Forex glossary

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Margin

The minimal cash deposit that you have to put up for the transaction. Trading forex on margin increases your buying power, but it can also increase your losses. Click here to learn more about margin.

See also Leverage

Offer Price

See Ask Price

Pip

Pip is the smallest price increment in the last digit in the rate – usually the fourth digit after the decimal point (apart from the USD/JPY).

Pip Currency

See Counter Currency

Point

See Pip

Price Trend

A consistent movement of currency prices in a certain direction. Traders try to spot trends in order to capitalize on their potential.

See also Fundamental Analysis, Technical Analysis

Quote Currency

See Counter Currency

Rate

Rate or quote, is the price of one currency in terms of another.

See also Base Currency, Counter Currency

Risk Capital

The amount of money that a trader can afford to risk, the potential loss of which would not affect their lifestyle.

See also Leverage, Margin, Hedging

Sell Price

See Bid Price

Short Position

Going short means opening a position in which the trader sells currency in hopes that this currency’s value will decrease (sell high, buy low).

See also Short Position

Spread

The spread is the difference between the bid price and the ask price.

See also Bid Price, Ask Price

Stop Loss

A trade order which automatically closes an open position at a specific price in order to prevent losses in case the market moves against your position. Click here to learn more about Stop Loss orders.

See also Take Profit

Swissy

Dealer slang for the USD/CHF currency pair.

See also Currency Pair

Take Profit

A trade order which automatically closes an open position at a specific price realizing a specific amount of profit. Use this order to realize your gains.

See also Stop Loss

Technical Analysis

This type of analysis focuses on chart patterns of currency movements. It assumes that a currency’s future movements can be predicted by looking at past behavior.

See also Fundamental Analysis, Price Trend

Virtual Balance

Your current potential account balance that can be realized by closing all your open trades. For example, if your actual account balance is $525 and you have an open trade for $50 with a $25 profit, your virtual account balance will show $600.