Trading glossary
Over 100 forex and CFD terms explained in plain English. Search, or jump by letter, to find exactly what you need.
Showing 110 terms
A
Account balance
The total cash in your trading account from deposits, withdrawals and closed-trade results. It does not move with open positions; for that, see equity.
Algorithmic trading
Placing trades automatically using a coded set of rules rather than manual clicks. On MetaTrader 5 these programs are called Expert Advisors.
Ask price
The price at which the broker will sell an instrument to you, so the price you pay to buy (go long). It is the higher side of the quote.
ATR (Average True Range)
A technical indicator that measures how much an instrument typically moves over a period, used to gauge volatility and size stops.
B
Base currency
The first currency in a pair. In EUR/USD the euro is the base, and the price tells you how much of the quote currency one unit of the base is worth.
Bear market
A market in a sustained downtrend, where prices are generally falling and sentiment is negative.
Bid price
The price at which the broker will buy an instrument from you, so the price you receive to sell (go short). It is the lower side of the quote.
Bollinger Bands
A technical tool of three lines, a moving average with a band above and below it set by standard deviation, used to read volatility and stretched prices.
Broker
The regulated firm that gives you access to the markets, quotes prices and executes your trades. RocketX is an FSCA-authorised broker.
Bull market
A market in a sustained uptrend, where prices are generally rising and sentiment is positive.
C
Candlestick
A chart symbol showing the open, high, low and close for one period. The body spans open to close and the wicks show the extremes.
Carry trade
Holding a position to earn the interest-rate difference between the two currencies, collected or paid as swap each night the trade stays open.
CFD (Contract for Difference)
An agreement to exchange the difference in an instrument price between opening and closing a trade. You profit from price movement without owning the underlying asset.
Commission
A fee some account types charge per trade instead of, or alongside, the spread. RocketX shows any commission up front.
Commodity
A raw physical asset such as gold, silver, oil or natural gas that can be traded as a CFD.
Copy trading
Automatically mirroring the trades of another trader you choose, in proportion to your account.
Counterparty
The other side of a trade. With a CFD your counterparty is the broker, which is why the broker's regulation and financial strength matter.
Cross rate
The exchange rate between two currencies that does not involve the US dollar, such as EUR/GBP.
Currency pair
Two currencies quoted against each other, such as GBP/USD. You are always buying one and selling the other at the same time.
D
Day trading
A style of opening and closing trades within the same day so that no position is held overnight.
Dealing desk
A broker model where the firm may act as the counterparty to your trades. The opposite is a no-dealing-desk (STP or ECN) model.
Demo account
A practice account funded with virtual money so you can learn the platform and test strategies at no risk.
Dovish
Describes a central bank leaning towards lower interest rates or looser policy, which tends to weaken its currency.
Drawdown
The fall from a peak to a trough in your account equity, usually shown as a percentage. It measures how much you were down before recovering.
E
ECN (Electronic Communication Network)
A model that matches your orders directly with other market participants for tight spreads and transparent pricing, usually with a commission.
Economic calendar
A schedule of upcoming data releases and central-bank events that can move markets, with their expected and previous figures.
Equity
Your account balance adjusted for the running profit or loss of all open trades. It is the live value of your account right now.
Exotic pair
A currency pair that combines a major currency with one from a smaller or emerging economy, such as USD/ZAR. Exotics tend to have wider spreads.
Expert Advisor (EA)
An automated trading program that runs on MetaTrader 5, opening and managing trades according to its coded rules.
Exposure
The total market value you control through your open positions, which leverage can make far larger than your deposited margin.
F
Fibonacci retracement
A technical tool that marks possible support and resistance levels at key ratios (such as 38.2% and 61.8%) of a prior move.
FICA
South Africa's Financial Intelligence Centre Act. It requires brokers to verify client identity and address, which is why onboarding asks for documents.
Fill
The execution of your order. A full fill completes the whole order; a partial fill completes only part of it.
Floating profit and loss
The running, not-yet-realised gain or loss on your open trades. It becomes realised only when you close them.
Forex
The foreign exchange market, the global marketplace for trading currencies against one another. It is the most heavily traded market in the world.
Free margin
The equity still available to open new trades or absorb losses, calculated as equity minus the margin already in use.
FSCA
The Financial Sector Conduct Authority, South Africa's market-conduct regulator. RocketX is authorised by the FSCA under FSP No. 52142.
Fundamental analysis
Studying economic data, interest rates and news to judge where a market should move, as opposed to technical analysis of the chart.
G
Gap
A jump between one period's close and the next period's open with no trading in between, common after weekends or major news.
GTC (Good Til Cancelled)
An instruction that keeps a pending order active until it is filled or you cancel it, rather than expiring at the end of the day.
H
Hawkish
Describes a central bank leaning towards higher interest rates or tighter policy, which tends to strengthen its currency.
Hedging
Opening a position to offset the risk of another, for example holding both a long and a short to limit exposure to a sudden move.
I
Index
A basket that tracks a group of shares, such as the US 500 or Germany 40. Traded as a CFD it lets you take a view on a whole market at once.
Inflation
The rate at which prices rise across an economy. It shapes central-bank interest-rate decisions, which in turn move currencies.
Interest rate
The rate set by a central bank that influences the value of its currency. Higher rates often attract capital and strengthen the currency.
J
JPY (Japanese yen)
A major currency. Yen pairs are quoted to two decimal places, so one pip is 0.01 rather than the usual 0.0001.
K
KYC (Know Your Customer)
The checks a regulated broker runs to confirm who you are before you trade, part of meeting FICA and anti-money-laundering rules.
L
Leverage
Borrowed exposure that lets you control a larger position than your deposit. At 1:100, R1,000 of margin controls R100,000. It magnifies both gains and losses.
Limit order
An instruction to buy or sell only at a set price or better. A buy limit sits below the current price; a sell limit sits above it.
Liquidity
How easily an instrument can be traded without moving its price. Major pairs are highly liquid; exotics and some shares are less so.
Long position
A buy trade that profits if the price rises. You are long the instrument until you close or sell it.
Lot
The standard trade-size unit in forex. A standard lot is 100,000 units of the base currency; a mini lot is 10,000 and a micro lot is 1,000.
M
MACD
Moving Average Convergence Divergence, a momentum indicator built from two moving averages and a signal line, used to spot shifts in trend.
Major pairs
The most heavily traded currency pairs, all involving the US dollar, such as EUR/USD, GBP/USD and USD/JPY. They have the tightest spreads.
Margin
The good-faith deposit the broker sets aside to open and hold a leveraged trade. It is a portion of the position, not a fee.
Margin call
A warning that your equity has fallen too close to your used margin. You may need to add funds or close trades before a stop out occurs.
Margin level
Equity divided by used margin, shown as a percentage. The lower it gets, the closer you are to a margin call and stop out.
Market order
An instruction to buy or sell immediately at the best available current price.
MetaTrader 5 (MT5)
The industry-standard trading platform RocketX provides, with advanced charting, multiple order types and support for automated trading.
Minor pairs
Pairs of major currencies that do not include the US dollar, such as EUR/GBP or AUD/JPY.
Moving average
A line that smooths price by averaging it over a chosen number of periods, used to read trend direction and dynamic support or resistance.
N
Negative balance protection
A safeguard ensuring you cannot lose more than the funds in your account, so your balance cannot go below zero.
NFP (Non-Farm Payrolls)
A monthly United States jobs report that often causes sharp moves in the dollar and other markets on release.
O
OCO (One Cancels the Other)
A pair of orders linked so that if one is filled, the other is automatically cancelled.
ODP (OTC Derivatives Provider)
A South African licence for firms that issue over-the-counter derivatives such as CFDs. RocketX holds ODP No. 74.
OHLC
Open, High, Low and Close, the four prices that define a period on a bar or candlestick chart.
Order book
A live list of the buy and sell orders waiting in the market at different prices, giving a view of supply and demand.
Overnight financing
The interest credited or debited for holding a leveraged position past the daily rollover time, also known as swap.
P
PAMM account
A managed-account structure where a money manager trades a pooled fund and profits or losses are split among investors by their share.
Pending order
An order set to trigger only when price reaches a level you choose, such as a buy stop or sell limit, rather than executing now.
Pip
The standard smallest price move in a currency pair, usually the fourth decimal place (0.0001), or the second decimal (0.01) for yen pairs.
Pipette
A fractional pip, one tenth of a pip, shown as a fifth decimal place on many platforms for more precise pricing.
Pivot point
A calculated level, based on the prior period's high, low and close, used to anticipate intraday support and resistance.
Position sizing
Deciding how large a trade to place based on your account size and the risk you are willing to take, often a fixed percentage per trade.
Q
Quote currency
The second currency in a pair, in which the price is expressed. In EUR/USD the dollar is the quote currency.
R
Realised profit and loss
The gain or loss locked in once a trade is closed, as opposed to the floating result of open trades.
Requote
When the price you tried to deal at is no longer available and the broker offers a new one, more common in fast-moving markets.
Resistance
A price level where selling has tended to halt a rise. A clear break above it can signal further upside.
Risk-reward ratio
The size of the potential loss compared with the potential gain on a trade, for example risking one to make two (1:2).
Rollover
The process of carrying a position to the next trading day, at which point swap interest is applied.
RSI (Relative Strength Index)
A momentum indicator scaled from 0 to 100 that flags potentially overbought (above 70) or oversold (below 30) conditions.
S
Scalping
A fast style of trading that takes many small profits from brief price moves, holding each position for seconds or minutes.
Segregated account
Client money kept separate from the broker's own funds, so it is protected and cannot be used for the firm's operations.
Short position
A sell trade that profits if the price falls. With a CFD you can go short as easily as long, without owning the asset.
Slippage
The difference between the price you expected and the price your order actually filled at, which can be positive or negative.
Spot price
The current price for buying or selling an instrument for immediate delivery, as opposed to a future-dated price.
Spread
The gap between the bid and ask price, quoted in pips. It is a core cost of trading and can be fixed or variable.
Stop order
An order that triggers a market order once price passes a set level. A buy stop sits above the current price; a sell stop sits below.
Stop out
The automatic closing of positions by the broker when equity falls below the required margin level, to prevent further losses.
Stop-loss
An order that closes a trade automatically once price reaches a set level, used to cap a loss. A core risk-management tool.
STP (Straight Through Processing)
A no-dealing-desk model that routes your orders straight to liquidity providers without manual intervention.
Support
A price level where buying has tended to halt a fall. A clear break below it can signal further downside.
Swap
The interest paid or earned for holding a leveraged position overnight, set by the rate difference between the two currencies.
Swap-free account
An account that does not charge or pay overnight swap, offered so trading can comply with Islamic finance principles.
Swing trading
A style that holds trades for several days to weeks to capture larger moves, sitting between day trading and long-term investing.
Synthetic indices
Simulated instruments driven by a constant, randomised volatility model rather than a real-world market, so they trade 24/7 and are not affected by news.
T
Take-profit
An order that closes a trade automatically once price reaches a set profit level, locking in the gain.
Technical analysis
Studying price charts, patterns and indicators to forecast future movement, as opposed to fundamental analysis of economic data.
Tick
The smallest recorded change in an instrument's price, marking each individual update in the quote.
Timeframe
The period each candle or bar represents on a chart, from one minute to one month, chosen to suit your trading style.
Trailing stop
A stop-loss that follows price as a trade moves in your favour, locking in gains while leaving room for the trend to continue.
Trend
The general direction of a market over time, described as up, down or sideways (ranging).
U
Used margin
The portion of your equity currently committed to holding open trades, no longer available to open new ones.
V
Volatility
How much and how quickly a price moves. Higher volatility means larger swings, more opportunity and more risk.
Volume
The amount traded in an instrument over a period. Rising volume can confirm the strength of a price move.
VPS (Virtual Private Server)
A remote, always-on computer used to run automated strategies so they keep trading even when your own device is off.
W
Web Trader
A browser-based version of the trading platform that needs no download, letting you trade from any computer.
X
XAU / XAG
The market symbols for spot gold (XAU) and spot silver (XAG), usually quoted against the US dollar as XAU/USD and XAG/USD.
Y
Yield
The income return on an asset, such as the interest on a currency or bond, which influences flows between currencies.
Z
ZAR (South African rand)
South Africa's currency. In USD/ZAR the rand is the quote currency, and as an emerging-market currency it can be volatile.
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