Glossary
This section contains a collection of answers to the most common questions people ask us about Glossary.
A
The use of computer systems to generate buy and sell orders, or signals, that are carried out automatically. It is also known as 'algorithmic trading', 'black-box trading' and 'robotic trading'.
The average loss incurred from losing trades over a specific time period or number of trades.
The average profit per winning trade over a period of time, calculated by dividing total profits by the number of winning trades.
The average duration of time that a trade remains open from entry to exit.
B
The first currency listed in a currency pair, against which the second currency is quoted.
The highest price that a buyer is willing to pay for an asset in the market.
C
A system of money in general use in a particular country, used as the basis for trading pairs in the forex market.
Two currencies that are traded against each other in the forex market, such as EUR/USD.
The shorthand notation used to represent different currencies in trading, such as USD for the U.S. Dollar or EUR for the Euro.
D
The number of days a trading system or strategy has been active or used.
F
The global marketplace for buying and selling currencies, also known as the foreign exchange market.
The time during which the forex market is open for trading, typically 24 hours a day, five days a week.
H
The practice of making an investment to reduce the risk of adverse price movements in an asset.
Simulated or backtested results based on historical data, not reflecting actual live trading performance.
I
The percentage of the purchase price of securities (or the deposit required in forex trading) that must be covered by the trader's own capital.
L
The single trade that incurred the highest loss over a specific period.
The single trade that incurred the highest profit over a specific period.
The use of borrowed funds to increase the potential return of an investment, often expressed as a ratio (e.g., 100:1).
A type of order to buy or sell a security at a specific price or better.
A standardized quantity of a financial instrument being traded, often used in forex trading (e.g., a standard lot is 100,000 units of currency).
M
The amount of capital that must be maintained in a trader's account to cover potential losses.
A demand by a broker that a trader deposits more money to cover potential losses when the account balance falls below the required margin level.
A firm or individual that actively quotes two-sided markets in a particular security, providing bids and offers along with the market size.
The largest peak-to-trough decline in the value of a portfolio before a new peak is achieved.
The highest number of open trades a strategy can hold simultaneously.
P
The potential financial return or reward from an investment or trade.
The smallest price movement in the forex market, typically the fourth decimal place in currency pairs.
A collection of financial investments like stocks, bonds, commodities, currencies, or derivatives.
The amount of a security, commodity, or currency held by a trader or investor, indicating whether they are long or short in the market.
The total amount of money earned from trading, usually expressed in a particular currency, such as Euros.
A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period.
The ratio of gross profits to gross losses, indicating the profitability of a trading strategy.
Q
The last price at which a trade was executed, or the most recent price bid and ask in the market.
R
The price or value of one currency in terms of another currency in a forex pair.
A price level where an asset's upward movement is expected to face selling pressure, often leading to a reversal.
A trading strategy that involves taking the opposite position of a previously executed trade. This approach aims to profit from anticipated market reversals or corrections, effectively 'reversing' the initial trade direction.
A measurement that adjusts returns by taking into account the level of risk involved.
The process of identifying, assessing, and controlling risks involved in trading or investing.
The interest paid or received for holding a currency position overnight in forex trading.
A completed trade that consists of both an opening and closing transaction.
S
An order placed to sell an asset at a specific price.
The sale of an asset that the seller does not own, typically borrowed, with the intention of buying it back at a lower price.
Indications or alerts that a trading opportunity may exist based on specific criteria or patterns.
The difference between the bid price and ask price of a currency pair or other security.
The date when a particular trading strategy or system was first initiated.
A type of order used to enter a market at a predetermined price.
A predetermined price level where a position is automatically closed to limit potential losses.
A trader or algorithm whose trading strategies are made available for others to copy or follow.
A price level where an asset's downward movement is expected to pause due to buying pressure.
The interest differential between two currencies in a currency pair, often paid or received when holding a position overnight.
Automated trading algorithms or methods that execute trades based on predefined rules.
T
The study of past market data, primarily price and volume, to forecast future price movements.
The minimum price movement of a trading instrument.
A stop-loss order that adjusts with favorable price movements to lock in profits while limiting risk.
The total value of all trades executed in a particular market or account over a specific period.
W
The percentage of trades that result in a profit out of the total number of trades executed.
