Forex Glossary Of Terms
While this is not a full and comprehensive glossary of Forex terminology, the most commonly used Forex terms are listed.
Ask: Also called “offer” Indicates a willingness to sell a Forex lot at a given price.
Bear: One who expects prices to decline.
Bear Market: A market in which prices are declining.
Bid: The price that the market participants are willing to pay.
Bull: One who expects prices to rise.
Bull Market: A market in which prices are rising.
Buy Limit: This means you place the order to buy below the current price. The order will fill once the price moves down to your designated buy limit price.
Buy Stop: This means you place the order to buy above the current price. The order will fill once the price moves up to your designated buy limit price.
Commission: The one-time fee charged by a broker to a customer when a Forex position is liquidated either by offset or delivery.
Day Trading: Refers to establishing and liquidating the same position or positions within one day’s trading, thus ending the day with no established position in the market.
Entry Order: An order to buy when the market reaches a specified price.
Entry Point: The entry price of an order
Key Pivot Levels: Levels of Support or Resistance where traders usually enter the market, providing continued strong movement in the direction of the current momentum.
Limit: An order given to the deal station to exit a trade when and if the market passes through a specified price (in the direction of profit)
Long: One who has bought a Forex Lot or Lots to establish a market position and has not yet closed out this position through an offsetting sale; the opposite of short.
Lot: A currency pair that is bought or sold
Offer: Also called ask. It indicates a willingness to sell a Forex Lot at a given price.
Pip: Refers to a change in price, either up or down.
Position: An interest in the market, either long or short, in the form of open lots.
Rally: An upward movement of prices following a decline; the opposite of reaction.
Range: The high and low prices or high and low bids and offers, recorded during a specific time.
Reaction: A decline in prices following an advance; the opposite of rally.
Resistance: Resistance is a price level above which a pair has difficulty breaking through. Think of the area between support and resistance as being a room. Support is the floor and resistance is the ceiling. The pair will move between those two levels until a “breakout” occurs in one direction or the other.
Scalp: To trade for small gains. Scalping normally involves establishing and liquidating a position quickly, usually within the same day, hour or even just a few minutes.
Sell Limit: This means you place the order to sell above the current price. The order will fill once the price moves up to your designated sell limit price.
Sell Stop: This means you place the order to sell below the current price. The order will fill once the price moves down to your designated sell stop price.
Short: One who has sold a Forex Lot to establish a market position and who has not yet closed out this position through an offsetting purchase; the opposite of long.
Speculator: One who attempts to anticipate price changes and, through buying and selling Forex Lots or Futures contracts, aims to make profits; does not use the Forex / Futures market in connection with the production, processing, marketing or handling of product. The speculator has no interest in making or taking delivery.
Stopped Out: Being exited from a trade when the currency price reaches its stop loss
Stop Loss: An order given to the deal station to exit a trade if the currency gets to a certain price (in the direction of loss).
Support: Support is a price level below which a currency pair has difficulty going and Resistance is a price level above which a pair has difficulty going. Think of the area between support and resistance as being a room. Support is the floor and resistance is the ceiling. The pair will move between those two levels until a “breakout” occurs in one direction or the other.
Trend: The general direction of the market.