- Ask / bid
- The ask is the lowest price a seller accepts; the bid is the highest price a buyer pays. The gap between them is the spread.
- Breakout
- Price moving beyond a level. A real breakout closes beyond it, follows through and holds on the retest.
- Candle (candlestick)
- One period of price on a chart: open, high, low and close. The body runs from open to close; the wicks show where price went and did not stay.
- Close
- The last price of a candle’s period — the price that counts most when judging a level.
- Confluence
- Several reasons in the same place — for example a monthly low, a weekly low and a round number inside one narrow zone.
- Divergence
- Price makes a new high (or low) while an oscillator such as the RSI does not — a sign that momentum is fading.
- Drawdown
- The fall of an account from its peak. A 50% drawdown needs a 100% gain to recover.
- Equal highs / equal lows
- Two or more turning points at almost the same price. Stop orders gather just beyond them.
- False break
- Price pushes beyond an obvious level, triggers the stops resting there, and closes back inside. The break failed — and the traders who chased it are trapped.
- Fibonacci retracement
- Lines at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a swing, used to measure how far a pullback has gone.
- Gap
- A jump between one candle’s close and the next candle’s open, common after weekends and news.
- Higher high / higher low
- The swings of an uptrend: each high above the last, each low above the last.
- Leverage
- Trading a position larger than the money in the account. It magnifies gains and losses alike.
- Liquidity
- Orders waiting to be filled. Pools of stop orders above highs and below lows are liquidity that price often reaches for.
- Lot
- A standard unit of size in forex; one standard lot is 100,000 units of the base currency.
- MACD
- An indicator built from two moving averages and their difference; it shows momentum, always a little late.
- Market structure
- The sequence of highs and lows that tells whether a market is trending up, trending down or ranging.
- Monthly / weekly / daily level
- The high, low and open of the previous month, week or day. The bigger the timeframe, the more traders watch the level.
- Pin bar
- A candle with a long wick on one side and a small body: price was pushed beyond a level and rejected.
- Pip
- The smallest usual price step in a currency pair — 0.0001 for most pairs, 0.01 for yen pairs.
- Position size
- How much you trade. It comes from the money you accept to lose and the distance to your stop.
- Range
- A market moving sideways between a clear high and a clear low. The edges matter; the middle has no edge.
- Retest
- Price returning to a level it has just broken. A retest that holds from the other side confirms the break.
- Reward to risk (R)
- The distance to the target divided by the distance to the stop. 1R is the risk of one trade.
- RSI
- Relative Strength Index — an oscillator from 0 to 100 that measures the strength of recent moves.
- Session
- The trading hours of a financial centre — Asia, London and New York. The London–New York overlap is usually the busiest time.
- Slippage
- The difference between the price you asked for and the price you got, common in fast markets and gaps.
- Spread
- The difference between the ask and the bid — a cost paid on every trade.
- Stop loss
- An order that closes the trade if price reaches a level where the idea is wrong.
- Stop hunt
- Price running to a pool of stop orders and snapping back — the mechanism behind many false breaks.
- Support / resistance
- Zones where price turned before: support below price, resistance above it. Drawn as areas, not thin lines.
- Swing
- A move from one turning point to the next.
- Timeframe
- The period one candle covers — 15 minutes, 4 hours, a day, a week, a month.
- Trend line
- A line through the higher lows of an uptrend (or the lower highs of a downtrend). A close beyond it is the break.
- Volatility
- How far and how fast price moves. Higher volatility needs a smaller position for the same risk.
- Wick (shadow)
- The thin line above or below a candle’s body: where price travelled during the period and was pushed back.