Forex Glossary

Ask
The ask price is the price your trade will be executed at if you submit a sell or go short on a trade.

Account Balance
The total sum of funds (deposits/withdrawals and transactions) in your individual trading account.

Base Currency
E.g.: EUR/USD
The currency on the left side of the slash is the base currency - EUR

Bear Market
A market condition in which the market prices are declining, causing wide pessimism and negative sentiment in the market

Bid
The bid price is the price your trade will be executed at if you submit a buy or go long on a trade.

Broker
An individual or a company that is regulated and licenced to act as a mediator and offer an online forex trading environment to traders.

Bull market
A market condition in which the market prices arise or are expected to arise, resulting in investor confidence and a trading environment of confidence and positivity.

Currency pair
The currency pair is the quotation of the value of one currency unit against the unit of another currency.

Equity
Equity is your account balance plus the floating profit/loss of your open positions. When you have no open positions, hence no floating profit/loss, then your account equity and balance are the same.

Expert Advisor (EA)
A software programme commonly known as ‘Robots’ which are configured to do the trading for you. This can be referred to as ‘automated trading’.

Free Margin
The difference of your account equity and the open positions’ margin.

Hedging
In the forex market hedging constitutes a strategy used by traders to mitigate risk which may occur from the transactions in foreign currencies.

High Price
Indicates the highest price of the trading day

Leverage
The ratio used to mirror the transaction size and the actual investment used for margin. Leverage enables clients to trade more money than they actually deposit into their account. A client that deposits $100 and chooses a 200:1 leverage will have the possibility of placing orders of $20, 000.

Limit Entry Pending Order
An order to buy below the market or sell above the market at a pre-defined level, hoping that the price will turn in direction from that point.

Long
When you "go long" you are simply placing a buy order on a currency pair.

In forex trading all currency pairs have a base currency and a quote currency. The quote will usually look something like this: USD/JPY = 100.00. The USD is the base currency and the JPY is the quote currency. This quote shows a rate of $1 US Dollar being equal to 100 Japanese Yen. When you place a long trade on this currency pair, you are going long on the USD Dollar and simultaneously going short on the Japanese Yen.
It sounds complicated, but you would make this trade if you believed that $1 was going to become more valuable than 100.00 Japanese Yen(i.e. $1 = 101.00JPY).

Lot
The standard unit size of a transaction. One standard lot is equal to 100,000 units of the base currency, 10,000 units if it's a mini, or 1,000 units if it's a micro.

Low price
Indicates the lowest price of the trading day

Manual Execution
An order which is carried out by dealer intervention.

Margin
The necessary deposit required to keep the client’s trades on the market. For example, if your leverage is 200:1 and you execute an order worth of $20 000 then the margin would be the $100 you are required to deposit. If the funds in the account are less than $100, no trades can be executed.

Margin Level
It is the ratio of equity to margin [(Equity/Margin) x 100]. A very important aspect as brokers use it to determine whether the traders can take any new positions or not.

Margin Call Level
The initial warning that the amount of Equity equals or falls below the Used Margin in the Client’s Account. The Margin Call for FirewoodFX clients is activated at the level of 100%

Market Order
An order to buy or sell a currency at the current market price.

Pip
The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point, that is the fourth digit after the decimal point.

Quote Currency
E.g.: EUR/USD
The currency on the right side of the slash is the base currency- USD

Resistance
Resistance is a technical price level where sellers compensate buyers, causing prices to bounce off a provisional price ceiling.

Rollover
The overnight charge of interest on a currency pair

Scalping
Trading that involves regular trading seeking small gains over a very short period of time. Trades can last from seconds to minutes.

Short
When you "go short" you are simply placing a sell order on a currency pair
In forex trading all currency pairs have a base currency and a quote currency. The quote will usually look something like this: USD/JPY = 100.00. The USD is the base currency and the JPY is the quote currency.
This quote shows a rate of $1 US Dollar being equal to 100 Japanese Yen. When you place a short trade on this currency pair, you are going short on the USD Dollar and simultaneously going long on the Japanese Yen.

Slippage
Calculated in pips, it’s the difference between the order price and the executed price. Slippage occurs in fast moving and volatile markets, or where there is manual execution of trades.

Spot Market
Buying and selling currencies at the current market price

Spread
The difference between the bid and ask price of a currency pair.

Stop Entry Pending Order
An order to buy above the market or sell below the market at a pre-defined level, believing that the price will carry on in the same direction.

Stop-Loss
An order to limit losses at a pre-defined price level.

Stop-out Level
The forced closing, at current prices, by the Company of Client’s open positions when equity falls below the minimum required margin. The Stop-out level on the FirewoodFX has been defined at 20%.

Straight-Through Processing (STP) broker
A Forex Broker that acts as a mediator between the trader and liquidity providers. Brokers with STP systems transmit the traders’ orders directly to the liquidity providers and charge on commission basis.

Swap
The simultaneous purchase and sale of a particular amount of one currency to the same amount of another currency. Swaps are commonly charged with interest rates namely ‘swap rates’. At FirewoodFX we offer our clients Swap-free accounts.

Support
Support is a technical price level where buyers compensate sellers, causing prices to bounce off a provisional price floor.

Take Profit Order (T/P) An order used by traders to specify the exact rate of pips from the current price point where to close out their current position for a profit. The rate deemed to be the level where the trader wants to take a profit is sometimes referred to as the “take-profit point”.

Trailing Stop
A stop-loss order set at a percentage level below/above the market price - for a long/short position. The trailing stop price is attuned as the price fluctuates. The trailing stop order can be placed as a trailing stop market order.


Simply the best forex trading platform. Mobile platform also available.


Start trading forex in 5 minutes. Get 20% deposit bonus.


Free $10000 forex virtual trading account. Practice makes perfect.

LiveZilla Live Chat Software