Forex Glossary

  • Ask Price
  • The ask price (right quote display) is the price at which traders can buy the base currency. If you think that the EUR value will increase then you can choose to buy it for USD at the price displayed in the ask quote.
  • Aussie
  • Dealer slang for the AUD/USD currency pair.
  • Base Currency
  • The base currency is the first currency listed in any currency pair. Its value is determined against the counter currency’s value. For example, if the rate of the EUR/USD pair is 1.3525, then the EUR is the base currency and it is worth 1.3525 USD.
  • Bear
  • A Bear market is a pessimistic market with declining prices.
  • Bid Price
  • The bid price (left quote display) is the price at which traders can sell the base currency. If you think that the EUR value will decrease then you can choose to sell it for USD at the price displayed in the bid quote.
  • Bull
  • A Bull market is an optimistic market with rising prices.
  • Buy Price
  • The buy price (left quote display) is the price at which traders can sell the base currency. If you think that the EUR value will decrease then you can choose to sell it for USD at the price displayed in the bid quote.
  • Cable
  • Also known as Sterling. Dealer slang for the GPB/USD currency pair.
  • Cross Rate
  • A price quote consisting of any currency quoted against a currency that is not the USD. The quote is made up of the individual exchange rates of the two currencies against the USD.
  • Currency Pair
  • The two currencies that the exchange rate is comprised of. One of the currencies is bought, and the other is sold at the same time.
  • Day Trading
  • The practice of opening and closing positions within the same trading day, so that at the end of the day the trader has no open positions.
  • Fed
  • The Fed is short for Federal Reserve, which is the central banking system of the United States. The Fed issues announcements regarding U.S. monetary policy which can have significant effect on the Forex market.
  • Forex
  • Forex, or FX, stands for Foreign Exchange. Forex is the simultaneous buying of one currency and selling of another. Since you purchase money with money, there are two transactions (buying and selling) happening at the same time.
  • Fundamental Analysis
  • This type of analysis focuses on the macroeconomic factors that influence the value of a country’s currency. Traders open positions based on how they think changes in these factors are bound to affect different economies.
  • Hedging
  • The practice of opening several positions at once where one position minimizes the risk of another position. Click here to learn more about hedging.
  • Kiwi
  • Dealer slang for the NZD/USD currency pair.
  • Leverage
  • Leverage is a loan from your broker, which enables you to trade with a small amount of capital. It can increase your potential profit, but it can also increase your risk. Click here to learn more about leverage.
  • Long Position
  • Going long means opening a position in which the trader buys currency in hopes that this currency’s value will increase (buy low, sell high).
  • Loonie
  • Dealer slang for the USD/CAD currency pair.
  • Lot
  • The standard unit of trading. One standard lot equals 100,000 units of the base currency, a mini lot equals 10,000 units, and a micro lot equals 1,000 units. eToro’s standard trade volume is the mini lot.
  • Margin
  • The minimal cash deposit that you have to put up for the transaction. Trading forex on margin increases your buying power, but it can also increase your losses. Click here to learn more about margin.
  • Pip
  • Pip is the smallest price increment in the last digit in the rate – usually the fourth digit after the decimal point (apart from the USD/JPY).
  • Price Trend
  • A consistent movement of currency prices in a certain direction. Traders try to spot trends in order to capitalize on their potential. Click here to learn more about trends.
  • Rate
  • Rate or quote, is the price of one currency in terms of another.
  • Risk Capital
  • The amount of money that a trader can afford to risk, the potential loss of which would not affect their lifestyle.
  • Short Position
  • Going short means opening a position in which the trader sells currency in hopes that this currency’s value will decrease (sell high, buy low).
  • Spread
  • The spread is the difference between the bid price and the ask price.
  • Stop Loss
  • A trade order which automatically closes an open position at a specific price in order to prevent losses in case the market moves against your position. Click here to learn more about Stop Loss orders.
  • Swissy
  • Dealer slang for the USD/CHF currency pair.
  • Take Profit
  • A trade order which automatically closes an open position at a specific price realizing a specific amount of profit. Use this order to realize your gains. Click here to learn more about Take Profit orders.
  • Technocal Analysis
  • This type of analysis focuses on chart patterns of currency movements. It assumes that a currency’s future movements can be predicted by looking at past behavior. Click here to learn more about technical analysis.
  • Virtual Balance
  • Your current potential account balance that can be realized by closing all your open trades. For example, if your actual account balance is $525 and you have an open trade for $50 with a $25 profit, your virtual account balance will show $600.