Forex Terminology & Abbreviations

Flashcards covering terminology and abbreviations related to Forex trading, including market basics, trading strategies, and common abbreviations.

Leverage

Money borrowed from a broker as a ratio.

Lots

Lot size/position size/number of units traded.

Pip

Smallest price movement in a currency pair.

Spread

Difference between bid and ask price.

Bid Price

Price at which a trader can sell a currency pair.

Ask Price

Price at which a trader can buy a currency pair.

Margin

Amount of capital required to open a leveraged position.

Equity

Account balance + floating profits/losses.

Balance

Account value excluding open trades.

Drawdown

Peak-to-trough decline in account equity.

Stop Loss (SL)

Price level where a trade is automatically closed to limit loss.

Take Profit (TP)

Price level where a trade is automatically closed to secure profit.

Swap (Rollover)

Interest paid or earned for holding a position overnight.

Margin Call

Broker warning when margin level is too low to maintain trades.

Stop Out

Automatic closing of trades when margin level is critically low.

Liquidity

Market’s ability to execute trades without significant price changes.

Slippage

Difference between expected and actual execution price.

Commission

Broker’s fee per trade, usually for ECN accounts.

Lot Types

Standard (100k units), Mini (10k units), Micro (1k units).

Order Types

Market, Limit, Stop, Stop-Loss, Take Profit, Pending Orders.

Bullish

Expecting price to rise.

Bearish

Expecting price to fall.

Support

Price area where buying interest is strong enough to prevent further decline.

Resistance

Price area where selling interest is strong enough to prevent further rise.

Breakout

Price moving beyond a support or resistance level with momentum.

Trend

Overall direction of price movement (uptrend, downtrend, sideways).

Retracement

Temporary reversal in the direction of the prevailing trend.

Volatility

Measure of price fluctuations in a given period.

Hedging

Opening opposing positions to reduce risk exposure.

Scalping

Trading strategy focused on small, frequent trades.

Day Trading

Opening and closing trades within the same trading day.

Swing Trading

Holding trades for several days to weeks based on trends.

Position Trading

Long-term trading approach based on fundamental and technical analysis.

Risk-Reward Ratio

Ratio comparing potential profit to potential loss.

CFD (Contract for Difference)

Derivative allowing traders to speculate on price movements without owning the underlying asset.

BoS

Break of structure.

LIQ

Liquidity.

IMB

Imbalance.

EQH

Equal high.

EQL

Equal lows.

SZ

Supply zone.

DMZ / DZ

Demand zone.

POI

Point of interest.

HH

Higher high.

LL

Lower low.

HL

Higher low.

LH

Lower high.

MS

Market structure.

CE

Confirmation entry.

RE

Risk entry.

SL

Stop loss.

TP

Take profit.

ZTBS

Zone that broke structure.

BSL

Buy side liquidity.

SSL

Sell side liquidity.

FVG

Fair value gap (imbalance).

ChoCh

Change of character (BoS).