TOOLS · GLOSSARY

Trading Glossary

Plain-English definitions of the terms you will meet on the desk — searchable, no jargon.

Ask: The price at which you can buy. The ask is always slightly above the bid (the spread).
Bid: The price at which you can sell. The bid is always slightly below the ask.
Spread: The difference between the ask and bid price — effectively the broker's fee on each trade.
Pip: The smallest standard price move in a currency pair — usually 0.0001 (0.01 for JPY pairs).
Lot: A standardised trade size — 1 standard lot = 100,000 units of the base currency.
Leverage: Borrowed buying power. 100:1 leverage lets a $1,000 margin control a $100,000 position. Amplifies both gains and losses.
Margin: The amount of your own capital required to open a leveraged position.
Free Margin: The equity available to open new positions — equity minus used margin.
Margin Call: A broker warning that your equity has fallen too close to required margin; positions may be closed if it worsens.
Stop Loss: An order that closes a trade at a pre-set loss level to cap risk.
Take Profit: An order that closes a trade at a pre-set profit level.
Risk-Reward Ratio: Potential profit relative to potential loss — e.g. 1:3 means risking 1 to make 3.
Drawdown: The drop in your account from its peak to a trough. Large drawdowns are hard to recover from.
Risk of Ruin: The probability that you will lose so much you can no longer trade. Driven by win rate and risk per trade.
Volatility: How much a price swings over time. Higher volatility means bigger moves and bigger risk.
RSI: Relative Strength Index — a momentum oscillator from 0–100. Above 70 is often 'overbought', below 30 'oversold'.
EMA: Exponential Moving Average — a smoothed average that weights recent prices more heavily. EMA20 vs EMA50 is a common trend gauge.
Support: A price level where buying has historically stepped in, slowing or reversing a fall.
Resistance: A price level where selling has historically stepped in, slowing or reversing a rise.
Trend: The general direction of price — up, down, or sideways. 'The trend is your friend' until it isn't.
Fibonacci Retracement: Levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) marking likely pullback zones in a move.
Pivot Points: Levels derived from the prior period's high, low and close, used to map intraday support/resistance.
Economic Calendar: A schedule of key economic releases (CPI, NFP, central-bank decisions) that move markets.
CPI: Consumer Price Index — a key inflation gauge that shapes central-bank rate decisions.
Non-Farm Payrolls (NFP): The US monthly jobs report — one of the most market-moving releases in FX.
Central Bank: The institution setting interest rates (Fed, ECB, BoJ, BoE…). Rate decisions drive currency moves.
Hawkish: A central-bank tone that leans toward higher rates — usually strengthens the currency.
Dovish: A central-bank tone that leans toward lower rates — usually weakens the currency.
Safe Haven: Assets that tend to hold value in turmoil — gold, USD, JPY, CHF.
Correlation: How two assets move together. Correlations break in stress, so never trust them blindly.
Fundamental Analysis: Judging a currency by economic data, rates and policy.
Technical Analysis: Judging a currency by price action, levels and indicators.
Slippage: Getting a worse fill than expected when the market moves between order and execution.
Swap / Rollover: Interest paid or earned for holding a position overnight. Held over Wednesday incurs triple swap.
Scalping: Many very short trades aiming at tiny moves — heavy spread cost, high discipline needed.
Swing Trading: Holding trades for days to capture a broader move.
Position Sizing: Choosing trade size so that a losing stop costs an acceptable slice of your account.
Long: A position that profits if the price goes up. 'Going long' means buying first, selling later.
Short: A position that profits if the price goes down. You sell first and buy back later — possible in forex, CFDs and crypto CFDs because you never own the asset.
Market Order: An order to buy or sell right now, at the best price available. Fast, but the fill can differ from the price you saw (see Slippage).
Limit Order: An order to buy below, or sell above, the current price — it waits until the market reaches your level. You choose the price; you do not choose whether it fills.
Stop Order: An order that becomes a market order once the price reaches your level — used to enter on a breakout (buy stop above, sell stop below) or to exit (a stop loss).
Pending Order: Any order waiting for a price to be reached: limits and stops. It sits with the broker until it triggers or you cancel it.
Trailing Stop: A stop loss that follows the price as it moves in your favour by a set distance, and stays put when the price moves against you. Locks in gains without you watching.
OCO (One Cancels the Other): Two orders linked so that when one fills, the other is cancelled — typically a take profit and a stop loss on the same position.
Execution: The moment your order is actually filled. 'Instant' and 'market' execution differ in whether the broker may requote you or simply fill at the next available price.
Requote: The broker offering a new price because the one you clicked is gone. Common in fast markets on instant-execution accounts.
Liquidity: How easily you can buy or sell without moving the price. Deep liquidity means tight spreads and small slippage; thin liquidity (holidays, the daily rollover) means the opposite.
Volume: How much was traded in a period. In forex it is your broker's tick volume, not the whole market's — useful for comparing activity, not for absolute numbers.
Order Book: The list of waiting buy and sell orders at each price on an exchange. Forex has no single order book; crypto exchanges show theirs.
Market Maker: A broker or firm that quotes both a bid and an ask and takes the other side of client trades. Not sinister by itself — it is how many markets get their liquidity.
ECN / STP: Account types where the broker passes your order to outside liquidity rather than taking the other side. Usually raw spreads plus a commission.
Base Currency: The first currency in a pair. In EUR/USD it is the euro: the price says how many dollars one euro costs.
Quote Currency: The second currency in a pair — the one the price is expressed in. In EUR/USD it is the dollar; your profit or loss is first calculated in it.
Major Pairs: The most traded pairs, all against the US dollar: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD. Tightest spreads, deepest liquidity.
Cross Pairs: Pairs without the US dollar, such as EUR/GBP or GBP/JPY. Priced through the dollar behind the scenes; spreads are usually wider.
Exotic Pairs: A major currency against a smaller economy's currency (USD/TRY, USD/ZAR). Wide spreads, sharp moves, and swaps that can surprise you.
Standard / Mini / Micro Lot: 100,000 / 10,000 / 1,000 units of the base currency. A micro lot on EUR/USD moves about $0.10 per pip — the right size to learn with.
Contract Size: How many units one lot represents for that instrument. 100,000 for most currency pairs; often 100 ounces for gold; check the specification, brokers differ.
Notional Value: The full size of what you control: lots × contract size × price. Your margin is a fraction of it; your profit and loss move on all of it.
Balance: The money in your account not counting open positions. It changes only when a trade closes or you deposit or withdraw.
Equity: Balance plus the profit or loss of open positions, right now. This is what margin is measured against, and what a stop out looks at.
Unrealised P&L: The profit or loss on positions still open. It is not yours until you close — it can and does reverse.
Realised P&L: Profit or loss that has been locked in by closing a position. This is what actually changes your balance.
Stop Out: The level at which the broker closes your positions for you because equity has fallen too far against margin. It happens automatically and at the worst moment; a stop loss is how you avoid meeting it.
Hedging: Holding positions that offset each other, for example long and short on the same pair. Some accounts allow it, some net the two out; it reduces exposure, not risk of being wrong.
Averaging Down: Adding to a losing position to lower the average entry. Feels like a plan; usually turns one mistake into a bigger one. Course 03 covers why.
Breakout: Price moving decisively through a level that had held — support, resistance, or a range boundary. The question is always whether it holds or comes straight back (a false breakout).
Pullback: A move against the trend that stops and turns back. Trend traders wait for pullbacks to enter with the trend rather than chasing.
Reversal: A change in the direction of the trend itself, not just a pause. Telling a pullback from a reversal is the whole of Course 06.
Range: A market moving sideways between a floor and a ceiling. Trend strategies lose money here; range strategies lose money when it ends.
Consolidation: A pause where price tightens into a narrow area after a move. Often precedes the next move; says nothing about its direction.
Higher High / Higher Low: The footprint of an uptrend: each peak above the last, each dip above the last dip. A downtrend is the mirror: lower highs and lower lows.
Candlestick: One bar showing the open, high, low and close for a period. The body is open-to-close; the wicks are the extremes reached in between.
Wick: The thin line above or below a candle's body — how far price travelled before being pushed back. A long wick is a rejection, not a promise.
Doji: A candle whose open and close are almost equal: the market could not decide. Meaningful at a level after a trend, noise in the middle of a range.
Engulfing Candle: A candle whose body completely covers the previous candle's body in the opposite direction. One of the few patterns that survives a careful look — still needs a level and context.
Timeframe: The period each candle represents: M1, M5, M15, H1, H4, D1. The higher timeframe sets direction; the lower one sets timing.
Trading Sessions: The market's day in three parts: Asia (Sydney and Tokyo), London, New York. Volatility and which pairs move depend on which session is open.
Session Overlap: When two sessions are open at once — London and New York, roughly 12:00 to 16:00 UTC — usually the day's busiest hours.
Gap: A jump in price with no trades in between, most often at the Sunday open after weekend news. Stops can fill beyond their level when the market gaps.
Rollover Time: The daily moment, usually 22:00 UTC, when swaps are charged and spreads widen briefly. Avoid entering or exiting right on it.
Trend Line: A straight line drawn along successive higher lows (uptrend) or lower highs (downtrend). Useful once it has been respected twice; before that it is a guess.
Channel: Two parallel trend lines that contain the price. The lower one is where trend traders look to buy in an uptrend; the upper one where they take profit.
Moving Average: The average price over the last N candles, redrawn on each new candle. Smooths the noise; the price crossing it or sitting far from it is what people watch.
MACD: Moving Average Convergence Divergence — the gap between two moving averages, and a signal line on that gap. A momentum tool; lags, like everything built on averages.
Bollinger Bands: A moving average with a band each side set at a number of standard deviations. Bands squeeze in quiet markets and widen in volatile ones; touching a band is not a signal by itself.
ATR (Average True Range): How far the price typically moves in a candle, averaged over 14 candles. The honest way to size a stop loss — a stop inside one ATR is inside the noise.
Stochastic Oscillator: Where the close sits within the recent high-low range, 0 to 100. Like RSI, it reads overbought and oversold — which in a strong trend can stay that way for days.
Divergence: The price making a new high or low while an indicator such as RSI does not. A warning that momentum is fading, not a signal to trade against the trend on its own.
Confluence: Several independent reasons pointing to the same level or direction — a support level, a trend line and a moving average all meeting. More confluence, better odds; never certainty.
Risk per Trade: The amount you are willing to lose if the stop is hit, as a percentage of the account. One percent is the working number in the courses; a quarter percent for the first live month.
Win Rate: The share of trades that end in profit. On its own it says nothing — a 40% win rate with winners twice the size of losers is a profitable system.
Expectancy: What a trade is worth on average: (win rate × average win) minus (loss rate × average loss). Positive expectancy is the only thing that matters over hundreds of trades.
R-Multiple: A result measured in units of the risk taken. A trade that risked $50 and made $100 is +2R; one that lost the full stop is −1R. Lets you compare trades of any size.
Trading Journal: A record of every trade: the setup, the reason, the size, the result, and whether the plan was followed. The second column — followed the plan, yes or no — is the one that changes a trader.
Backtest: Running a set of rules over past price data to see how it would have done. Useful for finding what does not work; past results do not guarantee anything about the future.
Demo Account: A practice account with virtual money and real prices. The only place to learn the platform and test a plan — and the only account the courses ask you to open.
Live Account: An account funded with real money. The chart does not change when the money becomes real; you do. Course 09 is about that step.
KYC (Know Your Customer): The identity checks a regulated broker must do before you can trade or withdraw — ID, address, sometimes source of funds. A broker that skips them is the warning, not the convenience.
Regulation: Oversight by a financial authority that sets rules on client money, leverage and conduct. Check which authority, and check on the authority's own website, not the broker's.
Negative Balance Protection: A guarantee that you cannot lose more than the money in your account, even if a gap takes prices past your stop. Standard with regulated brokers in many jurisdictions.
Spread Widening: Spreads getting temporarily larger — around news, at rollover, in thin hours. A stop loss can be hit by the spread alone; a tight stop is a bet on spreads staying tight.
Interest Rate Decision: A central bank setting its policy rate. The most important scheduled event for a currency; the surprise versus expectations moves the market, not the number itself.
GDP: Gross Domestic Product — the size of an economy's output over a quarter or year. Released quarterly; markets trade the difference from the forecast.
PMI: Purchasing Managers' Index — a monthly survey of businesses. Above 50 means expansion, below 50 contraction. Watched because it arrives before the hard data.
Inflation: The rate at which prices in general are rising. Central banks raise rates to slow it and cut rates when it falls; that link is why CPI moves currencies.
Risk-On / Risk-Off: The market's mood. Risk-on: money flows into stocks, commodity currencies and crypto. Risk-off: into the dollar, yen, franc and gold. Many pairs move together on it.
Carry Trade: Borrowing in a low-rate currency to hold a high-rate one, earning the difference in swap each day. Profitable while calm; unwinds violently when the mood turns.
Intervention: A central bank buying or selling its own currency to move the price. Rare, sudden, and the one event no chart can predict — Japan is the usual example.
Dollar Index (DXY): The US dollar measured against a basket of six currencies, euro-heavy. A quick read of dollar strength that most dollar pairs follow.
Basis Points: One hundredth of a percent. A 25-basis-point rate rise is 0.25%. The unit central banks and bond markets speak in.
FOMO: Fear of missing out — entering because the price is already running, without a setup. The most expensive emotion in trading; Course 04 is largely about it.
Revenge Trading: Taking a new trade to win back a loss, usually bigger and faster than the plan allows. The plan is the defence; the size on the page is the line to point at.
Overtrading: Trading because you are at the screen, not because there is a setup. Costs spread and swap every time, and attention when it matters.
Signal Group: A channel that sells trade calls to follow. The record is written by the seller, the reasoning is never yours, and the losses arrive in full. Course 08 takes it apart.
Guaranteed Returns: A promise no market can keep. It is not a product feature; it is the signature of a scam — along with a 90% win rate and 'send it to me and I'll trade it for you'.
Risk Management: The discipline of surviving losses: position size, stop-losses, and never over-leveraging.