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Forex glossary

Plain-English definitions of the terms you will meet on broker websites, in platforms and in our reviews.

63 terms Updated 3 Nov 2026

Ask: The price at which you can buy. Always higher than the bid.
Bid: The price at which you can sell.
Spread: The difference between the bid and ask, paid when you open a trade.
Pip: The standard unit of price movement. 0.0001 for most pairs, 0.01 for yen pairs.
Lot: A trade size unit. A standard lot is 100,000 units of the base currency; a mini lot 10,000; a micro lot 1,000.
Base and quote currency: In EUR/USD, EUR is the base and USD the quote. The price shows how many USD buy one EUR.
Leverage: The ratio between position size and the margin required, e.g. 1:30.
Margin: The money a broker holds to keep a leveraged position open.
Margin level: Equity divided by used margin, as a percentage.
Margin call: A warning that your margin level has fallen to the broker's threshold.
Stop-out: The level at which the broker closes positions automatically. 50% for EU, UK and Australian retail clients.
Negative balance protection: A rule that stops retail clients losing more than their account balance.
Swap (rollover): Interest charged or paid on positions held overnight.
Commission: A fee per lot, usually quoted per side, on raw or ECN accounts.
Slippage: The difference between the price you requested and the price you got.
Requote: When a broker offers a new price instead of filling at the one you requested.
ECN / STP: Execution models that pass orders to liquidity providers rather than taking the other side.
Market maker: A broker that quotes its own prices and may take the other side of client trades.
Stop-loss: An order that closes a position at a set loss.
Take-profit: An order that closes a position at a set profit.
Limit order: An order to buy below or sell above the current price.
Stop order: An order to buy above or sell below the current price.
Expert Advisor (EA): An automated trading program for MetaTrader.
CFD: Contract for difference: a contract on a price movement, without owning the asset.
Volatility: How much and how fast a price moves.
Liquidity: How easily an instrument can be traded without moving the price.
Quote currency: The second currency in a pair. The price tells you how much of it one unit of the base currency costs.
Currency pair: Two currencies quoted against each other, such as EUR/USD. You buy one and sell the other.
Major pair: A pair that includes the US dollar and another heavily traded currency, such as EUR/USD, USD/JPY or GBP/USD.
Cross pair: A pair that does not include the US dollar, such as EUR/GBP or AUD/JPY. Also called a minor.
Exotic pair: A major currency paired with a less traded one, such as USD/TRY. Spreads and swaps are usually wider.
Pipette: A tenth of a pip. Many brokers quote prices to five decimal places, or three for yen pairs.
Long: A position that profits if the price rises. Going long means buying the base currency.
Short: A position that profits if the price falls. Going short means selling the base currency.
Balance: The money in your account from closed trades, deposits and withdrawals, ignoring open positions.
Equity: Your balance plus or minus the profit or loss on open positions.
Free margin: Equity minus the margin used by open positions: what is left to open new trades or absorb losses.
Drawdown: The fall in an account from a peak to a later low, usually shown as a percentage.
Hedging: Holding positions that offset each other to reduce risk. Some brokers and regulators restrict holding opposite positions on the same pair.
Rollover: The overnight process that extends open positions to the next trading day and applies the swap.
Triple swap: The day of the week, often Wednesday for forex, when three days of swap are charged to cover the weekend.
Gap: A jump in price with no trading in between, often after weekends or major news. Stops can fill beyond their level.
Trailing stop: A stop-loss that follows the price by a set distance as a trade moves in your favour.
Guaranteed stop: A stop-loss that closes at exactly your level even if the market gaps, usually for a fee.
Market order: An instruction to buy or sell straight away at the best available price.
Pending order: An order that waits until a set price is reached, such as a limit or stop order.
Spread bet: A UK and Irish product where you stake an amount per point of price movement. Profits are currently not usually subject to UK capital gains tax.
Rolling spot: A forex contract that is rolled over each day instead of being settled, which is how most retail forex is traded.
Account currency: The currency your account is held in. Profits and losses in other currencies are converted into it.
Retail client: The default client category, with the most regulatory protection, including leverage limits in many countries.
Professional client: A client who meets experience and wealth tests and gives up some retail protections in exchange for higher leverage.
Regulator: A government body that authorises and supervises brokers, such as the FCA in the UK or ASIC in Australia.
Segregated funds: Client money held in bank accounts separate from the broker's own money.
Compensation scheme: A scheme that may repay eligible clients up to a limit if a regulated firm fails, such as the FSCS in the UK.
Economic calendar: A schedule of data releases and central bank decisions that can move currency prices.
Non-farm payrolls: The monthly US jobs report, usually released on the first Friday of the month and often followed by sharp moves.
Central bank: The institution that sets a country's interest rates, such as the Federal Reserve or Bank of England.
Average true range (ATR): An indicator of how far a price typically moves over a period, often used to set stop distances.
Support and resistance: Price levels where buying or selling has previously stopped a move. Used in technical analysis.
Risk-reward ratio: The potential loss on a trade compared with its potential gain, for example 1:2.
Position size: How large a trade is, in lots or units. It decides how much each pip is worth.
Copy trading: Automatically copying another trader's positions into your own account.
Dealing desk: A broker set-up where the broker takes the other side of client trades instead of passing them to the market.