54 terms

A-book

A-book is a model in which the broker routes your orders to the external market.

B-book

B-book is a model in which the broker fills your trades internally, acting as your counterparty.

Backtest

A backtest is testing a strategy on historical data.

Bid and ask

The bid is the price at which you sell, and the ask is the price at which you buy.

Broker regulation

Broker regulation is oversight by a financial regulator that licenses the broker's operations.

Bucket shop

A bucket shop is a broker that dishonestly trades against its clients.

Candlestick pattern

A candlestick pattern is a combination of one to three candles that reflects the battle between buyers and sellers.

Chart pattern

A chart pattern is a recognizable shape on the chart, such as a triangle, head and shoulders, or flag.

Copy trading

Copy trading is the automatic replication of another trader's trades on your own account.

Dealing center

A dealing center is an intermediary for trading forex, a term common in the CIS.

Divergence

Divergence is a disagreement between the direction of price and that of an oscillator.

Drawdown

Drawdown is the decline in capital from a peak to the subsequent low.

ECN

ECN is an execution model that routes orders into an electronic network with direct access to liquidity.

Economic calendar

An economic calendar is a schedule of economic data releases that move currencies.

Expert Advisor (EA)

An Expert Advisor (EA) is a program for trading automatically according to preset rules.

Fixed spread

A fixed spread is a spread that the broker keeps unchanged regardless of the market.

Floating spread

A floating spread is a spread that changes depending on market conditions.

Forward test

A forward test is testing a strategy going forward in real time on data that was not part of the optimization.

Grid

Grid is a strategy of placing a series of orders at equal intervals without stop-losses.

Indicator

An indicator is a mathematical processing of price (and volume) shown as a line or histogram.

Leverage

Leverage is the ability to control a position larger than your own capital.

Liquidity

Liquidity is the ability to quickly buy or sell an asset without significantly affecting its price.

Long

A long is a buy trade opened in expectation of a price rise.

Lot

A lot is the standard unit of trade size in forex.

Managed account

Discretionary management is handing your money to a trader or firm to trade on your behalf for a fee.

Margin

Margin is the portion of your funds that the broker locks up as collateral for an open position.

Margin call

A margin call is a broker's warning that there are not enough funds to maintain your positions.

Martingale

Martingale is a system of doubling the trade size after every loss in order to recover.

Myfxbook

Myfxbook is a service for verifying and publishing the statistics of trading accounts.

Oscillator

An oscillator is an indicator that fluctuates within a range and shows momentum and overbought/oversold zones.

Over-optimization

Over-optimization is fitting a strategy's parameters to the random noise of historical data.

PAMM

A PAMM is an account where a single trader manages investors' capital pooled together.

Pip

A pip is the smallest standard increment by which a currency pair's exchange rate changes.

Profit factor

The profit factor is the ratio of total profit to total loss.

Quote

A quote is the current price of a currency pair.

Requote

A requote is the broker's offer to confirm a trade at a new price instead of the one requested.

Risk/reward (R/R)

R/R (risk/reward) is the ratio of the risk taken to the potential reward in a trade.

Screener

A screener is a tool that filters the market according to specified conditions.

Segregated account

A segregated account is the keeping of client funds separate from the broker's own money.

Sentiment

Sentiment is the prevailing mood of market participants, whether bullish or bearish.

Sharpe ratio

The Sharpe ratio is a measure of return adjusted for risk (volatility).

Short

A short is a sell trade opened in expectation of a price fall.

Slippage

Slippage is the execution of an order at a price different from the one requested.

Spread

The spread is the difference between the buy price (Ask) and the sell price (Bid).

Stop-loss

A stop-loss is an order that closes a position once losses reach a set level.

STP

STP (Straight Through Processing) is a model in which orders are passed directly to liquidity providers.

Swap

A swap is a charge or credit for holding a position overnight.

Swap-free account

A swap-free (Islamic) account is an account with no swap charges or credits for holding a position overnight.

Take-profit

A take-profit is an order that locks in profit once a set target is reached.

Trading signal

A trading signal is a ready-made trade idea with parameters: instrument, direction, entry, stop, and target.

Trailing stop

A trailing stop is a stop-loss that automatically moves along with the price in the profitable direction.

Volatility

Volatility is the range and speed of price movements over a period of time.

VPS

A VPS is a virtual server on which a terminal running an EA operates around the clock.

Win rate

The win rate is the share of profitable trades out of the total number of trades.