Essential Trading Terminology

Understanding trading terminology is crucial before entering the markets.

Price Action Terms

Bid: The price buyers are willing to pay Ask (Offer): The price sellers are asking Spread: Difference between bid and ask Pip: Point in Percentage - smallest price movement (0.0001) Pipette: 1/10th of a pip (0.00001)

Order Types

Market Order: Execute immediately at current price Limit Order: Execute at specified price or better Stop Order: Execute when price reaches specified level Stop-Loss: Automatic order to limit losses Take-Profit: Automatic order to lock profits

Position Terms

Long: Buying, expecting price to rise Short: Selling, expecting price to fall Position Size: Amount of currency units traded Lot Size:

Standard Lot = 100,000 units
Mini Lot = 10,000 units
Micro Lot = 1,000 units

Account Terms

Leverage: Borrowed capital to increase position size Margin: Required deposit to open a position Free Margin: Available funds for new trades Margin Call: Warning when account equity is low Equity: Account balance + floating profit/loss

Chart Terms

Candlestick: Visual price representation Timeframe: Period each candle represents (1min, 1hr, daily) Support: Price level where buying interest is strong Resistance: Price level where selling interest is strong