Glossary
Forex glossary
Market terms in plain language, with the English term and an example.
44 termsLearn it in the learning path
44 terms
B
C
- CandlestickA display of open, close, high and low for a period; the body spans open to close and the wicks show the extremes.
- Change of character (CHoCH)The first break against the prior trend, warning that the trend may be reversing.
- Consumer Price Index (CPI)The main inflation gauge, measuring the change in prices of a basket of consumer goods and services; it drives rate decisions.
- Currency pairThe price of one currency (the base) quoted in another (the quote). The first currency is the base and the second is the quote.
D
E
F
- Fair value gap (FVG)A three-candle imbalance where the wicks of the first and third candles do not overlap; price often returns to fill it.
- Fibonacci extensionLevels beyond 100%, such as 127.2%, 161.8% and 261.8%, used to project targets for the next move.
- Fibonacci retracementA tool that uses 23.6%, 38.2%, 50%, 61.8% and 78.6% ratios to mark where a pullback within a trend may end.
- ForexThe global, decentralized market for exchanging currencies, open 24 hours a day five days a week, and the largest financial market in the world by trading volume.
H
I
L
- LeverageBorrowed exposure from the broker that lets you control a larger position with less capital. It magnifies both profits and losses.
- LiquidityIn analysis, clusters of stops and orders above obvious highs and below obvious lows that price often targets to fill large orders.
- Liquidity sweepA brief move beyond a high or low that triggers stops before price quickly reverses.
- LotThe unit of trade size. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000.
M
- MarginThe part of your account balance locked as collateral to keep a leveraged position open.
- Margin callA broker warning when your margin level falls to a set threshold; if it keeps falling, positions are closed automatically (stop-out).
- Market structureThe pattern of highs and lows: higher highs and higher lows mean an uptrend, lower highs and lower lows a downtrend.
O
P
- Pin barA candle with a small body and a long wick that shows price rejection at a level.
- PipThe smallest standard unit of price change in a currency pair: the fourth decimal place in most pairs and the second in yen pairs.
- Position sizingCalculating trade size from the percentage you are willing to risk and the stop distance.
- Premium and discountSplitting a range at 50%: above it is premium (better for selling), below it is discount (better for buying).
- Price channelTwo parallel lines that contain price action, rising, falling or sideways.
R
- RebateA return of part of the spread or commission paid, credited per lot traded to the trader or introducer.
- ResistanceA level or zone above price where supply tends to strengthen and halt rallies.
- Risk-reward ratioThe distance to your stop compared with the distance to your target. A 1:2 ratio means the target is twice the risk.
S
- Safe havenAssets such as gold, the Japanese yen and the Swiss franc that attract demand during crises and risk-off periods.
- SlippageThe difference between the requested price and the actual fill, common during news or thin markets.
- Smart Money Concepts (SMC)A price-action approach that tracks institutional order flow through BOS, CHoCH, order blocks, fair value gaps and liquidity.
- SpreadThe difference between the ask (buy) price and the bid (sell) price; the main cost of entering a trade.
- Stop lossAn order that closes a trade at a preset level if price moves against you, capping the loss.
- Supply and demand zoneAreas price left sharply, suggesting unfilled buy orders (demand) or sell orders (supply).
- SupportA level or zone below price where demand tends to strengthen and halt declines.
- SwapThe overnight fee or credit for holding a position past the trading day, based on the interest-rate difference of the two currencies.
T
- Take profitAn order that closes a trade once price reaches your target, locking in the profit.
- TimeframeThe period each candle covers on a chart, such as 15 minutes, 1 hour, 4 hours, daily or weekly.
- Trading sessionThe main market hours: Asia (Tokyo), London and New York; the London–New York overlap is usually the most volatile.
- TrendlineA line connecting higher lows or lower highs that shows the direction and slope of a trend.