Glossario Forex

Ask (offer) – price of the offer, the price you buy currency for.

Bid – price of the demand, the price you sell currency for.

Broker – is a company that acts as the middleman between trader and larger commercial institution.

Commission – certain amount of money that broker takes for operation handling.

EA (expert advisor) or Robot – an automated script, that was written by professional trader and used by the trading platform to manage buy/sell orders automatically.

Flat (square) – neutral state, when all your positions are closed

Floating leverage – a leverage that changes depending on the total size of open positions.

Gap – a difference between the previous period’s price and the next open price. It usually happens during weekends – between the Friday’s close and the Monday’s open price.

Leverage – use of borrowed capital, allowing the Forex trader to gain access to larger sums of capital. This can heighten profits and losses and should be used wisely.

Long (long position) – a trade opened with a buy. It gains when the price rises and loses when the price falls. Going long means buying a currency pair.

Lot – a unit of trade size. A standard lot (1.00) is 100,000 units of the base currency, a mini lot (0.10) is 10,000 and a micro lot (0.01) is 1,000.

Margin – the deposit your broker sets aside to keep a trade open.

Margin call – is a situation when your margin deposits have fallen below the required minimum level.

Order (trade) – an order for a broker to buy or sell a currency at a certain rate.

Pip (point) – the last digit in a currency rate (e.g. EUR/USD = 0.0001)

Profit (gain) – positive amount of money that you earn for closing the position.

Scalping – a special type of trading, where a big number of positions are opened for short-term profits.

Short (short position, short selling) – a trade opened with a sell. It gains when the price falls and loses when the price rises. Going short means selling a currency pair, and you don’t need to own the currency first. More in Short Selling in Forex.

Slippage – execution of an order at a rate different from ordered.

Spread – a difference between ask and bid rates of a currency pair.

Stop-loss order (SL) – an order to close a deal when the market reaches a certain rate.

Swap – an overnight fee for holding a position in Forex.

Take-profit order (TP) – an order to close a position when the price reaches a level you set in advance. On a long position it sits above the current price, on a short position below it.

Trend – a market’s direction established under an influence of different factors.

Volatility – a statistical measure of the number of price changes for a given currency pair in a given period of time.

VPS (Virtual Private Server) – a virtual space hosted on a dedicated server, used to run programs independent on the user’s PC.