Glossary | BrokerCut Forex Academy

Ask price: The price at which you can buy a currency pair. Always slightly higher than the bid.
ATR (average true range): An indicator that measures a pair's average range per candle over a set period, often 14. Traders use it to compare volatility between pairs and to place stops.
Backtest: Applying a strategy's exact rules to past price data to see how it would have performed. Useful for rejecting bad ideas; weak evidence that a good-looking idea will work.
Base currency: The first currency in a pair. In EUR/USD it is the euro. The price tells you how much of the quote currency one unit of the base is worth.
Bid price: The price at which you can sell a currency pair. Always slightly lower than the ask.
Body (of a candle): The thick part of a candlestick, drawn between the open and the close. Its length shows how decisively one side won the period.
Break-even win rate: The share of trades you must win to neither gain nor lose, given your reward-to-risk ratio: 1 ÷ (1 + R). At 2:1 it is about 33%.
Breakout: When price moves through a support or resistance level that had held before, often with a burst of volume and momentum.
Broker: The company that gives you access to the market, holds your deposit and executes your orders.
Candlestick: A chart element showing the open, high, low and close of one period, with a body between open and close and wicks to the high and low.
Carry trade: Borrowing in a low-rate currency to buy a high-rate one and earn the difference. Profitable in calm markets; unwound violently in fearful ones.
Central bank: The institution that sets a country's interest rates and manages its currency, such as the Federal Reserve (US), ECB (eurozone), Bank of England or Bank of Japan.
Chart pattern: A recognisable shape made by price over many periods, such as a double top or a flag, that traders use to anticipate what might come next.
Commission: A fixed fee some brokers charge per trade, usually quoted per lot, instead of or in addition to a wider spread.
Commodity currency: A currency whose country exports a lot of raw materials, so it tends to follow their prices: AUD, NZD and CAD in particular.
Compensation scheme: A fund, backed by a regulator, that repays clients up to a limit if a regulated broker fails and cannot return their money.
Confirmation bias: Looking for evidence that supports what you already believe and ignoring the rest. In trading, finding a reason to stay in a losing position.
Confluence: When several independent reasons point to the same trade: for example a support level, a trend line and an oversold indicator at the same price.
Consensus (forecast): The average of economists' predictions for a data release. The market prices in the consensus beforehand, so the reaction depends on the surprise relative to it.
Correlation: How closely two pairs move together, from +1 (always together) to −1 (always opposite). Correlated positions add up to one bigger bet.
CPI: Consumer price index: the main measure of inflation, released monthly. One of the most market-moving data points because it steers interest-rate expectations.
Cross pair (minor): A pair of two major currencies without the US dollar, such as EUR/GBP or GBP/JPY. Its price is derived from the two currencies' dollar rates.
cTrader: A trading platform popular with ECN brokers, known for modern charting, built-in market depth and C# automation.
Currency pair: Two currencies quoted against each other, such as EUR/USD. The price is how much of the second (quote) currency buys one unit of the first (base) currency.
Curve fitting: Tuning a strategy's settings until they match past data perfectly. The result usually fails on new data because it learned the noise, not a real pattern.
Daily loss limit: A fixed loss, in money or in consecutive losses, at which you stop trading for the day. It prevents one bad session from becoming a disaster.
Day trading: A style that opens and closes trades within the same day, usually on 5-minute to 1-hour charts, with no positions held overnight.
Demo account: A practice account with virtual money that works like a real one. Used to learn a platform and test ideas without risk.
Deposit bonus: Credit added to a deposit, usually with conditions that require a large trading volume before withdrawal. Banned by several regulators because it encourages overtrading.
Discipline: Doing what the plan says when you do not feel like it. Built through routine and a daily loss limit, not through willpower alone.
Drawdown: The fall in your account from a peak to a low, usually shown as a percentage.
ECN / STP broker: A broker that passes your orders through to liquidity providers rather than taking the other side itself.
Economic calendar: A schedule of upcoming data releases and central-bank events, with the previous figure, the forecast, and an impact rating.
Edge: A repeatable reason a set of trading rules should make more than it loses over many trades, after costs. Measured by expectancy, not by how convincing a setup looks.
Equity: Your account balance plus or minus the running profit or loss on open trades.
Execution: How and how fast your order is filled: the price you get, the delay, and whether the broker fills it itself or passes it to the market.
Exotic pair: A major currency against the currency of a smaller or emerging economy, such as USD/TRY or USD/ZAR. Spreads, swaps and gaps are usually much larger.
Expectancy: The average result per trade over many trades: (win rate × average win) − (loss rate × average loss). Positive expectancy is what makes a method profitable over time.
FOMO: Fear of missing out: entering a trade late, without a setup, because price is moving and you feel left behind. Usually the worst price of the move.
Forward test: Trading a strategy's rules in real time, on demo or very small size, after the backtest. It shows how the rules behave with real spreads, slippage and your own discipline.
Free margin: Equity minus the margin locked up by open trades. The amount available to open new positions.
GDP: Gross domestic product: the total value of everything an economy produces. Its growth rate is the broadest measure of economic health, but it is published late and revised often.
Hawkish / dovish: Hawkish means leaning towards higher rates to fight inflation; dovish means leaning towards lower rates to support growth. Markets react to the lean, not just the decision.
Indicator: A calculation drawn on or under the chart, such as a moving average or RSI, that summarises past prices to help you read them.
Inflation: The rate at which prices rise. Central banks usually target about 2%. Inflation above target tends to bring rate rises; below target, rate cuts.
Interest rate (policy rate): The rate a central bank sets for lending to banks. It shapes every other rate in the economy and is the strongest single driver of a currency.
KYC: Know your customer: the identity and address checks a regulated broker must run before you can deposit or withdraw. Their absence is a warning sign, not a convenience.
Leverage: Borrowed exposure from your broker that lets you control a larger position than your deposit. It magnifies both gains and losses.
Limit order: An order to buy below the current price or sell above it. It waits until the market reaches your price.
Liquidity: How easily you can trade without moving the price. High liquidity means tight spreads and quick fills.
Losing streak: Several losing trades in a row. Streaks are a normal product of chance, and their length is what decides how small risk per trade must be.
Loss aversion: The tendency to feel a loss roughly twice as strongly as an equal gain. It is why traders cut winners early and let losers run.
Lot: A standard trade size. A standard lot is 100,000 units of the base currency; a mini lot is 10,000; a micro lot is 1,000.
MACD: Moving average convergence divergence: the gap between a fast and a slow EMA, plotted with its own average (the signal line). Used to read momentum.
Major pair: One of the most traded pairs, each including the US dollar: EUR/USD, USD/JPY, GBP/USD, USD/CHF, AUD/USD, USD/CAD and NZD/USD. They usually have the tightest spreads.
Margin: The deposit your broker sets aside to keep a leveraged trade open. It is returned when the trade closes.
Margin call: A warning from your broker that your equity has fallen close to the margin required. If it keeps falling, positions are closed automatically.
Market maker: A broker that takes the other side of your trade itself rather than passing it to the market.
Market order: An order to buy or sell immediately at the best available price.
Maximum drawdown: The largest peak-to-trough fall in account value over a period. It measures how painful a method is to trade, not just how profitable.
Mean reversion: A method that bets a stretched price will move back towards its average, usually by selling near the top of a range and buying near the bottom.
MetaTrader (MT4 / MT5): The most widely offered trading platforms, made by MetaQuotes. MT4 is older and simpler; MT5 is its successor with more timeframes and order types.
Momentum: The speed and strength of a price move. Momentum methods trade in the direction of a strong move, often using indicators such as RSI or MACD.
Moving average: The average closing price over the last N periods, redrawn each period. It smooths price so the trend is easier to see.
Neckline: The level joining the dips of a head-and-shoulders or the peak between a double bottom. A break of it confirms the pattern.
Negative balance protection: A rule that a retail client cannot lose more than the money in the account, even if a gap in the market takes a position past the stop.
Non-farm payrolls (NFP): The monthly US jobs report, released on the first Friday of the month. Shows jobs added, the unemployment rate and wage growth. Frequently the most volatile release of the month.
Overtrading: Taking more trades than your method produces: trading boredom, trading noise, or trading to feel busy. Costs add up and quality falls.
Pip: The standard unit of price movement: 0.0001 for most pairs, or 0.01 for pairs quoted in Japanese yen.
Pip value: What one pip is worth in money for a given position size. It depends on the pair's quote currency, so the same lot size can be worth a different amount per pip on each pair.
Pipette: One tenth of a pip, the fifth decimal place many brokers display.
Position size: How much you trade, in lots or units. Set from your stop loss and the amount you are willing to risk, not the other way round.
Position trading: A long-term style that holds trades for weeks to months, driven by big trends and fundamentals. Swap costs matter more than spreads.
Priced in: Already reflected in the current price. A widely expected rate rise is priced in, so when it happens the currency may barely move, or even fall.
Pullback: A temporary move against the trend before the trend resumes. Many traders wait for a pullback to enter rather than chasing price.
Quote currency: The second currency in a pair. In EUR/USD it is the US dollar. Profits and losses are first measured in this currency.
Range: A period when price moves sideways between a floor (support) and a ceiling (resistance) without a clear trend.
Raw spread (ECN) account: An account with spreads close to the interbank price plus a fixed commission per lot. Usually cheaper than a spread-only account for active traders.
Regulation: Supervision of a broker by a financial authority that sets capital, conduct and client-money rules and can fine or shut the firm. The first thing to check about any broker.
Requote: When a broker refuses to fill a market order at the price shown and offers a new, usually worse, price instead. Common at dealing-desk brokers in fast markets.
Resistance: A price area where rising prices have stalled and turned lower before. A ceiling, until it breaks.
Revenge trading: Taking a new trade immediately after a loss to win the money back, usually larger and without a setup. One of the fastest ways to turn a normal loss into a serious one.
Reward-to-risk ratio: How much a trade stands to gain for each unit it risks, measured from entry to target against entry to stop. 2:1 means two pips of potential reward for every pip risked.
Risk per trade: The amount you would lose if your stop loss is hit, usually expressed as a percentage of the account. Common guidance is 1 to 2%.
Risk-on / risk-off: The market's overall mood. Risk-on: investors buy higher-yielding assets and currencies. Risk-off: they sell them and buy safe havens.
RSI: Relative strength index: a 0–100 score of recent gains against recent losses. Above 70 is called overbought, below 30 oversold.
Safe haven: An asset bought in times of fear because it is expected to hold its value: the US dollar, Japanese yen and Swiss franc among currencies.
Scalping: A very short-term style that holds trades for seconds to minutes and aims for a few pips each time. Costs take a large share of every trade.
Segregated client funds: Client deposits held in bank accounts separate from the broker's own money, so they cannot be used to run the business and are protected if the firm fails.
Slippage: The difference between the price you asked for and the price you got. Common during fast markets and news.
Spread: The difference between the bid and the ask price. It is the main cost of trading and is paid the moment a trade opens.
Stop loss: An order that closes your trade automatically at a set price to limit your loss.
Stop order: An order to buy above the current price or sell below it, triggered when the market reaches that level. Used to enter on breakouts.
Support: A price area where falling prices have stopped and bounced before. A floor, until it breaks.
Swap (rollover): The interest paid or earned for holding a position overnight, based on the interest-rate difference between the two currencies.
Swap-free account: An account with no overnight interest charged or paid, offered for religious reasons. Brokers often recover the cost through a wider spread or an admin fee.
Swing high / swing low: A local peak or trough on the chart. A series of higher highs and higher lows defines an uptrend; lower highs and lower lows a downtrend.
Swing trading: A style that holds trades for days to a couple of weeks to catch one swing in price, usually on 4-hour and daily charts.
Take profit: An order that closes your trade automatically once it reaches a set profit.
Tilt: An emotional state, usually after losses, in which decisions become impulsive and rules are abandoned. The remedy is to stop trading until it passes.
Timeframe: The length of time each candle represents, such as M15 (15 minutes), H1 (one hour), H4 or D1 (one day).
Trading journal: A record of every trade: the reason, the plan, the result and how you felt. Over time it shows which setups and which behaviours actually make money.
Trading plan: A written set of rules covering what you trade, when, how much you risk, what a valid setup is, and how you enter, exit and review.
Trading session: The hours when a major financial centre is open: Sydney, Tokyo, London and New York. The market is busiest when sessions overlap.
Trend: The overall direction of price over a chosen timeframe: up (higher highs and lows), down (lower highs and lows) or sideways.
Trend following: A method that buys in uptrends and sells in downtrends, accepting many small losses for a few large wins when a trend runs.
Volatility: How far and how fast a price typically moves. A more volatile pair needs a wider stop, and therefore a smaller position, for the same money at risk.
Wick (shadow): The thin line above or below a candle body, reaching to the high or the low of the period. Long wicks show prices that were rejected.