Master the language of trading with our comprehensive glossary. From algorithmic trading to volatility, discover 200+ essential terms every forex, CFD, and cryptocurrency trader should know.
Account management in forex and prop trading refers to professional money management services where experienced traders manage client funds or prop firm capital. This includes portfolio optimization, risk control, and trading strategy implementation for institutional and retail clients.
An algorithm is a set of instructions to be followed in a step-by-step manner by a computer. Algorithmic trading is the use of algorithms to automatically open and close trades according to predefined parameters. For instance, an algorithm can be programmed to observe the overbought and oversold conditions of a given market and to automatically open and close positions when certain criteria are met.
Arbitrage is when traders take advantage of price inefficiencies between markets. If, for instance, you become aware that a certain asset is selling for a higher price on Market A than you are able to purchase it for on Market B, then buying it at the cheaper price and selling it on the more expensive market would be an example of arbitrage. In practice, arbitrage becomes harder to take advantage of the more interconnected markets become.
An arbitrager is a professional trader who specializes in identifying and exploiting price discrepancies between different markets, exchanges, or financial instruments. Arbitragers play a crucial role in maintaining market efficiency and are commonly employed by hedge funds, prop trading firms, and investment banks.
The global forex market is open 24/5 and is divided into three trading sessions in each day. These sessions refer to different regions of the globe as they open and close for business throughout every 24 hour period. The Asian session is the first to open after the weekend, it runs between 11 pm and 8 am GMT and includes countries such as New Zealand, Australia, Japan, China and Russia.
When trading, you will be presented with two prices for any asset that you're interested in, the bid price and the ask price. The ask price (also known as the offer price) is the lowest price at which sellers are willing to sell the asset in question. In short, if you are buying you will receive the ask price.
ATR is a technical indicator that measures market volatility by calculating the average range between high and low prices over a specified period. It's commonly used to set stop-loss levels and determine position sizes.
An automated trading system (ATS) is a computer program that creates orders and automatically submits them to a market center or exchange. These systems are widely used by prop trading firms and institutional investors to execute large volumes of trades with minimal human intervention and reduced emotional bias.
An altcoin is any cryptocurrency other than Bitcoin. The term is a combination of 'alternative' and 'coin' and includes popular cryptocurrencies like Ethereum, Litecoin, Ripple, and thousands of others.
Your balance is the amount of money you have available in your trading account.
Currencies are quoted in pairs. The base currency is the first currency in any currency pair. For example, in the EURUSD pair the base currency is the Euro. The exchange rate tells you how much of the second currency in the pair you need in order to buy a single unit of the first currency. A EURUSD exchange rate of 1.14 means that you need to spend 1 dollar and 14 cents in order to purchase 1 Euro.
A bear market is a market that has consistently fallen in value. Sentiment in a bear market is negative, traders choose to sell the assets that they are holding, reasoning that further drops in price are imminent. Bear markets have a self-perpetuating nature as widespread selling inspires further selling. This occurs until the market in question becomes oversold and thus an attractive investment opportunity again.
As a trader you will be quoted two prices for any security that you are trading. The bid price is the highest price that buyers are willing to pay. The ask price is the lowest price that sellers are willing to receive in order to part with that same security. When selling you will receive the bid price.
Bollinger bands is a type of indicator used in technical analysis. It was developed by John Bollinger and is classified as a volatility indicator. Essentially, Bollinger bands compare current highs and lows to historical price action. Bollinger bands are calculated using a moving average line and two bands, each plotted one standard deviation above and one standard deviation below this moving average line.
A breakout occurs when a security's price suddenly breaks into new territory. The term is most commonly used to describe a positive move, where price action pushes through a known area of resistance, allowing the security to trade higher.
In finance, brokers bring buyers and sellers together, allowing them to trade between themselves, effectively making a market. Brokers receive commissions for each trade they broker or alternatively a mark-up on the bid/ask spread offered to clients.
Bull markets exist when prices consistently rise for a sustained period of time. Sentiment during bull markets is overwhelmingly positive, with traders purchasing assets in the hope that they will continue rising in value. Bull markets are often self-perpetuating and can be extremely vulnerable to the formation of bubbles as more traders flock to the same securities.
Bitcoin is the first and most well-known cryptocurrency, created by the pseudonymous Satoshi Nakamoto in 2009. It operates on a decentralized blockchain network and is often referred to as digital gold.
Blue chip stocks are shares of large, well-established, and financially stable companies with a history of reliable performance. Examples include companies in the Dow Jones Industrial Average like Apple, Microsoft, and Coca-Cola.
Bridge technology connects trading platforms (like MT4/MT5) with liquidity providers and banks. This essential infrastructure enables forex brokers and prop firms to offer competitive spreads and fast execution by routing orders to multiple liquidity sources automatically.
A brokerage license is a regulatory permit required to operate a financial services firm that facilitates trading between buyers and sellers. Popular jurisdictions include Cyprus (CySEC), UK (FCA), Vanuatu (VFSC), and offshore locations like Saint Vincent, providing different regulatory frameworks for forex and CFD brokers.
The buy side refers to firms that purchase securities and investments for money-management purposes. This includes hedge funds, pension funds, mutual funds, and prop trading firms that buy securities for their own accounts rather than on behalf of clients.
A candlestick chart is a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. Each candlestick represents one time period and provides visual information about price movement and market sentiment.
A carry trade is a trading strategy that involves borrowing at a low interest rate and investing in an asset that provides a higher rate of return. In forex, this typically involves buying a currency with a high interest rate while selling a currency with a low interest rate.
A central bank is a financial institution that manages a country's currency, money supply, and interest rates. Central banks also oversee the commercial banking system of their respective countries. Examples include the Federal Reserve (US), European Central Bank (EU), and Bank of Japan (Japan).
A CFD is a financial derivative that allows traders to speculate on the rising or falling prices of fast-moving global financial markets without actually owning the underlying asset. CFDs are available for forex, stocks, indices, commodities, and cryptocurrencies.
A cryptocurrency is a digital or virtual currency that uses cryptography for security. Cryptocurrencies operate independently of a central bank and use blockchain technology to maintain a secure and decentralized ledger of transactions.
A cross currency pair is a currency pair that does not include the US Dollar. Examples include EUR/GBP, GBP/JPY, and AUD/CAD. These pairs often have wider spreads than major pairs.
A commodity is a raw material or primary agricultural product that can be bought and sold. In trading, commodities include precious metals (gold, silver), energy products (oil, gas), and agricultural products (wheat, corn).
A challenge account is a demo trading account used by prop trading firms to evaluate potential funded traders. Traders must meet specific profit targets and risk parameters within a set timeframe to qualify for live funded trading accounts with real capital.
Copy trading is a service that allows investors to automatically replicate the trading strategies and positions of experienced traders. Popular in forex and social trading platforms, it enables beginners to follow successful traders while experienced traders earn additional income from followers.
Commission structure refers to how brokers and trading firms charge for their services. This can include fixed commissions per trade, spread markups, or revenue sharing models. Prop firms often use profit-split models where traders keep 70-90% of profits generated.
A Customer Relationship Management (CRM) platform for forex and prop trading firms manages client relationships, tracks leads, handles onboarding, and monitors trading performance. Advanced CRM systems integrate with trading platforms and compliance tools for comprehensive business management.
Day trading is a trading strategy where positions are opened and closed within the same trading day. Day traders aim to profit from short-term price movements and typically do not hold positions overnight to avoid overnight risk.
Drawdown refers to the peak-to-trough decline during a specific period for an investment, trading account, or fund. It is usually quoted as the percentage between the peak and the trough. Drawdown is an important risk metric for traders and investors.
A doji is a type of candlestick pattern where the opening and closing prices are virtually equal, creating a cross-like appearance. Doji patterns often signal market indecision and potential trend reversals.
A dividend is a payment made by a corporation to its shareholders, usually from profits. Dividends can be paid in cash or additional shares and are typically distributed quarterly.
DeFi refers to a blockchain-based form of finance that does not rely on central financial intermediaries. It uses smart contracts on blockchains to provide traditional financial services.
Dollar cost averaging is an investment strategy where a fixed amount of money is invested in a particular asset at regular intervals, regardless of the asset's price. This strategy helps reduce the impact of volatility.
A dark pool is a private electronic trading platform where large institutional investors can trade securities without revealing their intentions to the public market. Dark pools help prevent market impact when executing large orders and are commonly used by hedge funds and prop trading firms.
A dealing desk is a department within a brokerage firm where dealers execute and process client orders. Market maker brokers use dealing desks to provide liquidity and set prices, while ECN/STP brokers may route orders directly to external liquidity providers without dealing desk intervention.
Direct Market Access allows traders to place orders directly into the order book of an exchange without going through a broker's dealing desk. DMA provides faster execution speeds, better transparency, and is preferred by professional traders and prop trading firms for algorithmic trading strategies.
An economic calendar is a schedule of economic events, announcements, and data releases that can impact financial markets. Traders use economic calendars to stay informed about upcoming events that may affect their trading decisions.
Elliott Wave Theory is a method of technical analysis that looks for recurrent long-term price patterns related to persistent changes in investor sentiment and psychology. The theory identifies impulse waves that establish the trend and corrective waves that move against the trend.
In trading, equity refers to the current value of a trading account, calculated as the balance plus or minus any unrealized profit or loss from open positions. It represents the actual worth of the account at any given moment.
EUR/USD is the most traded currency pair in the forex market, representing the Euro against the US Dollar. It's often called the 'fiber' by traders and typically has the tightest spreads.
An ETF is a type of investment fund that trades on stock exchanges like individual stocks. ETFs typically track an index, commodity, bonds, or a basket of assets and offer diversification at a low cost.
EPS is a company's profit divided by the outstanding shares of its common stock. It's a key metric used to determine a company's profitability and is often used in stock valuation.
An Electronic Communication Network (ECN) broker provides direct access to interbank markets by connecting traders with liquidity providers, banks, and other market participants. ECN brokers offer transparent pricing, faster execution, and typically charge commission-based fees rather than spread markups.
Execution speed refers to how quickly a broker processes and fills trading orders. Measured in milliseconds, fast execution is crucial for scalpers, day traders, and algorithmic trading systems. Top-tier brokers and prop firms offer execution speeds under 50ms to remain competitive.
Electronic trading is the automated buying and selling of financial instruments through computer networks and electronic platforms. This technology has revolutionized financial markets by increasing speed, reducing costs, and enabling 24/7 trading across global markets.
Fibonacci retracement is a technical analysis tool that uses horizontal lines to indicate areas of support or resistance at the key Fibonacci levels before the price continues in the original direction. These levels are derived from the Fibonacci sequence: 23.6%, 38.2%, 50%, 61.8%, and 78.6%.
Fundamental analysis is a method of evaluating securities by attempting to measure their intrinsic value. In forex, this involves analyzing economic indicators, political events, and other factors that may affect currency values.
Forex, also known as FX or foreign exchange, is the global marketplace for trading national currencies against one another. It is the largest and most liquid financial market in the world, with a daily trading volume exceeding $6 trillion.
FOMO is an emotional response that can lead to impulsive trading decisions. It occurs when traders fear missing out on potential profits and make rushed investment decisions without proper analysis.
A futures contract is a legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. Futures are standardized and traded on exchanges.
Free float refers to the shares of a publicly traded company that are available for trading by the general public. It excludes shares held by company insiders, governments, or other controlling interests.
A funded trader is a professional trader who trades with capital provided by a prop trading firm rather than their own money. After passing evaluation challenges, funded traders typically keep 70-90% of profits while the firm provides the trading capital and covers losses up to predetermined limits.
A forex license is a regulatory authorization allowing companies to provide foreign exchange trading services to clients. Popular jurisdictions include Cyprus (CySEC), UK (FCA), Australia (ASIC), and offshore locations offering different regulatory frameworks and market access rights.
The Financial Information eXchange (FIX) protocol is an industry-standard electronic communications protocol for pre-trade and trade communications in securities transactions. FIX is widely used by institutional traders, prime brokers, and professional trading firms for reliable, high-speed order routing.
A fractional pip, also known as a pipette, is one-tenth of a pip and represents the fifth decimal place in most currency pairs (third decimal place for JPY pairs). Fractional pips allow for more precise pricing and are commonly used by ECN brokers and institutional trading platforms.
A gap occurs when a security's price jumps from one level to another without any trading occurring in between. Gaps can occur due to news events, earnings announcements, or other factors that cause significant changes in market sentiment.
Going long means buying a security with the expectation that its price will rise. When you go long on a currency pair, you are buying the base currency and selling the quote currency.
Going short means selling a security with the expectation that its price will fall. In forex, when you go short on a currency pair, you are selling the base currency and buying the quote currency.
GDP is the total monetary value of all finished goods and services produced within a country's borders in a specific time period. It's a key economic indicator that significantly impacts currency values.
The gold standard is a monetary system in which a currency's value is directly linked to gold. Although no longer used by any government, gold remains an important safe-haven asset in times of economic uncertainty.
Grid trading is a strategy that involves placing buy and sell orders at regular intervals above and below a set price. This creates a grid of orders that aim to profit from normal price volatility.
A grid trading strategy is an automated trading approach that places multiple buy and sell orders at predetermined price levels, creating a grid pattern. This strategy aims to profit from market volatility and is popular among algorithmic traders and prop firms for its systematic approach to capturing price movements.
A guaranteed stop loss is an order type that ensures a position will be closed at the exact price specified, regardless of market gaps or slippage. This premium feature is offered by some brokers for an additional fee and provides complete protection against adverse market movements.
A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. In forex trading, hedging involves opening positions to reduce the risk of adverse price movements.
High-frequency trading is a type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios. HFT uses powerful computers to transact a large number of orders at very fast speeds.
A hammer is a bullish reversal candlestick pattern that typically occurs at the bottom of a downtrend. It has a small body with a long lower wick, indicating that sellers drove prices down but buyers regained control.
In cryptocurrency, a hard fork is a radical change to a blockchain protocol that makes previously invalid blocks/transactions valid or vice-versa. It requires all nodes to upgrade to the latest version of the protocol software.
HODL is a cryptocurrency term that originated from a misspelled 'hold.' It refers to a buy-and-hold strategy where investors hold onto their cryptocurrency for the long term, regardless of market volatility.
Hawkish refers to a monetary policy stance that favors higher interest rates to combat inflation. A hawkish central bank is more likely to raise interest rates, which typically strengthens the currency.
High-Frequency Trading (HFT) is a type of algorithmic trading that uses powerful computers to execute thousands of trades per second. HFT firms use advanced algorithms, co-location services, and ultra-low latency connections to profit from tiny price discrepancies across markets.
A hedge fund is an investment partnership that pools capital from accredited investors and uses sophisticated strategies to generate returns. Hedge funds often employ leverage, derivatives, and alternative strategies including long/short equity, arbitrage, and global macro trading.
Hosting solutions for trading include VPS (Virtual Private Server) and dedicated server services optimized for forex and prop trading. These services provide low-latency connections to broker servers, 24/7 uptime, and reliable infrastructure for automated trading systems and expert advisors.
Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to limit inflation and avoid deflation to keep the economy running smoothly.
An interest rate is the amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal. Interest rates significantly impact currency values and are closely watched by forex traders.
An IPO is the first sale of a company's shares to the public. It allows companies to raise capital from public investors and provides an exit strategy for early investors and founders.
A stock market index is a measurement of the value of a section of the stock market. Popular indices include the S&P 500, Dow Jones, NASDAQ, and FTSE 100. Indices are used as benchmarks for market performance.
The Ichimoku Cloud is a comprehensive technical analysis indicator that provides information about support and resistance levels, trend direction, and momentum. It consists of five lines that create a 'cloud' on the chart.
Insider trading refers to the buying or selling of securities by individuals who have access to non-public, material information about the company. It's illegal in most jurisdictions when done for personal profit.
An Introducing Broker (IB) is a financial intermediary that refers clients to a brokerage firm but does not hold customer funds. IBs earn commissions or rebates for each client they introduce and are common in the forex industry for expanding broker reach into new markets.
Institutional trading refers to large-volume securities transactions conducted by institutional investors such as hedge funds, pension funds, mutual funds, and prop trading firms. These trades often move markets due to their size and are executed through prime brokers.
Trading infrastructure encompasses the technology, systems, and networks that enable financial markets to function. This includes trading platforms, data feeds, clearing systems, and communication networks that connect traders, brokers, and exchanges globally.
The Japanese Yen is the official currency of Japan and the third most traded currency in the forex market. Yen pairs are quoted to two decimal places instead of four, making a pip worth 0.01.
Japanese candlesticks are a type of price chart that originated in Japan in the 18th century. They display open, high, low, and close prices for specific time periods and are widely used in technical analysis.
Jobless claims are a weekly economic indicator that measures the number of people filing for unemployment benefits. High jobless claims can indicate economic weakness and may negatively impact currency values.
A joint venture is a business arrangement where two or more parties agree to pool their resources for a specific task or business activity. In trading, this might involve collaborative investment strategies.
A key level is a significant price point that acts as strong support or resistance. These levels are often psychological round numbers, previous highs/lows, or areas where significant volume has traded.
Keltner Channels are volatility-based technical indicators that consist of three lines: a middle line (exponential moving average) and upper and lower bands based on the Average True Range (ATR).
KYC is a process used by financial institutions to verify the identity of their clients. It includes collecting personal information and documentation to comply with anti-money laundering regulations.
Kiwi is the nickname for the New Zealand Dollar (NZD), particularly in the NZD/USD currency pair. The nickname comes from New Zealand's national bird and symbol.
Leverage is the use of borrowed capital to increase the potential return of an investment. In forex trading, leverage allows traders to control larger positions with a smaller amount of capital. For example, 1:100 leverage means you can control $100,000 with just $1,000.
Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price. High liquidity means there are many buyers and sellers, making it easy to execute trades quickly at stable prices.
A long position is a trade where the trader buys a security expecting its price to rise. In forex, going long on a currency pair means buying the base currency and selling the quote currency.
The London session is one of the three major forex trading sessions, running from 8:00 AM to 5:00 PM GMT. It's the most active session, accounting for about 43% of all forex transactions.
A limit order is an order to buy or sell a security at a specific price or better. A buy limit order will only execute at the limit price or lower, while a sell limit order will only execute at the limit price or higher.
A lot is a standard trading unit in forex. A standard lot is 100,000 units of the base currency, a mini lot is 10,000 units, and a micro lot is 1,000 units.
Latency in trading refers to the time delay between placing an order and its execution. Measured in milliseconds, low latency is crucial for high-frequency trading, scalping strategies, and algorithmic trading. Top brokers and prop firms invest heavily in reducing latency through co-location and advanced technology.
A liquidity provider is a financial institution or market maker that offers bid and ask prices for financial instruments, ensuring there are always buyers and sellers in the market. Major liquidity providers include banks, hedge funds, and prime brokers that supply pricing to forex brokers.
A live trading account is a real money trading account where actual capital is at risk, as opposed to demo accounts that use virtual funds. Prop trading firms provide live accounts to successful traders after they pass evaluation challenges, funding them with real capital.
Margin is the deposit required to open a leveraged trading position. It represents a fraction of the full value of the position. Margin allows traders to access larger positions than their account balance would normally allow.
A margin call occurs when the value of an investor's margin account falls below the broker's required amount. It is a demand by the broker for the investor to deposit additional money or securities to bring the account back to the minimum value.
A moving average is a technical analysis indicator that smooths out price data by creating a constantly updated average price. It helps identify trends by filtering out the noise from random price fluctuations.
MACD is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price. It consists of the MACD line, signal line, and histogram.
A market maker is a firm or individual that actively quotes two-sided markets in a particular security, providing bids and offers along with market size. They profit from the bid-ask spread.
Market capitalization is the total value of a company's shares in the stock market. It's calculated by multiplying the current stock price by the total number of outstanding shares.
A multi-asset platform allows traders to access various financial instruments including forex, stocks, commodities, indices, and cryptocurrencies from a single interface. These platforms are preferred by prop trading firms and professional traders for diversified trading strategies.
Money management refers to the systematic approach to controlling trading capital, including position sizing, risk allocation, and capital preservation strategies. Effective money management is crucial for long-term trading success and is a key requirement for prop trading firm evaluations.
News trading is a strategy that involves making trading decisions based on news announcements and economic data releases. Traders attempt to capitalize on the volatility and price movements that often follow significant news events.
Non-Farm Payrolls is a key economic indicator for the United States that represents the total number of paid workers in the US excluding farm employees, government employees, private household employees, and employees of nonprofit organizations.
NASDAQ is an American stock exchange and the second-largest stock exchange in the world by market capitalization. It's known for listing many technology companies including Apple, Microsoft, and Amazon.
An NFT is a unique digital asset that represents ownership of a specific item or piece of content on a blockchain. Unlike cryptocurrencies, NFTs are not interchangeable and each has unique properties.
Negative balance protection is a feature offered by some brokers that prevents traders from losing more money than they have in their account, protecting them from owing money to the broker.
The New York session is one of the three major forex trading sessions, running from 1:00 PM to 10:00 PM GMT. It overlaps with the London session, creating the most active trading period.
Non-Dealing Desk (NDD) brokers route client orders directly to liquidity providers without intervention from a dealing desk. This model provides better transparency, faster execution, and reduced conflicts of interest compared to market maker brokers with dealing desks.
An open position is a trade that has been entered but not yet closed with an opposing trade. Open positions can be either long (buy) or short (sell) and remain open until they are closed by the trader or automatically closed by the broker.
An order is an instruction to buy or sell a financial instrument. There are various types of orders including market orders, limit orders, stop orders, and more, each with different execution conditions.
Options are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price within a certain time period.
Overbought is a condition where a security's price has risen to levels that are not supported by fundamentals or technical indicators, suggesting a potential price decline. RSI above 70 often indicates overbought conditions.
Oversold is a condition where a security's price has fallen to levels that are below its intrinsic value, suggesting a potential price increase. RSI below 30 often indicates oversold conditions.
An OCO order is a pair of orders where the execution of one order automatically cancels the other. This is commonly used to set both profit targets and stop losses simultaneously.
A pip (percentage in point) is the smallest price move in a currency pair. For most currency pairs, a pip is the fourth decimal place (0.0001), except for pairs involving the Japanese Yen where a pip is the second decimal place (0.01).
Position size refers to the number of units of a security held by an investor or trader. Proper position sizing is crucial for risk management and determines how much of your capital is at risk in each trade.
Price action is the movement of a security's price plotted over time. Price action trading involves making trading decisions based on the recent and historical price movements rather than relying solely on technical indicators.
The P/E ratio is a valuation metric that compares a company's current share price to its earnings per share. It indicates how much investors are willing to pay per dollar of earnings.
A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents. Diversification across different assets is key to portfolio management.
A pivot point is a technical analysis indicator used to determine the overall trend of the market over different time frames. It's calculated using the previous day's high, low, and closing prices.
A proprietary trading firm (prop firm) provides capital to skilled traders in exchange for a share of the profits. Traders must typically pass evaluation challenges before receiving funded accounts. Popular prop firms offer profit splits of 70-90% to successful traders while covering losses.
Prime brokerage is a bundled group of services that investment banks and large financial institutions provide to hedge funds and large institutional clients. Services include securities lending, leveraged trade execution, and cash management for complex trading strategies.
A profit split is the percentage of trading profits that funded traders keep when trading with prop firm capital. Common profit splits range from 70-90% for the trader, with the remaining percentage going to the prop firm. High-performing traders often negotiate better profit split terms.
A payout system in prop trading refers to how and when traders receive their share of profits. Most prop firms offer bi-weekly or monthly payouts, with some providing on-demand withdrawals for top performers. Payout speed and reliability are key factors traders consider when choosing prop firms.
The quote currency is the second currency in a currency pair. In EUR/USD, USD is the quote currency. The exchange rate shows how much of the quote currency is needed to buy one unit of the base currency.
QE is an unconventional monetary policy tool where central banks purchase government securities or other securities from the market to increase the money supply and encourage lending and investment.
Quarterly earnings are financial reports that public companies must file every three months, showing their financial performance. These reports significantly impact stock prices.
The quick ratio is a financial metric that measures a company's ability to meet short-term obligations with its most liquid assets, excluding inventory from current assets.
Resistance is a price level where a security tends to stop rising and may reverse direction. It represents a ceiling where selling pressure overcomes buying pressure, preventing the price from moving higher.
Risk management is the process of identifying, analyzing, and mitigating potential losses in trading. It includes strategies like position sizing, stop losses, diversification, and proper leverage usage to protect capital.
RSI is a momentum oscillator that measures the speed and magnitude of price changes. It ranges from 0 to 100 and is typically used to identify overbought (above 70) and oversold (below 30) conditions.
Rollover is the process of extending the settlement date of an open position. In forex, positions held overnight are automatically rolled over, and traders either pay or receive interest based on the interest rate differential.
The risk-reward ratio compares the potential profit of a trade to its potential loss. A 1:2 risk-reward ratio means you're risking $1 to potentially make $2.
A resistance level is a price point where an asset tends to stop rising due to increased selling pressure. Multiple touches of this level without breaking through confirm its significance.
Scalping is a trading strategy that involves making numerous trades over short time frames to capture small price movements. Scalpers typically hold positions for seconds to minutes and aim for small but frequent profits.
Slippage is the difference between the expected price of a trade and the actual price at which the trade is executed. It often occurs during periods of high volatility or when there is insufficient liquidity in the market.
The spread is the difference between the bid price (selling price) and ask price (buying price) of a currency pair. It represents the cost of trading and is how brokers typically make money from trades.
A stop loss is an order placed with a broker to buy or sell a security when it reaches a certain price. It is designed to limit an investor's loss on a position and is a crucial risk management tool.
Support is a price level where a security tends to stop falling and may reverse direction upward. It represents a floor where buying pressure overcomes selling pressure, preventing the price from moving lower.
A swap in forex trading is the interest rate differential between the two currencies in a pair. When holding a position overnight, traders either pay or receive swap depending on the interest rate differential and their position direction.
The Stochastic Oscillator is a momentum indicator that compares a security's closing price to its price range over a specific period. It ranges from 0 to 100 and helps identify overbought and oversold conditions.
The S&P 500 is a stock market index that tracks the performance of 500 large companies listed on stock exchanges in the United States. It's widely regarded as the best gauge of large-cap U.S. equities.
A scalper is a trader who uses scalping strategies to make numerous quick trades, holding positions for seconds to minutes to profit from small price movements. Scalpers require low-latency execution, tight spreads, and fast order processing to be profitable.
A Straight Through Processing (STP) broker automatically routes client orders to liquidity providers without manual intervention. STP brokers offer faster execution, transparent pricing, and reduced conflicts of interest compared to market makers, making them popular among professional traders.
Slippage control refers to tools and settings that limit the price difference between expected and actual order execution. Professional trading platforms offer slippage control features to help traders manage execution risk, especially during volatile market conditions.
A scaling plan in prop trading outlines how traders can increase their account size and trading capital based on performance milestones. Successful traders may qualify for account size increases from $10k to $100k+ or higher, with corresponding increases in profit potential.
A take profit order is an order placed with a broker to sell a security when it reaches a certain profit target. It allows traders to automatically close profitable positions and lock in gains.
Technical analysis is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts use charts and various indicators to identify patterns and predict future price movements.
A trend is the general direction in which a security's price is moving. Trends can be upward (bullish), downward (bearish), or sideways (ranging). Identifying trends is fundamental to many trading strategies.
Trading volume is the number of shares or contracts traded in a security during a given period. High volume often confirms price movements and indicates strong investor interest.
A triangle pattern is a chart pattern characterized by converging trend lines connecting a series of peaks and troughs. It can be ascending, descending, or symmetrical and often indicates a continuation or reversal.
A trailing stop is a dynamic stop loss order that adjusts as the price moves in favor of the trade. It locks in profits while allowing for additional gains if the trend continues.
A trading challenge is an evaluation process used by prop firms to assess trader skill and risk management before providing funded accounts. Challenges typically require achieving specific profit targets while staying within maximum drawdown limits over a set period.
A turnkey solution in forex and prop trading provides a complete, ready-to-use business package including licenses, trading platforms, CRM systems, payment processing, and operational support. This allows entrepreneurs to launch trading businesses quickly without building infrastructure from scratch.
An uptrend is a series of higher highs and higher lows in price action, indicating that buyers are in control and the overall direction is bullish. Uptrends can occur across all timeframes.
The US Dollar Index measures the value of the US Dollar against a basket of six major currencies: EUR, JPY, GBP, CAD, SEK, and CHF. It's a key indicator of dollar strength.
The unemployment rate is the percentage of the labor force that is jobless and actively seeking employment. It's a key economic indicator that affects currency values and monetary policy decisions.
An asset is considered undervalued when its current market price is below its intrinsic or fair value. Value investors often seek undervalued stocks with strong fundamentals.
Unrealized profit and loss refers to the theoretical gain or loss on open positions that haven't been closed yet. It fluctuates with market movements and becomes realized when the position is closed.
Volatility is a measure of the degree of variation in a security's price over time. High volatility means large price swings, while low volatility indicates more stable prices. Volatility presents both opportunities and risks for traders.
Volume refers to the number of shares or contracts traded in a security during a given period. Volume is an important indicator that can confirm price movements and signal the strength of trends.
The VIX is a real-time market index that represents the market's expectation of 30-day forward-looking volatility. Often called the 'fear gauge,' it tends to rise during market stress.
Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic value. Value investors look for undervalued companies with strong fundamentals.
VWAP is a trading benchmark that gives the average price a security has traded at throughout the day, based on both volume and price. It's commonly used by institutional traders.
VPS (Virtual Private Server) trading provides dedicated server resources for automated trading systems and expert advisors. VPS hosting ensures 24/7 uptime, low latency connections to broker servers, and reliable execution of algorithmic trading strategies without interruption.
Value at Risk (VaR) is a statistical measure that quantifies the potential loss in value of a trading portfolio over a specific time period under normal market conditions. VaR is widely used by prop firms and institutional traders for risk management and regulatory compliance.
A whipsaw is a sharp price movement followed by a sharp reversal. It often occurs in volatile markets and can result in losses for traders who get caught in false breakouts or breakdowns.
Williams %R is a momentum indicator that measures overbought and oversold levels. It ranges from 0 to -100, with readings above -20 considered overbought and below -80 considered oversold.
A wedge pattern is a chart pattern where price action is bounded by two converging trend lines. Rising wedges are typically bearish, while falling wedges are usually bullish.
A wick (or shadow) is the thin line extending from the body of a candlestick that shows the high and low prices during the trading period. Long wicks can indicate rejection at certain price levels.
In cryptocurrency, a wallet is a digital tool that allows users to store, send, and receive digital currencies. Wallets can be hot (connected to the internet) or cold (offline storage).
A white label solution allows companies to rebrand and resell existing trading platforms, CRM systems, or brokerage services under their own brand name. White label providers handle technical development and maintenance while partners focus on client acquisition and business development.
XAU/USD represents the price of gold quoted in US Dollars. XAU is the ISO currency code for one troy ounce of gold, and it's one of the most popular precious metal trading instruments.
XRP is a digital currency created by Ripple Labs. It's designed for fast, low-cost international payments and is used by financial institutions for cross-border transactions.
In trading charts, the X-axis represents time, showing the chronological progression of price data from left to right. Different timeframes can be displayed depending on the chart settings.
Yield is the income return on an investment, usually expressed as an annual percentage. In bonds, it's the annual interest payment divided by the bond's current price.
Year-over-year is a comparison method that looks at data from one year against the same period in the previous year. It's commonly used in economic indicators and earnings reports.
A yen carry trade involves borrowing Japanese yen at low interest rates and investing in higher-yielding currencies or assets. This strategy was popular when Japan maintained near-zero interest rates.
Yellow metal is a colloquial term for gold, often used in trading and financial markets. Gold is considered a safe-haven asset and hedge against inflation and currency devaluation.
ZIRP is a monetary policy tool where central banks set interest rates at or near zero percent. This policy is used to stimulate economic growth during periods of recession or deflation.
In trading, a zone refers to a price area or range where significant support or resistance is expected. Zones are often wider than specific price levels and account for market volatility.
A zombie company is a business that earns just enough money to continue operating and service debt but is unable to pay off its debt or invest in growth. These companies can impact market performance.
The Z-score is a statistical measurement that describes a value's relationship to the mean of a group of values. In trading, it can be used to identify overbought or oversold conditions.
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