Forex Glossary

Traders, especially beginners, may not know or understand some Forex terms, so we provide our users with a list of specialized terms with their definitions.

En TermEn Description
Head and Shoulders

is a trend reversal pattern of technical analysis represented by two peaks and the price high in the middle

High-Frequency Trading, HFT

is a type of trading which applies technical tools and computer algorithms (high-speed servers) to trade securities with high speed. In contrast to usual trading, High-Frequency Trading uses powerful computers to execute a greater number of trading operations. Usually, a computer analyzes the markets and executes operations based on its own trading strategy. The number of operations generated via High-Frequency Trading daily is counted in tens of thousands

Leverage

is an interest-free loan provided immediately by a broker to trader for trading on financial markets

Limit order

is a type of a pending order (see pending order) that enables entering the market at the given potentially important level after which the reversal is expected. Limit order types are Buy limit and Sell limit

Liquidity

is the degree to which an asset (currency, security, etc.) can be sold at the current market price. This term refers to market volatility and dynamics: a liquid market is a type of a market with large trading volumes where every trade incapable of making a significant impact

Long position

is the buying of a financial instrument

Loss

is the fixed loss on the position

Lot

is a trading unit on the market; the standardized quantity of goods making up a transaction, exchange-traded securities, a certain amount of currency on Forex. Lot also represents the trade volume (position, order)

Margin call

is a notice from a Forex broker to an account holder that tells the account holder that he must deposit additional money in order to cover opened losing trades

Market price

the last posted bid and ask prices for a given asset, currently valid on the market

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