Trading Glossary —
Every Term You'll
Encounter, Explained

The simultaneous purchase and sale of an asset in different markets to exploit price discrepancies. In theory, arbitrage generates risk-free profit. In practice, it requires extremely fast execution and significant capital, making it inaccessible to most retail traders.

The price at which your broker will sell an instrument to you — the price you pay to open a long (buy) trade. Always slightly higher than the bid price. The difference between Ask and Bid is the spread.

A volatility indicator that measures the average price range of an instrument over a specified period (default 14). Higher ATR = more volatile market. Used by traders to set stop-loss distances that account for normal price "noise."

The first currency in a currency pair — the one being bought or sold. The price of a pair shows how much of the quote currency is needed to buy one unit of the base currency.

The price at which your broker will buy an instrument from you — the price at which you can open a short (sell) trade. Always slightly lower than the ask price.

A volatility indicator consisting of a middle SMA and two outer bands (typically 2 standard deviations above and below). When bands widen, volatility is increasing. When they narrow ("squeeze"), a large move is often imminent.

When price moves decisively beyond a key support or resistance level, often triggering accelerated price movement in the breakout direction. Traders buy breakouts above resistance and sell breakouts below support.

A chart representation of price action showing the Open, High, Low, and Close for a given time period. A green (bullish) candle closes higher than it opened. A red (bearish) candle closes lower than it opened. The wicks show the full price range.

A derivative financial instrument that pays the difference in price between when a position is opened and closed. CFDs allow you to speculate on price movements without owning the underlying asset. Available on Forex, Gold, Oil, indices, stocks, and crypto at GBH Markets.

The primary measure of inflation — tracks the change in price of a basket of consumer goods over time. Central banks target approximately 2% annual CPI. Higher-than-expected CPI signals inflationary pressure, potentially leading to interest rate increases.

A national institution that manages a country's monetary policy, sets interest rates, controls money supply, and acts as lender of last resort. The most influential central bank for Forex markets is the US Federal Reserve.

The peak-to-trough decline in account value, expressed as a percentage. A $10,000 account that falls to $8,500 has a 15% drawdown. Managing maximum drawdown is a core part of professional risk management.

A candlestick where the open and close prices are virtually equal, creating a cross shape. Represents market indecision — neither buyers nor sellers in control. Often signals an imminent directional move when appearing after a sustained trend.

A central bank stance favouring lower interest rates and expansionary monetary policy. A dovish Fed signals rate cuts ahead — bearish for USD, typically bullish for Gold. The opposite of hawkish.

A trading infrastructure that routes orders directly to multiple liquidity providers — banks, prime brokers, and market makers — without passing through a dealing desk. Results in raw interbank spreads, zero requotes, and sub-30ms execution. Used by GBH Pro and Prime accounts.

The current value of your trading account — your account balance plus or minus any floating (unrealised) profit or loss on open positions. Equity fluctuates constantly while positions are open. Your margin level is calculated using equity, not balance.

A moving average that gives more weight to recent price data, making it faster to respond to price changes than the simple SMA. Commonly used at periods 20, 50, and 200. The 200 EMA on the daily chart is the most watched moving average in global markets.

The average profit or loss per trade, calculated as: (Win Rate × Average Win) − (Loss Rate × Average Loss). Positive expectancy = profitable system over time. The true measure of whether a trading strategy has an edge.

A tool that identifies potential support and resistance levels based on the Fibonacci sequence ratios: 23.6%, 38.2%, 50%, 61.8%, and 78.6%. The 61.8% level (the "Golden Ratio") is the most powerful, frequently acting as support during pullbacks in uptrends.

The emotional urge to enter a trade because you see it moving strongly without you — often leading to chasing price into late, high-risk entries with poor risk-reward ratios. One of the most common causes of avoidable trading losses.

The global over-the-counter market for trading currencies. The largest financial market in the world by volume — over $7.5 trillion traded daily. Operates 24 hours a day, 5 days a week (Sunday 22:00 GMT to Friday 22:00 GMT).

The portion of your equity that is not currently used as margin for open positions and is available to open new trades. Free Margin = Equity − Used Margin. When free margin is zero or negative, you cannot open new positions.

The study of economic data, central bank policy, geopolitical events, and macroeconomic factors to determine the fair value and direction of financial assets. Contrasted with technical analysis, which focuses on price charts.

The total monetary value of all goods and services produced by a country in a specific period. The primary measure of economic size and growth rate. Strong GDP growth is generally bullish for a country's currency.

A significant price difference between one candle's close and the next candle's open, with no trading at intermediate prices. Common on market open after weekends or major news events. Can cause stop-loss orders to fill at prices significantly beyond the set level (slippage).

Opening a buy position — speculating that the price will rise. In Forex, going long EUR/USD means buying Euros and selling Dollars, expecting the Euro to appreciate against the Dollar.

Opening a sell position — speculating that the price will fall. In CFD trading, you can profit from falling prices by selling first and buying back at a lower price. This is one of the key advantages of CFDs over traditional investing.

A bullish technical signal where the 50-period moving average crosses above the 200-period moving average. Indicates a long-term shift from bearish to bullish trend. Widely followed by both retail and institutional traders. Opposite of the Death Cross.

A central bank stance favouring higher interest rates and tighter monetary policy to combat inflation. A hawkish Fed signals rates will rise or stay elevated longer — bullish for USD, typically bearish for Gold. Opposite of dovish.

Opening a position in the opposite direction to an existing trade to reduce or offset potential losses. GBH Markets permits hedging on all account types. Hedging can protect an existing position during high-impact news events without closing it.

A chart pattern with three peaks: a central higher peak (the head) flanked by two lower peaks (the shoulders). A classic bearish reversal pattern, confirmed when price breaks below the "neckline" connecting the troughs between the peaks.

The identity verification process required by regulated brokers before a client can trade with real funds. Typically requires government-issued photo ID and proof of address dated within 3 months. Required by FSC Mauritius and all major regulators globally.

The ability to control a position larger than your deposited capital. Expressed as a ratio (100:1, 500:1). Amplifies both profits and losses proportionally. GBH Markets offers up to 500:1 on major Forex pairs. All retail accounts include negative balance protection.

The ease with which an asset can be bought or sold without significantly affecting its price. High liquidity = tight spreads, fast execution, large orders filled without slippage. Forex majors like EUR/USD are among the most liquid markets in the world.

A pending order to buy below the current price (buy limit) or sell above the current price (sell limit). Executes automatically if price reaches your specified level. Allows you to enter at a predetermined price without watching the screen.

The standard unit of trade size in Forex. 1 standard lot = 100,000 units of the base currency. Also available: mini lot (0.10 = 10,000 units) and micro lot (0.01 = 1,000 units). GBH Markets minimum lot size is 0.01 on all accounts.

Moving Average Convergence Divergence — a momentum and trend indicator showing the relationship between two EMAs (typically 12 and 26 periods). A bullish signal occurs when the MACD line crosses above the Signal line. A bearish signal when it crosses below.

The deposit required to open and maintain a leveraged position. Calculated as: Position Value ÷ Leverage. Expressed as a percentage of the full trade value. GBH margin requirements: 0.20% for Forex majors at 500:1, up to 10% for crypto at 10:1.

An alert issued when your margin level (Equity ÷ Used Margin × 100) falls to a pre-defined threshold. At GBH Markets, the margin call level is 80%. No positions are automatically closed at this stage — it is a warning to add funds or reduce exposure.

A broker execution model where the broker acts as counterparty to client trades, setting its own bid and ask prices and profiting from the spread. Contrasted with ECN/NDD model. May involve requotes during high volatility. Used in GBH Standard accounts.

The world's most widely used trading platforms. MT4 (MetaTrader 4) is the standard for Forex trading; MT5 (MetaTrader 5) supports additional asset classes and order types. Both are available free on GBH Markets for desktop, browser, and mobile.

An execution model where client orders bypass the broker's internal dealing desk entirely and route directly to external liquidity providers. Results in zero requotes, transparent pricing, and no conflict of interest between broker and client. Used in GBH Pro and Prime accounts.

The monthly change in US employment, excluding farm workers. Released the first Friday of each month at 08:30 EST by the US Bureau of Labor Statistics. The single most market-moving regular economic release — often causing EUR/USD to move 50–150+ pips within minutes.

A safeguard that prevents a trading account from going below zero — ensuring clients never owe their broker money. Mandatory for all GBH Markets retail accounts (Standard, Pro, Prime including Islamic variants). Any negative balance is absorbed by GBH.

Organisation of the Petroleum Exporting Countries — a cartel of oil-producing nations led by Saudi Arabia that collectively sets production quotas to influence global oil prices. OPEC+ includes Russia and other non-OPEC producers. Meetings and announcements are major market events for Oil and MENA-related instruments.

Conditions describing when an instrument has risen (overbought) or fallen (oversold) too far, too fast — indicated by momentum indicators like RSI. RSI above 70 = overbought; below 30 = oversold. Not automatic sell/buy signals — context and confirmation required.

The smallest standardised unit of price movement in Forex. Equal to 0.0001 (the 4th decimal place) on most pairs, or 0.01 (the 2nd decimal place) on JPY pairs. Pip value depends on lot size and the quote currency. On 1 standard lot of a USD-quoted pair, 1 pip = approximately $10.

The number of lots you trade. Correct position sizing is calculated from your risk amount and stop-loss distance: Lots = Risk Amount ÷ (Stop Pips × Pip Value). Never choose position size arbitrarily — always derive it from your risk parameters.

A calculated price level used to identify potential support and resistance. Derived from the previous session's High, Low, and Close. Widely used by day traders — price above the pivot is bullish bias; below is bearish. Standard pivot levels: P, R1, R2, S1, S2.

The second currency in a pair — the one used to price the base currency. Also called the counter currency. The pair's price shows how many units of the quote currency are needed to buy one unit of the base currency.

An unconventional monetary policy tool where a central bank purchases financial assets (government bonds, mortgage securities) to inject money into the economy when interest rates are near zero. QE typically weakens the currency and can be bullish for Gold.

A momentum oscillator ranging from 0–100 that measures the speed and magnitude of price changes. Above 70 = overbought; below 30 = oversold. RSI divergence (price and RSI moving in opposite directions) is a powerful early warning of trend reversals.

The ratio comparing the potential loss (distance to stop-loss) to the potential profit (distance to take-profit). A 1:2 R:R means risking $1 to make $2. Professional traders typically seek minimum 1:2 ratios — at this ratio, you can be profitable winning only 34% of trades.

The interest adjustment applied to positions held overnight, reflecting the interest rate differential between the two currencies in a pair. Can be positive (you receive interest) or negative (you pay interest). Zero on GBH Islamic accounts — no administrative fee replacement.

When a broker cannot fill your market order at the requested price and offers a different (usually worse) price instead. Common during high volatility on Market Maker accounts. Zero requotes on GBH Pro and Prime ECN/NDD accounts.

A price area where sellers consistently appear and prevent further upward price movement — acting as a ceiling. When resistance is broken convincingly, it often becomes the new support (role reversal). A key concept in technical analysis and trade planning.

An asset expected to retain or increase in value during periods of market stress, geopolitical uncertainty, or economic crisis. Classic safe havens include Gold (XAU/USD), the Swiss Franc (CHF), and Japanese Yen (JPY). High demand in MENA region due to gold's cultural significance.

A very short-term trading strategy capturing small price movements — typically holding positions for seconds to minutes. Requires tight spreads (ECN accounts preferred), fast execution, and intense focus. Fully permitted on all GBH account types.

The difference between the price at which you expected your order to be filled and the actual execution price. Occurs during fast markets, major news releases, or low liquidity periods. Can be positive (better price than expected) or negative (worse price).

The arithmetic average of closing prices over a specified number of periods. A 200-period SMA on the daily chart averages the past 200 trading days. Smoother and slower to react than the EMA. The 200-day SMA is the most widely followed moving average globally.

The difference between the Bid (sell) and Ask (buy) price of an instrument. Represents the cost of entering a trade on Standard (spread-only) accounts. Tighter spreads = lower trading costs. ECN accounts (GBH Pro/Prime) have raw spreads from 0.0 pips with a separate commission.

A pre-set order that automatically closes your position at a specified price if the market moves against you. Essential for every trade — without a stop-loss, a small loss can become catastrophic. Place at the price that proves your trade thesis wrong, not an arbitrary dollar amount.

The automatic closure of open positions by the broker when margin level falls below a defined threshold. GBH Markets stop-out level is 50% — positions are closed from most unprofitable first until margin level recovers above 50%. A server-side automated process.

A price area where buyers consistently appear and prevent further price decline — acting as a floor. When support is broken convincingly, it often becomes the new resistance. Finding strong support levels is fundamental to planning long (buy) trade entries.

An account type that eliminates overnight swap charges — compliant with Islamic finance principles that prohibit Riba (interest). On GBH Islamic accounts, no administrative fees replace swaps. Available on Standard, Pro, and Prime tiers at no additional cost.

A pre-set order that automatically closes your position at a specified profit level. Allows you to lock in profit without watching the screen. Place at the next key resistance level (for longs) or support level (for shorts) — not at an arbitrary number.

The study of historical price data — charts, patterns, and indicators — to forecast future price direction. Based on the principles that price discounts all information, prices move in trends, and history repeats. Contrasted with fundamental analysis.

A stop-loss that automatically moves in the direction of a winning trade, locking in progressively more profit as price moves in your favour. If price reverses by the specified distance, the trailing stop triggers and closes the position. Available on MT4, MT5, and GBH WebTrader.

The general direction of price over a period. An uptrend is characterised by higher highs and higher lows; a downtrend by lower lows and lower highs; sideways/ranging markets show no clear direction. "The trend is your friend" — trading in the direction of the prevailing trend statistically improves win rates.

The rate and magnitude of price change. High volatility means prices move rapidly and significantly — creating both opportunity and risk. Major economic releases (NFP, CPI, Fed decisions) dramatically increase volatility. Measured by indicators like ATR and VIX.

A dedicated remote computer that keeps MetaTrader running continuously — essential for algorithmic (EA) traders who need 24/5 uptime without depending on their local internet or power. GBH Pro and Prime accounts receive complimentary VPS hosting.

The percentage of trades that result in a profit. Win rate alone does not determine profitability — it must be considered alongside risk-reward ratio to calculate expectancy. A 40% win rate with 1:3 R:R can be more profitable than a 70% win rate with 1:0.5 R:R.

A false breakout — when price briefly moves beyond a support or resistance level before reversing sharply back. Triggers stop-losses placed just beyond the level before reversing to hurt both buyers and sellers. Common during low-liquidity periods and around news events.

A description of markets where one participant's gain is exactly matched by another's loss — the total gains and losses sum to zero (before costs). Forex and CFD trading are often described as zero-sum games. The implication: for every winning trader, there is a losing counterparty.