Forex and EA glossary: 59 terms beginners meet in the first month, in plain English

How to use this glossary

This forex and EA glossary covers the words you will meet in your first month, whether you are looking at a forex robot, a signals group, copy trading, or a trading account page for the first time. Each entry is a plain definition, and where a number helps, there is one. The terms are grouped by topic rather than alphabetically, so you can read a whole group in a few minutes. Words in bold inside a definition are defined elsewhere on this page.

Prices and sizes

The vocabulary of what you are trading and how much.

• Forex (FX): The market where one currency is exchanged for another. Traders bet on whether one currency will rise or fall against another.
• Currency pair: Two currencies quoted together, such as EUR/USD. The first is the base currency, the second the quote currency. A price of 1.0850 means one euro costs 1.0850 dollars.
• Pip: The standard unit of price movement. On most pairs it is the fourth decimal place (0.0001); on Japanese yen pairs it is the second (0.01). A move from 1.0850 to 1.0880 is 30 pips.
• Point: One tenth of a pip on a five-digit broker, the smallest price step shown. Spread and slippage on a track record are often measured in points.
• Lot: The trade size. A standard lot is 100,000 units of the base currency; a mini lot (0.10) is 10,000; a micro lot (0.01) is 1,000. On EUR/USD a standard lot moves about $10 per pip, a micro lot about $0.10.
• Spread: The gap between the buying price (ask) and the selling price (bid). It is the cost of every trade. A 1.2-pip spread on EUR/USD costs about $12 per standard lot before the trade has moved at all.
• Slippage: The difference between the price you asked for and the price you actually got. It is usually small, but adds up for strategies that trade often.
• Leverage: Trading with borrowed size. At 1:100 leverage, $1,000 of your money controls $100,000 of currency. It multiplies gains and losses equally.
• Margin: The deposit the broker holds against a trade. At 1:100 leverage, one standard lot of EUR/USD needs about $1,085 of margin.
• Margin call / stop out: When losses eat the margin, the broker warns you (margin call) and then closes trades for you (stop out). It is how an account gets emptied in one bad day.
• Long / short: Long means you bought, expecting the price to rise. Short means you sold first, expecting it to fall. Forex lets you do either.
• Swap (rollover): A small interest charge or credit for holding a trade overnight. It can quietly erode a strategy that holds trades for weeks.

Orders and trades

What happens when a trade is placed and closed.

• Market order: An instruction to buy or sell right now at the current price.
• Pending order: An instruction to buy or sell only if the price reaches a level you choose. It sits and waits, and can be cancelled.
• Stop-loss (SL): A pre-set price at which a losing trade closes automatically. A trade without a stop-loss has no defined worst case, which is a red flag on any track record.
• Take-profit (TP): A pre-set price at which a winning trade closes automatically.
• Risk-to-reward ratio: How much a trade stands to gain compared with how much it risks. A 20-pip stop-loss and a 40-pip take-profit is 1:2.
• Position sizing: Choosing the lot size so that a loss costs a fixed, small fraction of the account, commonly 1% or 2%. The position size calculator does the arithmetic.
• Scalping: A style that takes many small trades for a few pips each. Extremely sensitive to spread and slippage, and the classic strategy that works on demo and fails on real.
• Hedging: Holding a buy and a sell on the same pair at once. Allowed by some brokers and not others, and sometimes used to hide a losing trade rather than close it.

Accounts and brokers

The places where trading happens.

• Broker: The company that gives you access to the market, holds your money and executes your orders. Choose one regulated in a reputable jurisdiction.
• Demo account: A practice account funded with pretend money. Same charts, same buttons, same spread, swap and commission — fills still slip, just less than a live account would. Demo results are reliably better than real ones; see demo vs real account.
• Real (live) account: An account funded with actual money, where every loss is real.
• MetaTrader 4 (MT4) / MetaTrader 5 (MT5): The two most common retail trading platforms. Both run Expert Advisors, but an MT4 EA (.ex4) and an MT5 EA (.ex5) are different files and not interchangeable.
• Investor password: A read-only password for a MetaTrader account. Whoever has it can see the trades but cannot place orders or move money. It is what a third party uses to verify a track record safely.
• Prop firm: A company that lets traders pass a test and then trade the firm's money for a share of the profit. Prop-firm accounts have their own rules and appear as their own category in rankings.
• VPS: A small rented computer in a data centre that runs MetaTrader 24 hours a day, so an EA keeps trading when your own computer is off.
• Equity vs balance: Balance is the money in the account counting only closed trades. Equity is balance plus or minus any open trades. An account can show a healthy balance while its equity is deep underwater.

Automation: EAs, bots and copying

The words around letting software or someone else trade for you.

• Expert Advisor (EA): A program that runs inside MetaTrader and places trades automatically according to fixed rules. Also called a forex robot, trading bot or auto trading system. See what is an Expert Advisor.
• Algo trading (algorithmic trading): Any trading done by a program following rules rather than by a person clicking. An EA is the retail form of it.
• Magic number: The ID number an EA stamps on its trades so the platform can tell which robot placed which trade. On a track record, it lets results be broken down by strategy.
• Backtest: Running a strategy over old prices to see how it would have done. Useful for development, worthless as proof, because the settings can be tuned until the past looks perfect.
• Forward test: Running a strategy on live prices, usually on a demo, before risking money. A fair stage to show, but still not a real-money record.
• Curve fitting (over-optimisation): Tuning a strategy's settings so tightly to past data that it stops working on new data. The reason a beautiful backtest so often fails live.
• Martingale: Increasing trade size after each loss so that one win recovers everything. Looks flawless for months, then a normal losing streak empties the account. A red flag on any record.
• Grid: Placing a ladder of buy and sell orders at fixed intervals regardless of direction. Profitable in sideways markets, dangerous in trending ones. Often combined with martingale.
• Copy trading: A service that automatically mirrors another trader's trades into your account. Legitimate as a mechanism; the quality depends entirely on the trader being copied.
• Signals: Trade instructions sent by a person or service for you to place yourself, usually by Telegram or app. "Free forex signals" is nearly always a funnel to a paid group or a broker commission.
• Free EA download: Exactly what it says, and free EAs do exist. The issue is not the price but the evidence: most come with a backtest curve and no live, verified record. Check one the same way you would check a paid robot.

Reading a track record

The statistics you will see on an account page and what they mean.

• Track record: The complete, dated list of every trade an account has taken, with the balance over time. Complete is the important word; a highlight reel is not a track record.
• Gain: How much the account grew, as a percentage. On ConfirmedTrades it is shown as a time-weighted return, so deposits and withdrawals do not distort it.
• Time-weighted return (TWR): A way of measuring gain that ignores when money was added or taken out, so it reflects trading skill rather than funding. See time-weighted return explained.
• Drawdown: A fall from a peak. If an account rose to $12,000 and then dropped to $9,000, it was in a 25% drawdown.
• Maximum drawdown: The worst drawdown the account has ever had. The single most important number for deciding whether you could have held on. See maximum drawdown explained.
• Win rate: The percentage of trades that closed in profit. Misleading on its own: a 90% win rate with tiny wins and huge losses loses money. See win rate is lying.
• Profit factor: Total profit from winning trades divided by total loss from losing trades. Above 1 means profitable; 1.5 or more is healthy; far above 3 on a short record usually means too few trades to judge.
• Average win vs average loss: How big the typical winner is compared with the typical loser. Together with win rate, it tells you whether the strategy can make money.
• Sample size (trade count): How many trades the record contains. Twenty trades is noise; a few hundred begins to mean something.
• Consistency: Whether returns arrive steadily month after month or in one lucky burst. Part of the ConfirmedTrades Score.
• Risk of ruin: The probability that a strategy, at a given bet size, eventually loses the whole account. The risk of ruin calculator lets you test it.
• Monte Carlo: Reshuffling a record's trades thousands of times to see the range of outcomes the same strategy could have produced. Shown in the Risk Lab on deeper account pages.

Verification terms on ConfirmedTrades

Labels you will see on every account page, and what each one proves.

• Self-reported: Nothing about the record has been independently confirmed. A starting point, not proof.
• Live-synced: Trades, balance and equity stream automatically from the MetaTrader terminal through the connector and cannot be edited afterwards.
• Broker-verified: The record was independently confirmed at the broker using read-only investor access. This earns the verified badge.
• Trading privileges: An optional extra check proving the owner can actually place orders on the account, done by placing a harmless pending order with a one-off code in its comment.
• Score: A single 0 to 100 number blending profitability, risk, consistency, longevity and verification, with a grade from A+ (90+) down to E (below 50).
• Heartbeat: The live status of a connected account: Live-synced, Sync lost, or Connector unloaded. Tells you whether the robot behind a record is actually still running. See EA heartbeat monitoring.
• Reveal delay: An owner's option to delay how soon each recent closed trade becomes public, to prevent live copying. Headline stats are never delayed.
• Custom Analysis: A button on an account page that lets a visitor filter the trades (by date, instrument, strategy, and more) and recompute every statistic over that subset. Read-only.

Where to go from here

With these terms in hand, a trading account page stops being a wall of numbers. Open any verified account from Rankings and read it with reading a trading account page beside you. If something is still unclear, the Help Center covers the platform itself, and forex for complete beginners is the gentlest next step.