Words to know
| Word | Meaning |
|---|---|
| Pip | The small unit of a forex price. EURUSD 1.1000 to 1.1001 is 1 pip. On USDJPY, 1 pip is 0.01. |
| Spread | The difference between the buy and sell price. You pay it on every trade. |
| Lot | Trade size. 1 lot of EURUSD = 100,000 euros. 0.01 lot is the smallest usual size. |
| Stop-loss (SL) | Where your trade closes automatically at a loss. |
| Take-profit (TP) | Where your trade closes automatically at a profit. |
| R | Your risk on one trade. Winning 2R means you won twice what you risked. |
| ATR | Average True Range: how big candles usually are. |
| HH / HL / LH / LL | Higher high, higher low, lower high, lower low. |
| BOS | Break of structure: a close beyond the last swing in the trend direction. |
| CHoCH | Change of character: the first close beyond a swing against the trend. |
| Liquidity | Places where many orders wait, mostly stop-losses above highs and below lows. |
| Sweep | A wick beyond a level that takes the stops, then closes back inside. |
| Displacement | A strong, fast impulsive move made of big candles. |
| FVG | Fair value gap: a 3-candle gap left by a fast move. |
| Supply / demand zone | The base before a strong move, where orders may still wait. |
| Premium / discount | The upper (expensive) and lower (cheap) half of a swing. |
| Session | The working hours of a money centre: Sydney, Tokyo, London, New York. |
| Prop firm | A company that lends you its capital after you pass a trading test (challenge). |