Basics
Pip
A pip is the smallest standard price move in a forex pair — typically the fourth decimal place (0.0001) on most majors, or the second decimal (0.01) on yen pairs.
Leverage
Leverage lets you control a trading position larger than the capital you deposit — a 1:100 leverage means $1,000 margin controls a $100,000 position.
Lot Size
A lot is the standardised position unit in forex. A standard lot is 100,000 units of the base currency; a mini lot is 10,000, a micro lot is 1,000.
Equity
Account equity is the real-time total value of your account including open positions — balance plus unrealised profit or loss.
CFD
A Contract for Difference is a derivative that lets you trade the price movement of an underlying asset (forex, stocks, commodities) without owning it.
MetaTrader 4 (MT4)
MT4 is the most widely used retail forex trading platform, supporting automated strategies (EAs), custom indicators, and all major brokers.
MetaTrader 5 (MT5)
MT5 is the successor to MT4 — faster, multi-asset (stocks, futures, crypto), with 21 timeframes and a more capable scripting language (MQL5).
cTrader
cTrader is an ECN-focused trading platform known for its clean UI, depth-of-market order book, and pro-grade execution features.
Orders & Execution
Bid / Ask
The bid is the highest price a buyer is willing to pay; the ask (or offer) is the lowest price a seller is willing to accept. The difference is the spread.
Stop Loss
A stop loss is a pre-set order that automatically closes your trade when price hits a level you specify — the core risk management tool in forex.
Take Profit
A take profit is a pre-set order that closes a winning trade automatically at a target price, locking in gains without needing to watch the screen.
Costs & Fees
Spread
The spread is the difference between the bid (sell) and ask (buy) prices on a forex pair — effectively your cost per round-trip trade on a commission-free account.
Slippage
Slippage is the difference between the price you intended to trade at and the price you actually got filled at — usually worse under fast market conditions.
Commission
Commission is a per-lot fee charged on ECN and raw-spread accounts, replacing the wider spread of standard accounts.
Swap
Swap (or rollover) is the overnight interest charge or credit applied when you hold a forex position past the end-of-day cut-off.
Rollover
Rollover is the daily 5pm New York cut-off that marks the end of the forex trading day and triggers swap charges on open positions.
Risk Management
Margin
Margin is the amount of your own capital a broker sets aside to keep a leveraged position open. It is collateral, not a fee.
Margin Call
A margin call is a warning from your broker that your account equity has fallen close to the minimum required to keep positions open — the next step is a stop-out.
Stop-Out
The stop-out level is the margin percentage at which a broker automatically closes your losing positions to prevent your account from going negative.
Risk-Reward Ratio
Risk-reward ratio compares the distance from entry to stop loss versus entry to take profit — expressed as "1:2" meaning you risk 1 to make 2.
Position Sizing
Position sizing is the calculation of how many lots to trade so your maximum loss matches a fixed percentage of account equity, regardless of stop distance.
Drawdown
Drawdown is the peak-to-trough decline in account equity, usually expressed as a percentage — the standard measure of a strategy's worst losing streak.
Strategy
Breakout
A breakout happens when price clears a defined support or resistance level with momentum, signalling a potential new trend or range expansion.
Scalping
Scalping is a trading style that enters and exits positions within minutes (or seconds), targeting a few pips per trade with tight stops.
Day Trading
Day trading is a style where positions are opened and closed within the same trading day, avoiding overnight exposure and swap costs.
Swing Trading
Swing trading holds positions for several days to a few weeks, targeting larger directional moves than day trading and tolerating overnight risk.
Carry Trade
A carry trade buys a high-interest-rate currency and sells a low-interest-rate currency, profiting from the daily swap credit as well as any appreciation.
Hedging
Hedging means opening an offsetting position in a correlated instrument to reduce risk on an existing exposure.
News Trading
News trading involves taking positions around high-impact economic releases (NFP, CPI, FOMC) to capture the immediate volatility spike.
Pips Per Trade
Pips per trade is the average profit or loss per completed trade, expressed in pips — a core performance metric for discretionary traders.
Copy Trading
Copy trading lets you automatically mirror the trades of another trader — popularised by eToro and now offered across most major brokers.
Analysis
Liquidity
Liquidity is how easily a currency pair can be traded at the quoted price — high-liquidity pairs like EUR/USD have tight spreads and minimal slippage.
Volatility
Volatility measures how much price moves over a given period — higher volatility means larger ranges and more opportunity, but also more risk.
Support & Resistance
Support and resistance are horizontal price zones where demand (support) or supply (resistance) has historically caused price to reverse or consolidate.
Trendline
A trendline is a line drawn connecting a series of higher lows (uptrend) or lower highs (downtrend) to visualise the direction of price movement.
Correlation
Currency correlation describes how two pairs move relative to each other — positive correlation means they move together, negative means they move opposite.
Indicators
ATR
Average True Range (ATR) is a volatility indicator measuring the average trading range over a set period — commonly 14 bars.
RSI
Relative Strength Index is a 0–100 momentum oscillator used to identify overbought (>70) and oversold (<30) conditions in forex pairs.
MACD
MACD (Moving Average Convergence Divergence) is a momentum indicator showing the relationship between two exponential moving averages of price.
Fibonacci
Fibonacci retracement levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) are used to identify potential reversal or continuation zones within a trend.
Pivot Points
Pivot points are pre-calculated support and resistance levels based on the previous period's high, low, and close — popular with intraday traders.
Brokers
ECN
ECN (Electronic Communication Network) brokers route client orders directly into an interbank pool, offering raw spreads with a separate per-lot commission.
STP
STP (Straight-Through Processing) brokers forward client orders to liquidity providers without a dealing desk, typically offering standard accounts with no commission.
Dealing Desk
A dealing desk (or market maker) broker takes the opposite side of client trades internally, creating an inherent conflict of interest.
Islamic Account
An Islamic (swap-free) account complies with Sharia law by eliminating overnight interest (riba) on held positions.
Requote
A requote is a broker's rejection of your order at the requested price, followed by an offer to execute at a new (usually worse) price.
Regulation
Broker regulation refers to the government authority overseeing a broker's conduct — tier-1 regulators include FCA, ASIC, CySEC, CFTC, DFSA, and FSCA.
Segregated Funds
Segregated funds are client deposits held in a separate bank account from the broker's operating capital, protecting them from broker insolvency.
Negative Balance Protection
Negative balance protection is a regulatory guarantee that a retail client's account cannot go below zero — losses are capped at the deposit.
Execution Quality
Execution quality measures how closely your fills match the quoted price — taking into account slippage, requotes, and speed of order processing.
No-Deposit Bonus
A no-deposit bonus is credit given by a broker to new clients without requiring them to deposit their own funds — usually $10 to $50.