Ask: The price/rate that a seller is prepared to sell at.
Bid: The price that a buyer is prepared to purchase at the price of the currency.
Close Position: Closing a position refers to executing a transaction that is the exact opposite of an open position.
Leverage: Leverage is having the ability to control a large amount of money using very little of your own money and borrowing the rest.
For example, to control a $100,000 position, your broker will set aside $1,000 from your account. Your leverage, which is expressed in ratios, is now 100:1.
Margin: Margin is the amount of money needed as a “good faith deposit” to open a position with your broker.
It is used by your broker to maintain your position. Your broker basically takes your margin deposit and pools them with everyone else’s margin deposit and uses this one “super margin deposit” to be able to place trades within the interbank network.
Market order: An order to make a transaction at the current market price.
Open position: An active trade that has yet to be closed.
Pending Order/Entry order: An entry order is one that is used to enter a trade at a specified price level. If the currency pair never reaches that price level then the entry order is not executed.
Pip: The most common increment of currencies is known as the “pip.” Most currency pairs are quoted to four decimal places (0.0001 in case of EUR/USD, GBD/USD, USD/CHF and 01 in case of USD/JPY).
For instance, if the EUR/USD moves from 1.28015 to 1.28025, then this represents a one pip movement.
For Japanese Yen pairs, 1 pip is the second decimal place of a quotation. If USD/JPY moved from 109.105 to 109.115, then this represents a one pip movement.
Rollover: Rollover is the interest paid or earned by a trader for holding a position overnight. Since every currency trade involves borrowing one currency to buy another, interest rollover charges are part of FX trading. Interest is paid on the currency that is borrowed and earned on the one that is bought.
Spread: The difference between the ask (buy)and bid (sell) price.
Stop loss: A stop loss is an instruction to close out a trade at a price worse than the current market level and, as the name suggests, is used to help minimise losses.
Take Profit: The Take Profit is an instruction to close out a trade at a price that is better than the current market level and is used to help lock in price targets.