Forex Glossary

Ask – If you submit a sell or go short on a trade, the ask price is the price at which your trade will be executed.

Account Balance – The entire amount of money in your trading account (deposits, withdrawals, and transactions).

Base Currency – EUR/USD, for example. The base currency – EUR – is the currency on the left side of the slash.

Bear Market – A market circumstance in which market prices are falling, resulting in widespread pessimism and bad mood.

Bid – If you submit a purchase or go long trade, the bid price is the price at which your trade will be executed.

Broker – A regulated and licensed individual or corporation that acts as a broker and provides traders with an online forex trading environment.

Bull market – A market state in which market prices rise or are predicted to rise, resulting in increased investor confidence and a more positive trading environment.

Currency pair – The quotation of the value of one currency unit against the unit of another currency is known as a currency pair.

Equity – The floating profit/loss of your open positions is added to your account balance. Your account equity and balance are the same when you have no active trades and thus no floating profit/loss.

Expert Advisor (EA) – A software program generally referred to as a “Robot” that is set up to trade for you. The term for this is ‘automatic trading.’

Free Margin – The gap between your account equity and the margin on open positions.

Hedging – Hedging is a tactic employed by traders in the forex market to reduce the risk associated with foreign currency transactions.

High Price – The highest price of the trading day is indicated.

Leverage – The ratio used to reflect the transaction size and the actual margin investment. Clients can use leverage to trade more money than they put into their account. A client who deposits $100 and picks a leverage of 200:1 will be able to place orders for $20,000.

Limit Entry Pending Order – An order to purchase below the market or sell above the market at a predetermined level, with the expectation that the price would turn in the desired direction from there.

Long – When you “go long” on a currency pair, you are just placing a buy order. All currency pairs in forex trading have a base currency and a quote currency. Typically, the quote will look like this: USD/JPY = 100.00. The base currency is the US dollar, while the quote currency is the Japanese yen. A rate of $1 US Dollar to 100 Japanese Yen is shown in this statement. When you conduct a long trade on this currency pair, you are buying the USD and selling the Japanese Yen at the same time. It may appear difficult, but you would make this transaction if you thought $1 would become more valuable than 100.00 Japanese Yen (i.e. $1 = 101.00JPY).

Lot – A transaction’s normal unit size. A normal lot consists of 100,000 units of the basic currency, 10,000 units for minis, and 1,000 units for micros.

Low price – The lowest price of the trading day is indicated.

Manual Execution – An order that is carried out with the help of a dealer.

Margin – The minimum deposit to keep the client’s trades active on the market. For example, if your leverage is 200:1 and you place a $20 000 order, the margin is the $100 you must deposit. No trades can be conducted if the account balance is less than $100.

Margin Level – [(Equity/Margin) x 100] is the equity-to-margin ratio. This is a critical factor since brokers use it to determine whether or not traders can open fresh positions.

Margin Call Level – The early notification that the quantity of Equity in the Client’s Account matches or falls below the Used Margin. For Marketnetic clients, the Margin Call is turned on to 100 percent.

Market Order – A buy or sell order for a currency at the current market price.

Pip – The minimal possible price change for a given exchange rate. Because most major currency pairs are priced to four decimal places, the smallest change is the fourth digit following the decimal point, or the last decimal point.

Quote Currency – EUR/USD, for example. The base currency is the currency on the right side of the slash, which is USD.

Resistance – A technical price level when sellers compensate purchasers, forcing prices to bounce off a preliminary price ceiling, is known as resistance.

Rollover – The rate of interest charged on a currency pair over the course of one day.

Scalping – Trading that entails regular trading with the goal of making tiny profits in a short period of time. Trades might last anything from a few seconds to many minutes.

Short – When you “go short” on a currency pair, you are just placing a sell order. All currency pairs in forex trading have a base currency and a quote currency. Typically, the quote will look like this: USD/JPY = 100.00. The base currency is the US dollar, while the quote currency is the Japanese yen. A rate of $1 US Dollar to 100 Japanese Yen is shown in this statement. When you make a short trade on this currency pair, you are selling the US dollar and buying the Japanese yen at the same time.

Slippage – It’s the difference between the order price and the executed price, measured in pips. Slippage occurs in fast-moving and volatile markets, as well as when trades are manually executed.

Spot Market – Purchasing and selling currencies at market rates

Spread – The difference between a currency pair’s bid and ask prices.

Stop Entry Pending Order – An order to buy above or sell below the market at a pre-determined level, with the expectation that the price will continue in the same direction.
Stop-Loss – Limiting losses at a pre-determined price level.

Stop-out Level – The Company’s forced closing of Client’s open positions at current prices when equity falls below the minimum needed margin. On the Marketnetic, the stop-out level has been set at 20%.

Straight-Through Processing (STP) broker – A Forex broker who serves as a middleman between traders and liquidity providers. Brokers who use STP systems send trader orders straight to liquidity providers and charge a commission.

Swap – Buying and selling a specific amount of one currency for the same amount of another currency at the same time. Swaps are routinely charged interest rates, referred to as “swap rates.” Swap-free accounts are available at Marketnetic.

Support – A technical price level where buyers compensate sellers, causing prices to bounce off a preliminary price floor, is known as support.

Take Profit Order (T/P) – Traders use this order to define the exact number of pips from the current price point where they want to close out their position for a profit. The “take-profit point” is the rate that is judged to be the level at which the trader intends to take a profit.

Trailing Stop – For a long/short position, a stop-loss order set at a percentage level below/above the market price. As the price changes, the trailing stop price adjusts. A trailing stop market order can be used to place a trailing stop order.