Plain-English glossary
Forex terms, defined simply.
50 terms every beginner meets in their first month. Each entry is one or two sentences you can actually understand, then a link to the lesson that goes deeper.
50 terms
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A
B
Base CurrencyThe base currency is the first currency in a forex pair, always one unit…Bid PriceThe bid is the price at which you can sell a currency pair — always the…
C
Commission ForexCommissionCross Currency PairsCross pairsCurrency PairA currency pair quotes one currency against another, like EUR/USD
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Demo AccountDemo accountDrawdownDrawdown
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Ecn BrokerECN brokerEquityEquity is your balance plus or minus the unrealised profit and loss on…Exchange RateAn exchange rate is the price of one currency in terms of anotherExotic PairsExotic currency pairsExpectancyExpectancy
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Hedging ForexHedging
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LeverageLeverage is borrowed buying power written as a ratio such as 30:1Limit OrderLimit orderLiquidityLiquidityLong PositionLong positionLotA lot is the standard trade size in forex
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Major PairsMajor currency pairsMarginMargin is collateral your broker locks while a leveraged trade is open,…Margin CallA margin call is a broker's warning that equity is too low to support…Margin LevelMargin level is equity divided by used margin, as a percentageMarket Maker BrokerIn forex, a market maker broker takes the other side of your trade instead…Market OrderMarket orderMicro LotA micro lot is 1,000 units of the base currency and about 10 cents per pip…Mini LotA mini lot is 10,000 units of the base currency, a tenth of a standard…
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P
PipA pip is the standard unit of price movement in forex — 0.0001 on most pairsPipettePipettePosition SizePosition size
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Regulation ForexIn forex, regulation means a broker is licensed by a financial authority…Revenge TradingRevenge tradingRisk Of Ruin MeaningRisk of ruinRisk Per TradeRisk per tradeRisk Reward Ratio MeaningRisk/reward ratio
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Segregated FundsSegregated funds means client money is held apart from a broker's own…Short PositionShort positionSlippageSlippageSpreadThe spread is the gap between the bid and ask price, and the main cost of…Standard LotA standard lot is 100,000 units of the base currency, the full-size forex…Stop LossA stop loss closes a trade at a level you set in advanceStop Out LevelThe stop-out level is the margin level where a broker closes your trades…Swap ForexSwap / rollover
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Take ProfitA take profit closes a winning trade at a level you set in advanceTrailing StopTrailing stop
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VolatilityVolatility
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Win RateWin rate