Glossary

The price you buy at. It is always the higher of the two prices quoted for an instrument.

EUR/USD 1.14670 / 1.14673 — the ask is 1.14673.

Average True Range: how far the price typically moves in one candle. Traders use it to set stops outside everyday noise.

The money in your account, counting only closed trades. Open positions do not change it until they close.

The first currency in a pair — the one you are buying or selling. The price says how much of the second currency one unit of it costs.

EUR/USD at 1.1467: one euro costs 1.1467 US dollars. EUR is the base.

A market that has been falling for a sustained stretch, with sellers in control. A trader who expects prices to fall is “bearish”.

The price you sell at. It is always the lower of the two prices quoted for an instrument.

EUR/USD 1.14670 / 1.14673 — the bid is 1.14670.

Moving a trade’s stop loss to its entry price, so that from there the worst it can do is close for nothing.

The price pushing through a level it has respected — support, resistance, a trendline or the edge of a range — often with a burst of momentum.

A market that has been rising for a sustained stretch, with buyers in control. A trader who expects prices to rise is “bullish”.

A chart bar showing one period’s open, high, low and close. The body spans open to close; the wicks reach the high and low.

The institution that sets a currency’s interest rate — the Fed, the ECB, the Bank of England, the Bank of Japan. Its decisions are the biggest scheduled movers in forex.

A contract for difference: you trade the change in an instrument’s price without owning the instrument itself, and can go long or short with the same ease.

A gold CFD pays you the move in gold’s price — no bars change hands.

A fee charged per lot traded, on top of the spread. Accounts that charge one usually offer a tighter spread in return.

Standard accounts pay no commission; Executive and Corporate pay commission for spreads from 0.2 pips.

Linking your account to another trader’s so their trades open in yours automatically, scaled to your balance.

A pair of two major currencies without the US dollar in it.

EUR/GBP, EUR/JPY, GBP/JPY, AUD/JPY.

Two currencies quoted against each other. Buying the pair buys the first currency and sells the second at the same time.

Buy GBP/USD and you are long pounds, short dollars.

A practice account funded with virtual money on live prices. Everything works as it would on a real account; nothing is at stake.

Sending your orders straight to the market’s liquidity providers, with no dealing desk in between to take the other side. You trade on the prices the market is quoting, and a busy market fills you at the best one available.

You buy 1 lot of EUR/USD at 1.14673: the order goes straight to the liquidity providers and fills at their price, not at a price a dealer sets.

Price and an indicator disagreeing — price making a new high while the indicator makes a lower one, say. It often warns that a move is running out of steam.

How far an account has fallen from its highest point, before recovering. The deepest one it has ever had is its maximum drawdown.

$10,000 falls to $8,500: a 15% drawdown.

Electronic Communication Network: a marketplace where orders from banks, funds, brokers and traders meet and match against each other. You see the best bids and offers in the network and pay a small commission on top of a raw spread.

The best offer in the network for EUR/USD is 1.14673 from one bank; your 1-lot buy matches against it there and then.

The schedule of data releases and central bank decisions, with the forecast, the previous figure and the actual result as it lands.

Your balance plus or minus the profit and loss on everything still open — what the account would be worth if you closed it all now.

Balance $1,000, open trades −$150: equity $850.

The filling of your order at a price. Execution speed is how long that takes — at DMA Capitals, typically under 25 milliseconds.

A major currency against the currency of a smaller or emerging economy. Thinner trading means wider spreads and sharper moves.

USD/TRY, EUR/ZAR, USD/MXN.

A program that trades for you inside MetaTrader, opening and closing positions by rules written in advance.

Levels drawn between a swing high and low at set ratios, marking where a pullback may stall before the trend carries on.

23.6% · 38.2% · 50% · 61.8% · 78.6%.

The profit or loss on a trade that is still open. It becomes real — and reaches your balance — only when the trade is closed.

The foreign exchange market, where currencies are traded against each other. It runs 24 hours a day, five days a week, and is the largest market in the world.

Equity not tied up as margin — what is left to open new positions or absorb losses on open ones.

Equity $850, margin in use $229: free margin $621.

Judging a currency by the economy behind it: interest rates, inflation, jobs, growth and what the central bank is likely to do next.

A jump in price with no trading between the two levels, most often over a weekend or around a major surprise. Stops inside a gap fill at the first price after it.

Friday close 1.1460, Monday open 1.1490: a 30-pip gap.

Buying, in the expectation that the price will rise. You profit if it goes up and lose if it goes down.

Buy EUR/USD at 1.1467, close at 1.1517: +50 pips.

Selling first, in the expectation that the price will fall, and buying back later. You profit if it goes down.

Sell gold at 4,388.8, buy back at 4,350.0: a $38.80 fall in your favour per ounce.

Opening a position that offsets another, so a loss on one is balanced by a gain on the other.

Long 1 lot and short 1 lot of EUR/USD: price moves no longer change your P/L.

Trading a position larger than the money you put up for it. It multiplies profit and loss by the same amount, which is why it is a ceiling, not a target.

At 1:500, 1 lot of EUR/USD (≈ $114,670) needs about $229 of margin.

A pending order to buy below the current price, or sell above it — getting in on a pullback at a better price.

EUR/USD at 1.1467; a buy limit at 1.1430 opens only if it dips there.

How much buying and selling is going on. A liquid market fills orders quickly near the quoted price; a thin one — at night, on bank holidays — trades with wider spreads and bigger jumps.

The unit a trade size is counted in. One standard lot of a currency pair is 100,000 units of the base currency.

1 lot = 100,000 · 0.1 lot (mini) = 10,000 · 0.01 lot (micro) = 1,000.

Moving Average Convergence Divergence: the gap between two moving averages, plotted with a signal line, to show momentum and its turns.

One of the most-traded pairs, each with the US dollar on one side. They carry the most liquidity and usually the tightest spreads.

EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, NZD/USD.

The part of your balance set aside to hold a position open. It is not a fee — it is released when the trade closes.

100,000 × 1.1467 ÷ 500 = $229.34 of margin for 1 lot of EUR/USD at 1:500.

A warning that your margin level has fallen to the broker’s threshold: add funds or reduce positions before it falls further.

Equity as a percentage of the margin in use. The lower it falls, the closer the account is to a margin call and a stop out.

$850 ÷ $229 × 100 = 371%.

An order to buy or sell straight away at the best price available now.

Click Buy on EUR/USD and you are filled at the current ask.

The overall mood of traders towards an instrument — how many are long against short. Some traders read an extreme as a sign the crowd is about to be wrong.

The trading platform DMA Capitals accounts run on, for desktop, web and phone. It carries the charts, the order types and the automated trading in one place.

The average price over a set number of past candles, drawn as a line that smooths out the noise and shows the trend.

A 200-day moving average: the average of the last 200 daily closes.

The monthly count of new US jobs outside farming, usually out on the first Friday of the month. Few releases move the dollar more.

A market that has risen (or fallen) so far, so fast, that a pause or pullback is likely. It is a warning, not a signal on its own.

Closing part of an open position and leaving the rest running — banking some profit while keeping a stake in the move.

Close 0.5 of a 1-lot position; 0.5 lots stay open.

An order that waits for the price to reach a level you set before it opens. The four kinds are buy limit, sell limit, buy stop and sell stop.

The standard unit a price moves in: the fourth decimal place on most pairs, the second on yen pairs.

EUR/USD 1.14670 → 1.14680 is one pip. On one standard lot, that pip is worth $10.

A tenth of a pip — the fifth decimal place on most pairs, the third on yen pairs. It is what lets spreads be quoted as 0.3 pips.

In 1.14675, the final 5 is five pipettes: half a pip.

Support and resistance levels worked out from the previous day’s high, low and close — the same levels every trader using them can see.

Pivot = (High + Low + Close) ÷ 3.

A trade you have open. It stays open — and its profit or loss keeps moving — until you close it or a stop loss or take profit closes it for you.

Working out how many lots to trade from the risk you accept and the distance to your stop — so every loss costs what you planned.

$10,000 × 1% = $100 at risk. A 25-pip stop at $10 a pip per lot: 0.40 lots.

The second currency in a pair — the one the price is counted in, and the one your profit or loss is first worked out in.

In USD/JPY at 157.79, the yen is the quote currency.

A market moving sideways between a clear support and resistance, with no trend either way.

A price level where rises have stalled before, because sellers stepped in there. Once broken, it often becomes support.

A temporary move against the trend before it resumes. Traders use retracements to join a trend at a better price.

A lasting change in a trend’s direction — unlike a retracement, the old trend does not resume.

The share of the account a single trade may lose if its stop is hit. Most traders keep it between 1% and 2%.

At 1% a trade, ten losses in a row leave about 90% of the account.

What a trade stands to lose against what it stands to gain, from the stop and the target.

20 pips of risk for a 60-pip target: 1:3.

The moment at the end of each trading day when open positions are carried into the next, and swap is charged or paid.

The Relative Strength Index: a 0–100 gauge of how strongly price has been moving. Above 70 is read as overbought, below 30 as oversold.

The difference between the price you asked for and the price you got, when the market moves between the two. It happens most in fast or thin markets.

A stop at 1.1450 filled at 1.1447: 3 pips of slippage.

The gap between the bid and the ask — the cost built into every trade. You open a little behind and the market has to move by the spread before you are in profit.

Bid 1.14670, ask 1.14673: a spread of 0.3 pips.

A level that closes your trade automatically if the price moves against you, capping what the trade can lose.

Buy at 1.1467 with a stop at 1.1442: the most at risk is 25 pips.

A pending order to buy above the current price, or sell below it — getting in once a move is already under way.

EUR/USD at 1.1467; a buy stop at 1.1500 opens if it breaks higher.

The margin level at which the platform starts closing your positions for you, largest loss first, to stop the account going below zero.

Straight Through Processing: your broker passes each order on to its liquidity providers automatically, with no dealer handling it by hand. The broker usually earns a small mark-up on the spread rather than a commission.

A liquidity provider quotes EUR/USD at 1.14670 / 1.14672; with a 0.1-pip mark-up on each side you trade at 1.14669 / 1.14673.

A price level where falls have stopped before, because buyers stepped in there. Once broken, it often becomes resistance.

The interest paid or earned for holding a position open overnight, set by the gap between the two currencies’ interest rates. It can be a cost or a credit.

A level that closes your trade automatically once it reaches the profit you were aiming for.

Buy at 1.1467 with a take profit at 1.1542: the trade banks 75 pips if it gets there.

Reading the price chart itself — trends, levels, patterns and indicators — to judge where the price is likely to go next.

How much time each candle on a chart covers, from one minute (M1) to one month (MN).

M1 · M5 · M15 · H1 · H4 · D1 · W1.

The hours a major financial centre is open — Sydney, Tokyo, London and New York. The hours where two overlap, London and New York above all, are the busiest of the day.

A stop loss that follows the price as a trade moves in your favour, a set distance behind it, and never moves back.

A 30-pip trailing stop on a long: price rises 50 pips, the stop rises 50 pips with it.

The direction a market has been moving. An uptrend makes higher highs and higher lows; a downtrend, lower highs and lower lows.

A straight line drawn through a trend’s lows (in an uptrend) or highs (in a downtrend) to show its slope and where it may find support.

Three days’ swap charged in one night, usually Wednesday’s, to cover the weekend the position will be held through.

A spread that moves with the market: tightest when trading is busy, wider around news, at the daily rollover and on holidays.

How far and how fast a price moves. High volatility means bigger swings both ways — more opportunity and more risk in the same measure.