Ask Price
The price at which a market maker is willing to sell a currency. Also known as the offer price.
Base Currency
The first currency in a currency pair. For example, in EUR/USD, EUR is the base currency.
Bid Price
The price at which a market maker is willing to buy a currency. This is the price at which you can sell.
Bull Market
A market characterized by rising prices and optimistic sentiment.
Bear Market
A market characterized by falling prices and pessimistic sentiment.
CFD
Contract for Difference. A financial instrument that allows traders to speculate on price movements without owning the underlying asset.
Cross Rate
A currency pair that does not include the US dollar (e.g., EUR/GBP, GBP/JPY).
Drawdown
The decline from a peak to a trough in a trading account balance, measured as a percentage.
Equity
The value of a trading account, including unrealized profits and losses from open positions.
Exotic Pair
A currency pair consisting of one major currency and one currency from an emerging economy (e.g., USD/TRY).
Fundamental Analysis
Analysis method that uses economic, financial, and political factors to predict currency movements.
Gap
An area on a chart where no trading has occurred, causing a jump between one period's close and the next period's open.
Hedge
A position taken to reduce the risk of adverse price movements in an existing position.
Interbank Market
The network of banks and financial institutions that trade currencies directly with each other.
Leverage
The use of borrowed capital to increase the potential return of an investment. In Forex, leverage amplifies both profits and losses.
Limit Order
An order to buy or sell a currency at a specified price or better.
Liquidity
The ease with which a currency can be bought or sold in the market without affecting its price.
Lot
A standardized quantity of a financial instrument. In Forex, a standard lot is 100,000 units of the base currency.
Margin
The collateral required to open and maintain a leveraged position. It is a percentage of the total position value.
Margin Call
A broker's demand for additional funds when the margin account falls below the required level.
Major Pair
A currency pair that includes the US dollar and one of the other major currencies (EUR, GBP, JPY, CHF, AUD, CAD, NZD).
Minor Pair
A currency pair that does not include the US dollar (e.g., EUR/GBP, EUR/JPY).
Pip
The smallest price movement in a currency pair. For most pairs, it is 0.0001 (1/100 of a percent).
Pipette
One-tenth of a pip. Used for more precise pricing in some currency pairs.
Quote Currency
The second currency in a currency pair. For example, in EUR/USD, USD is the quote currency.
Risk Management
The practice of identifying, analyzing, and mitigating trading risks to protect capital.
Spread
The difference between the bid and ask price. It represents the broker's commission on a trade.
Stop Loss
An order placed to close a trade at a predetermined price to limit potential losses.
Take Profit
An order placed to close a trade at a predetermined price to lock in profits.
Technical Analysis
Analysis method that uses historical price data, charts, and indicators to predict future price movements.
Volatility
The degree of price variation in a market over time. Higher volatility means larger price swings.
Swap
The interest rate differential between two currencies in a pair, charged or credited for overnight positions.
Volume
The total amount of a financial instrument that has been traded during a specific time period.
Whipsaw
A market condition where price moves rapidly in one direction, then quickly reverses.