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Foreign Exchange. Refers to the market where currencies are traded. For example, exchanging US dollars for euros.

Point In Percentage. The smallest price move that a given exchange rate can make, usually one basis point or 0.0001. For example, if the EUR/USD pair moves from 1.1050 to 1.1051, that's one pip.

The difference between the bid price and the ask price in the forex market. For example, if the EUR/USD bid price is 1.1050 and the ask price is 1.1052, the spread is 2 pips.

The use of borrowed capital to increase the potential return of an investment. In forex, leverage might allow a trader to trade $10,000 in currency with an account of only$100. For example, a 100:1 leverage ratio means $1 controls$100.

A standardized quantity of currency. A standard lot represents 100,000 units of the base currency. For example, trading one lot of EUR/USD means trading 100,000 euros.

The amount of money needed in your account to maintain an open position in the forex market. For example, with a 1% margin, you can control $100,000 with$1,000.

A market where prices are falling, encouraging selling. For example, if the USD is losing value against the EUR, it might be considered in a bear market.

A market where prices are rising, encouraging buying. For example, if the USD is gaining value against the JPY, it might be considered in a bull market.

The price at which a forex trader is willing to buy a currency pair. For example, if the bid price for EUR/USD is 1.1050, a trader is willing to buy euros at this price.

The price at which a forex trader is willing to sell a currency pair. For example, if the ask price for EUR/USD is 1.1052, a trader is willing to sell euros at this price.

A measure of how easily a currency or security can be bought or sold in the market without affecting its price. For example, the EUR/USD pair is very liquid due to its high trade volume.

Electronic Communication Network. A computer system that facilitates trading of financial products outside stock exchanges. For forex, ECNs connect brokers and traders directly. Example: A trader uses an ECN to get better spreads.

Contract For Difference. A financial instrument that allows traders to speculate on price movements without owning the underlying asset. Example: A forex CFD may allow speculation on the EUR/USD without holding actual currencies.

The exchange rate between two currencies that are not the official currencies of the country where the exchange rate quote is given. Example: In the US, the EUR/JPY rate would be considered a cross rate.

The first currency listed in a forex pair which is used as the reference point for the trade. Example: In the EUR/USD pair, the euro is the base currency.

The second currency listed in a forex pair. It represents how much of this currency is required to get one unit of the base currency. Example: In the EUR/USD pair, the US dollar is the quote currency.

When a currency increases in value against another currency. Example: If EUR/USD moves from 1.10 to 1.15, the euro appreciates against the US dollar.

When a currency decreases in value against another currency. Example: If EUR/USD moves from 1.15 to 1.10, the euro depreciates against the US dollar.

Stop Loss. An order placed with a broker to buy or sell once the currency reaches a certain price. Example: Setting an SL at 1.1000 on EUR/USD secures the trader from heavy losses if the price drops below this point.

Take Profit. An order to sell or buy a currency when it reaches a certain price to ensure the trader a profit. Example: Placing a TP at 1.1200 on a long EUR/USD trade to realize gains when attained.

The process of extending the settlement date of an open position by rolling it over to the next available settlement date. Example: Holding an open forex position overnight may involve a rollover charge or credit.

A fee paid or earned for holding a currency position overnight, determined by the differential between the interest rates of the two currencies in the pair. Example: A trader might pay a swap fee if holding AUD/USD with AUD having a lower interest rate than USD.

A methodology for forecasting the direction of prices through the study of past market data, primarily price and volume. Example: Using a chart pattern like 'Head and Shoulders' to predict forex price movements.

A method of measuring a currency's intrinsic value by examining related economic, financial, and other qualitative and quantitative factors. Example: Analysing the GDP growth rate of a country to predict its currency strength.

A trading strategy that attempts to make many profits on small price changes. Traders who implement this strategy place anywhere from 10 to a few hundred trades in a single day. Example: Buying EUR/USD at 1.1050 and selling at 1.1051, repeatedly during the day.

The act of buying and selling currencies within the same trading day, before the markets close. Example: A forex day trader might buy GBP/USD at market open and sell it before the close, not holding positions overnight.

To 'go long' means to buy a currency pair with the expectation that its value will rise. Example: A trader goes long on USD/JPY at 110.00, hoping to sell it at a higher price later.

To 'go short' means to sell a currency pair with the expectation that its value will fall and you can buy it back at a lower price later. Example: A trader goes short on GBP/USD at 1.3000, hoping to repurchase it cheaper.

Another term for the quote currency in a foreign exchange transaction. It indicates which currency an investor will be selling or receiving. Example: In the USD/CAD currency pair, the Canadian dollar is the counter currency.

The measure of how much the price of a currency fluctuates over a specific time. High volatility indicates large price swings. Example: News events can increase forex pair volatility, causing rapid price movements.

Statistics that indicate the current economic growth and stability of a country, which affects its currency's value. Example: Unemployment rates are an economic indicator that can influence a country's currency strength.

Consumer Price Index. A statistical measure that examines the weighted average of prices of a basket of consumer goods and services. Example: A rising CPI indicates inflation, which might influence a central bank to raise interest rates.

Gross Domestic Product. The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period. Example: A higher GDP indicates a strong economy, potentially strengthening the currency.

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Example: Forex traders often monitor changes in central bank interest rates, as they can have a significant impact on currency valuation.

An institution that manages a state's currency, money supply, and interest rates. Example: The Federal Reserve in the U.S. may affect the USD's value through its policy decisions.

The process of identification, analysis, and acceptance or mitigation of uncertainty in investment decisions. Example: Proper risk management in forex might include setting stop-loss orders and managing leverage.

The quotation of the relative value of one currency unit against the unit of another currency in the foreign exchange market. Example: EUR/USD is a currency pair where the euro is the base and the US dollar is the quote currency.

Refers to an economic outlook which generally supports lower interest rates. Central banks with a dovish view are less likely to raise interest rates. Example: A dovish statement by the ECB may lead to weakness in the euro.

Denotes a monetary policy attitude that suggests preference for higher interest rates to combat inflation and cool economic growth. Example: A hawkish stance by the Federal Reserve is often bullish for USD.

A tool used to identify potential support or resistance levels, based on the Fibonacci sequence. Example: A trader might expect EUR/USD to find support at a 61.8% Fibonacci retracement level.

A price level at which a currency pair tends to stop rising and may bounce off or reverse direction. Example: The 1.3000 level has acted as resistance for the GBP/USD pair in the past.