Are you a new trader? Do you find all the Forex trading jargon confusing? Well, you’re not alone. We’ve been trading for years and we still find myself having to look up the occasional term.
That’s why we’ve put together this handy guide on Forex trading acronyms. Bookmark this page and refer back to it whenever you need a refresher course on Forex trading lingo.
- PIP: Price Interest Point. A PIP is the smallest unit of price movement in a currency pair. For most currency pairs, one PIP is equal to 0.0001 of the quote currency.
- USD: United States Dollar. The USD is the base currency in many currency pairs.
- EUR: Euro. The EUR is the quote currency in many currency pairs.
- GBP: Great Britain Pound. The GBP is the quote currency in many currency pairs.
- JPY: Japanese Yen. The JPY is the quote currency in many currency pairs.
- VIX : Volatility Index. The VIX is a measure of market turbulence.
- E-mini: Electronic Mini Futures Contracts. E-mini contracts are smaller versions of standard futures contracts.
- Fibonacci Retracement: A technical analysis tool used to identify support and resistance levels.
- MACD: Moving Average Convergence Divergence. MACD is a technical analysis indicator used to identify trend reversals.
- RSI: Relative Strength Index. RSI is a technical analysis indicator used to identify overbought and oversold conditions.
- ATR: Average True Range. ATR is a technical analysis indicator used to measure market volatility.
- ADX: Average Directional Index. ADX is a technical analysis indicator used to measure the strength of a trend.
- Bollinger Bands: A technical analysis tool used to identify overbought and oversold conditions.
- P/L: Profit/Loss. P/L is the net result of all your winning and losing trades.
- Stop Loss: An order to sell a security when it reaches a certain price.
- Take Profit: An order to buy a security when it reaches a certain price.
- Trailing Stop: A stop loss order that is attached to a security’s price movement.
- Limit Order: An order to buy or sell a security at a specified price.
- Market Order: An order to buy or sell a security at the current market price.
- Entry Price: The price at which you enter a trade.
- Exit Price: The price at which you exit a trade.
- Long Position: A trade that is bought with the expectation that the price will rise.
- Short Position: A trade that is sold with the expectation that the price will fall.
- Margin: The amount of money required to open a position.
- Leverage: The use of borrowed money to increase your buying power.
- Margin Call: A demand from your broker for additional funds to cover your losses.
- Liquidity: The ability of a security to be bought or sold without affecting the price.
- Market Maker: A firm that provides liquidity to the market by buying and selling securities.
- OTC: Over-the-Counter. OTC securities are not traded on exchanges.
- ECN: Electronic Communications Network. ECNs are electronic platforms that match buyers and sellers.
- Retail Investor: An individual investor who trades securities through a broker-dealer.
- Institutional Investor: A large financial institution that trades securities in large quantities.
We hope this guide has been helpful in demystifying some of the Forex trading jargon. Remember, don’t be afraid to ask your broker or fellow traders for help if you’re ever stuck. Happy trading!
