The market glossary: from spread to swap

Six of the forex terms repeat on every account page, every report and every support conversation; not knowing them means reading only half of your own financial documents. This glossary arranges forex terms and market terms in the plainest language with examples, so that whenever you meet a word in MetaTrader, on an account page or in a manager report, you find its exact meaning in seconds. Twenty minutes here removes hundreds of hours of ambiguity.

How to learn forex terms so they stick

Memorising a list does not help; connect each term to a real moment of trading. When you open your first practice trade, see the spread at that very moment in the buy and sell prices; when you change the volume, watch the effect of lot and pip on that same trade profit and loss. This glossary is arranged in four groups: price and costs, volume and leverage, account and risk, and orders and execution. For the real calculations of each, the platform calculators are beside you, and the complete reference version lives in the PAMM Iran glossary.

Price and costs

• Bid and ask prices: at every moment you see two prices; Bid is the price at which you can sell and Ask the price at which you can buy. Your buy opens at Ask and closes at Bid.
• Spread: the distance between the buy and sell prices; the hidden cost of every trade, paid at the very moment of entry. It widens in quiet hours and around major news.
• Commission: the explicit trading cost a broker takes per lot or per trade; on some accounts it is charged separately from the spread, and the two must be seen together.
• Swap: the cost or interest of holding a position overnight; a trade that stays open for days pays swap every night, and on some symbols it can become significant.
• Slippage: the difference between the price you wanted and the price you actually got; it grows in a volatile market and at the moment of news, and broker execution quality is seen exactly here.

Volume and leverage

• Lot: the unit of trade volume. One standard lot in currency pairs is 100,000 units of the base currency, and retail accounts work with fractions of a lot (such as 0.01).
• Pip: the common smallest unit for measuring price movement in a currency pair; your profit and loss are built from the combination of pip count and your trade volume.
• Leverage: the multiplier that scales trading power relative to capital; it multiplies profit and loss together and is the most common cause of destroyed beginner accounts.
• Position size: the real size of each trade, which must be calculated from the allowed risk and the stop-loss distance — not from feeling and hope.

Account and risk

• Balance: the closed equity of the account without counting open trades; money whose result is final.
• Equity: the momentary value of the account including the profit and loss of open trades; the number that shows the account real health and is the basis of most risk caps.
• Margin: the part of the balance engaged and locked for keeping positions open; the higher the volume and leverage, the more margin is engaged.
• Free margin: equity minus the engaged margin; the very money available for a new trade or for tolerating fluctuation.
• Margin call and stop-out: a margin call is the broker warning that the margin is running out; stop-out is the point where the broker force-closes trades. Volume management is the way to stay far from both.
• Drawdown: the distance of the account value from its highest point to its lowest point in an interval; the most important number for measuring the real risk of any record and any manager.
• Hedge: opening an opposite position on the same symbol to temporarily neutralise directional risk; it is a shield, not a profit, and carries its own cost and management.

Orders and execution

• Stop-loss: the order to automatically close a trade at a defined price to limit loss; a trade without one has no exit plan.
• Take-profit: the order to automatically close at a price target; it locks the profit so greed does not turn a winning trade back.
• Market and pending orders: a market order executes right now at the current price; a pending order waits until the price reaches the number you set.
• Currency pair: the price of one currency against another, such as the euro against the dollar; in forex you always deal with pairs, never with a single currency alone.
• Timeframe: the time span of each chart candle, from one minute to one month. Your trading style decides on which timeframe you analyse and execute.

Market and chart

• Liquidity: the ease and speed of buying and selling without a noticeable price change; the major currency pairs are the most liquid, and in thinly traded symbols the spread and slippage are larger.
• Volatility: the intensity of price moving up and down in an interval; high volatility means opportunity and danger grow together, and stop-loss and volume must be adjusted to it.
• Candle: the graphical display of price in one time span with four numbers: open, close, highest and lowest; the visual language of reading a chart.
• Support and resistance: levels from which price has turned back in the past; support is a probable floor and resistance a probable ceiling of the move — not a magic, certain line.
• Trend: the general direction of price movement: rising, falling, or neutral (moving back and forth in a range). Most trading styles work either with the trend or with reversals from it.
• Major and minor pairs: the majors are the most traded pairs with the US dollar and lower spreads; the minors are without the dollar or thinner-traded and usually carry more cost and volatility.

Where do you see these terms on the account page?

Now connect these words to the real page. On every trading account page you see “return” beside “maximum drawdown”; that is how far that account historical equity has fallen from its peak. In the trade report, spread, commission and swap of every trade have separate rows, and their sum shows the real cost of the manager style. In every symbol specification in MetaTrader, the contract size, pip value and nightly swap are written and must be read before entry. And in the manager ranking, record length and data source (live, statement or declared) matter as much as the return figure itself. Whenever you see a number with none of these words beside it, ask right there; a number without context is not information.

The pairs most often confused with each other

Keep this table beside you; most report-reading errors come from confusing exactly these five pairs. If you want to practise these terms in a real environment, the MetaTrader tutorial is the next step.

Frequently asked questions

Where exactly does slippage hurt my money? When your order fills a few pips worse than the requested price; small in one trade, but across dozens of trades and fast styles, its sum changes the result. That is why a scalping style needs a broker and account with good execution and a low spread.

How large is a “standard lot”, and what lot should I start with? In currency pairs, 100,000 units of the base currency. A real start is almost always with the smallest possible volume (usually 0.01 lots) so the risk of each trade stays negligible on your capital; the volume calculator does the conversions for you.

Does high leverage mean more profit? Leverage only multiplies the size of profit and loss together; it does not multiply skill. For a beginner, lower leverage means cheaper mistakes and a longer account life.

When should I take swap seriously? When your trades last several days and weeks. In day trading it is usually negligible; in long holding, the nightly swap can eat a meaningful part of the result and must be seen in the symbol specification before entry.

I saw a term somewhere that is not here; what should I do? First see the complete PAMM Iran glossary, then the guide of that same topic. If it is still missing, asking support is not only fine, it is right; users frequently asked questions are exactly what builds the next terms of this list.

The bottom line

See the forex terms like the tools in a box: each has a defined job and is needed at a defined moment. Bookmark this page and come back whenever a word meets you in a report or on an account page. When you read spread, equity and drawdown the way a driver reads a dashboard, half of the market wrong decisions are never made at all.