sit within the range of the candle before it, showing a pause.

After a large candle, a small candle that stays inside its range is an inside bar.

Interest RateBeginner

The cost of borrowing money, set for an economy by its central bank's policy rate.

When a central bank raises its rate, loans become more expensive and saving pays more.

Interest Rate DecisionBeginner

A central-bank announcement of its policy rate and often its policy outlook.

Rate decisions can produce volatility in currencies, indices, and gold.

IntradayBeginner

Activity occurring within a single trading day.

An intraday trader may use five-minute and fifteen-minute charts.

InvalidationBeginner

The price level at which the reason for a trade is no longer true.

A trade based on a support zone holding is invalidated when price closes clearly below that zone.

Investment HorizonBeginner

The expected holding period for a trade, strategy, or investment.

Scalpers use minutes; position traders may use weeks or months.

Japanese YenBeginner

The currency of Japan, commonly traded in pairs such as USD/JPY, EUR/JPY, and GBP/JPY.

Yen pairs can react strongly to global yields and risk sentiment.

Jobless ClaimsIntermediate

A US labor-market release showing new unemployment benefit claims.

A sudden rise in jobless claims may weaken growth expectations.

JournalingBeginner

Recording trades, decisions, emotions, screenshots, and statistics to improve process discipline.

A journal helps identify whether losses come from strategy or execution mistakes.

Keltner ChannelIntermediate

A volatility channel typically built from an exponential moving average and ATR.

Trend followers may use Keltner channels to trail stops.

KiwiBeginner

Trader nickname for the New Zealand dollar, especially NZD/USD.

“Kiwi is selling off” usually means NZD/USD is falling.

KYCBeginner

Know Your Customer checks used by financial firms to verify identity and comply with regulation.

A broker may request ID and proof of address before account approval.

Lagging IndicatorBeginner

An indicator that responds after price has already moved, often used for confirmation.

Moving averages are lagging indicators because they are calculated from past prices.

LatencyAdvanced

The delay between sending an order or data request and receiving execution or response.

Low latency can matter for scalpers and automated strategies.

LeverageBeginner

Using borrowed or broker-provided exposure so a smaller deposit controls a larger position.

20:1 leverage allows $1,000 margin to control $20,000 exposure.

Also called: Gearing

Limit OrderBeginner

An instruction to buy or sell at a specified price or better.

A sell limit above current price waits for price to rise to that level.

LiquidationIntermediate

Forced closing of positions when margin requirements are not met.

A highly leveraged crypto position may be liquidated if price moves against it.

LiquidityBeginner

The ease of trading an instrument without significantly affecting its price.

Major FX pairs usually have deeper liquidity than exotic pairs.

Liquidity ProviderIntermediate

A bank, institution, or venue that supplies tradable bid and ask prices.

A broker may aggregate quotes from several liquidity providers.

Long PositionBeginner

A trade that benefits when the instrument price rises.

Buying EUR/USD creates a long position in EUR against USD.

Loss AversionBeginner

The tendency to feel a loss more strongly than a gain of the same size, which leads to holding losing trades too long.

Moving a stop loss further away to avoid accepting a small loss.

LotBeginner

A standardized trade size, especially in forex.

One standard lot is 100,000 base-currency units; one mini lot is 10,000.

MACDIntermediate

A momentum indicator based on moving-average relationships, often used for trend confirmation and signal changes.

A MACD signal-line crossover may support a momentum trade idea.

Maintenance MarginIntermediate

Minimum equity required to keep a leveraged position open.

If equity falls below maintenance margin, margin call or stop-out may occur.

Major PairBeginner

A heavily traded currency pair that includes the US dollar, usually with the tightest spreads.

The euro against the US dollar is the most traded major pair.

MarginBeginner

Capital set aside as collateral to open or maintain leveraged exposure.

A $10,000 position with 10% margin requires $1,000.

Margin CallBeginner

A warning or requirement to add funds or reduce positions when account equity falls too low.

A losing leveraged trade can trigger a margin call.

Margin LevelBeginner

Equity divided by used margin, shown as a percentage. It shows how close an account is to a margin call.

Equity of one thousand dollars with used margin of five hundred dollars is a margin level of two hundred percent.

Mark-to-MarketIntermediate

Revaluing open positions at current market prices to calculate unrealized profit, loss, and margin.

Futures accounts are typically marked to market daily.

MarketBeginner

Any place, physical or electronic, where buyers and sellers agree a price for something.

The currency market is a network of banks, brokers and traders agreeing exchange rates all day.

Market DepthIntermediate

Visible buy and sell interest at different price levels in an order book.

Thin market depth can lead to bigger price jumps after market orders.

Market MakerIntermediate

A participant that provides continuous bid and ask prices and may earn the spread.

Market makers help create liquidity but may widen spreads during volatile periods.

Market OrderBeginner

An instruction to buy or sell immediately at the best available price.

Market orders prioritize speed over exact fill price.

Market StructureBeginner

The pattern of swing highs and swing lows that shows whether price is trending up, trending down or moving sideways.

Higher highs and higher lows describe an uptrend.

MetaTraderBeginner

A popular trading platform family used for forex and CFD charting, order placement, and automation.

Many traders run indicators and expert advisors on MetaTrader 4 or 5.

Micro LotBeginner

A forex trade size of one thousand units of the base currency, one hundredth of a standard lot.

Zero point zero one lots is one micro lot.

Mini LotBeginner

A forex trade size of ten thousand units of the base currency, one tenth of a standard lot.

Zero point one lots is one mini lot.

Minor PairBeginner

A pair of two major currencies that does not include the US dollar.

The euro against the British pound is a minor pair.

MomentumBeginner

The speed and strength of a price move.

Large candles closing near their highs show strong upward momentum.

Moving AverageBeginner

An indicator that smooths price by averaging it over a chosen number of periods.

A 200-day moving average is often used to assess long-term trend.

Negative Balance ProtectionBeginner

A rule or broker policy under which a retail client cannot lose more than the money in the account.

If a sudden gap pushes an account below zero, the broker resets it to zero where this protection applies.

Net ExposureIntermediate

Directional exposure after offsetting long and short positions.

Long $100,000 EUR/USD and short $40,000 EUR/USD leaves $60,000 net long exposure.

NettingIntermediate

A position accounting mode where opposite trades in the same instrument reduce one combined position.

A buy 1 lot and sell 0.4 lot results in a net long 0.6 lot.

NFPBeginner

US non-farm payrolls, a major monthly employment report watched by global traders.

NFP surprises can cause sharp moves in USD pairs and gold.

No Dealing DeskIntermediate

A broker model where orders are routed to external liquidity rather than manually handled by a dealing desk.

NDD execution is often marketed as agency-style order routing.

Notional ValueBeginner

The total market value controlled by a position.

A 100,000-unit EUR/USD trade has notional value of 100,000 euros.

OCO OrderIntermediate

One-cancels-the-other order: if one linked order executes, the other is automatically cancelled.

A trader may place a profit target and stop loss as an OCO pair.

Open PositionBeginner

A trade that has been entered but not yet closed.

A long gold trade remains an open position until sold or otherwise closed.

Order BookIntermediate

A list of resting buy and sell orders organized by price level.

Order-book traders watch where liquidity is stacked.

Order TicketBeginner

The platform window or form used to enter trade size, order type, stop loss, and take profit.

Before confirming, check the order ticket for symbol, volume, and direction.

OscillatorBeginner

An indicator that moves within or around a range to show momentum or overextended conditions.

RSI and stochastic are common oscillators.

Out of the MoneyIntermediate

An option with no intrinsic value: calls above the underlying price or puts below it.

A 110 call is out of the money when the stock trades at 100.

Out-of-Sample DataIntermediate

Historical data that was kept aside and not used while the rules were being built, used to check them afterwards.

Rules are built on three years of data and then checked on a fourth year they have never seen.

OverboughtBeginner

A condition where price or an indicator suggests upward momentum may be stretched.

RSI above 70 is often described as overbought, though trends can stay overbought.

OverfittingIntermediate

Adjusting rules until they match past data very closely, so that they describe the past and fail on new data.

Adding filter after filter until a backtest shows no losing month.

Also called: Curve Fitting

Overnight PositionBeginner

A position kept open after the market’s daily rollover or close.

Overnight positions may face swaps, financing, and gap risk.

OversoldBeginner

A condition where price or an indicator suggests downward momentum may be stretched.

RSI below 30 is often described as oversold.

OvertradingBeginner

Taking more trades than the plan allows, usually from boredom or emotion.

A plan allows two setups a day and the trader takes nine trades.

Pair TradingAdvanced

A relative-value strategy that trades two related instruments against each other.

A trader may go long one bank stock and short another to isolate relative performance.

Paper TradingBeginner

Simulated trading used to practice strategy and execution without real money.

Paper trading helps test order logic before live trading.

Parabolic SARIntermediate

A trend-following indicator that plots dots to suggest potential trailing stops or reversals.

Dots below price are often read as bullish; dots above price as bearish.

Pending OrderBeginner

An order set to execute only if future price conditions are met.

Limit and stop orders are pending orders until triggered or filled.

Also called: Working Order

PipBeginner

A standard unit of price movement in forex, usually the fourth decimal place for most pairs.

A move from 1.1050 to 1.1055 is five pips.

Pip ValueBeginner

The monetary value of one pip movement for a position size.

For many USD-quoted major pairs, one standard lot equals about $10 per pip.

Pivot PointIntermediate

A calculated support/resistance framework based on prior high, low, and close.

Day traders may watch daily pivot levels for intraday reactions.

PMIIntermediate

Purchasing Managers’ Index, a survey-based indicator of business activity.

Weak PMI readings can pressure a currency or equity market.

PortfolioBeginner

A collection of open positions or investments held by a trader or investor.

A portfolio may include forex, indices, commodities, and cash.

Position SizeBeginner

The quantity traded, chosen to align risk with account size and stop distance.

Risking 1% per trade requires calculating size from stop-loss distance.

Price ActionBeginner

Analyzing raw price movement, structure, candles, and levels without relying heavily on indicators.

Price-action traders may focus on support, resistance, and rejection candles.

Profit FactorIntermediate

Gross profit divided by gross loss, used to evaluate a trading system.

A profit factor above 1 means gross profits exceed gross losses.

PullbackBeginner

A temporary move against the prevailing trend.

In an uptrend, traders may buy a pullback toward support.

Put OptionBeginner

An option giving the holder the right, not obligation, to sell the underlying at a strike price.

A trader may buy a put to speculate on downside or hedge a stock position.

Quantitative EasingIntermediate

Central-bank asset purchases intended to ease financial conditions and support liquidity.

QE can influence bond yields, equities, and currencies.

Quantitative TighteningIntermediate

Central-bank balance-sheet reduction intended to withdraw liquidity or tighten financial conditions.

QT may put upward pressure on yields if markets expect less central-bank demand.

QuoteBeginner

A displayed bid and ask price for an instrument.

A quote of 1.2500/1.2502 shows where traders can sell and buy.

Quote CurrencyBeginner

The second currency in a pair; it expresses the price of one unit of the base currency.

In GBP/USD, USD is the quote currency.

R MultipleBeginner

A trade result expressed in units of the amount that was risked. One R is the planned loss on one trade.

Risking ten dollars and making twenty is a result of plus two R.

Also called: Risk Unit, R

RangeBeginner

A market condition where price moves between support and resistance instead of trending.

A trader may buy near range support and sell near range resistance.

Rate DifferentialIntermediate

The interest-rate gap between two currencies, often relevant to carry and forward pricing.

A wider US-Japan rate differential can influence USD/JPY.

Realized Profit and LossBeginner

Profit or loss locked in after closing a trade.

A trade closed for $120 gain becomes realized profit.

Recency BiasBeginner

Giving too much weight to the last few results when judging a method.

Abandoning a tested plan after three losses in a row.

RegulationBeginner

Rules set and enforced by a financial authority that a broker must follow in order to serve clients.

A regulated broker must keep client money separate from its own.

RequoteIntermediate

A broker response offering a new price when the requested price is no longer available.

Requotes are more likely in fast-moving or low-liquidity conditions.

ResistanceBeginner

A price area where selling pressure has previously limited upward movement.

If gold repeatedly fails near 2400, traders may mark 2400 as resistance.

Retail TraderBeginner

An individual trader using personal capital rather than trading for an institution.

Retail traders often access markets through online brokers.

Revenge TradingBeginner

Taking impulsive trades straight after a loss in order to win the money back.

Doubling the trade size immediately after being stopped out.

Risk ManagementBeginner

Rules and processes used to control losses, position size, leverage, and exposure.

A trader may risk no more than 1% of equity on any single trade.

Risk per TradeBeginner

The amount of the account a trader accepts losing if one trade reaches its stop loss.

One percent risk on a two-thousand-dollar account is twenty dollars per trade.

Risk-Reward RatioBeginner

Comparison of potential loss to potential gain on a trade.

Risking $100 to target $300 is a 1:3 risk-reward setup.

RolloverIntermediate

The process of extending a forex position beyond the settlement cut-off, often creating swap charges or credits.

Holding USD/TRY overnight may generate a large rollover debit or credit.

RSIBeginner

Relative Strength Index, a momentum oscillator used to gauge speed and magnitude of price changes.

RSI divergence can warn that momentum is weakening.

ScalpingIntermediate

A short-term trading style seeking small gains from frequent trades.

Scalpers often prioritize tight spreads, fast execution, and liquid markets.

Sell Limit OrderBeginner

An instruction to sell above the current market price at a specified level or better.

With price at one point one zero, a sell limit at one point one one waits for price to rise to it.

Sell Stop OrderBeginner

An instruction to sell below the current market price, triggered if price falls to a specified level.

With price at one point one zero, a sell stop at one point zero nine is triggered if price falls to it.

SentimentBeginner

The overall mood or positioning bias of market participants.

Extreme bullish sentiment can sometimes precede corrections.

SetupBeginner

The set of conditions that must be present before a trade is considered.

An uptrend on the higher timeframe plus a pullback to a support zone is a setup.

Sharpe RatioAdvanced

A risk-adjusted performance metric comparing excess return to volatility.

Two strategies with equal return can differ if one has a better Sharpe ratio.

Short PositionBeginner

A trade that benefits when the instrument price falls.

Selling EUR/USD creates a short position in EUR against USD.

Simple Moving AverageBeginner

A moving average that gives every period in its window the same weight.

A twenty-period simple moving average adds the last twenty closing prices and divides by twenty.

Also called: SMA

SlippageBeginner

The difference between expected execution price and actual fill price.

A stop order may slip during a fast news move.

SpreadBeginner

The difference between bid and ask prices.

Lower spreads reduce the immediate cost of entering and exiting trades.

Also called: Bid-Ask Spread

Spread BettingIntermediate

A derivative format, common in the UK and Ireland, where profit or loss is based on stake per point of price movement.

A £2-per-point stake gains £20 if the market moves 10 points in your favor.

Standard LotBeginner

A forex trade size of one hundred thousand units of the base currency.

One standard lot of the euro against the US dollar is one hundred thousand euros.

StockBeginner

A share of ownership in a company, which can be bought and sold on a stock market.

Someone who owns one share of a company owns a very small part of that company.

Also called: Share

Stop LossBeginner

An order designed to close a position if price moves against it beyond a chosen level.

A trader long at 1.1000 may set a stop loss at 1.0950.

Stop Out LevelIntermediate

A broker-defined margin threshold where positions may be automatically closed.

If margin level drops below the stop-out level, the platform may liquidate trades.

SupportBeginner

A price area where buying pressure has previously limited downward movement.

A market bouncing several times near 100 may have support at 100.

SwapIntermediate

An overnight debit or credit reflecting interest-rate differences and broker financing rules.

A position can earn positive swap in one direction and pay negative swap in the other.

Swing HighBeginner

A peak on a chart: a high with lower highs on both sides of it.

Price rises to a peak, falls back, and the peak stands out as a swing high.

Swing LowBeginner

A trough on a chart: a low with higher lows on both sides of it.

Price falls to a trough, rises again, and the trough stands out as a swing low.

Swing TradingBeginner

Holding trades for several days or weeks to capture medium-term price swings.

A swing trader may use daily charts and wider stops.

Synthetic PairAdvanced

A currency exposure constructed from two or more related pairs instead of trading the direct pair.

EUR/JPY exposure can be approximated through EUR/USD and USD/JPY.

Take ProfitBeginner

An order to close a position at a chosen favorable price to lock in gains.

A long trade from 50 may use a take-profit order at 55.

Technical AnalysisBeginner

Studying price, volume, patterns, and indicators to form trading decisions.

A trader may combine trendlines, support, resistance, and momentum indicators.

ThetaAdvanced

An option Greek measuring expected time-decay impact on an option price.

Short-dated options often lose theta faster as expiry approaches.

TickBeginner

The smallest price movement or a single change in quoted price, depending on market context.

Futures contracts have defined tick sizes and tick values.

TimeframeBeginner

The amount of time each bar or candle on a chart covers.

On a one-hour chart, each candle shows what price did during one hour.

Trading PlanBeginner

A written set of rules stating what a trader trades, when, how much is risked, and when to stop.

A plan names one market, one timeframe, one setup and a maximum loss for the day.

Trading SessionBeginner

A period of the day when a major financial centre is open and active, such as the Asian, London or New York session.

Activity is usually highest when the London and New York sessions overlap.

Trailing StopBeginner

A stop order that moves with favorable price movement to help protect gains.

A trailing stop may follow price by 50 pips after a trade moves into profit.

Transaction CostBeginner

Total cost of entering, holding, and exiting a trade, including spread, commission, slippage, and financing.

A profitable strategy on paper may fail after transaction costs.

TrendBeginner

A sustained directional tendency in price, either upward, downward, or sideways.

Higher highs and higher lows define an uptrend.

TrendlineBeginner

A line drawn across swing highs or lows to visualize trend direction or dynamic support/resistance.

A break below an uptrend line can warn of weakening momentum.

Underlying AssetBeginner

The asset, index, or rate that determines the value of a derivative.

For an S&P 500 CFD, the underlying is the S&P 500 index price.

UptickBeginner

A trade or quote occurring at a higher price than the previous one.

A series of upticks may show short-term buying pressure.

Used MarginBeginner

The portion of account equity currently reserved to support open leveraged positions.

If used margin is high, there is less free margin to absorb losses.

Value at RiskAdvanced

A statistical estimate of potential portfolio loss over a time period at a given confidence level.

A one-day 95% VaR of $5,000 estimates losses may exceed $5,000 on 5% of days.

VegaAdvanced

An option Greek measuring sensitivity to changes in implied volatility.

Options with high vega rise more when implied volatility increases.

Virtual Private ServerIntermediate

A remote server used to keep trading platforms, bots, or expert advisors running continuously.

Algorithmic traders use VPS hosting to reduce downtime.

VolatilityBeginner

The degree of price variation over time.

High volatility means larger price swings and often wider stops.

VolumeBeginner

The amount traded during a period, measured in contracts, shares, ticks, or broker-specific activity.

Rising volume on a breakout can support conviction.

VWAPIntermediate

Volume-weighted average price, a benchmark showing the average traded price weighted by volume.

Institutional traders often compare execution quality against VWAP.

WhipsawIntermediate

A rapid move in one direction followed by a sharp reversal, often causing false signals.

Range-bound markets can whipsaw trend-following strategies.

WickBeginner

The thin line above or below a candle's body, showing prices that were reached during the period but not held at the close.

A long upper wick shows that price went up and was pushed back down before the candle closed.

Also called: Shadow

Wide SpreadBeginner

A larger-than-normal gap between bid and ask, often during illiquidity or news.

Spreads may widen around market open, close, or major data releases.

Win RateBeginner

The percentage of trades that close profitably.

A strategy with 60 winners out of 100 trades has a 60% win rate.

WTI Crude OilBeginner

West Texas Intermediate, a benchmark grade of US crude oil.

WTI often reacts to inventory data, OPEC headlines, and dollar moves.

XAG/USDBeginner

The spot silver price quoted against the US dollar.

If XAG/USD rises from 28.00 to 28.50, silver gained 50 cents per ounce.

XAU/USDBeginner

The spot gold price quoted against the US dollar.

XAU/USD at 2350 means one troy ounce of gold is quoted at $2,350.

Also called: Gold Spot

XetraIntermediate

An electronic trading venue operated by Deutsche Börse for German and European securities.

Many German equities and ETFs trade on Xetra.

Yen CrossBeginner

A currency pair involving the Japanese yen but not necessarily the US dollar.

EUR/JPY, GBP/JPY, and AUD/JPY are yen crosses.

YieldBeginner

Income return on a bond or investment, often expressed as a percentage.

Rising bond yields can affect equity valuations and currency flows.

Yield CurveIntermediate

A line showing bond yields across maturities, used to assess rate expectations and economic outlook.

An inverted yield curve means shorter-term yields exceed longer-term yields.

YoYBeginner

Year over year, comparing data with the same period one year earlier.

CPI at 3.2% YoY means prices are 3.2% higher than a year ago.

Zero-Coupon BondIntermediate

A bond sold at a discount that pays no periodic coupon and matures at face value.

The investor earns return from the difference between purchase price and redemption value.

Zero-Sum GameIntermediate

A situation where one participant’s gain equals another participant’s loss before costs.

Some derivative markets are often described as close to zero-sum before fees.

Zig Zag IndicatorIntermediate

A charting tool that filters smaller price movements to highlight major swings.

Traders may use Zig Zag to identify swing highs, swing lows, and wave structure.