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The lowest price a seller is willing to accept. When you buy, you pay the ask price.
Average True Range - measures volatility by averaging the range of price movement.
Average Directional Index - measures trend strength regardless of direction.
Overthinking to the point of being unable to make a trading decision.
Phase where institutions quietly build positions at low prices.
The highest price a buyer is willing to pay. When you sell, you receive the bid price.
A market characterized by rising prices and optimism.
A market characterized by falling prices and pessimism.
When price moves beyond a defined support or resistance level.
Volatility indicator with bands that expand/contract based on price volatility.
Moving your stop loss to entry price so the trade has no risk of loss.
The first currency in a forex pair - what you're buying or selling.
Example: In EUR/USD, EUR is the base currency
Strong upward move followed by consolidation - signals continuation of uptrend.
Strong downward move followed by consolidation - signals continuation of downtrend.
A failed order block that becomes support/resistance in opposite direction.
Break of Structure - when price breaks a significant swing point.
Bank of Japan - Japan's central bank, known for intervention.
Bank of England - UK's central bank.
Entering when price breaks through key levels.
Testing a strategy on historical data to measure performance.
A chart type showing open, high, low, and close prices for a time period.
Contract for Difference - a derivative product that lets you trade price movements without owning the asset.
U-shaped recovery followed by small pullback - bullish continuation pattern.
Parallel trend lines containing price movement.
Period where price trades in a range without clear direction.
Seeking information that confirms your existing beliefs while ignoring contrary evidence.
Change of Character - first sign of potential trend reversal.
Consumer Price Index - measures inflation by tracking price changes.
Borrowing in low-interest currency to invest in higher-yielding one.
How two assets move in relation to each other.
Example: EUR/USD and GBP/USD are positively correlated
Multiple factors aligning to support a trade idea.
Example: Support + Fibonacci + Order Block at same level
Two currencies quoted against each other.
Example: EUR/USD, GBP/JPY
Fee charged per trade by some brokers.
A candlestick where open and close are nearly equal, showing market indecision.
When price and an indicator move in opposite directions, often signaling reversal.
The decline from a peak to a trough in your account balance.
Price hits resistance twice at similar levels, forming an M shape. Bearish reversal.
Price hits support twice at similar levels, forming a W shape. Bullish reversal.
Holding losers too long and selling winners too soon.
The ability to follow your trading plan without deviation.
Phase where institutions sell positions to retail traders at high prices.
Price area below equilibrium - better for buying.
Central bank stance favoring lower interest rates to stimulate economy.
Opening and closing positions within the same trading day.
Practice account with virtual money to learn without risk.
A two-candle pattern where the second candle completely covers the first.
A three-candle bearish reversal pattern: green candle, small body, red candle.
Your account balance plus or minus any unrealized profits/losses from open positions.
Exponential Moving Average - gives more weight to recent prices than SMA.
Making decisions based on feelings rather than strategy.
European Central Bank - sets monetary policy for the Eurozone.
Statistical advantage that makes a strategy profitable over time.
Average profit per trade based on win rate and risk/reward.
Pairs with emerging market currencies.
Example: USD/TRY, USD/ZAR
Electronic Communication Network broker with direct market access.
Foreign Exchange - the market for trading currencies.
The amount of money available to open new positions.
Mathematical ratios (23.6%, 38.2%, 61.8%) used to identify potential support/resistance.
Fear Of Missing Out - the anxiety that you're missing a profitable opportunity.
Example: Chasing a trade after it's already moved 100 pips
A 3-candle imbalance where middle candle doesn't overlap with outer candles.
Example: Price often returns to fill these gaps
Federal Open Market Committee - sets US interest rates.
Federal Reserve - the central bank of the United States.
Analyzing economic data and news to predict price movement.
Testing strategy in live market with small position sizes.
Trading account with capital provided by a prop firm.
Believing past results affect future probabilities in independent events.
Example: Thinking you're 'due' for a win after losses
Gross Domestic Product - total value of goods and services produced.
A bullish reversal pattern with a small body at top and long lower shadow.
Taking an opposite position to reduce risk on an existing trade.
Three peaks with middle one highest - classic bearish reversal pattern.
Believing past events were predictable after they've occurred.
Central bank stance favoring higher interest rates to control inflation.
Hammer pattern at top of uptrend - bearish warning.
A peak that is higher than the previous peak.
A trough that is higher than the previous trough.
A comprehensive indicator showing support, resistance, momentum, and trend direction.
False move designed to trap traders before the real move.
Cost of borrowing money, set by central banks. Affects currency value.
Candle whose range is within the previous candle's range.
Hammer with long upper wick at bottom of downtrend.
A standardized unit of currency. Standard lot = 100,000 units, Mini = 10,000, Micro = 1,000.
Using borrowed capital to increase potential returns. 10:1 leverage means $1,000 controls $10,000.
Buying an asset expecting the price to rise.
How easily an asset can be bought or sold without affecting its price.
The tendency to feel losses more strongly than equivalent gains.
Areas where stop losses cluster, creating targets for smart money.
Example: Above swing highs, below swing lows
Price move designed to trigger stop losses before reversing.
Real trading account with actual money at risk.
Order to buy/sell at a specific price or better.
A peak that is lower than the previous peak.
A trough that is lower than the previous trough.
The amount required to open and maintain a leveraged position.
A three-candle bullish reversal pattern: red candle, small body, green candle.
An indicator that smooths price data by creating an average over a set period.
Moving Average Convergence Divergence - shows relationship between two moving averages.
A warning that your equity has fallen below the required margin level.
Entity that provides liquidity by always being ready to buy or sell.
Deliberate price movement to trap traders or trigger stops.
When price returns to an order block to fill remaining orders.
Strategy betting price will return to its average.
Most traded pairs, all including USD.
Example: EUR/USD, GBP/USD, USD/JPY
Pairs without USD but with other major currencies.
Example: EUR/GBP, GBP/JPY
Order to buy/sell immediately at current price.
Non-Farm Payrolls - monthly US employment report, major market mover.
Example: Released first Friday of each month
Trading around major economic news releases.
On-Balance Volume - measures buying and selling pressure using volume.
Taking too many trades, often due to boredom or attempting to recover losses.
The last opposite candle before a strong move - institutional entry zone.
Optimal Trade Entry - typically 61.8%-79% Fibonacci retracement zone.
When two trading sessions are open simultaneously.
Example: London/NY overlap = highest volatility
Candle whose range engulfs the previous candle completely.
The smallest price movement in forex, typically the 4th decimal place for most pairs.
Example: EUR/USD moving from 1.1050 to 1.1051 is a 1 pip move
A temporary reversal in the direction of the prevailing trend.
Determining how much capital to risk on a single trade.
Adding to a winning position as it moves in your favor.
Practicing trading with simulated money instead of real capital.
Small symmetrical triangle that forms after a strong move - continuation pattern.
Calculated levels used to identify potential support and resistance.
Price area above equilibrium - better for selling.
Purchasing Managers Index - economic indicator based on surveys of businesses.
Example: Above 50 = expansion, below 50 = contraction
Long-term trading holding positions for weeks to months.
Company that provides capital for traders to trade with.
1/10th of a pip, the 5th decimal place.
Smallest price increment, varies by instrument.
Candle with long wick showing rejection of prices.
The second currency in a forex pair - what you're measuring the base currency in.
Example: In EUR/USD, USD is the quote currency
Quantitative Easing - central bank buying assets to inject money into economy.
Quantitative Tightening - central bank selling assets to reduce money supply.
A price level where selling pressure is expected to prevent further rise.
Relative Strength Index - measures speed and change of price movements (0-100 scale).
Example: RSI above 70 = overbought, below 30 = oversold
The potential profit compared to potential loss on a trade.
Example: Risking $100 for potential $300 gain = 1:3 R:R
Trading impulsively to recover losses, usually leading to more losses.
Giving more weight to recent events than historical data.
Individual traders trading with personal capital.
Market sentiment favoring higher-risk assets like stocks and commodity currencies.
Market sentiment favoring safe-haven assets like USD, JPY, and gold.
Trading between support and resistance in sideways markets.
Amount of capital risked on a single trade, usually 1-2%.
Extension of settlement date, with swap interest applied.
The difference between the bid and ask price. This is essentially a cost of trading.
Example: If bid is $100 and ask is $100.50, the spread is $0.50
Selling an asset expecting the price to fall, with the intent to buy back cheaper.
A price level where buying pressure is expected to prevent further decline.
An order to automatically close a position at a specified price to limit losses.
The difference between expected price and the actual execution price.
Adding to a position gradually rather than all at once.
Closing portions of a winning trade at different price targets.
When the broker automatically closes your positions because margin is too low.
The interest paid or earned for holding a position overnight.
Simple Moving Average - the average price over a set number of periods.
Momentum indicator comparing closing price to price range over time (0-100).
Institutional traders, banks, and hedge funds that move markets.
Intentional push to trigger retail stop losses before reversal.
Assets that hold value during market uncertainty.
Example: USD, JPY, CHF, Gold
Gauging overall market mood to predict price direction.
Trading style taking many small profits from quick trades.
Holding positions for days to weeks to capture price swings.
Trading periods based on major financial centers.
Example: Asian, London, New York
Order that becomes market order when price reaches level.
Small body candle with wicks both directions - indecision.
A local price peak with lower highs on both sides.
A local price trough with higher lows on both sides.
An order to automatically close a position at a target price to lock in gains.
A stop loss that moves with the price to lock in profits as the trade moves in your favor.
The minimum price movement of an instrument.
Price consolidation between converging trendlines - can break either direction.
A line connecting swing highs or lows to identify the direction of trend.
Emotional state where judgment is impaired, often after losses.
A written document defining your trading rules, strategies, and risk management.
A record of all trades including entry, exit, reasoning, and emotions.
Difference between a country's exports and imports.
Analyzing price charts and patterns to predict future movement.
Strategy that enters in the direction of the prevailing trend.
Two candles with matching highs - bearish reversal.
Two candles with matching lows - bullish reversal.
Three consecutive long red candles - bearish signal.
Three consecutive long green candles - bullish signal.
The number of shares or contracts traded in a given period.
The degree of price variation over time. High volatility = larger price swings.
Volume Weighted Average Price - average price weighted by trading volume.
Converging trendlines that slope in the same direction - typically reversal pattern.
Trading methodology studying accumulation and distribution cycles.
Percentage of trades that are profitable.
Example: 40 wins out of 100 trades = 40% win rate