Forex and gold trading glossary

Last updated: 23 October 2026 · By Forexuro Desk · Editorial policy

How to use this glossary

Each entry gives a plain English definition, a worked example with real maths, common mistakes and links to the calculators and guides that go deeper. Start with pip, lot and position sizing if you are new, then work through risk terms such as drawdown and expectancy.

Whether you trade your own ideas or follow forex signals such as the gold signals, these are the words you will meet every day. The video courses and chart patterns e-book use the same vocabulary.

A B C D E F G H I L M P Q R S T V W

A

• Average true range (ATR): ATR measures average price range over a set number of periods, including gaps, and is used to size stops to current volatility.

B

• Base currency: The base currency is the first currency in a pair; the price shows how much of the quote currency one unit of it costs.
• Bid and ask: The bid is the price at which you can sell and the ask (or offer) is the price at which you can buy; the gap between them is the spread.
• Breakeven: Moving a stop to breakeven means placing it at the entry price so the trade can no longer lose, apart from costs and slippage.

C

• Candlestick: A candlestick shows the open, high, low and close for one period, with a body between open and close and wicks to the high and low.
• Carry trade: A carry trade buys a higher yielding currency against a lower yielding one to earn the interest rate differential through swaps.
• Central bank: A central bank sets a country's monetary policy, including the main interest rate, and is one of the biggest drivers of its currency.
• CFD (contract for difference): A CFD is a contract with a broker that pays the difference in price of an asset between opening and closing, without owning the asset.
• Correlation: Correlation measures how closely two markets move together, from +1 (in step) to −1 (opposite).
• Cross pairs: Cross pairs are currency pairs that do not include the US dollar, such as EUR/GBP or EUR/JPY.
• Currency pair: A currency pair quotes the price of one currency in terms of another, such as EUR/USD, the number of dollars per euro.

D

• Drawdown: Drawdown is the fall in account value from a peak to a later low, usually shown as a percentage.

E

• Expectancy: Expectancy is the average amount a trading method wins or loses per trade, combining win rate and the size of wins and losses.

F

• Free margin: Free margin is your equity minus the margin already used by open positions; it is what is left to open new trades or absorb losses.

G

• Gap: A gap is a jump in price between one quote and the next with no trading in between, most often at the weekly open.

H

• Hedging: Hedging is opening a position to offset the risk of another, so losses on one are partly balanced by gains on the other.

I

• Interest rate differential: The interest rate differential is the gap between two countries' interest rates, a key driver of currency flows and swaps.

L

• Leverage: Leverage lets you control a position larger than your deposit, which magnifies both profits and losses.
• Liquidity: Liquidity is how easily a market can be bought or sold without moving the price; liquid markets have tight spreads and deep order books.
• Long and short: Going long means buying to profit from a rise; going short means selling to profit from a fall.
• Lot: A lot is a standard trade size: a standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000.

M

• Major pairs: The major pairs are the most traded currency pairs, each combining the US dollar with another major currency.
• Margin: Margin is the deposit a broker holds to keep a leveraged position open, set by the position value divided by the leverage.
• Margin call: A margin call is a warning that your equity has fallen close to the margin required to keep positions open.
• Market order: A market order buys or sells immediately at the best available price.

P

• Pending order: A pending order is an instruction to open a trade later if price reaches a set level: buy limit, sell limit, buy stop or sell stop.
• Pip: A pip is the standard unit for measuring a price move in a currency pair: 0.0001 on most pairs and 0.01 on yen pairs.
• Pip value: Pip value is the money one pip is worth for a given position size, in the quote currency or converted to your account currency.
• Pipette: A pipette is one tenth of a pip: the fifth decimal on most pairs and the third decimal on yen pairs.
• Pivot point: A pivot point is a level calculated from the previous period's high, low and close, with support and resistance levels derived from it.
• Position sizing: Position sizing is choosing the trade size so that a stop loss hit costs a fixed, planned share of your account.

Q

• Quote currency: The quote currency is the second currency in a pair; profit, loss and pip value are first calculated in it.

R

• Risk of ruin: Risk of ruin is the probability that a run of losses will shrink an account to a level where you cannot continue trading.
• Risk to reward ratio: The risk to reward ratio compares the distance to the stop loss with the distance to the take profit, such as 1:2.
• Rollover: Rollover is the daily process of extending open positions to the next value date, when brokers apply swap charges or credits.

S

• Slippage: Slippage is the difference between the price you expected and the price your order was actually filled at.
• Spread: The spread is the difference between the bid and ask price, and it is the basic cost of opening a trade.
• Stop loss: A stop loss is an order that closes a trade at a set price to cap the loss if the market moves against you.
• Stop out: A stop out is when the broker automatically closes positions because your margin level has fallen to its minimum.
• Support and resistance: Support is a price zone where buying has tended to stop declines; resistance is a zone where selling has tended to cap rallies.
• Swap (rollover): A swap is the overnight financing charge or credit applied to a position held past the broker's daily rollover time.

T

• Take profit: A take profit is a limit order that closes a trade automatically when price reaches a chosen profit target.
• Trailing stop: A trailing stop is a stop loss that moves with price by a set distance as the trade goes in your favour, but never moves back.

V

• Volatility: Volatility is how much and how fast price moves; higher volatility means larger swings in both directions.

W

• Win rate: Win rate is the percentage of closed trades that made a profit.

Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.