Understanding forex trading terminology is essential for anyone entering the world of currency markets. Whether you’re a beginner or looking to refresh your knowledge, mastering the language of forex trading—like pips, lots, spreads, and leverage—will help you navigate trades with confidence. In this guide by Oxy Capitals, we cover the key forex trading terms you need to know.
The smallest unit of price movement in a currency pair.
🔸 Most commonly 0.0001 for major forex pairs.
The standard unit for trading volume in forex.
Standard Lot = 100,000 units
Mini Lot = 10,000 units
Micro Lot = 1,000 units
Nano Lot = 100 units
The difference between the bid (sell) price and ask (buy) price. This is a key concept in forex trading terminology.
Allows traders to control a large position using a small amount of capital.
The amount required to open or maintain a trading position.
The total funds in your account, excluding current open trades.
The account balance plus or minus any profit or loss from open positions.
Available funds that can be used to open new trades.
Ratio of equity to used margin, shown as a percentage.
The margin level at which your broker may automatically close positions to avoid negative balance.
Buying = expecting price to rise.
Selling = expecting price to fall.
An order executed instantly at the current price.
An order set to be executed in the future when price hits a target level.
Automatically closes a trade at a specific loss level.
Automatically closes a trade at a specific profit level.
A dynamic stop loss that follows the price movement in your favor.
Interest charged or earned for holding a position overnight.
Bullish = Expecting price to go up
Bearish = Expecting price to go down
Overall direction of the market: uptrend, downtrend, or sideways.
Key levels where price tends to reverse or consolidate.
Price moving beyond a key support or resistance level.
A temporary price reversal to re-test a broken level.
Sideways movement in price before the next big move.
A visual representation of price action showing open, high, low, and close.
Smooths out price data to identify trends.
Indicates overbought or oversold market conditions.
Shows momentum and potential trend reversals.
Helps predict possible support/resistance using Fibonacci levels.
Occurs when price moves differently than an indicator—can signal reversals.
Compares how much you’re risking versus the potential reward.
Measures how much capital is lost before a new high is reached.
The amount you trade based on your account size and risk.
A company that provides access to the forex market.
DD processes trades internally, NDD sends them to the market.
Execution models that offer direct access to liquidity.
Difference between expected and actual execution price.
When a broker asks for trade confirmation at a new price due to volatility.
Opening a second position to reduce risk from the first one.
Making lots of small trades for tiny profits.
All trades opened and closed within the same day.
Holding trades for several days to capture market swings.
Using economic data releases to trade volatility.
How much the price of a pair moves over time.
How easily a currency can be bought or sold.
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