Forex Glossary

The price at which a seller is willing to sell a currency pair. Also known as the offer price. When you open a buy (long) position, you enter at the ask price.

The practice of simultaneously buying and selling the same asset in different markets to profit from a price discrepancy. In forex, arbitrage opportunities are rare and typically exploited by algorithms due to their extremely short duration.

Adding to a losing position at a lower price to reduce the average entry cost. While it lowers the breakeven price, averaging down increases total risk exposure and can lead to catastrophic losses if the trend continues against you.

A volatility indicator that measures the average range of price movement over a specified period, accounting for gaps. ATR does not indicate direction; it measures how much an instrument moves. Traders use it to set stop losses and gauge volatility conditions.

A trend strength indicator that ranges from 0 to 100. ADX above 25 suggests a strong trend; below 20 suggests a weak trend or range. It does not indicate trend direction, only strength. It is often paired with +DI and -DI for directional signals.

A technical indicator consisting of Aroon Up and Aroon Down lines, each oscillating between 0 and 100. Aroon measures the time since the most recent high or low, helping traders identify whether a trend is emerging or fading.

The lowest price at which a seller is willing to sell a currency pair at a given moment. The ask is always higher than the bid. When you buy (go long), you enter at the ask price. The difference between the bid and ask is the spread.

A phase in the market cycle where informed traders and institutions are quietly building positions before a significant price move. Accumulation typically appears as a range-bound period following a downtrend, with subtle signs of increasing buying volume.

A smoothed version of the ADX that averages the current ADX value with the ADX value from a specified number of periods ago. ADXR reduces the lag of ADX and provides a more stable measure of trend strength, making it easier to identify genuine trending conditions.

The total amount of money in a trading account after all closed trades are accounted for, but before any open positions are considered. It differs from equity, which includes unrealised profits and losses from open trades.

A certificate issued by a US bank representing shares in a foreign company trading on US exchanges. ADRs allow US-based trading of international stocks. Some forex brokers offer ADR CFDs alongside currency pairs.

The use of computer programs to execute trades automatically based on predefined rules and conditions. In forex, algorithmic trading is implemented through Expert Advisors (MT4/MT5), cBots (cTrader), or custom API integrations.

Trading through an Application Programming Interface that allows custom software to connect directly to a broker's trading system. API trading enables fully automated strategies, custom dashboards, and integration with third-party tools beyond standard platforms.

The first currency listed in a currency pair. In EUR/USD, EUR is the base currency. It represents the currency you are buying or selling.

A market condition where prices are falling or expected to fall. A bearish trader believes prices will decline and may take short positions.

The price at which a buyer is willing to purchase a currency pair. When you open a sell (short) position, you enter at the bid price. The bid is always lower than the ask.

A technical analysis indicator consisting of a middle band (SMA) and two outer bands set at standard deviations above and below. Used to measure volatility and identify overbought or oversold conditions.

A financial intermediary that provides traders with access to the forex market. In the EU, brokers must be regulated by authorities such as CySEC, BaFin, or the FCA.

A market condition where prices are rising or expected to rise. A bullish trader believes prices will increase and may take long positions.

The process of testing a trading strategy against historical price data to evaluate its potential performance. Backtesting helps identify flaws in a strategy before risking real capital, though past performance does not guarantee future results.

A strategy that involves trading a group of correlated currency pairs simultaneously rather than individual pairs. Basket trading can be used to gain broad exposure to a single currency or to hedge portfolio risk across multiple instruments.

A price movement through an established level of support or resistance, often accompanied by increased volume and volatility. Breakouts can signal the start of a new trend, though false breakouts where price quickly reverses are common.

A derivative of Bollinger Bands that measures the distance between the upper and lower bands as a percentage of the middle band. Narrow width signals low volatility (a squeeze) and often precedes a breakout; wide bands signal high volatility.

The highest price at which a buyer is willing to purchase a currency pair at a given moment. The bid is always lower than the ask. When you sell (go short), you enter at the bid price.

The difference between the bid price and the ask price for a currency pair. The spread represents the primary transaction cost in forex trading and varies by pair, time of day, and market conditions. Major pairs typically have the tightest spreads.

A measure of an asset's volatility relative to a benchmark. A beta of 1.0 means the asset moves in line with the benchmark; above 1.0 means more volatile; below 1.0 means less volatile. In forex, beta is sometimes used to compare a pair's volatility to the overall FX market.

The difference between a country's exports and imports over a given period. A trade surplus (exports exceeding imports) is generally positive for the currency, while a trade deficit (imports exceeding exports) can weaken it due to higher demand for foreign currencies.

A technical signal where price makes a higher high while an oscillator (such as RSI or MACD) makes a lower high. This divergence suggests weakening bullish momentum and often precedes a price reversal to the downside.

A condition where Bollinger Bands narrow significantly, indicating low volatility and a compression of price range. A squeeze often precedes a strong breakout move in either direction, making it a valuable setup for breakout traders.

An extremely rare, unpredictable event with severe consequences for financial markets. Named after Nassim Taleb's concept, black swan events in forex include the 2015 Swiss franc de-peg and extreme flash crashes. Standard risk models cannot predict them.

A pending order to buy at a price below the current market price. Traders use buy limits when they expect price to drop to a support level before rising. The order triggers when the ask price reaches the specified limit price.

A pending order to buy at a price above the current market price. Traders use buy stops for breakout strategies, entering a long position when price moves above a resistance level. The order triggers when the ask price reaches the stop price.

One hundredth of a percentage point (0.01%). Used primarily to measure changes in interest rates and bond yields. A central bank raising rates by 25 basis points increases them by 0.25%. In forex, basis point changes in rates drive significant currency movements.

A debt instrument issued by governments or corporations to raise capital. Bonds pay periodic interest (coupon) and return the principal at maturity. Bond yields and prices influence forex markets through interest rate expectations and capital flow dynamics.

A type of price chart that displays the open, high, low, and close for a given period. The body shows the open-to-close range, and the wicks show the high and low extremes.

A national institution that manages a country's currency, money supply, and interest rates. Key central banks include the ECB, Federal Reserve, Bank of England, and Bank of Japan.

Contract for Difference. A derivative product that allows traders to speculate on price movements without owning the underlying asset. Most retail forex trading in the EU is done via CFDs.

A fee charged by a broker for executing a trade, usually expressed per lot per side. ECN/Raw accounts typically charge commissions alongside tighter spreads.

Consumer Price Index. A key economic indicator measuring inflation by tracking the average change in prices paid by consumers for goods and services. Rising CPI often leads to higher interest rates.

A currency pair that does not include the US dollar. Examples include EUR/GBP, EUR/JPY, and GBP/CHF. Cross pairs can have wider spreads than major pairs.

A strategy that involves borrowing a low-interest-rate currency and investing in a higher-interest-rate currency to profit from the interest rate differential. The carry trader earns the swap each night the position is held open.

A chart pattern formed by two parallel trend lines that contain the price action. An ascending channel has upward-sloping lines, a descending channel has downward-sloping lines, and a horizontal channel indicates a range-bound market.

A period when price moves sideways within a defined range after a trending move. Consolidation indicates a temporary balance between buyers and sellers and often precedes a breakout in either direction.

When the price of an asset and a technical indicator move in the same direction, confirming the current trend. Convergence between price and momentum indicators like MACD or RSI suggests the existing trend is likely to continue.

A momentum oscillator that measures the current price level relative to an average price over a given period. Readings above +100 suggest overbought conditions; below -100 suggest oversold. CCI works on any asset class despite its name.

A volume-weighted indicator that measures the buying and selling pressure over a specified period. Positive CMF values indicate accumulation (buying pressure) and negative values indicate distribution (selling pressure).

A statistical measure of how two currency pairs move in relation to each other. A correlation of +1 means they move identically; -1 means they move in opposite directions; 0 means no relationship. Understanding correlation prevents inadvertent overexposure to correlated positions.

An unethical practice where a broker or account manager executes excessive trades in a client's account to generate commissions. Churning is illegal under EU regulations and is one reason managed account activity should be monitored closely.

An investor protection fund that reimburses clients if a regulated broker becomes insolvent. In the EU, most compensation schemes cover up to EUR 20,000 per client. Examples include the ICF in Cyprus and the FSCS in the UK (up to GBP 85,000).

An economic indicator that measures the degree of optimism consumers feel about the overall state of the economy and their personal finances. Higher consumer confidence typically leads to increased spending, which supports economic growth and can strengthen the currency.

A measure of inflation that excludes volatile items such as food and energy prices. Central banks often focus on core inflation when making monetary policy decisions because it provides a clearer picture of underlying price trends. Rising core inflation may prompt rate hikes.

A component of a country's balance of payments that records trade in goods and services, investment income, and current transfers. A current account surplus indicates a country earns more from abroad than it spends, which tends to support the currency.

A method that allows traders to automatically replicate the positions of experienced traders in their own accounts. When the copied trader opens or closes a trade, the same action is proportionally replicated. It is regulated under MiFID II in the EU.

The last price at which a currency pair or instrument traded during a specific period (candle). In forex, closing prices are particularly important on daily candles as they form the basis for many technical indicators and pattern recognition.

A trader who relies primarily on chart patterns and technical analysis to make trading decisions, rather than fundamental economic data. Chartists study price action, support and resistance levels, and pattern formations to identify trade setups.

A bullish continuation pattern resembling a teacup on the chart. The cup forms a rounded bottom, followed by a smaller downward drift (the handle). A breakout above the handle's resistance signals continuation of the prior uptrend.

A regulatory requirement that financial institutions maintain sufficient capital reserves relative to their risk-weighted assets. For forex brokers, capital adequacy requirements under CRD IV ensure they can absorb losses and protect client funds.

The risk that the other party in a financial transaction will fail to fulfil their obligations. In forex, counterparty risk exists between traders and their brokers. EU regulation mitigates this through fund segregation and compensation schemes.

The risk that a borrower or counterparty will fail to meet their financial obligations. In the context of forex brokers, credit risk relates to the broker's ability to pay out client profits and return deposits.

The risk of financial loss due to fluctuations in exchange rates. Also called foreign exchange risk or FX risk. It affects any entity with assets, liabilities, or cash flows denominated in foreign currencies.

A standardised contract to buy or sell a specific quantity of a commodity at a predetermined price on a future date. Commodity futures for oil, gold, and agricultural products are available as CFDs at most EU forex brokers.

The amount of the underlying asset represented by a single trading contract. In forex, a standard lot is 100,000 units of the base currency, a mini lot is 10,000, and a micro lot is 1,000. Contract sizes vary for other CFD instruments.

The exchange rate between two currencies calculated from their respective rates against a third currency (usually USD). For example, the EUR/GBP cross rate is derived from EUR/USD and GBP/USD. Cross rates are also called cross pairs.

A weighted collection of currencies used to measure the value of another currency. The US Dollar Index (DXY) is a basket measuring USD against EUR, JPY, GBP, CAD, SEK, and CHF. Currency baskets help traders assess broad currency strength.

A trading style where all positions are opened and closed within the same trading day. Day traders aim to profit from short-term price movements and avoid overnight swap charges.

A situation where the price of an asset moves in the opposite direction of a technical indicator such as RSI or MACD. Divergence can signal potential trend reversals.

The peak-to-trough decline in the value of a trading account, usually expressed as a percentage. Maximum drawdown is a key risk metric used to evaluate trading strategies.

A temporary recovery in the price of a declining asset, followed by a continuation of the downtrend. The bounce creates a false impression of reversal and can trap traders who enter long positions prematurely.

A bullish reversal chart pattern that forms after a downtrend, where price tests a support level twice before breaking upward. The pattern resembles the letter W and signals that selling pressure is exhausting.

A bearish reversal chart pattern that forms after an uptrend, where price tests a resistance level twice before breaking downward. The pattern resembles the letter M and signals that buying pressure is exhausting.

A technical indicator formed by the highest high and lowest low over a specified period (typically 20 periods). A breakout above the upper channel signals a potential long entry; below the lower channel signals a short entry. It forms the basis of the classic Turtle Trading system.

A private exchange or forum for trading securities where orders are not visible to the public until after execution. Dark pools allow large institutional orders to be filled without impacting the visible market price. They are less relevant in retail forex.

A display showing the number of open buy and sell orders at different price levels. DOM provides insight into the liquidity available at each price and helps traders assess where large orders may cause price reactions. It is available natively on cTrader and MT5.

A broker execution model where the broker acts as the counterparty to client trades. The dealing desk may manage risk internally rather than passing orders to the market. This creates a potential conflict of interest, as the broker profits when clients lose.

A practice trading account funded with virtual money that simulates real market conditions. Demo accounts allow traders to learn the platform, test strategies, and build confidence without risking real capital. Most EU brokers offer free demo accounts.

A monetary policy stance that favors lower interest rates and expansionary measures to stimulate economic growth. Dovish central bank language or decisions typically weaken the currency because lower rates make it less attractive to foreign investors.

A phase in the market cycle where informed traders and institutions are quietly selling their positions before a significant decline. Distribution typically appears as a range-bound period following an uptrend, with subtle signs of increasing selling volume.

A candlestick pattern where the open and close prices are virtually equal, creating a cross or plus-sign shape. Doji candles represent indecision between buyers and sellers and can signal potential reversals when they appear after strong trends.

A bearish technical signal that occurs when a shorter-term moving average (typically the 50-period) crosses below a longer-term moving average (typically the 200-period). It suggests a potential shift from a bullish to a bearish trend.

The potential for a trading position or portfolio to decrease in value. Downside risk focuses specifically on negative outcomes, unlike standard deviation which measures both upside and downside volatility equally.

A financial instrument whose value is derived from an underlying asset, index, or reference rate. CFDs, options, futures, and forwards are all derivatives. Most retail forex trading in the EU is conducted through CFDs, which are derivative products.

European Central Bank. The central bank for the eurozone, responsible for monetary policy and setting interest rates for the euro. ECB decisions heavily influence EUR pairs.

Electronic Communication Network. A type of broker execution model that connects traders directly to liquidity providers, offering tighter spreads but typically charging a commission.

European Securities and Markets Authority. The EU regulator that sets rules for retail CFD trading, including leverage limits (30:1 for major FX pairs), negative balance protection, and margin close-out requirements.

A currency pair that includes one major currency and one currency from an emerging or smaller economy, such as USD/TRY or EUR/ZAR. Exotics typically have wider spreads and higher volatility.

A form of technical analysis based on the theory that markets move in predictable wave patterns consisting of five impulse waves in the direction of the trend and three corrective waves against it. The theory was developed by Ralph Nelson Elliott in the 1930s.

A two-candlestick reversal pattern where the second candle completely engulfs the body of the first. A bullish engulfing occurs at the bottom of a downtrend; a bearish engulfing occurs at the top of an uptrend.

The total value of a trading account including the balance plus or minus any unrealized profit or loss from open positions. Equity fluctuates in real time as open positions move and is used to calculate margin level.

A bearish reversal candlestick pattern consisting of three candles: a long bullish candle, a small-bodied candle (the star) that gaps up, and a long bearish candle that closes below the midpoint of the first candle. It signals the end of an uptrend.

A type of moving average that gives more weight to recent prices, making it more responsive to new information than a Simple Moving Average. Common EMA periods include 9, 21, 50, and 200. EMA crossovers are widely used for trend-following signals.

The process of completing a buy or sell order in the market. Execution quality is measured by speed (latency), the frequency of slippage, and the rate of requotes. ECN and STP execution models generally offer better execution than dealing desk models.

The price of one currency expressed in terms of another currency. Exchange rates fluctuate continuously during trading hours based on supply and demand, economic data, central bank policies, and geopolitical events.

The total amount of capital at risk in a particular market, currency, or position. Net exposure accounts for offsetting positions, while gross exposure is the total absolute value of all positions regardless of direction.

An investment fund traded on stock exchanges that tracks an index, commodity, bonds, or basket of assets. Some forex brokers offer ETF CFDs, allowing traders to speculate on ETF prices without owning shares. Currency ETFs track specific exchange rates.

An automated trading program that runs on the MetaTrader platform. Expert Advisors execute trades based on coded rules without manual intervention. EAs are written in MQL4 (for MT4) or MQL5 (for MT5) and can be backtested against historical data.

The time between submitting a trade order and its execution by the broker, measured in milliseconds. Faster execution reduces slippage and is critical for scalpers and algorithmic traders. Top ECN brokers achieve execution speeds under 50 milliseconds.

A technical analysis tool that uses horizontal lines at key Fibonacci levels (23.6%, 38.2%, 50%, 61.8%, 78.6%) to identify potential support and resistance areas during a price pullback.

The execution of an order. A fill occurs when a broker matches your order at a specific price. Partial fills happen when only part of the order is executed.

A method of evaluating currencies by analyzing economic data, central bank policies, geopolitical events, and macroeconomic indicators to determine intrinsic value and forecast price direction.

The theoretical price at which an asset should trade based on fundamental analysis. In forex, fair value is estimated using models like purchasing power parity or interest rate differentials between two economies.

A continuation chart pattern that forms as a brief rectangular consolidation against the prevailing trend, preceded by a sharp move (the flagpole). Flags suggest the trend will resume once price breaks out of the pattern.

A bullish chart pattern formed by two converging downward-sloping trendlines. Despite prices making lower highs and lower lows, the narrowing range signals weakening selling pressure and typically resolves with an upside breakout.

An oscillator developed by Alexander Elder that combines price movement and volume to measure the power behind a price move. Positive values indicate buying force and negative values indicate selling force. It is typically smoothed with a 13-period EMA.

An order that must be executed immediately and in full, or it is cancelled entirely. No partial fills are allowed. FOK orders are used when a trader needs the full position size at a specific price or not at all.

A technical tool that projects price targets beyond the 100% retracement level using Fibonacci ratios such as 127.2%, 161.8%, and 261.8%. Traders use extensions to set profit targets when price breaks through the previous swing high or low.

A technical indicator developed by Bill Williams that identifies potential reversal points on a chart. An up fractal forms when a candle has a higher high than the two candles on either side; a down fractal has a lower low. Fractals help identify significant swing points.

Communication by a central bank about its future monetary policy intentions. Forward guidance aims to manage market expectations about the path of interest rates. Hawkish forward guidance strengthens the currency; dovish guidance weakens it.

The percentage of orders that are executed at the requested price without requotes or rejection. A high fill rate indicates good execution quality. ECN brokers typically offer fill rates above 99% during normal market conditions.

An agreement to buy or sell a currency at a specified price on a future date. Unlike futures, forwards are traded over-the-counter (OTC) and can be customised. Businesses use forwards to hedge currency exposure; retail traders typically use spot or CFD markets.

A break in price on a chart where no trading occurs, causing a visible space between two consecutive candlesticks. Gaps often occur at the market open on Sunday or after major news events.

Gross Domestic Product. The total monetary value of all goods and services produced within a country. GDP growth or contraction is a key indicator of economic health and influences currency strength.

An order that remains active until the trader cancels it or it is executed. Unlike day orders that expire at the end of the session, GTC orders persist indefinitely. Most brokers set a maximum GTC period (e.g., 90 days) for pending orders.

A harmonic chart pattern that uses Fibonacci ratios to identify potential reversal zones. The pattern consists of four distinct price swings forming an M or W shape. When completed at specific Fibonacci confluences, it signals a high-probability reversal entry.

Opening a buy position on a currency pair or instrument with the expectation that the price will rise. When you go long EUR/USD, you are buying euros and selling US dollars, profiting if the euro strengthens.

Opening a sell position on a currency pair or instrument with the expectation that the price will fall. When you go short EUR/USD, you are selling euros and buying US dollars, profiting if the euro weakens.

A bullish technical signal that occurs when a shorter-term moving average (typically the 50-period) crosses above a longer-term moving average (typically the 200-period). It suggests a potential shift from a bearish to a bullish trend.

A measure of inflation that reflects the change in prices of all goods and services included in GDP. Unlike CPI, the GDP deflator is not based on a fixed basket of goods, making it a broader measure of economy-wide price changes.

A risk management strategy where a trader opens a position to offset potential losses in another position. For example, going long EUR/USD and long USD/CHF to reduce USD exposure.

A bullish reversal candlestick pattern with a small body near the top and a long lower wick (at least twice the body length). It appears at the bottom of a downtrend and signals that buyers rejected lower prices.

A bearish reversal candlestick pattern that looks identical to a hammer but appears at the top of an uptrend. The long lower wick shows that sellers briefly took control, warning that the uptrend may be losing momentum.

A bearish reversal chart pattern consisting of three peaks: a higher peak (head) between two lower peaks (shoulders). A break below the neckline connecting the two troughs confirms the pattern and signals a potential trend reversal.

A monetary policy stance that favors higher interest rates and tighter conditions to control inflation. Hawkish central bank language or decisions typically strengthen the currency because higher rates attract foreign capital seeking better yields.

A form of algorithmic trading characterised by extremely high execution speeds, high turnover rates, and very short holding periods. HFT firms use co-located servers and advanced algorithms to capture tiny price inefficiencies. Not typically available to retail traders.

A mathematical calculation applied to price or volume data used to forecast future market direction. Common indicators include Moving Averages, RSI, MACD, and Bollinger Bands.

The cost of borrowing money set by central banks. Higher interest rates tend to strengthen a currency as they attract foreign investment seeking higher returns.

A candlestick whose high and low are completely contained within the range of the previous candle. Inside bars represent a contraction in volatility and often precede a breakout. They are used in price action trading as continuation or reversal signals.

A bullish reversal chart pattern that is the mirror image of the head and shoulders pattern. It consists of three troughs with the middle trough (head) being the deepest. A break above the neckline confirms the reversal.

A comprehensive technical indicator that defines support, resistance, trend direction, and momentum in a single view. It consists of five lines: Tenkan-sen, Kijun-sen, Senkou Span A, Senkou Span B (which form the cloud), and Chikou Span.

An order that must be filled immediately, but partial fills are permitted. Any portion of the order that cannot be filled immediately is cancelled. IOC orders are useful when you want quick execution but are flexible on the full quantity.

An economic indicator that measures the output of factories, mines, and utilities. It reflects the manufacturing sector's contribution to GDP. Rising industrial production signals economic expansion and can strengthen the currency, while declining output suggests contraction.

A person or entity that allocates capital with the expectation of future financial returns. In forex, investors typically hold positions for longer periods compared to traders, focusing on fundamental analysis and macroeconomic trends.

Economic statistics tracking the value of goods and services a country buys from (imports) and sells to (exports) foreign nations. The balance between imports and exports affects currency demand and is a key component of the current account.

The difference in interest rates between two countries whose currencies form a forex pair. Interest rate differentials drive capital flows and are the primary determinant of swap rates. Currencies with higher rates tend to attract capital inflows.

The Institute for Supply Management's Manufacturing PMI, a key US economic indicator measuring factory activity. A reading above 50 indicates expansion; below 50 signals contraction. It is one of the earliest monthly economic releases and moves USD pairs significantly.

A fund that aims to replicate the performance of a specific market index (such as the DAX 40 or S&P 500). In forex brokerage, index CFDs allow traders to speculate on index movements with leverage, available at most EU-regulated brokers.

A weekly economic report measuring the number of people filing for unemployment benefits for the first time. Lower claims indicate a stronger labor market. In the US, weekly jobless claims are a closely watched leading indicator that can move USD pairs.

A charting method originating from 18th-century Japanese rice traders that displays four price points (open, high, low, close) for each period. The body colour indicates whether the close was above (bullish) or below (bearish) the open.

A volatility-based technical indicator consisting of an EMA center line with upper and lower bands set at a multiple of the Average True Range (ATR). Similar to Bollinger Bands but uses ATR instead of standard deviation, making it less sensitive to spikes.

A mathematical formula that determines the optimal percentage of capital to risk on each trade based on your win rate and average win/loss ratio. While theoretically optimal, full Kelly sizing is aggressive; most traders use a fraction (quarter or half Kelly) for practical risk management.

The use of borrowed capital to increase the size of a trading position. In the EU, ESMA limits retail leverage to 30:1 for major FX pairs. Leverage amplifies both profits and losses.

An order to buy or sell at a specified price or better. A buy limit is placed below the current price; a sell limit is placed above. The order will only fill at the limit price or a more favorable one.

The degree to which an asset can be bought or sold without significantly affecting its price. Major currency pairs like EUR/USD have high liquidity, while exotic pairs have lower liquidity.

A position that profits from a rise in price. Going long on EUR/USD means buying euros and selling US dollars, expecting the euro to appreciate.

A standardized unit of measurement for trade size. A standard lot is 100,000 units of the base currency, a mini lot is 10,000, and a micro lot is 1,000.

The time delay between sending an order and receiving confirmation of its execution. Lower latency means faster execution. Latency is measured in milliseconds and depends on your internet connection, broker server location, and the execution model used.

An aggregation of buy and sell orders from various liquidity providers (banks, hedge funds, other brokers) that forms the tradeable market. ECN brokers connect traders to multiple liquidity pools to provide tighter spreads and deeper market depth.

A financial institution (typically a major bank or prime broker) that supplies buy and sell quotes to the forex market, enabling trades to be executed. ECN and STP brokers aggregate quotes from multiple liquidity providers to offer competitive pricing.

A pending order to enter a trade at a more favourable price than the current market. Buy limit orders are placed below current price; sell limit orders above. Limit entries allow traders to pre-define entry points without watching the market constantly.

Market data showing the full order book with bid and ask prices at multiple levels beyond the best available price. Level 2 data reveals the depth of liquidity at each price level and is available natively in cTrader and MT5's Depth of Market feature.

Moving Average Convergence Divergence. A trend-following momentum indicator that shows the relationship between two EMAs (typically 12 and 26 period). The MACD line, signal line, and histogram are used to identify trend direction and momentum.

A currency pair that includes the US dollar and one of the other most traded currencies: EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, NZD/USD, and USD/CAD.

The amount of money required in your account to open and maintain a leveraged position. At 30:1 leverage, a one standard lot EUR/USD position requires approximately 3,333 EUR in margin.

A notification from your broker that your account equity has fallen below the required margin level. Under ESMA rules, brokers must issue a margin call when equity drops to 100% of the required margin.

A broker or financial institution that provides liquidity by quoting both buy and sell prices. Market makers take the opposite side of client trades and profit from the spread.

An order to buy or sell immediately at the best available price. Market orders guarantee execution but not a specific price, especially in fast-moving or illiquid markets.

A widely used trading platform developed by MetaQuotes. MetaTrader 4 (MT4) and MetaTrader 5 (MT5) are the most popular platforms among retail forex traders, offering charting, automated trading via Expert Advisors, and technical analysis tools.

A technical indicator that smooths price data by calculating the average price over a specified period. The two main types are Simple Moving Average (SMA) and Exponential Moving Average (EMA).

The rate of acceleration of a price movement. Strong momentum indicates a powerful trend with conviction behind it, while weakening momentum can signal an approaching reversal. Momentum is measured by indicators like RSI, MACD, and the Rate of Change.

A bullish reversal candlestick pattern consisting of three candles: a long bearish candle, a small-bodied candle (the star) that gaps down, and a long bullish candle that closes above the midpoint of the first candle. It signals the end of a downtrend.

The visual representation of the difference between the MACD line and the signal line. Positive histogram bars indicate bullish momentum; negative bars indicate bearish momentum. Shrinking bars suggest momentum is weakening, even if direction has not changed.

A volume-weighted momentum oscillator that ranges from 0 to 100, often called the volume-weighted RSI. Readings above 80 suggest overbought conditions; below 20 suggest oversold. MFI incorporates both price and volume data to measure buying and selling pressure.

An order that becomes a market order when the price touches a specified level. Unlike a limit order, a MIT order does not require the price to trade through the level. It is used to enter the market on a pullback to a particular price with guaranteed execution.

The volume of orders available at various price levels around the current market price. Deep markets have large volumes close to the current price, which reduces slippage. Shallow markets have less volume, leading to wider spreads and greater price impact.

The largest intra-trade drawdown experienced by a position before it was closed. Analyzing MAE across multiple trades helps traders optimize stop loss placement by understanding how far winning trades typically move against them before reaching their target.

A statistical method that uses randomized sampling to model the range of possible outcomes for a trading strategy. By shuffling the order of historical trades thousands of times, Monte Carlo analysis estimates the probability of various drawdown and return scenarios.

Multi-Account Manager. A type of managed account where a fund manager trades on behalf of multiple clients from a single master account. Trades are allocated to sub-accounts based on pre-defined ratios. MAM accounts offer more flexibility than PAMM accounts in how trades are distributed.

A position size equal to 1,000 units of the base currency (0.01 lots). A micro lot represents the smallest standard position size and is ideal for beginners and traders with smaller accounts. One pip movement on a micro lot equals approximately USD 0.10.

A position size equal to 10,000 units of the base currency (0.1 lots). A mini lot is ten times the size of a micro lot. One pip movement on a mini lot equals approximately USD 1.00. Mini lots offer a middle ground between micro and standard lot sizes.

The total amount of money in circulation in an economy, measured in aggregates such as M1 (cash and checking deposits), M2 (M1 plus savings and small deposits), and M3 (M2 plus large deposits). Rapid growth in money supply can be inflationary and affect currency value.

Markets in Financial Instruments Directive II. The EU regulatory framework governing financial markets and investment services. MiFID II sets rules for transparency, best execution, investor protection, and the authorization of firms providing financial services across the EU.

The largest peak-to-trough decline in a trading account's equity over a specific period. Maximum drawdown is a critical risk metric used to evaluate trading strategies and set prop firm challenge rules. Lower maximum drawdown indicates better risk control.

An order type that executes immediately at the best available market price. Unlike instant execution, market execution does not guarantee a specific price but guarantees the order will be filled. It eliminates requotes but may result in slippage.

A method where a trader's account automatically replicates the strategies of selected signal providers in real time. Similar to copy trading but typically involves copying entire trading strategies rather than individual trades.

Non-Farm Payrolls. A monthly US employment report that measures the number of jobs added or lost, excluding farm workers. NFP is one of the most market-moving economic releases for USD pairs.

An EU regulatory requirement that prevents a retail trader's account from falling below zero. If extreme market movements cause losses exceeding the account balance, the broker must absorb the difference. This protects retail traders from owing money to the broker.

A monthly US employment report measuring the number of jobs added or lost in the economy, excluding agricultural workers. NFP is released on the first Friday of each month and is one of the most market-moving economic events for forex traders.

A broker execution model where client orders are routed directly to liquidity providers without passing through a dealing desk. NDD brokers include both ECN and STP models. They have no conflict of interest with client trades since they profit from commissions rather than client losses.

A candlestick whose high and low completely engulf the range of the previous candle. Outside bars represent a sudden expansion in volatility and can signal strong momentum or a potential reversal depending on context.

A condition where the price of an asset has risen rapidly and may be due for a pullback. Oscillators like RSI signal overbought conditions when they exceed certain thresholds (e.g., RSI above 70). Being overbought does not guarantee a reversal.

A condition where the price of an asset has fallen rapidly and may be due for a bounce. Oscillators like RSI signal oversold conditions when they drop below certain thresholds (e.g., RSI below 30). Being oversold does not guarantee a reversal.

A cumulative volume indicator that adds volume on up days and subtracts volume on down days. Rising OBV confirms an uptrend by showing that volume is supporting higher prices; falling OBV confirms a downtrend. Divergences between OBV and price can signal reversals.

A pair of linked orders where the execution of one automatically cancels the other. Commonly used to set both a take profit and a stop loss simultaneously, ensuring that when one triggers, the other is removed to prevent conflicting positions.

An electronic list of all pending buy and sell orders for a particular instrument, organized by price level. The order book shows the depth of available liquidity and helps traders understand the supply and demand dynamics at different prices.

The analysis of incoming buy and sell orders to understand the real-time supply and demand dynamics in a market. Order flow analysis helps identify where institutional participants are entering or exiting, providing an edge beyond what traditional chart analysis reveals.

A money management formula developed by Ralph Vince that calculates the optimal fraction of capital to risk per trade to maximize geometric growth. Similar in concept to the Kelly Criterion but based on the largest historical loss rather than win probability.

A trading position that is held open past the daily rollover time (typically 5 PM New York time). Overnight positions are subject to swap charges or credits based on the interest rate differential between the two currencies in the pair.

A trade that has been entered but not yet closed. Open positions generate unrealised profit or loss that fluctuates with market price. They consume margin and are subject to swap charges if held overnight.

A derivative contract giving the holder the right, but not the obligation, to buy (call) or sell (put) an asset at a specified price before a specified date. Forex options are available at some EU brokers and are used for hedging and speculative strategies.

Percentage in Point. The smallest standard price movement in a currency pair, typically the fourth decimal place (0.0001) for most pairs. For JPY pairs, a pip is the second decimal (0.01).

A fractional pip, equal to one-tenth of a pip. It is the fifth decimal place for most currency pairs (0.00001) or the third decimal for JPY pairs (0.001). Also called a point.

The process of determining how many lots or units to trade based on your account size, risk tolerance, and stop loss distance. Proper position sizing is fundamental to risk management.

A trading methodology that analyzes raw price movements on a chart without relying on indicators. Price action traders use candlestick patterns, support/resistance levels, and chart patterns.

The net gain or loss from a trade or series of trades. Realized P&L comes from closed positions; unrealized (floating) P&L comes from open positions.

A continuation chart pattern that forms as converging trendlines create a small symmetrical triangle after a sharp price move (the flagpole). Pennants suggest the trend will resume after a brief period of consolidation.

A temporary decline in price during an uptrend (or a temporary rise during a downtrend). Pullbacks are considered normal corrections within a larger trend and often present entry opportunities for trend-following traders.

A trend-following indicator that plots dots above or below price to indicate potential reversal points. Dots below price suggest an uptrend; dots above suggest a downtrend. The SAR (Stop and Reverse) provides trailing stop levels that accelerate as the trend continues.

Percentage Allocation Management Module. A type of managed account where a fund manager trades client funds pooled together. Profits and losses are distributed proportionally to each investor's contribution. PAMM accounts are regulated as a form of asset management in the EU.

A survey-based economic indicator that measures the health of the manufacturing or services sector. A PMI reading above 50 indicates expansion; below 50 indicates contraction. Flash PMI releases are among the earliest signals of economic conditions each month.

A technical indicator calculated from the previous period's high, low, and close prices, used to determine potential support and resistance levels. The main pivot point and its surrounding levels (S1, S2, S3, R1, R2, R3) are widely used by day traders for intraday reference points.

The collection of all financial assets and open positions held by a trader or investor. In forex, portfolio management involves diversifying across multiple currency pairs and managing overall exposure to reduce concentration risk.

A candlestick pattern with a small body and a long wick (shadow) on one side, indicating rejection of a price level. A bullish pin bar has a long lower wick (price rejected lower levels); a bearish pin bar has a long upper wick.

An economic indicator measuring the average change in selling prices received by domestic producers for their output. PPI is a leading indicator of consumer inflation because rising production costs are often passed on to consumers.

When only a portion of an order is executed at the requested price due to insufficient liquidity at that level. The remaining unfilled portion may be filled at the next available price or cancelled, depending on the order type and broker settings.

An instruction to buy or sell at a specified price in the future. Pending orders include buy limits, sell limits, buy stops, sell stops, and stop-limit variants. They allow traders to set up trades in advance without needing to monitor the market.

Simulated trading using virtual money to practice strategies without financial risk. Paper trading is conducted through demo accounts at forex brokers. While valuable for learning, it does not replicate the psychological pressure of real money trading.

The second currency listed in a currency pair. In EUR/USD, USD is the quote currency. It shows how much of the quote currency is needed to buy one unit of the base currency.

An unconventional monetary policy where a central bank purchases government bonds or other financial assets to inject money into the economy and lower interest rates. QE is typically used when rates are already near zero. QE tends to weaken the currency by increasing money supply.

The process of a central bank reducing its balance sheet by allowing bonds to mature without reinvestment or by actively selling holdings. QT reduces money supply and is the reverse of quantitative easing. It tends to strengthen the currency and raise long-term interest rates.

A price level where selling pressure tends to outweigh buying pressure, preventing the price from rising further. Resistance levels are identified from historical price highs and used as potential sell or take-profit zones.

The ratio between the potential loss and potential profit of a trade. A risk-reward ratio of 1:2 means you risk 1 unit to potentially gain 2. Most professionals target a minimum of 1:2.

Relative Strength Index. A momentum oscillator ranging from 0 to 100 that measures the speed and magnitude of recent price changes. Readings above 70 suggest overbought conditions; below 30 suggest oversold.

A period where price oscillates between a defined support floor and resistance ceiling without establishing a clear trend. Range-bound markets favor strategies that buy at support and sell at resistance.

A temporary reversal in price within a larger trend, often measured using Fibonacci levels. A retracement differs from a reversal in that the overall trend direction is expected to resume after the correction.

A change in the overall direction of a price trend. A bullish reversal shifts from a downtrend to an uptrend, while a bearish reversal shifts from an uptrend to a downtrend. Reversals are confirmed by chart patterns and indicator signals.

A bearish chart pattern formed by two converging upward-sloping trendlines. Despite prices making higher highs and higher lows, the narrowing range signals weakening momentum and typically resolves with a downside breakout.

A momentum oscillator that measures the percentage change in price over a specified number of periods. Positive ROC values indicate upward momentum; negative values indicate downward momentum. Extreme readings can signal overbought or oversold conditions.

A situation where a broker is unable to execute your order at the requested price and offers a new (usually worse) price. Requotes typically occur during fast-moving markets and are more common with dealing desk brokers than ECN or STP brokers.

The probability that a trader will lose enough capital to be unable to continue trading. Risk of ruin depends on win rate, average win/loss size, and the percentage of capital risked per trade. It is a fundamental concept in determining appropriate position sizing.

A monthly economic indicator measuring the total revenue of retail stores. It serves as a key gauge of consumer spending, which drives a large portion of GDP in developed economies. Better-than-expected retail sales data typically strengthens the currency.

Money that a trader can afford to lose without affecting their financial well-being or lifestyle. Sound money management dictates that only risk capital should be used for trading. Funds needed for living expenses, emergencies, or debt obligations should never be traded.

The process of extending the settlement date of an open forex position by closing it at the daily cutoff and reopening it at the next day's opening rate. The swap charge or credit is applied during rollover, typically at 5 PM New York time.

A momentum oscillator that compares the closing price relative to the trading range and smooths the result. The principle is that prices tend to close higher than they open in uptrends and lower than they open in downtrends. Signal line crossovers generate trading signals.

A sustained period of rising prices in a market or specific instrument. A rally can occur within a broader uptrend or as a corrective move within a downtrend (a bear market rally). Rallies are driven by increased buying pressure.

The level of risk a trader or investor is willing to accept in pursuit of returns. Risk appetite varies with market conditions: risk-on environments see capital flow to higher-yielding, riskier assets, while risk-off drives flows to safe havens like USD, CHF, and JPY.

A preference for lower risk, even at the cost of lower potential returns. In forex markets, risk aversion drives capital toward safe-haven currencies (USD, JPY, CHF) and away from higher-yielding, riskier currencies (AUD, NZD, emerging markets).

The theoretical return on an investment with zero risk, typically represented by short-term government bond yields. The risk-free rate is used as a benchmark in calculating risk-adjusted performance metrics like the Sharpe ratio.

A fast-paced trading style that aims to profit from very small price movements, typically holding positions for seconds to minutes. Scalpers require tight spreads, fast execution, and a broker that allows this strategy.

A position that profits from a fall in price. Going short on EUR/USD means selling euros and buying US dollars, expecting the euro to depreciate.

The difference between the expected price of a trade and the actual price at which it is executed. Slippage commonly occurs during high volatility or low liquidity periods and can be positive or negative.

The difference between the bid and ask price of a currency pair. Spreads are the primary cost of trading and vary by pair, market conditions, and broker type. Tighter spreads mean lower trading costs.

An order placed to close a position at a predetermined price to limit losses. Once the price reaches the stop level, the order becomes a market order. Stop losses are a cornerstone of risk management.

The level at which a broker automatically closes your losing positions to prevent further losses. Under ESMA rules, stop out occurs when margin level falls to 50% of the required margin.

A price level where buying pressure tends to outweigh selling pressure, preventing the price from falling further. Support levels are identified from historical price lows and used as potential buy or stop-loss zones.

An overnight interest charge (or credit) applied to positions held past the daily rollover time (typically 5 PM EST). Swaps reflect the interest rate differential between the two currencies in the pair.

A trading style that aims to capture medium-term price moves over several days to weeks. Swing traders use a combination of technical and fundamental analysis to identify entry and exit points.

A bearish reversal candlestick pattern with a small body near the bottom and a long upper wick (at least twice the body length). It appears at the top of an uptrend and signals that buyers pushed higher but sellers rejected the move.

The arithmetic mean of a set of prices over a specified period. The 50-period and 200-period SMAs are widely watched by traders. A cross of the 50 SMA above the 200 SMA is called a golden cross (bullish); below is a death cross (bearish).

An oscillator that applies the Stochastic formula to RSI values rather than price data, creating a more sensitive momentum indicator. It ranges from 0 to 1 and is useful for identifying short-term overbought and oversold conditions within a trend.

A conditional order that becomes a limit order once a specified stop price is reached. Unlike a regular stop order that converts to a market order, the stop limit only fills at the limit price or better. This avoids slippage but risks non-execution in fast markets.

An order that becomes a market order once a specified stop price is reached. Stop market orders guarantee execution but not price, meaning slippage is possible during volatile conditions. They are commonly used to enter breakout trades or exit losing positions.

A broker execution model where client orders are passed directly to liquidity providers without dealer intervention. STP brokers do not take the opposite side of client trades. They profit from a markup on the spread or commissions rather than from client losses.

A measure of risk-adjusted return calculated by dividing the excess return (return above the risk-free rate) by the standard deviation of returns. A higher Sharpe ratio indicates better risk-adjusted performance. Ratios above 1.0 are generally considered acceptable; above 2.0 is excellent.

A variation of the Sharpe ratio that only penalizes downside volatility rather than total volatility. It divides excess return by the standard deviation of negative returns only, providing a more accurate picture of risk-adjusted performance for strategies with asymmetric return profiles.

A bank account where client funds are held separately from the broker's operational funds. EU regulation requires all regulated brokers to maintain segregated accounts, ensuring that client money is protected if the broker becomes insolvent.

A position size equal to 100,000 units of the base currency (1.0 lot). A standard lot is the default trading unit in forex. One pip movement on a standard lot equals approximately USD 10.00. Trading standard lots requires significant margin under EU leverage limits.

A trading account that does not charge or credit overnight swap interest, originally designed to comply with Islamic finance principles. Some EU brokers offer swap-free accounts to a broader audience, though alternative fees such as administration charges may apply.

An economic condition characterized by stagnant economic growth, high unemployment, and rising inflation occurring simultaneously. Stagflation is challenging for central banks because the typical remedy for inflation (raising rates) worsens unemployment and growth.

A time period during which a major financial center is actively trading. The three main forex sessions are Asian (Tokyo), European (London), and American (New York). Liquidity, volatility, and spread conditions vary significantly between sessions.

The overall attitude of traders toward a particular market or asset. Sentiment indicators such as the Commitment of Traders (COT) report and broker positioning data reveal whether traders are predominantly long or short, which can be used as a contrarian signal.

A momentum indicator that compares a closing price to the range of prices over a specified period. The %K line and %D signal line oscillate between 0 and 100. Readings above 80 indicate overbought conditions; below 20 indicate oversold conditions.

The act of trading financial instruments with the goal of profiting from price movements rather than hedging or investing for long-term returns. The majority of retail forex trading is speculative in nature.

The risk that the failure of one financial institution or market event could trigger a chain reaction affecting the entire financial system. Systemic risk in forex can manifest as liquidity crises, broker failures, or sudden currency devaluations.

A pending order to sell at a price above the current market price. Traders use sell limits when they expect price to rise to a resistance level before falling. The order triggers when the bid price reaches the specified limit price.

A pending order to sell at a price below the current market price. Traders use sell stops for breakout strategies, entering a short position when price breaks below a support level. The order triggers when the bid price reaches the stop price.

A pending order that triggers when price reaches a specified level, entering the market in the direction of the breakout. Buy stop entries are above current price; sell stop entries below. Used primarily for breakout and momentum strategies.

A market where financial instruments are traded for immediate delivery. In forex, the spot market involves exchanging currencies at the current market rate with settlement typically within two business days (T+2). Most retail forex is spot-based.

A derivative agreement in which two parties exchange financial obligations, such as interest payments or currency amounts. In retail forex, the term swap more commonly refers to the overnight rollover charge or credit on open positions.

The physical location of a broker's trading servers. Proximity to liquidity providers' servers reduces latency and improves execution speed. Major server locations include Equinix data centres in New York (NY4), London (LD4), and Tokyo (TY3).

A trader or service that shares trading recommendations (buy/sell signals) with subscribers. Signal providers may operate through copy trading platforms, dedicated apps, or messaging services. In the EU, providing investment signals may require regulatory authorization.

A trading approach that combines social media features with investment platforms, allowing traders to share strategies, follow other traders, and copy trades. eToro pioneered social trading in the retail space. It is regulated under MiFID II in the EU.

An order placed to automatically close a position when the price reaches a specified profit target. Take profit orders lock in gains and remove the need to manually monitor open positions.

A method of evaluating and forecasting price movements by studying historical price charts, patterns, and technical indicators. It operates on the premise that price action discounts all known information.

A dynamic stop loss that moves with the market price by a set distance. As the price moves in your favor, the stop follows; if the price reverses, the stop stays in place, protecting accumulated profits.

The general direction of market price movement. An uptrend consists of higher highs and higher lows; a downtrend consists of lower highs and lower lows. Trading with the trend is a core principle of technical analysis.

A chart pattern formed by converging trendlines. Symmetrical triangles indicate indecision, ascending triangles are typically bullish with a flat top, and descending triangles are typically bearish with a flat bottom. Breakout direction determines the trade.

A momentum oscillator that displays the percentage rate of change of a triple-smoothed EMA. TRIX filters out insignificant price movements and is used to identify trend direction and potential reversal points through signal line crossovers.

The smallest possible price change in a trading instrument. In forex, a tick is typically one pipette (0.00001 for most pairs). Tick data records every individual price change and is the most granular form of market data available.

The number of price changes (ticks) during a given period, used as a proxy for actual trading volume in the decentralized forex market. While not a true measure of traded contracts, tick volume correlates with actual activity and is useful for volume-based analysis.

A bullish reversal pattern consisting of three consecutive long-bodied bullish candles that open within the previous candle's body and close near the session high. It appears after a downtrend and signals strong buying pressure and potential trend reversal.

A bearish reversal pattern consisting of three consecutive long-bodied bearish candles that open within the previous candle's body and close near the session low. It appears after an uptrend and signals strong selling pressure and potential trend reversal.

A parameter attached to an order that specifies how long the order remains active before it is executed or expires. Common time-in-force options include Day (expires at session end), GTC (Good Till Cancelled), IOC (Immediate or Cancel), and FOK (Fill or Kill).

A shorthand symbol used to identify a financial instrument. In forex, tickers follow the convention of two three-letter currency codes: EUR/USD, GBP/JPY, AUD/NZD. Brokers may use slightly different ticker formats on their platforms.

The act of buying or selling a financial instrument. A complete trade consists of opening a position (entry) and closing it (exit). The profit or loss is determined by the price difference between entry and exit, adjusted for lot size and any fees.

The gradual reduction of a central bank's asset purchase programme (quantitative easing). Tapering signals a shift toward tighter monetary policy and typically strengthens the currency as it implies future interest rate increases.

The return earned on government bonds (treasuries). Treasury yields reflect market expectations for interest rates, inflation, and economic growth. Rising yields typically strengthen the associated currency as they attract capital from foreign investors seeking higher returns.

A dynamic stop-loss order that automatically follows price by a specified distance as the trade moves in your favour. It locks in profits while allowing the trade to continue running. The stop only moves in the profitable direction and never retraces.

A limit order that automatically closes a position when the price reaches a specified profit target. Take profit orders ensure profits are captured without the trader needing to monitor the position continuously.

A statistical measure of the rate at which the price of a currency pair moves. Higher volatility means larger price swings and more risk but also more potential profit opportunities.

The number of units or contracts traded during a given period. In forex, true volume data is limited because the market is decentralized, but tick volume (number of price changes) is often used as a proxy.

An intraday benchmark that calculates the average price weighted by volume. Price above VWAP suggests bullish intraday sentiment; below suggests bearish. Institutional traders use VWAP to assess execution quality. It resets at the start of each session.

A statistical measure that estimates the maximum potential loss of a portfolio over a specified time period at a given confidence level. For example, a daily VaR of EUR 1,000 at 95% confidence means there is a 5% chance of losing more than EUR 1,000 in a day.

A position sizing method that adjusts trade size based on current market volatility. When volatility is high, position size is reduced; when volatility is low, position size is increased. This aims to keep the dollar risk per trade consistent regardless of market conditions.

A remote server used to run trading platforms and Expert Advisors continuously without relying on a personal computer. VPS hosting ensures 24/5 uptime for automated strategies and reduces latency when the server is located near the broker's data centre.

A chart pattern formed by two converging trendlines that both slope in the same direction. Rising wedges typically resolve bearishly and falling wedges resolve bullishly, making them reversal patterns in most contexts.

A rapid price movement in one direction followed immediately by a sharp reversal. Whipsaws frequently occur around news events and during low-liquidity periods, triggering stop losses on both sides of the market.

A momentum oscillator that ranges from 0 to -100, measuring the current close relative to the highest high over a lookback period (typically 14). Readings above -20 indicate overbought conditions; below -80 indicate oversold conditions.

The practice of institutional traders adjusting their portfolios near the end of a reporting period (quarter-end, year-end) to improve the appearance of their holdings. Window dressing can create unusual price movements in the final days of a quarter.

A derivative that gives the holder the right to buy or sell an underlying security at a specific price before expiration. Similar to options but typically issued by the company itself with longer expiration periods. Some brokers offer warrant CFDs.

A business arrangement where a technology provider licenses its trading platform and infrastructure to another company, which then offers it under its own brand. Many smaller forex brokers operate as white-label partners of larger brokers or platform providers.

A graph plotting interest rates of bonds with equal credit quality but different maturity dates. A normal yield curve slopes upward; an inverted yield curve (short-term rates higher than long-term) historically signals a recession. Currency traders monitor yield curves for monetary policy signals.

A filtering indicator that connects significant price highs and lows, removing noise below a specified percentage threshold. Zig Zag helps visualize the overall price structure and identify swing points, though it repaints and should not be used for entry signals.