Glossary

48 of 48 terms

AskPricing & Orders

The price at which the market will sell to you — the price you pay when you buy. Always slightly above the bid.

Base currencyBasics

The first currency in a pair — the one you are buying or selling. In GBP/USD, the base is the pound; the price tells you how many dollars one pound buys.

BidPricing & Orders

The price at which the market will buy from you — the price you receive when you sell. Always slightly below the ask.

Break of structureSmart Money

Price closing beyond a previous swing high or low in the direction of the trend, confirming trend continuation. Abbreviated BOS.

CandlestickAnalysis

A chart element showing four prices for a period: open, high, low and close. The body spans open to close; the wicks mark the extremes. The foundation of most technical analysis.

CFDBasics

Contract for Difference — a derivative that tracks the price of an underlying asset (a currency pair, gold, an index) without owning it. You settle the difference between entry and exit price in cash. Leveraged and high-risk.

Change of characterSmart Money

The first break of structure against the prevailing trend — an early warning that the trend may be reversing. Abbreviated CHoCH.

Demo accountBasics

A practice account funded with virtual money that mirrors live market prices. The standard proving ground before risking real capital — treat it seriously or it teaches you nothing.

DrawdownRisk & Psychology

The decline from an account's peak to its subsequent low, in percent. A 50% drawdown needs a 100% gain just to recover — the maths of why capital preservation comes first.

Economic calendarAnalysis

A schedule of upcoming economic data releases and central bank events, ranked by expected market impact. Checking it before trading is basic risk hygiene — news can blow through stops.

EquityBasics

Your account balance plus or minus the floating profit and loss of open positions. Equity, not balance, is what margin calculations are based on.

Exotic pairBasics

A pair combining a major currency with an emerging-market currency, such as USD/ZAR or USD/TRY. Wider spreads, thinner liquidity, and sharper gaps make exotics harder to trade well.

Fair value gapSmart Money

A three-candle pattern where the middle candle moves so fast it leaves a price gap between the first candle's wick and the third's. Often revisited ('filled') before the move continues.

Hawkish / DovishAnalysis

Descriptions of central bank tone. Hawkish means leaning toward higher interest rates (usually currency-positive); dovish means leaning toward cuts or stimulus (usually currency-negative).

LeverageBasics

Borrowed exposure provided by your broker, expressed as a ratio like 1:30 or 1:500. Leverage multiplies both gains and losses on the full position size — it is the main reason retail accounts blow up.

Limit orderPricing & Orders

An instruction to buy below the current price or sell above it, at your chosen level or better. Guarantees price, not execution — the market may never come to you.

LiquiditySmart Money

Resting orders in the market — including the clusters of stop losses sitting above obvious highs and below obvious lows. In SMC thinking, price is often drawn toward these pools before reversing.

Liquidity sweepSmart Money

A quick spike through an obvious high or low that triggers the stops resting there, followed by a reversal. Also called a stop hunt or raid.

LongBasics

A position that profits if price rises. Buying EUR/USD means going long the euro against the dollar.

LotBasics

A standardised trade size. A standard lot is 100,000 units of the base currency; a mini lot is 10,000; a micro lot is 1,000. Most retail traders size positions in fractions of a lot.

Major pairBasics

A currency pair containing the US dollar and one other highly traded currency: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, NZD/USD. Majors have the deepest liquidity and tightest spreads.

MarginBasics

The deposit your broker locks up as collateral to open a leveraged position. With 1:100 leverage, a $10,000 position requires $100 of margin.

Margin callBasics

A broker warning (or forced action) triggered when your account equity falls too close to your used margin. If equity keeps falling, the broker closes your positions automatically — the stop-out.

Market orderPricing & Orders

An instruction to buy or sell immediately at the best available price. Guarantees execution, not price.

Moving averageAnalysis

The average closing price over a set number of periods, drawn as a line on the chart. Used to read trend direction and dynamic support/resistance. Common settings: 20, 50, 200.

NFPAnalysis

US Non-Farm Payrolls — the monthly American jobs report, released the first Friday of each month. One of the most volatile scheduled events for the dollar, gold and indices.

Order blockSmart Money

The last opposing candle (or zone) before a strong institutional move — for example, the final down-candle before an aggressive rally. Traders mark these zones expecting price to react on a return visit.

PipBasics

The standard unit of price movement in forex — usually the fourth decimal place (0.0001) for most pairs, or the second decimal (0.01) for JPY pairs. If EUR/USD moves from 1.0850 to 1.0851, it has moved one pip.

Position sizingRisk & Psychology

Calculating how many lots to trade so that a stop-loss hit costs a fixed, small percentage of your account — typically 1–2%. The mechanism that makes losing streaks survivable.

Quote currencyBasics

The second currency in a pair — the one the price is expressed in. In GBP/USD at 1.27, one pound costs 1.27 US dollars.

RequotePricing & Orders

When a broker rejects your requested price and offers a new one, usually in fast markets. Frequent requotes are a sign of poor execution quality.

ResistanceAnalysis

A price area where selling interest has repeatedly capped price. Old resistance often becomes new support once broken, and vice versa.

Revenge tradingRisk & Psychology

Re-entering the market impulsively to win back a loss, usually with oversized risk. One of the most common ways disciplined plans die. The fix is procedural: stop trading after a set daily loss.

Risk-to-reward ratioRisk & Psychology

The ratio between what you risk (entry to stop) and what you stand to gain (entry to target). At 1:2 you risk one unit to make two — and you only need to win 34% of the time to break even.

RSIAnalysis

Relative Strength Index — a momentum oscillator from 0 to 100 that measures the speed of recent price changes. Readings above 70 or below 30 flag stretched conditions, not automatic reversal signals.

ShortBasics

A position that profits if price falls. In CFD and forex trading you can short as easily as you can buy — there is always a currency being sold on the other side.

SlippagePricing & Orders

The difference between the price you requested and the price you were actually filled at. Common during fast markets and news releases, when liquidity thins out.

SpreadPricing & Orders

The gap between the bid and the ask. It is the built-in cost of every trade: the moment you enter, you are down the spread. Tight on majors, wide on exotics, and widest during news and rollover.

Stop lossPricing & Orders

A pre-set order that closes your position at a defined loss. The single most important order type in trading — a trade without a stop loss is an unquantified risk.

Stop orderPricing & Orders

An instruction to buy above the current price or sell below it, triggered when price reaches your level. Used to enter on breakouts or to exit losing positions.

SupportAnalysis

A price area where buying interest has repeatedly stopped price from falling further. The more times a level holds — and the more violently price reacts there — the more significant it is.

SwapBasics

The overnight interest charged or paid for holding a leveraged position past the daily rollover (typically 5pm New York). Driven by the interest-rate differential between the two currencies.

Take profitPricing & Orders

A pre-set order that closes your position at a defined profit target. Pairs with the stop loss to fix your risk-to-reward ratio before you enter.

The 1% ruleRisk & Psychology

Risking no more than 1% (or at most 2%) of account equity on any single trade. At 1% risk, ten straight losses draw the account down roughly 10% — painful but recoverable.

TimeframeAnalysis

The duration each candle or bar on a chart represents, from one minute (M1) to monthly (MN). Higher timeframes show the broader structure; lower timeframes show the detail — and the noise.

TrendAnalysis

The prevailing direction of price: uptrends make higher highs and higher lows; downtrends make lower highs and lower lows. Trading with the trend puts probability on your side.

VolatilityBasics

How much and how fast price moves. High volatility means bigger opportunities and bigger risks — position sizes should shrink as volatility rises.

XAU/USDBasics

The symbol for spot gold priced in US dollars. Traded like a currency pair, gold is popular with retail traders for its strong trends and deep liquidity — but its volatility demands wider stops and smaller position sizes.