A complete, plain-English glossary of the trading terms every forex, CFD and MetaTrader trader should know, from pips, spreads and leverage to drawdown, risk management, chart patterns and market structure.
Whether you are new to trading or brushing up, this A to Z glossary defines 84 of the most searched forex and trading terms in clear language, with no jargon. Use the letter bar to jump to a term, or read straight through to build a solid foundation before you place a trade. Each definition is written for real traders on MetaTrader 4 and MetaTrader 5.
The Average Directional Index, which measures how strong a trend is regardless of direction.
The price at which you can buy a market.
Average True Range, a measure of how much a market moves on average, used to size stops and gauge volatility.
Testing a trading strategy on historical data to estimate how it would have performed.
The first currency in a pair. In EUR/USD, the euro is the base.
A market in a sustained downtrend, where prices are generally falling.
The price at which you can sell a market.
A volatility indicator of a moving average with bands set a number of standard deviations above and below it.
When price moves beyond a defined support or resistance level, often signalling a new move.
A market in a sustained uptrend, where prices are generally rising.
A price bar showing the open, high, low and close for a period, the basis of most chart reading.
Contract for difference, a product that tracks an asset price so you can trade it long or short with leverage without owning it.
When several signals or levels line up at the same area, strengthening a trade idea.
A pause where price trades in a tight range before the next move.
Automatically mirroring the trades of another trader in your own account.
How closely two markets move together. Positively correlated markets rise and fall together.
A modern ECN trading platform known for fast execution, depth of market and advanced order types, popular with scalpers and algo traders.
Opening and closing trades within the same day, holding no positions overnight.
A practice account with virtual funds that lets you trade real market conditions with no risk.
When price and an indicator move in opposite directions, often warning that a trend is weakening.
Direct Market Access, where your orders go straight to the exchange or liquidity providers.
The drop in your account from a peak to a low point, usually shown as a percentage.
A modern web and mobile trading platform used by many brokers and prop firms as an alternative to MetaTrader.
Electronic Communication Network, a model that routes your orders to the market for raw spreads plus a commission.
Your account balance plus or minus the profit or loss of any open trades.
An automated trading program (EA) that runs on MetaTrader to place trades by rules.
A false breakout that quickly reverses back into the prior range, trapping traders.
The equity in your account not tied up as margin, available to open new trades or absorb losses.
A trading account backed by a prop firm rather than your own capital, earned by passing a challenge.
A jump between one bar close and the next bar open, with no trading in between, common after weekends or news.
Opening an offsetting position to reduce the risk of an existing trade.
Borrowed capital that lets you control a larger position with a smaller deposit. It magnifies both profits and losses.
An order to buy or sell only at a chosen price or better.
How easily a market can be traded without moving the price. Major pairs are highly liquid.
A sharp move that runs stops beyond a level to fill large orders before reversing.
A buy position that profits when the price rises.
A standard unit of trade size. A standard lot is 100,000 units, a mini lot is 10,000, and a micro lot is 1,000.
Moving Average Convergence Divergence, a trend and momentum indicator built from two moving averages and a signal line.
The most traded currency pairs, all involving the US dollar, such as EUR/USD, GBP/USD and USD/JPY.
The deposit your broker holds to keep a leveraged position open.
A warning or automatic action when your equity falls too close to the margin required, which can close your positions.
A broker that takes the other side of your trade rather than passing it to the market.
An instruction to buy or sell immediately at the best available price.
The pattern of higher highs and lows or lower highs and lows that defines whether a market is trending or ranging.
A web, mobile and desktop trading platform used by a growing number of brokers and prop firms.
Known as MT4, the most widely used forex trading platform, popular for its charting and Expert Advisors.
Known as MT5, the newer MetaTrader platform, adding more timeframes, order types and asset classes than MT4. Market Structure Pro runs on MT5.
A line that smooths price over a set number of periods to show the trend direction and act as dynamic support or resistance.
Checking the same market on several timeframes to align the bigger trend with a precise entry.
A safeguard that stops your account going below zero, so you cannot lose more than you deposit.
A powerful trading platform favoured by futures and advanced forex traders, with advanced charting and strategy automation.
An indicator whose signals lock on the closed bar and do not change afterwards, so history stays honest.
An area where large orders previously entered the market, often acting as future support or resistance.
When two trading sessions are open at once, such as London and New York, usually the most active hours.
The smallest standard price move in a currency pair, usually the fourth decimal place (0.0001), or the second decimal (0.01) on JPY pairs.
How much one pip is worth for your position. About $10 per pip on a standard lot of most USD-quoted pairs.
The smallest price increment a platform quotes. On a five-decimal forex quote, ten points make one pip.
A proprietary trading firm that funds traders who pass an evaluation, sharing the profits.
The second currency in a pair. In EUR/USD, the US dollar is the quote.
A market moving sideways between support and resistance rather than trending.
A price level where selling has previously slowed or reversed a rise.
A temporary pullback against the main trend before it potentially resumes.
The ratio of how much you risk to how much you aim to gain. A 1 to 2 setup risks one to make two.
The Relative Strength Index, a momentum oscillator from 0 to 100 that flags overbought (above 70) and oversold (below 30) conditions.
A style of taking many small, fast trades to profit from tiny price moves.
Client money held separately from the broker own funds, so it is protected if the broker fails.
One of the four forex trading periods: Sydney, Tokyo, London and New York.
A sell position that profits when the price falls.
The difference between the price you expected and the price you actually got, common during fast or thin markets.
The difference between the bid and ask price. It is the first cost you pay on every trade.
A leveraged, tax-advantaged way to trade price moves, available mainly to UK clients.
A momentum oscillator that compares the close to the recent range to spot overbought and oversold conditions.
A preset order that closes a losing trade at a chosen price to cap your loss.
Zones where selling or buying pressure previously overwhelmed the other side, used to find reversals.
A price level where buying has previously stepped in and slowed or reversed a fall.
The interest paid or earned for holding a leveraged position overnight, also called rollover.
Holding trades for several days to weeks to capture larger price swings.
A preset order that closes a winning trade at a chosen price to lock in profit.
The period each candle or bar represents, such as 1 minute, 1 hour or 1 day.
A web-based platform with industry-leading charts, now offering live trading through connected brokers.
A stop loss that moves with the price in your favour to lock in profit while a trade runs.
The general direction of a market, up, down or sideways.
How much and how fast a price moves. Higher volatility means bigger moves and bigger risk.
A virtual private server that runs your platform and EAs 24/7 with low latency to the broker.
Market Structure Pro gives one clear TRADE / NO-TRADE verdict on any MT5 chart, with confidence, grade and a plain-English reason. Free 7-day trial, no card.
Start free trialPut these terms into practice with our free trading calculators, compare spreads and regulation in the broker directory, or read the full Learn hub.
