Your Essential Guide to Trading Terminology
If you’re new to trading — or even if you’ve been doing it for a while — financial terms can get in the way.
That’s why we created the HonorFX Trading Glossary: to break down the words and phrases used every day in forex, stocks, indices, and more.
Simple language. Clear meaning. So you don’t need to guess — you just understand.
A
Algorithmic Trading
Automated trading using predefined rules, strategies, or technical indicators.
Arbitrage
Taking advantage of price differences in different markets for the same asset.
Asian Session
One of the major forex trading sessions, aligned with Tokyo market hours.
Ask Price
The lowest price a seller is willing to accept for an asset.
B
Base Currency
The first currency listed in a currency pair.
Broker
A licensed intermediary facilitating trades between buyers and sellers.
Bear Market
A market characterized by declining prices.
Bearish Reversal
A trend change from bullish to bearish.
Bearish Sentiment
Overall negative outlook on market prices.
Bull Market
A market characterized by rising prices.
Bullish Reversal
A trend change from bearish to bullish.
Bullish Sentiment
Positive overall outlook on market prices.
Bid Price
The highest price a buyer is willing to pay for an asset.
Bid/Ask Spread
The difference between the bid and the ask price.
Balance
Total funds in a trading account excluding unrealized profits or losses.
Bollinger Bands
A technical indicator showing volatility using standard deviation bands.
Breakout
Price movement beyond a key support or resistance level.
Breakout
Price movement beyond a key support or resistance level.
C
Cable
Nickname for the GBP/USD currency pair.
Currency Pair
Two currencies quoted together for trading purposes.
CPI
Consumer Price Index – a measure of inflation based on consumer goods.
CFD
A contract that mirrors the price movement of an underlying asset without ownership.
Commodity
A tradable physical asset such as oil, gold, or silver.
Closing Order
An instruction to exit an open position.
Carry Trade
A strategy of borrowing in low-interest currencies to invest in higher-yielding ones.
Candlestick Chart
A chart displaying price movement through open, high, low, and close values.
Chart Pattern
Visual formations on charts indicating potential future price movements.
Commission
Broker’s fee for executing trades, typically per lot.
D
Dealing Desk
A broker execution model that internally matches client orders.
Derivative
A financial contract based on the value of an underlying asset.
Dove
A policymaker favoring low interest rates and economic stimulation.
Drawdown
A decline in account equity from a peak to a trough.
Day Trading
Trading style where positions are opened and closed within the same day.
E
European Session
One of the major trading sessions, aligned with London trading hours.
Economic Calendar
A schedule of major financial news releases.
Economic Indicator
Data used to gauge economic health, such as GDP or unemployment.
ECN
Electronic Communication Network – provides access to real-time quotes from liquidity providers.
Entry Order
A pending order placed to enter the market at a specified price.
Expert Advisor
Automated trading software used on MT5.
Equity
The total account value including unrealized gains or losses.
EMA
Exponential Moving Average – a faster-reacting average price indicator.
F
Fundamental Analysis
Evaluating market value using economic, political, and financial data.
Foreign Exchange
The global marketplace for trading national currencies.
Futures
Contracts obligating the buyer to purchase an asset at a predetermined price.
Fear
A psychological response to potential losses that causes traders to exit positions prematurely or avoid opportunities, often leading to suboptimal outcomes.
FOMO
Fear of Missing Out – a trading bias that may result in impulsive decisions.
FUD
Fear, Uncertainty, and Doubt – negative market sentiment.
Floating Profit & Loss
Unrealized gains or losses on open trades.
Free Margin
Funds available to open new positions.
Fibonacci Retracements
Technical tool to identify potential reversal levels using Fibonacci ratios.
G
Guppy
Slang term for GBP/JPY.
GDP
Gross Domestic Product – total economic output of a country.
Greed
An emotional trading driver where traders take excessive risks in pursuit of higher gains, often leading to poor decision-making.
GTC
Good Till Cancelled – an order that stays open until manually cancelled.
GTD Orders
Good Till Date – an order that expires on a specified date.
H
Hawk
A policymaker favoring higher interest rates to combat inflation.
Hedge
A position taken to offset potential losses.
I
Industrial Production
Measures real output from factories and utilities.
Indices
A representation of a group of stocks, such as S&P 500 or FTSE 100.
Indicator
A tool based on mathematical formulas to analyze price movement.
J
K
L
Limit Order
A pending order set to buy/sell at a specific price.
Liquidate
Closing out an open position.
Lot
Standard unit size of a forex trade (typically 100,000 units).
Leverage
Using borrowed capital to increase trade size and potential returns.
Liquidity
The ease of buying or selling an asset without affecting its price.
Long Position
Buying with the expectation that the asset will rise in value.
Lagging Indicator
An indicator that follows market price movements.
Leading Indicator
An indicator designed to predict future price movements.
Leading Indicator
An indicator designed to predict future price movements.
M
Market Maker
A broker who sets bid and ask prices and takes the opposite side of a client trade.
Market Order
An order to buy or sell immediately at current prices.
Mini
A trading lot size of 10,000 units.
Micro
A trading lot size of 1,000 units.
Market Depth
The number of buy and sell orders at different prices.
Margin
The required deposit to open or maintain a leveraged trade.
Margin Call
A broker alert that your account equity is below required margin levels.
MACD
Moving Average Convergence Divergence – a trend-following momentum indicator.
N
North American Session
A trading session aligned with U.S. and Canadian market hours.
NFP
Non-Farm Payrolls – a major U.S. employment report.
O
Option
A contract that gives the right, but not obligation, to buy or sell an asset.
Order
A request to open or close a trade.
Oscillator
An indicator that fluctuates between bounds to identify overbought or oversold conditions.
P
PMI
Purchasing Managers’ Index – gauges manufacturing sector health.
PPI
Producer Price Index – measures average change in selling prices.
Portfolio
A collection of assets held by a trader or investor.
Pending Order
An order that becomes active once a price level is reached.
Pip
The smallest unit of price movement in forex pairs.
Period
The timeframe represented by each candlestick or bar.
Pip Value
The monetary value of each pip movement.
P&L
Profit and Loss – the result of trading performance.
Parabolic SAR
A trend indicator used for setting trailing stops.
Position Trader
A trader who holds positions over long periods.
Pivot Point
A level used to identify overall market trend direction.
Price Channel
A range formed by support and resistance levels.
Q
R
S
T
Technical Analysis
The study of price charts and market statistics to make trading decisions.
Trade Balance
The difference between a country’s exports and imports.
Trade Deficit
When a country’s imports exceed its exports.
Trade Surplus
When a country’s exports exceed its imports.
Take Profit
An order to automatically close a position once a profit level is reached.
Trailing Stop
A stop-loss that adjusts automatically with favorable market movement.
Tick
The smallest possible price movement.
Trend
The general direction of market prices.
Trend Line
A line used to visualize the direction of a trend.
U
V
Volatility
The degree of price fluctuation in the market.
W
X
Y
Yuppy
An Informal term for the EUR/JPY currency pair.
Z
Analysis Types
Fundamental Analysis
Evaluating market value using economic, political, and financial data.
Technical Analysis
The study of price charts and market statistics to make trading decisions.
Forex Basics
Algorithmic Trading
Automated trading using predefined rules, strategies, or technical indicators.
Arbitrage
Taking advantage of price differences in different markets for the same asset.
Asian Session
One of the major forex trading sessions, aligned with Tokyo market hours.
Base Currency
The first currency listed in a currency pair.
Cable
Nickname for the GBP/USD currency pair.
Currency Pair
Two currencies quoted together for trading purposes.
European Session
One of the major trading sessions, aligned with London trading hours.
Foreign Exchange
The global marketplace for trading national currencies.
Guppy
Slang term for GBP/JPY.
North American Session
A trading session aligned with U.S. and Canadian market hours.
Yuppy
An Informal term for the EUR/JPY currency pair.
Fundamental Indicators
CPI
Consumer Price Index – a measure of inflation based on consumer goods.
Economic Calendar
A schedule of major financial news releases.
Economic Indicator
Data used to gauge economic health, such as GDP or unemployment.
FOMC
Federal Open Market Committee – the monetary policy branch of the U.S. Federal Reserve.
GDP
Gross Domestic Product – total economic output of a country.
Industrial Production
Measures real output from factories and utilities.
NFP
Non-Farm Payrolls – a major U.S. employment report.
PMI
Purchasing Managers’ Index – gauges manufacturing sector health.
PPI
Producer Price Index – measures average change in selling prices.
Trade Balance
The difference between a country’s exports and imports.
Trade Deficit
When a country’s imports exceed its exports.
Trade Surplus
When a country’s exports exceed its imports.
General
Broker
A licensed intermediary facilitating trades between buyers and sellers.
CFD
A contract that mirrors the price movement of an underlying asset without ownership.
Commodity
A tradable physical asset such as oil, gold, or silver.
Dealing Desk
A broker execution model that internally matches client orders.
Derivative
A financial contract based on the value of an underlying asset.
ECN
Electronic Communication Network – provides access to real-time quotes from liquidity providers.
Futures
Contracts obligating the buyer to purchase an asset at a predetermined price.
Indices
A representation of a group of stocks, such as S&P 500 or FTSE 100.
Market Maker
A broker who sets bid and ask prices and takes the opposite side of a client trade.
Option
A contract that gives the right, but not obligation, to buy or sell an asset.
Portfolio
A collection of assets held by a trader or investor.
Market Sentiment
Dove
A policymaker favoring low interest rates and economic stimulation.
Hawk
A policymaker favoring higher interest rates to combat inflation.
Greed
An emotional trading driver where traders take excessive risks in pursuit of higher gains, often leading to poor decision-making.
Fear
A psychological response to potential losses that causes traders to exit positions prematurely or avoid opportunities, often leading to suboptimal outcomes.
Market Trends
Bearish Reversal
A trend change from bullish to bearish.
Bearish Sentiment
Overall negative outlook on market prices.
Bull Market
A market characterized by rising prices.
Bullish Reversal
A trend change from bearish to bullish.
Bullish Sentiment
Positive overall outlook on market prices.
Order Types
Ask Price
The lowest price a seller is willing to accept for an asset.
Bid Price
The highest price a buyer is willing to pay for an asset.
Bid/Ask Spread
The difference between the bid and the ask price.
Closing Order
An instruction to exit an open position.
Entry Order
A pending order placed to enter the market at a specified price.
GTC
Good Till Cancelled – an order that stays open until manually cancelled.
GTD Orders
Good Till Date – an order that expires on a specified date.
Limit Order
A pending order set to buy/sell at a specific price.
Liquidate
Closing out an open position.
Market Order
An order to buy or sell immediately at current prices.
Order
A request to open or close a trade.
Pending Order
An order that becomes active once a price level is reached.
Pip
The smallest unit of price movement in forex pairs.
Take Profit
An order to automatically close a position once a profit level is reached.
Trailing Stop
A stop-loss that adjusts automatically with favorable market movement.
Platform Terms
Expert Advisor
Automated trading software used on MT5.
Lot
Standard unit size of a forex trade (typically 100,000 units).
Mini
A trading lot size of 10,000 units.
Micro
A trading lot size of 1,000 units.
Market Depth
The number of buy and sell orders at different prices.
Period
The timeframe represented by each candlestick or bar.
Tick
The smallest possible price movement.
Psychology
FOMO
Fear of Missing Out – a trading bias that may result in impulsive decisions.
FUD
Fear, Uncertainty, and Doubt – negative market sentiment.
Risk Management
Balance
Total funds in a trading account excluding unrealized profits or losses.
Drawdown
A decline in account equity from a peak to a trough.
Equity
The total account value including unrealized gains or losses.
Floating Profit & Loss
Unrealized gains or losses on open trades.
Free Margin
Funds available to open new positions.
Leverage
Using borrowed capital to increase trade size and potential returns.
Liquidity
The ease of buying or selling an asset without affecting its price.
Margin
The required deposit to open or maintain a leveraged trade.
Margin Call
A broker alert that your account equity is below required margin levels.
Pip Value
The monetary value of each pip movement.
P&L
Profit and Loss – the result of trading performance.
Strategy Terms
Carry Trade
A strategy of borrowing in low-interest currencies to invest in higher-yielding ones.
Day Trading
Trading style where positions are opened and closed within the same day.
Hedge
A position taken to offset potential losses.
Long Position
Buying with the expectation that the asset will rise in value.
Position Trader
A trader who holds positions over long periods.
Technical Analysis
Bollinger Bands
A technical indicator showing volatility using standard deviation bands.
Breakout
Price movement beyond a key support or resistance level.
Candlestick Chart
A chart displaying price movement through open, high, low, and close values.
Chart Pattern
Visual formations on charts indicating potential future price movements.
EMA
Exponential Moving Average – a faster-reacting average price indicator.
Fibonacci Retracements
Technical tool to identify potential reversal levels using Fibonacci ratios.
Lagging Indicator
An indicator that follows market price movements.
Leading Indicator
An indicator designed to predict future price movements.
MACD
Moving Average Convergence Divergence – a trend-following momentum indicator.
Oscillator
An indicator that fluctuates between bounds to identify overbought or oversold conditions.
Parabolic SAR
A trend indicator used for setting trailing stops.
Pivot Point
A level used to identify overall market trend direction.
Price Channel
A range formed by support and resistance levels.
Indicator
A tool based on mathematical formulas to analyze price movement.
Trend
The general direction of market prices.
Trend Line
A line used to visualize the direction of a trend.
Volatility
The degree of price fluctuation in the market.
Trading Costs
Commission
Broker’s fee for executing trades, typically per lot.
A Few Definitions to Get You Started
Pip
The smallest price unit in most currency pairs. Usually 0.0001.
Leverage
A way to control larger trades using smaller deposits.
Spread
The difference between buy (bid) and sell (ask) prices.
Drawdown
The drop in account value between a high point and a low.
Volatility
How much a market or asset tends to move over time.
FAQs
Is the glossary beginner-friendly?
Yes. We keep the explanations straightforward, even for advanced terms. It’s great for new traders or anyone who wants a refresh.
How often do you update it?
Often. Markets change, platforms evolve, and we adjust definitions to reflect that.
Can I search by topic?
Yes. There’s a search bar, plus filters to narrow terms by category.
Is it available in languages besides English?
Right now, it’s English-only. We’re working on expanding language support if demand continues to grow.
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