Bid Price: The highest price a buyer is willing to pay for a currency pair. It’s the price you’ll receive if you’re selling.
Base Currency: The first currency in a forex pair. For instance, in EUR/USD, the EUR is the base currency.
Bear Market: A market characterized by declining prices. A currency is said to be in a bear market if it has fallen more than 20% from its recent high.
Bull Market: A market characterized by rising prices. A currency is said to be in a bull market if it has risen more than 20% from its recent low.
Breakout: When the price of a currency pair moves outside of a defined support or resistance level with increased volume.
Broker: An individual or firm that acts as an intermediary between buyers and sellers. They earn a commission for this service.
Back Office: The administrative and support personnel in a financial firm who are not client-facing.
Balance of Payments: A record of all transactions made by a country over a certain period, reflecting trade balances, foreign investments, and other financial data.
Bar Chart: A type of chart used in technical analysis. Each bar represents a specific time frame (e.g., one day) and shows the open, close, high, and low prices for that period.
Base Rate: The interest rate set by a country’s central bank. It’s a key rate from which other lending rates are derived.

Currency Pair: The quotation of two different currencies, where the value of one currency is quoted against the other.

Cross Currency Pair: A currency pair that doesn’t include the US dollar, such as EUR/GBP.

Counter Currency: The second currency in a currency pair. In EUR/USD, USD is the counter currency.

Central Bank: The institution responsible for the monetary policy of its country or group of member states, such as the Federal Reserve in the US.

Carry Trade: A strategy in which an investor borrows money at a low interest rate in one currency to invest in another currency that provides a higher interest rate.

Candlestick Chart: A chart type that provides high, low, open, and close prices for a specific time frame, using “candles” to represent price movements.

CFD (Contract for Difference): A contract between two parties to exchange the difference between the opening and closing price of a contract.

Chartist: An individual who uses charts to analyze and forecast market movements.

Clearing: The process of settling a trade.

Commission: A service charge levied by a broker for handling transactions.

Day Trading: The practice of buying and selling within the same trading day, meaning positions are not held overnight.

Depreciation: A decrease in a currency’s value relative to another currency.

Derivative: A financial contract whose value is based on the performance of underlying market factors, such as interest rates, currency exchange rates, and commodity prices.

Direct Quote: A foreign exchange rate quoted as the domestic currency per unit of the foreign currency.

Dovish: A policy or statement that suggests a central bank is looking to lower interest rates or implement expansionary monetary policies.

Drawdown: The decline in value from a peak in an investment or trading account.

Durable Goods Order: A measure of the new orders placed with domestic manufacturers for delivery of hard goods.

Divergence: In technical analysis, it’s when the price is moving in the opposite direction of a technical indicator.

Dealer: An individual or firm that buys and sells assets for their own account.

Deficit: When a country’s total imports exceed its exports.

ECB (European Central Bank): The central bank responsible for monetary policy within the Eurozone.

Economic Indicator: A statistic about economic activity, which can provide insight into the overall health of an economy.

Equity: The total value of an account, including all profits and losses.

Exchange Rate: The value of one currency for the purpose of conversion to another.

Exotic Currency: A less popularly traded currency, often from emerging markets or smaller economies.

Expiry Date: The last day a derivatives contract, such as an options or futures contract, is valid.

European Session: The trading hours that correspond to European markets, including London, Frankfurt, and Paris.

End of Day (EOD): Refers to processes that are performed at the close of each trading day.

Execution: The process of completing an order to buy or sell securities or currencies.

Exposure: The amount of funds invested in a particular currency pair or market.

Forex (Foreign Exchange): The global market where currencies are traded. It is the largest, most liquid market in the world.

Fundamental Analysis: Evaluating currencies by analyzing economic indicators, government policy, and societal factors.

Futures Contract: A standardized contract to buy or sell a specific quantity of a currency at a set date in the future.

FOMC (Federal Open Market Committee): The branch of the Federal Reserve Board that determines the direction of monetary policy.

Fill: The action of completing an order.

Forward Contract: A non-standardized contract between two parties to buy or sell a currency at a specified future date.

Floating Exchange Rate: When the value of a currency is allowed to be determined by the forex market.

Fibonacci Retracement: A technical tool that uses horizontal lines to indicate areas of support or resistance at the main Fibonacci levels.

Foreign Exchange Reserves: Funds held by a central bank in foreign currencies.

Free Margin: Funds in a trading account that are available for trading.

Gross Domestic Product (GDP): The total value of all goods and services produced within a country’s borders in a specific time frame.
Going Long: Buying a currency pair in anticipation of a rise in value.
Going Short: Selling a currency pair in anticipation of a drop in value.
Gap: A break between prices on a chart, typically caused by after-hours trading.
Gold Standard: A monetary system where a country’s currency is directly linked to gold.
Good ‘Til Cancelled (GTC): An order to buy or sell which remains in effect until it’s either executed or cancelled by the trader.
G7: A group of seven major advanced economies: Canada, France, Germany, Italy, Japan, United Kingdom, and the United States.
G20: An international forum of 19 countries and the European Union that discusses global issues.
Gearing: A measure of financial leverage, demonstrating the degree to which a firm’s activities are funded by owner vs. creditor funds.
Greenback: A slang term for the U.S. dollar.

Hedge: An investment to reduce the risk of price movements in an asset.

Hard Currency: A currency that is trusted and widely accepted globally, often used in international transactions.

High (Daily): The highest price of a currency pair within a trading day.

Hawkish: A policy or stance suggesting that a central bank is looking to raise interest rates or implement contractionary monetary policies.

Head and Shoulders: A pattern in technical analysis indicating a currency pair might move against its previous trend.

Historical Data: Past market data used in back-testing trading strategies.

Handle: The whole number part of a price quote.

Holding Period: The length of time an investment is held.

Horizontal Level: In technical analysis, a level of support or resistance.

Hybrid Model: A mixture of methods or styles used by brokers.

Interest Rate: The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Inflation: The rate at which the general level of prices for goods and services rises, causing purchasing power to fall.

Intervention: Action by a central bank to effect the value of its currency by entering the market.

Indicators: Statistical tools used by traders to interpret price data in an attempt to predict market trends.

Intraday: Refers to price movements of a currency or market within a single trading day.

Inverse Relationship: A relationship between two variables in which they move in opposite directions.

Initial Margin: The initial deposit of collateral needed to enter into a position.

Illiquid: The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value.

IMF (International Monetary Fund): An international organization aimed at promoting global monetary cooperation and stable growth.

In the Money: Refers to an option that would be profitable if exercised immediately.

Japanese Candlesticks: A style of financial chart used to describe price movements of a currency, derivative, or security.

Joint Account: An account shared by two or more individuals.

JPY: The official currency of Japan, known as the Japanese yen.

Jawboning: Informal persuasion by politicians or central bankers to influence markets without any formal action.

Journal: A record where traders keep details of all their trades, often used to review and improve trading performance.

Kiwi: A slang term for the New Zealand dollar (NZD).

Knock-In: A process where a dormant option begins to function as a normal option after a certain price level is achieved.

Knock-Out: A process where an option ceases to function once a certain price level is reached.

Key Currency: A major currency that is widely used in international transactions.

Keltner Channel: A volatility-based technical analysis indicator showing a central moving average with bands at a distance above and below.

Leverage: The ability to control a large position with a small amount of capital.

Lot: A standardized quantity of a particular financial instrument. In Forex, a standard lot is 100,000 units of the base currency.

Liquidity: The capability of an asset to be quickly converted into cash without any price discount.

Limit Order: An order placed with a brokerage to execute a buy or sell transaction at a set number of shares and at a specified price or better.

Long Position: A situation where an individual owns a particular currency pair and hopes to profit from an increase in its value.

Loonie: A slang term for the Canadian dollar.

Leading Indicators: Statistics about economic performance that are used to predict future economic activity.

Libor (London Interbank Offered Rate): The interest rate at which banks offer to lend funds to one another in the international interbank market.

Liquidation: The closing of an existing position through the execution of an offsetting transaction.

Lagging Indicators: Statistical data that follow an event or trend, confirming it rather than predicting it.

Margin: The amount of capital required by a broker to maintain an open position in the market.

Major Pairs: The seven most traded currency pairs, including EUR/USD, USD/JPY, and GBP/USD.

Market Order: An order to buy or sell a currency pair at the best available current market price.

Mini Lot: Typically 10,000 units of the base currency.

Micro Lot: Typically 1,000 units of the base currency.

Moving Average (MA): A widely used indicator in technical analysis that smooths price data to create a single flowing line, which makes it easier to identify the direction of the trend.

Momentum: The rate of acceleration of a security’s price or volume.

Monetary Policy: The actions taken by central banks to achieve their objectives of price stability, full employment, and stable economic growth.

Money Market: The market in which short-term capital is raised, invested, and traded using financial instruments such as treasury bills, bankers’ acceptances, and commercial paper.

Market Maker: A broker or dealer who maintains a firm bid and offer price in a given currency pair by standing ready to buy or sell at publicly quoted prices.

Net Position: The amount of currency bought or sold which has not been offset by opposite transactions.

No Dealing Desk (NDD): An execution model which provides direct access to the interbank market.

NFP (Non-Farm Payrolls): A key economic indicator that represents the total number of paid U.S. workers, excluding farm employees, private household employees, and non-profit organization employees.

Narrow Market: A market with little public interest.

Negative Balance Protection: A policy ensuring that traders cannot lose more money than deposited.

News Trading: A method where traders make decisions based on major news events.

Nominal Quote: A quote generated by a futures or options contract.

NZD: The official currency of New Zealand, known as the New Zealand dollar.

Notional Value: The total value of a leveraged position’s assets.

Nostro Account: A bank’s account held in a foreign country and denominated in the currency of that country.

Offer (Ask): The price at which the market is prepared to sell a product.
Over the Counter (OTC): A market conducted directly between dealers and principals rather than a regulated exchange trading floor.
Open Position: A deal not yet reversed or settled with a physical payment.
Option: A derivative which gives the right, but not the obligation, to buy or sell a currency pair at a certain price at a specified time.
Oscillator: A technical analysis tool that is banded between two extreme values and used to discover short-term overbought or oversold conditions.
Order Flow: The direct derivative of Price Action; it’s the summation of all buy and sell orders executed in the market.
Out of the Money: Refers to a situation in which the underlying asset’s price is less than the strike price (for a call) or greater than the strike price (for a put).
Overbought: A situation in which the price of a currency is believed to have risen too high too quickly.
Oversold: A situation in which the price of a currency is believed to have fallen too low too quickly.
Overnight Position: A trade position that remains open until the next trading day.

Pip: The smallest price move that a given exchange rate can make based on market convention. It’s usually the fourth decimal place in most currency pairs.
Position: A trade that’s currently active or open.
Portfolio: A collection of financial investments, including stocks, bonds, commodities, and currencies.
Pending Order: An order that will be executed when a currency reaches a certain price.
Profit/Loss or P/L: The actual “realized” gain or loss resulting from trading activities.
Parity: When two currencies have an equal value to another country’s currency.
Price Action: The movement of a currency’s price, often analyzed for patterns and used for trade execution decisions.
Pullback: A temporary reversal of an existing trend.
Pair: Refers to a forex quote of the relative value of one currency unit against the unit of another currency.
Public Debt: The total amount of money that a government owes to creditors.

Quote Currency: The second currency in a currency pair. It’s also known as the “counter currency.”
Quantitative Easing: A monetary policy in which a central bank buys government securities or other securities to lower interest rates and increase the money supply.
Quick Ratio: A measure used to determine the financial health of a company, calculated by dividing liquid assets by current liabilities.
Quote: The current price or rate of a specific financial instrument.

Resistance: A price level at which a currency tends to stop rising and may even turn downward.
Rate: The price of one currency in terms of another.
Risk Management: The process of identifying, analyzing, and accepting or mitigating the uncertainties associated with decision-making.
Rollover: The process of extending the settlement date of an open position to the next valid settlement date.
Retracement: A temporary reversal in the direction of a stock’s price that goes against the prevailing trend.
Range: The difference between the highest and lowest prices of a currency pair during a specific period.
Recession: A period of temporary economic decline during which trade and industrial activity are reduced.
Risk/Reward Ratio: The ratio used by traders to compare the expected return of an investment to the amount of risk undertaken to capture such returns.
Relative Strength Index (RSI): A momentum oscillator that measures the speed and change of price movements.
Rally: A recovery in price after a period of decline.

Spot Market: Where currencies are traded for immediate delivery.
Spread: The difference between the bid and the ask price.
Support: A price level at which a currency tends to stop falling and may even turn upward.
Swap: A forex strategy in which two parties exchange or “swap” the interest rates on loans in different currencies.
Short Selling: The act of selling a currency with the expectation that its value will decrease and can be bought back at a later time for profit.
Scalping: A trading strategy aimed at making profits from small price changes.
Slippage: The difference between the expected price of a trade and the price at which the trade actually gets executed.
Stop-Loss Order: An order placed with a broker to buy or sell a currency pair when it reaches a certain price to prevent further loss.
Settlement: The completion of a transaction, wherein delivery of a currency takes place.
Sterling: Slang for British Pound.

Technical Analysis: An approach in which past price data is studied for indicators of future price movement.
Trend: The general direction in which market or price is moving.
Take-Profit Order: An order placed to close a trade when a particular profit has been achieved.
Tick Size: The minimum change in price that can occur in a particular market.
Trading Platform: Software used for trading: opening, closing, and managing market positions through a financial intermediary.
Trailing Stop: A stop loss order that moves with the market price.
Turnover: The total volume of all executed transactions in a given time period.
Triple Bottom: A bullish chart pattern used in technical analysis.
Triple Top: A bearish chart pattern used in technical analysis.
Two-Way Price: Both the buy and sell rates are quoted for a forex deal.

Underlying: The actual traded market from which the price of a derivative (e.g., a currency pair) is derived.
Unrealized P/L: The hypothetical profit or loss on open positions valued at current market rates.
Uptick: A new price quote at a price higher than the previous quote.
USD: The United States Dollar.
Uptrend: When prices are moving with higher highs and higher lows.

Volatility: Refers to the change in price of a currency pair.
Volume: The number of shares or contracts traded in a currency or security.
Value Date: The date on which counterparts of a financial transaction agree to settle their respective obligations.
Vanilla Option: A financial instrument that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price, within a given time frame.
Vostro Account: A bank account held in a foreign country by a domestic bank, denominated in the currency of that country.

Whipsaw: A condition where a security’s price is moving in one direction but then quickly shifts in the opposite direction.
Wedge: A price pattern that indicates a temporary interruption to an existing trend.
Wire Transfer: An electronic transfer of funds from one financial institution or individual to another.
Wholesale Prices: Prices that are quoted for large volume transactions.
Warrant: A derivative that confers the right, but not the obligation, to buy or sell a security – normally equity – at a certain price before expiration.

X-Rate: Slang term for exchange rate.
XAU: Symbol for gold.

Yard: Slang term for one billion units.
Yield: The annual rate of return on an investment.
Yen: The official currency of Japan.

Zero Bound: Refers to a situation in which a central bank’s monetary policy tool is at zero or nearly zero.
Zig Zag: A chart pattern used in technical analysis that shows a stock’s price movements.
Z-Score: A statistical measurement that describes a value’s relationship to the mean of a group of values.