Forex Terminology, Definitions and Slang With Free PDF (2024)

Have you ever read a trading blog or forum and thought what is all this Forex terminology that is being used? What do all these different terms mean?

In this post we go through the ten most commonly used and misunderstood trading slang terms and what exactly they mean.

NOTE: Get the Free Forex Terminology PDF Download Below.

Free PDF Guide: Get Your Forex Terminology & Definitions PDF

Table of Contents

1. Pip

Pip stands for “Percentage in Point”.

A pip in the Forex market is a common measurement for how far the price has moved.

Whilst most brokers these days go to the fifth decimal, a pip movement is the fourth decimal. For example; 0.0001 is one pip.

The image below shows where you can see the pip amount in your MT4 and MT5 order window.

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2. Spread

The spread is the difference between the bid (sell) and ask (buy) prices.

This difference is the spread you will pay when making your trades.

This is crucial for you to understand because each market and Forex pair will have hugely varying spreads.

The spread can severely cut into your trading profit or loss depending on a number of factors. These include the market you are trading and the type of strategy you are using.

Another huge factor is the broker you are using. If you are not using a broker with small spreads, then you can often be paying far too much just to make your trades.

3. Bid and Ask price

The bid and ask prices can vary widely depending on what market or Forex pair you are trading.

When buying you will be paying the ‘Ask’ price. This is always a little higher and has the ‘spread’ from your broker added into the price.

When you are selling you will receive the bid price that is the lower of the two quotes.

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4. Volume

Volume in your MT4 and MT5 trading terminals refers to the amount you want to trade.

As the image shows below you can set your own volume amount to trade.

Volume is traded in different lot sizes as explained just below.

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5. Lot size

Your trade size is referred to in ‘lots’.

One standard lot refers to 100,000.

For example; if you trade Forex pair XYZ for one standard lot, you are actually trading 100,000 of that Forex pair.

There are smaller lot amounts that will allow you to trade with smaller amounts than the 100,000 standard lot.

Most brokers offer micro lots: 1,000 and mini lots: 10,000.

6. Slippage

At times you will find that the price you tried to enter a trade was not the price that you had your order executed. This is called slippage.

The largest factor that creates slippage in the markets is large volatility. This can often be caused by news announcements or unexpected market shocks.

7. Going long/short

If you read any trading blogs or trading forums you would have seen traders discussing going long or going short.

This is because when trading CFD’s profits can be made from price moving both higher and lower.

When a trader is going ‘long’ it means they are buying and are looking for price to move back higher.

When a trader is going ‘short’ they are selling and looking for the price to move lower.

8. Bullish and Bearish

Ever heard of a bullish market? Or an economist say we are now in a bear market?

Being either bullish or bearish refers to what side of the market you are on.

If you are bullish you think that the price will rise.

If you are bearish you think that the price is likely to fall.

For example; a bullish trader may say; “I have just entered a long (buy) trade with the strong trend higher”.

9. Support and Resistance

One of the most popular and widely used technical analysis techniques in the stock and Forex markets is support and resistance.

As price moves up and down price action traders are constantly analyzing the prices movements.

Technical analysis and price action traders believe that the price moves inline with the fundamentals.

Support levels are demand levels where price can be seen on the chart to have found ‘support’.

On the flip side, resistance levels are seen as levels of supply and areas where price has found resistance to the move higher.

Support Example

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Resistance Example

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10. Currency ‘Pair’

Currencies are not able to be purchased or exchanged individually.

This is where currency pairs come in.

A currency pair is the two currencies that are being exchanged.

For example; the EUR/USD is the currency pair of the Euro and USD being exchanged.

NOTE: Get the Free Forex Terminology PDF Download Below.

Free PDF Guide: Get Your Forex Terminology & Definitions PDF

Your Guide to Price Action Entries FREE PDF Download

How to find, enter and place stop losses on the best price action entries

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Investagal

If you are new to Forex, then learning how to read a price action chart can be incredibly confusing. I am using all aspects of technical analysis and price action in my trading with a goal to help you learn to do the same.

Forex Terminology, Definitions and Slang With Free PDF (2024)

FAQs

How to understand forex easily? ›

Trading Forex for beginners summarized
  1. Learning the basics (currency pairs)
  2. Learn the software (MT4, MT5)
  3. Learn with demo accounts.
  4. Find a reliable service provider.
  5. Use the service provider's resources such as tools and guides.
  6. Read books on trading and watch videos online.
  7. Learn various trading strategies and test them.
Nov 1, 2023

What is the slang for FX? ›

FX is the slang word for Forex. And Forex is the biggest market where thousands of people and companies exchange currencies daily.

What is a pip in forex pdf? ›

A pip is the smallest unit of price movement for any currency pair. For pairs with the JPY as the counter currency, it's 0.01 Yen. For all other pairs, it's 0.0001 of the counter or quote currency. For example: For the EURUSD and most other pairs, movement from 1.4000 to 1.4001 is one pip.

What is the terminology in forex trading? ›

Bid price → the market price for the sale of an asset. Ask price → the market price for purchasing an asset. Spread → the difference between the “bid” and “ask” prices (the selling price and the purchase price). Appreciation → an increase in the value of an exchange rate.

Can I teach myself forex? ›

The short answer is yes, you can learn forex on your own. With the abundance of information available online and the availability of demo accounts, it is possible to teach yourself the basics of forex trading.

Which forex is best for beginners? ›

Top 5 Forex pairs to trade for beginners
  • EURUSD. EURUSD is one of the most traded currency pairs in the Forex market. ...
  • GBPUSD. GBPUSD is another best currency to trade for beginners. ...
  • USDJPY. USDJPY, also known as the “Gopher,” is another most traded Forex pair particularly suitable for beginners. ...
  • USDCHF. ...
  • USDCAD.
Aug 15, 2023

What is the slang for Eurusd? ›

EURUSD – Fiber

The EURUSD pair is the most traded currency pair in the world. It represents the eurozone and the United States. The nickname 'Fiber' has two legends behind it. One suggests that the name comes from the euro banknotes made of pure cotton fiber, which makes them more durable.

What is USD slang? ›

Nickname. List. Ace, bean, bill, bone, buck, deuce, dough, dub, ducat, doubloon, fin, frog, greenback, large, simoleons, skins, smackeroo, smackers, spondulix, Tom, yard, and eagle. Plural: dead presidents, green, bones, clams.

Does FX stand for forex? ›

The forex market is open on many holidays on which stock markets are closed, though the trading volume may be lower. Its name, forex, is a portmanteau of foreign and exchange. It's often abbreviated as fx.

How many pips is 1 dollar? ›

How much is $1 in pips? One pip is worth $1 for a mini lot, which means that if you buy 10,000 units or a mini lot of US dollars, one pip change in the price quote would equal $1. In short, $1 equals one pip if you trade a mini lot of US dollars.

How much is 50 pips worth? ›

How much is 50 pips or 100 pips? A pip usually equals 0.0001 of a Forex pair, so 50 pips equals 0.005, 100 pips—0.01. If one pip is worth $5, 50 pips are worth $250, 100 pips—$500.

How much is 0.01 lots? ›

0.01 is a micro lot in forex which is 1,000 units of currency. So 0.01 lot size would be around $1,000. The value of the pip for a micro-lot is roughly $0.10 based on the EUR/USD.

What are the three rules of forex trading? ›

10 golden rules of forex trading
  • Introduction. ...
  • Rule 1: Education Is Key. ...
  • Rule 2: Risk Management Is Paramount. ...
  • Rule 3: Patience Is a Virtue. ...
  • Rule 4: Use a Demo Account. ...
  • Rule 5: Stay Informed. ...
  • Rule 6: Keep Emotions in Check. ...
  • Rule 7: Diversify Your Portfolio.
Oct 25, 2023

What are the 4 types of forex traders? ›

Different Types of Forex Trader Summarized
Type of traderTrade in time
Day traderOne day without overnight positions
Swing traderSeveral days to weeks
Position traderFrom weeks, months to years
ScalperSeconds to minutes
Dec 19, 2023

How do you read forex names? ›

Usually, the first two letters define the name of the country and the last letter the name of the currency. For example, the United States Dollar is USD, the Great British Pound is GBP and the Japanese Yen is JPY.

What is considered a pip in forex? ›

Key Takeaways. Forex currency pairs are quoted in terms of pips, short for percentage in points. In practical terms, a pip is one-hundredth of one percent (1/100 x .01) and appears in the fourth decimal place (0.0001). It is the smallest price change increment for most forex pairs.

What is a pip in the forex market? ›

A pip is a measurement of movement in forex trading, used to define the change in value between two currencies. The literal meaning of pip is 'point in percentage', and it is the smallest standardised move that a currency quote can change by.

How to calculate pip in forex pdf? ›

  1. How Much is a Pip Worth? ...
  2. 1 pip / exchange rate = value per pip.
  3. Lets take a look at a few examples.
  4. Lets take a look at a few examples. ...
  5. 0.0001 / 1.0810 = 0.00009250. ...
  6. 0.01 / 96.27= 0.0001038. ...
  7. 0.0001 / 1.0810 = 0.00009250. ...
  8. pip value x exchange rate = pip value in USD.

What is a pip in forex example? ›

The unit of measurement to express the change in value between two currencies is called a “pip.” If EUR/USD moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE PIP. A pip is usually the last decimal place of a price quote.

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