FXSH TRADING ACADEMY

Glossary
Stay on top of the trading lingo with our comprehensive glossary of terms. Get clear definitions of trading, forex, and stock market terminology.

 

Glossary of Trading Terms

Ask Price
The price at which a seller is willing to sell a security or currency. In forex, it's the price at which you can buy a currency pair.

Bid Price
The price at which a buyer is willing to purchase a security or currency. In forex, it's the price at which you can sell a currency pair.

Bear Market
A market condition where prices are falling or expected to fall, typically by 20% or more over a sustained period.

Bull Market
A market condition where prices are rising or expected to rise, typically by 20% or more over a sustained period.

Currency Pair
In forex trading, currencies are quoted in pairs (e.g., EUR/USD), where the first currency is the base currency and the second is the quote currency.

Leverage
The use of borrowed funds to increase the potential return on an investment. However, leverage can also amplify losses.

Margin
The minimum amount of funds required in your trading account to open and maintain a leveraged position.

Pip
Short for "percentage in point," a pip is the smallest price movement in a currency pair in forex trading. For most currency pairs, it's the fourth decimal place (0.0001).

Spread
The difference between the ask price and the bid price of a currency pair. The spread is often how brokers make a profit.

Stop Loss
A type of order placed with a broker to buy or sell once a security reaches a certain price, used to limit potential losses.

Take Profit
A type of order that automatically closes a trade when the price reaches a certain level of profit, locking in gains.

Lot Size
The number of units of a currency being traded. In forex, a standard lot is 100,000 units of the base currency, but mini and micro-lots are also available.

Volatility
The degree of variation of a trading price series over time, indicating the level of risk or uncertainty in the market.

Slippage
The difference between the expected price of a trade and the actual price at which the trade is executed, often occurring during periods of high volatility.

Liquidity
Refers to how quickly and easily a security or asset can be bought or sold in the market without affecting its price.

Long Position
Buying a currency pair with the expectation that its value will rise.

Short Position
Selling a currency pair with the expectation that its value will fall, allowing the trader to buy it back at a lower price.

Hedging
A risk management strategy used to offset potential losses by taking an opposite position in a related asset.

Technical Analysis
The use of historical price data, charts, and technical indicators to forecast future price movements in financial markets.

Fundamental Analysis
A method of evaluating a security or asset by examining economic, financial, and other qualitative and quantitative factors that affect its value.