Africa.Forex Academy
Trading glossary: forex and investing terms A–Z
86 terms every trader meets, explained in one or two sentences, each linked to the lesson that goes deeper.
A
- Annual report
- A company's yearly publication with its financial statements, auditor's report and management commentary. Lesson: Reading annual reports →
- Ask (offer)
- The price at which you can buy. Lesson: How the market works →
- ATR (Average True Range)
- An indicator showing the average size of price moves per candle, often used to set stop distances. Lesson: Technical analysis →
B
- Backtesting
- Checking how a set of trading rules would have performed on past prices. Lesson: Backtesting and demo trading →
- Balance
- The money in your trading account, not counting open trades. Lesson: Leverage and margin →
- Base currency
- The first currency in a pair, for example EUR in EUR/USD. Lesson: Forex explained →
- Bear market
- A long period of falling prices, often defined as a 20% drop from a high. Lesson: Stocks and shares →
- Bid
- The price at which you can sell. Lesson: How the market works →
- Bond
- A loan to a government or company that pays interest. Lesson: Investing long term →
- Breakout
- A move through a support or resistance level, often with increased momentum. Lesson: Trading strategies →
- Broker
- A company that gives you access to markets, holds your money and executes your orders. Lesson: How to find a legit broker →
- Bull market
- A long period of rising prices. Lesson: Stocks and shares →
C
- Candlestick
- A chart bar showing the open, high, low and close for one period. Lesson: Technical analysis →
- Capital gains tax (CGT)
- Tax on the profit from selling an asset such as shares or property. Lesson: Taxes on trading →
- Carry trade
- Holding a higher-interest currency against a lower-interest one to earn the interest difference. Lesson: Trading strategies →
- Central bank
- The institution that sets interest rates and manages a country's currency, such as the SARB, CBK or CBN. Lesson: How money works →
- CFD (contract for difference)
- A contract that pays the difference in an asset's price between opening and closing, without owning the asset. Lesson: What is trading? →
- CMA
- Capital Markets Authority, the regulator that licenses online forex brokers in Kenya. Lesson: How to find a legit broker →
- Commission
- A fee charged per trade or per lot on some accounts. Lesson: Order types and trading costs →
- Commodity
- A raw material such as gold, oil, cocoa or coffee. Lesson: Commodities: gold, oil, cocoa →
- Compound interest
- Earning returns on previous returns, which accelerates growth over time. Lesson: Financial knowledge essentials →
- CPI
- Consumer Price Index, the main measure of inflation. Lesson: Fundamental analysis →
D
- Demo account
- A practice account with virtual money and real market prices. Lesson: Backtesting and demo trading →
- Diversification
- Spreading money across different assets to reduce risk. Lesson: Financial knowledge essentials →
- Dividend
- A cash payment from a company's profit to its shareholders. Lesson: Stocks and shares →
- Drawdown
- The fall from an account's peak value to its lowest point before a new peak. Lesson: Funded trading accounts →
E
- Economic calendar
- A schedule of economic data releases and central bank events. Lesson: Trading the news →
- Equity
- In trading, your balance plus or minus open profit or loss. In companies, assets minus liabilities. Lesson: Leverage and margin →
- ETF (exchange-traded fund)
- A fund that holds a basket of assets and trades on an exchange like a share. Lesson: Investing long term →
- Exotic pair
- A currency pair with a major and an emerging-market currency, such as USD/ZAR. Lesson: Forex explained →
- Expectancy
- The average amount you expect to win or lose per trade over many trades. Lesson: Risk and reward →
F
- FOMO
- Fear of missing out: jumping into a move late because others are profiting. Lesson: Trading psychology →
- Free margin
- Equity minus used margin: what is available for new trades. Lesson: Leverage and margin →
- FSCA
- Financial Sector Conduct Authority, the regulator of financial services providers in South Africa. Lesson: How to find a legit broker →
- Fundamental analysis
- Analysis of economic and business data to judge value and direction. Lesson: Fundamental analysis →
- Funded account
- An account trading a prop firm's capital, usually after passing a paid evaluation. Lesson: Funded trading accounts →
G
- Gap
- A jump in price between one candle's close and the next one's open, often after weekends or news. Lesson: Order types and trading costs →
- GDP
- Gross domestic product: the total value of goods and services an economy produces. Lesson: Fundamental analysis →
- Guidance
- A company's forecast of its future results. Lesson: Company earnings →
H
- HEPS
- Headline earnings per share, required on the JSE, which removes certain one-off items. Lesson: Company earnings →
I
- Index
- A number that tracks the value of a group of shares, such as the S&P 500 or JSE Top 40. Lesson: Indices →
- Inflation
- The general rise in prices, which reduces what money can buy. Lesson: How money works →
- Interest rate
- The price of borrowing money, set at the policy level by the central bank. Lesson: How money works →
L
- Leverage
- Using borrowed capacity to control a position larger than your margin. Lesson: Leverage and margin →
- Limit order
- An order to buy below or sell above the current price. Lesson: Order types and trading costs →
- Liquidity
- How easily something can be bought or sold without moving the price much. Lesson: How the market works →
- Long
- A position that profits when the price rises. Lesson: What is trading? →
- Lot
- A standard trade size; 1.00 lot of a forex pair is 100,000 units of the base currency. Lesson: What is a pip? Pips and lots →
M
- Major pair
- One of the most traded currency pairs, all including the US dollar. Lesson: Forex explained →
- Margin
- The deposit set aside by the broker to keep a leveraged trade open. Lesson: Leverage and margin →
- Margin call
- A warning that your margin level has fallen to the broker's threshold. Lesson: Leverage and margin →
- Money market fund
- A low-risk fund that invests in short-term deposits and bills. Lesson: Save your money →
- Moving average
- The average price over a set number of periods, used to show trend. Lesson: Technical analysis →
N
- NFP (Non-Farm Payrolls)
- The monthly US jobs report, a major market-moving event. Lesson: Trading the news →
P
- P/E ratio
- Share price divided by earnings per share. Lesson: Reading annual reports →
- Pip
- The standard unit of price movement: 0.0001 on most pairs, 0.01 on JPY pairs. Lesson: What is a pip? Pips and lots →
- PMI
- Purchasing Managers' Index, a survey of business activity; above 50 means expansion. Lesson: Fundamental analysis →
- Point (pipette)
- One tenth of a pip on five-digit quotes. Lesson: What is a pip? Pips and lots →
- Position size
- How many lots or units you trade, set so that a stop loss costs a planned amount. Lesson: Risk and reward →
- Prop firm
- A proprietary trading firm that funds traders with its own capital. Lesson: Funded trading accounts →
- Pump and dump
- Hyping a small asset to raise its price, then selling to late buyers. Lesson: Fake news and misinformation →
Q
- Quote currency
- The second currency in a pair, in which the price is expressed. Lesson: Forex explained →
R
- R multiple
- A trade result measured in units of the amount risked; a 2R win made twice the risk. Lesson: Trading plan and journal →
- REIT
- Real estate investment trust: a listed fund that owns property and pays out rental income. Lesson: Investing in real assets →
- Resistance
- A price zone where selling has stopped rises before. Lesson: Technical analysis →
- Revenge trading
- Trading bigger or more often to win back losses quickly. Lesson: Trading psychology →
- Risk/reward ratio
- The distance to the target compared with the distance to the stop loss. Lesson: Risk and reward →
- RSI
- Relative Strength Index, a momentum indicator from 0 to 100. Lesson: Technical analysis →
S
- Scalping
- Very short-term trading aiming for small moves many times a day. Lesson: What is trading? →
- Short
- A position that profits when the price falls. Lesson: What is trading? →
- Slippage
- The difference between the expected price of an order and the price you get. Lesson: Order types and trading costs →
- Spread
- The difference between the bid and ask price. Lesson: How the market works →
- Stop loss
- An order that closes a losing trade at a set price. Lesson: Order types and trading costs →
- Stop out
- The margin level at which the broker starts closing your trades. Lesson: Leverage and margin →
- Support
- A price zone where buying has stopped falls before. Lesson: Technical analysis →
- Swap (rollover)
- Interest paid or earned for holding a position overnight. Lesson: Order types and trading costs →
- Swing trading
- Holding trades for days to weeks to catch one larger move. Lesson: What is trading? →
T
- Take profit
- An order that closes a winning trade at a set price. Lesson: Order types and trading costs →
- Technical analysis
- Study of price charts to find likely areas of buying and selling. Lesson: Technical analysis →
- Trading journal
- A record of every trade, its reasons, result and your state of mind. Lesson: Trading plan and journal →
- Trading plan
- Written rules for what, when and how you trade and how you manage risk. Lesson: Trading plan and journal →
- Trailing stop
- A stop loss that moves with the price to protect profit. Lesson: Order types and trading costs →
- Trend
- The general direction of price: higher highs and lows in an uptrend, lower ones in a downtrend. Lesson: Technical analysis →
V
- Volatility
- How much and how fast prices move. Lesson: Trading strategies →
W
- Win rate
- The percentage of trades that are profitable. Lesson: Risk and reward →