Eighty concise definitions connect market language to what it changes on a chart, in an order ticket, in a backtest or inside a prop-firm rulebook.
Some formulas, triggers and protections vary by platform or provider. Those entries tell you exactly what to check.
Search plain-English definitions or narrow the glossary by category and first letter. Every term has a permanent link you can bookmark.
Showing 80 of 80 terms
The current account value after adding unrealised profit and subtracting unrealised loss and applicable adjustments from balance.
Why it mattersEquity can breach a rule while balance has not changed, which matters for margin and equity-based drawdown limits.
Also: offer
The price at which the quoting dealer or market is willing to sell the base currency. A trader buying the pair normally deals at the ask.
Why it mattersThe ask is usually above the bid, so a new trade normally begins with a small unrealised loss equal to trading friction.
Also: ATR
A moving average of true range, where true range captures the largest of the bar range and gaps from the previous close.
Why it mattersATR measures movement size, not direction; traders use it to normalise stops, filters and position sizes.
A hypothetical application of frozen rules to historical data, including realistic information timing, execution assumptions and costs.
Why it mattersA backtest can reject weak ideas; it cannot reproduce live financial pressure or prove future performance.
The first currency in a pair. One unit of the base currency is priced in the quote currency.
Why it mattersIn EUR/USD at 1.1000, EUR is the base and one euro is priced at 1.10 US dollars.
The price at which the quoting dealer or market is willing to buy the base currency. A trader selling the pair normally deals at the bid.
Why it mattersA chart that displays only bid prices can hide the ask price that would trigger or fill a buy.
Also: spread
The difference between the ask and bid at a moment in time. It is an implicit execution cost and can widen when liquidity is thin or uncertainty rises.
Why it mattersIf EUR/USD is 1.1000 bid and 1.1002 ask, the displayed spread is 2 pips.
A move beyond a predefined range, level or channel. A method must specify whether a touch, close or order fill qualifies.
Why it mattersFalse breaks are part of the distribution; do not relabel the boundary after seeing the outcome.
A chart mark showing a period’s open, high, low and close through a body and wicks.
Why it mattersA candle summarises a time interval; it does not reveal the exact order of movements inside that interval.
A public institution responsible for monetary functions such as policy implementation, currency issuance or financial-system operations; mandates differ by country.
Why it mattersFX responds to expected changes in relative policy paths, not only to the latest announced rate.
An explicit fee charged for executing a trade, often quoted per lot, per side or per round turn.
Why it mattersTranslate the full opening and closing commission into cash or R before comparing strategies or account types.
A programme rule limiting how concentrated eligible profit may be in one day, trade, size or style. There is no universal formula.
Why it mattersRecalculate it using the provider’s own numerator, denominator and rounding before requesting a payout.
Also: CPI
An index measuring average price change over time for a defined basket bought by a specified consumer population.
Why it mattersCountry methods, weights, seasonal adjustment and headline versus core measures differ; compare the release with its own consensus and history.
Also: currency cross
A currency pair that does not include the US dollar, such as EUR/GBP or AUD/JPY.
Why it mattersA cross can express a relative view directly, but its spread, liquidity and overlapping currency exposures still need checking.
Two currencies quoted together so the value of one is expressed in units of the other, such as EUR/USD.
Why it mattersEvery FX view is relative: being bullish EUR/USD means expecting the euro to strengthen against the US dollar.
The maximum permitted loss within the provider’s defined day, calculated from a stated balance or equity reference.
Why it mattersTimezone, reset point, open losses, commissions and prior-day reference can change the remaining allowance.
A fall from a previous peak to a later trough in balance, equity or a strategy curve. The chosen series must be stated.
Why it mattersMaximum drawdown describes the worst observed peak-to-trough loss in the sample, not the worst future loss possible.
A schedule of data releases, policy decisions and events, often showing prior, forecast and actual values.
Why it mattersImpact labels are publisher opinions; verify timestamps, timezones, revisions and the official release before using an event rule.
Also: challenge
A rule-bound assessment in which a participant must meet stated objectives without breaching loss or conduct limits.
Why it mattersPassing does not by itself guarantee a live funded account or payout; read the post-evaluation agreement separately.
The price of one currency expressed in another currency. It changes as buyers, sellers and dealers update executable prices.
Why it mattersA move from 1.1000 to 1.1050 in EUR/USD means one euro costs 0.0050 more US dollars.
The sample’s average net result per trade, often expressed as win rate × average win minus loss rate × average loss magnitude.
Why it mattersPositive historical expectancy is an estimate with uncertainty, not the amount the next trade is expected to make.
Also: FX, foreign exchange
The market and activity of exchanging one currency for another. Retail access may be provided through rolling spot or CFD products rather than delivery of bank deposits.
Why it mattersAlways identify the legal product and counterparty; a chart labelled EUR/USD does not by itself explain what the account owns.
Also: outright forward
An agreement made today to exchange two currencies at a fixed rate on a specified future date.
Why it mattersA forward can hedge a known future currency need; its rate reflects more than a simple forecast of the later spot rate.
Account equity not currently allocated as used margin, usually calculated as equity minus used margin.
Why it mattersIt is capacity under the platform formula, not spare money that can safely be risked; open losses can reduce it quickly.
The highest balance or equity value recognised by a rule, used as a reference for trailing limits or payout calculations.
Why it mattersAsk which value is sampled and when; an unrealised intraday high may count even if the trade later closes lower.
Also: development sample, training sample
The data used to design, select or tune a method and its parameters.
Why it mattersPerformance on data that influenced the rule is development evidence, not an independent confirmation.
A sustained increase in the general price level, reducing the purchasing power of a unit of currency. One price increase is not broad inflation.
Why it mattersCentral banks respond to measures, forecasts and causes of inflation, so the currency reaction is conditional rather than mechanical.
The difference between comparable interest rates or expected rate paths in two currency areas.
Why it mattersUse comparable maturities and distinguish current rates from market expectations; the differential is not a standalone entry signal.
The observable condition showing that the specific trade idea or setup no longer meets its stated logic.
Why it mattersInvalidation should determine the stop location before position size is calculated, not move because a loss feels uncomfortable.
The relationship between market exposure and the capital supporting it. Leverage lets a small amount of equity control a larger position.
Why it mattersAt 20:1 actual leverage, a 1% move in the position is roughly 20% of supporting equity before costs.
An instruction to transact only at a specified price or better: generally lower for a buy and higher for a sell.
Why it mattersPrice touching the level does not always mean a fill; available liquidity, queueing and provider rules matter.
Using information in a historical decision that would not have been known at that time, intentionally or accidentally.
Why it mattersFuture swing labels, final daily values on an intraday bar and revised event data can all leak future knowledge.
A platform unit for trade quantity. In retail FX a standard lot often represents 100,000 units of the base currency, but contract specifications control.
Why it mattersNever infer risk from the word lot alone; confirm the symbol’s contract size and calculate exposure from the actual units.
A market-convention label for a heavily traded currency pair that includes the US dollar. Lists differ slightly between brokers and publishers.
Why it mattersThe label often implies deeper liquidity, not guaranteed low costs at every time or during every event.
Funds required or reserved to open and maintain a leveraged position. Margin is collateral, not the maximum possible loss.
Why it mattersLow required margin does not make a large position low risk; price exposure and stop distance still determine loss.
A warning, demand for funds or account state triggered when available equity no longer supports required margin under the provider’s rules.
Why it mattersAutomated markets may reach close-out rapidly, so do not rely on receiving or acting on a manual warning first.
Also: stop-out
Automatic reduction or closure of positions when account equity breaches a provider’s maintenance threshold.
Why it mattersThe threshold, calculation basis and order of liquidation vary by product, jurisdiction and provider terms.
A platform ratio commonly calculated as equity divided by used margin, multiplied by 100. Exact labels and actions are provider-specific.
Why it mattersCompare the provider’s warning and liquidation thresholds rather than assuming every account uses the same percentage.
An instruction to buy or sell promptly at the best price available to the provider. It seeks execution, not a guaranteed price.
Why it mattersDuring a fast move, the fill can differ from the quote visible when the order was sent.
Also: overall drawdown limit
The lowest account value allowed under the programme’s overall loss rule before a breach occurs.
Why it mattersDetermine whether the floor is static or trailing and whether balance, equity, intraday lows and payouts affect it.
Also: MA, SMA, EMA
A rolling summary of recent prices. An SMA weights observations equally; an EMA gives more weight to recent values.
Why it mattersIt smooths price and therefore lags; period, price source and averaging method must match before charts are compared.
A protection that limits eligible client losses to funds in the covered trading account under applicable rules and provider terms.
Why it mattersIt is not universal across countries, client classifications or products; verify the legal entity and exact scope.
A programme restriction on opening, closing or holding positions around specified scheduled events.
Why it mattersCheck affected currencies, event source, blocked minutes, pending orders and whether forced stop or target fills count.
Also: exposure
The face value of the position used to calculate market exposure, before subtracting margin or considering account equity.
Why it mattersA small margin deposit can control a much larger notional position, which is why leverage magnifies both gains and losses.
Also: open, high, low, close
The four summary prices stored for a bar: its opening price, highest price, lowest price and closing price.
Why it mattersOHLC data cannot resolve which of the high or low occurred first, an important limitation for same-bar backtests.
Also: confirmation sample, test sample
Data protected from rule design and used only after the strategy version is frozen.
Why it mattersChanging the method after seeing this result consumes the sample; the revision needs new untouched data.
Also: OTC market
A market where counterparties trade through dealer and electronic networks rather than one central exchange and consolidated order book.
Why it mattersPrices, candle timestamps, spreads and available orders can differ between providers even when the pair name is identical.
Also: curve fitting, data snooping
Selecting rules or parameters that explain quirks and noise in one sample more closely than a repeatable market relationship.
Why it mattersMany tried variants increase the chance of a lucky winner; record the search and demand unseen-data stability.
Also: profit split
The stated percentage of eligible reward allocated to the trader and provider after programme conditions are met.
Why it mattersIt applies to defined eligible profit, not necessarily displayed account balance; minimums, fees, timing and deductions can matter.
A conventional small unit of exchange-rate movement, commonly 0.0001 for many pairs and 0.01 for many JPY pairs.
Why it mattersPip size and pip cash value are different: cash value also depends on pair, position size and account currency.
An interest rate or target used by a central bank to influence short-term funding conditions and broader monetary transmission.
Why it mattersMarkets compare the decision with expectations and the projected path; an unchanged rate can still move a currency.
Choosing trade quantity from account risk, entry-to-stop distance, pip value and expected trading costs.
Why it mattersSize should follow invalidation distance; selecting lots first can make similar ideas carry very different cash risk.
Gross profit from winning trades divided by the magnitude of gross loss from losing trades, normally after declared costs.
Why it mattersIt ignores the order of trades and is unstable in small samples; a value above one is not proof of durability.
The gain threshold an account must reach under the programme’s calculation rules, often during an evaluation stage.
Why it mattersCheck whether it uses closed balance or equity, whether costs count and whether a consistency rule changes eligibility.
Also: prop firm
A business that permits traders to operate under its capital, simulated-account or risk-allocation programme. Online evaluation models differ from traditional employer trading desks.
Why it mattersIdentify the legal entity, whether orders are simulated or live, the fee model and the contract governing any reward.
Also: retracement
A temporary move against a previously defined directional trend, without yet meeting that method’s trend-failure rule.
Why it mattersThe difference between pullback and reversal exists only after the invalidation rule is defined.
Also: counter currency, terms currency
The second currency in a pair: the currency used to state the price of one unit of the base currency.
Why it mattersIn EUR/USD at 1.1000, USD is the quote currency; many profit and pip calculations begin in USD.
Also: R
A trade result divided by its original planned risk. A gain equal to twice initial risk is +2R; losing all initial risk is −1R.
Why it mattersR makes differently sized trades comparable only when initial risk and costs are recorded consistently.
Also: consolidation
A period when price remains between declared upper and lower boundaries rather than sustaining one direction.
Why it mattersBoundaries should predate the signal; drawing them after a reversal creates hindsight.
Also: RSI
A bounded momentum oscillator that compares the magnitude of recent gains and losses, usually on a 0–100 scale.
Why it mattersAn overbought or oversold reading describes recent momentum; it is not an automatic reversal instruction.
Behaviour where an indicator’s earlier output changes after new information, history loading or recalculation. An updating open bar is not automatically deceptive repainting.
Why it mattersTest signals on completed bars and reload the chart; a historical marker that moves or disappears can invalidate a backtest assumption.
Also: overnight financing, swap rate
A debit or credit applied by a provider when a leveraged position remains open across its financing cutoff. Rates and multi-day conventions vary.
Why it mattersThis retail account charge is not the same instrument as an institutional FX swap; check both direction and day before holding overnight.
An event the provider treats as violating a programme condition, potentially ending an evaluation, account or payout eligibility.
Why it mattersHard and soft breaches can have different consequences; save the rule version and account evidence before disputing one.
A period when the conventional business hours of two major trading centres overlap.
Why it mattersOverlap can bring more participation, but it does not guarantee tight spreads or calm execution, especially during scheduled news.
A market situation that satisfies the preconditions for a method to look for an entry trigger.
Why it mattersSeparate setup eligibility from the trigger so every attractive chart is not counted after the event.
The difference between the price expected or requested and the price actually filled. It can be favourable or adverse.
Why it mattersBacktests that always fill at the signal price can overstate results, especially around news, gaps and low-liquidity periods.
Also: spot foreign exchange
An exchange of two currencies agreed now for near-term value, conventionally within two business days. Retail rolling products may imitate spot pricing without delivering currencies.
Why it mattersDo not assume an institutional deliverable spot contract and a broker’s rolling spot or CFD have identical settlement, financing or protections.
A loss floor that does not rise merely because the account reaches a new profit high, subject to the programme’s reset and payout terms.
Why it mattersA fixed floor can still be affected by withdrawals or phase changes, so the contract formula controls.
An instruction activated when a stop price is reached, commonly becoming a market order. Broker terminology and trigger-side rules vary.
Why it mattersA buy stop above market can enter a breakout, but a gap can produce a fill above the stop price.
An exit instruction intended to close a position after price reaches a chosen invalidation level. It limits the plan, not the exact fill.
Why it mattersGaps, slippage and provider execution mean realised loss can exceed the amount calculated at the stop price.
Predefined price areas where earlier trading suggests supply or demand may change. They are zones to test, not barriers guaranteed to hold.
Why it mattersRecord how a level was drawn, its width and its creation time before counting later reactions.
An instruction to close a position when a specified favourable price is available, usually operating like a limit exit.
Why it mattersA target defines one exit condition; it does not show that the reward is likely or that the method has positive expectancy.
The interval represented by each chart bar, such as 15 minutes, four hours or one day.
Why it mattersBroker clocks and session boundaries can make two bars with the same timeframe label contain different timestamps.
A practical time block associated with an active financial centre, such as Asia, London or New York, within the weekday OTC FX market.
Why it mattersSession boundaries are conventions, not one global exchange bell; daylight-saving changes and broker clocks must be handled explicitly.
A complete decision process covering eligibility, entry, sizing, invalidation, exit, costs and no-trade conditions.
Why it mattersAn indicator cross or candle name is only a component until the remaining decisions are written.
A loss floor that moves upward as a specified account high rises, sometimes stopping at a cap or initial balance.
Why it mattersEquity-based intraday trailing can tighten sooner than end-of-day balance trailing; model the exact formula candle by candle.
A persistent directional tendency defined by a chosen rule, such as rising swings, a channel slope or a moving-average state.
Why it mattersTrend is not one universal label; a method must state its timeframe and measurable definition.
Also: rolling-window test
A chronological process that repeatedly develops or calibrates on an earlier window and evaluates on the next unseen window.
Why it mattersEvery decision for each test window must use only information available before that window began.
A programme condition stating whether positions or pending orders may remain open through the provider’s weekend cutoff.
Why it mattersThe cutoff may be earlier than market close and can differ by instrument, account type or holiday schedule.
The proportion of counted trades classified as wins. The treatment of break-even, partial and open trades must be stated.
Why it mattersWin rate is incomplete without average win, average loss, costs, drawdown and sample size.