Basic Terminology

Leverage is borrowed capital provided by a broker that allows a trader to control a larger position in the market with a smaller amount of their own money. It is expressed as a ratio — 1:10, 1:50, 1:100, 1:500.

A pip (percentage in point) is the standard unit used to measure price movement in forex. For most currency pairs: 1 pip = 0.0001 (4th decimal place).

A lot is the standardized unit that measures the size of a trading position in forex.

• 1 Standard Lot = 100,000 units
• 1 Mini Lot = 10,000 units
• 1 Micro Lot = 1,000 units
• 1 Nano Lot = 100 units (some brokers)

Open, Close, High & Low — these four values form a candlestick, representing price movement during a specific time period.

• Open — price at the start of the candle period
• Close — price at the end of the candle period
• High — highest price reached during that period
• Low — lowest price reached during that period

The spread is the difference between the Bid price (sell) and the Ask price (buy). It represents the cost of entering a trade.

• Higher spread → harder to profit, higher trading cost
• Lower spread → more efficient entries and exits

A commission is a fixed fee charged by a broker for executing a trade — separate from the spread.

Volatility measures how much and how quickly the price of an asset moves over time.

• High volatility = large, fast price movements
• Low volatility = small, slow price movements

Trading sessions are the major time periods when financial markets are most active, based on global financial centers.

• Asian Session (Tokyo) — 00:00–09:00 UTC — generally lower volatility
• London Session — 08:00–17:00 UTC — strong moves and breakouts
• London & New York Overlap — 13:30–17:00 UTC — usually the most volatile period
• New York Stock Exchange open — 13:30 UTC (DST) / 14:30 UTC (Standard Time)

A swap charge (overnight fee / rollover) is the interest paid or earned for holding a trading position overnight, based on the interest rate difference between the two currencies.

• You may pay a swap (negative) or receive a swap (positive)
• Depends on: the currency pair, whether you are buying or selling, and the interest rate difference
• Swap is charged daily at the broker's cutoff time (usually 00:00 server time)

A time frame is the length of time each candlestick represents on a chart. Different time frames show different perspectives of the market.

• Lower time frames → more detail, more noise
• Higher time frames → clearer trends, fewer trades
• Scalpers → M1–M5
• Day traders → M15–H1
• Swing traders → H4–D1

Long (Buy) — opening a trade expecting the price to rise. You profit if the market moves up.
Short (Sell) — opening a trade expecting the price to fall. You profit if the market moves down.

A Stop Loss is a predefined price level where a trade automatically closes to limit losses.
A Take Profit is a predefined price level where a trade automatically closes to secure profits.

Slippage is the difference between the expected price of a trade and the actual execution price.

• Negative slippage → worse price than expected
• Positive slippage → better price than expected
• Can affect SL, TP, Pending & Market orders

Margin is the amount of money required to open and maintain a leveraged position. It is not a fee — it is collateral set aside by the broker while your trade is open.

• If your balance drops too far: Margin Call or automatic position closure (Stop Out)
• Higher leverage → lower required margin
• Lower leverage → higher required margin