Reference
Glossary of forex terms.
The vocabulary that turns up across retail FX broker platforms, ACI Dealing Certificate curriculum, and BIS Triennial Survey publications. Each entry links to longer treatment where one exists.
- ACI
- ACI Financial Markets Association. Industry body administering the Dealing Certificate and Operations Certificate — the standard professional qualifications for FX dealers.
- Ask
- The price at which a market-maker will sell the base currency. Higher than the bid by the spread.
- Base currency
- The first currency in a pair. In EUR/USD, EUR is the base; the rate states how many USD buy one EUR.
- Bid
- The price at which a market-maker will buy the base currency.
- BIS Triennial Survey
- The Bank for International Settlements survey of FX market turnover, published every three years. The authoritative source on global FX volumes.
- Carry trade
- Buying a high-interest-rate currency funded by selling a low-interest-rate currency, capturing the rate differential as daily rollover credit. See the rollover page.
- CLS
- Continuous Linked Settlement. The interbank settlement system that eliminates Herstatt risk by settling both legs of an FX trade simultaneously. Settles approximately 50 % of global FX turnover.
- Cross pair
- An FX pair that does not include the US dollar. EUR/GBP, EUR/JPY, GBP/AUD. See the pairs page.
- ECN
- Electronic Communication Network. A broker model where retail orders are matched against external liquidity providers (interbank market, other retail) rather than internalised by the broker. Typically tighter raw spreads + commission.
- Exotic pair
- An FX pair combining a major currency with the currency of a smaller or emerging economy. USD/MXN, USD/ZAR, USD/HKD. Wider spreads, lower liquidity.
- FCA
- Financial Conduct Authority. UK regulator of FX brokers and CFD providers.
- Leverage
- The ratio of position notional to margin posted. Retail caps: 1:30 majors in EU/UK/Australia, 1:50 in the US. See the leverage page.
- Lot
- The standard FX trade unit. Standard lot = 100,000 base-currency units; mini = 10,000; micro = 1,000; nano = 100.
- Major pair
- An FX pair involving the US dollar and one of the seven most-traded currencies (EUR, JPY, GBP, CHF, CAD, AUD, NZD).
- Margin
- The capital required to open and maintain a leveraged position. Calculated as
position_notional / leverage_ratio. - Margin call
- A broker request for additional funds when floating losses on open positions reduce account equity below a maintenance threshold. If unmet, the broker liquidates positions.
- Notional
- The full size of a position in base-currency units. Distinct from the margin posted to control it.
- Pip
- The smallest standard unit of price movement in an FX pair. 0.0001 for most pairs; 0.01 for JPY pairs. See the pip vs pipette page.
- Pipette
- One tenth of a pip. The fifth decimal on most pairs (third on JPY pairs). Most modern brokers quote in pipettes for tighter spread display.
- Quote currency
- The second currency in a pair. In EUR/USD, USD is the quote; the rate is expressed in USD per unit of EUR.
- Rollover (swap)
- The daily interest-rate-differential charge or credit applied to overnight positions. See the rollover page.
- Slippage
- The difference between expected and realised execution price. Particularly material on stop-loss orders during high-impact news releases and at session opens.
- Spread
- The difference between the bid and the ask. Compensation for the market-maker. Measured in pips for FX.
- STP
- Straight-Through Processing. A broker model where retail orders are routed to liquidity providers without the broker taking the other side. Distinct from a market-maker model where the broker is the counterparty.
- T+2
- Trade date plus two business days. The standard FX spot settlement period for most pairs (USD/CAD and USD/MXN settle T+1).