Forex glossary — the 12 terms you need

The gap between buy and sell price — your cost on every trade, measured in pips.

The smallest amount a currency pair's price can move. For EURUSD, one pip = 0.0001 — it's the "unit" traders use to say how far the price moved.

The trade size unit. 1 standard lot = 100,000 units of the base currency — the bigger the lot, the bigger each price move affects your profit or loss.

Trading with borrowed size (1:500 = control 500× your money). It multiplies profit AND loss — the deposit that makes this possible is called margin.

The deposit locked to keep a leveraged position open — it's held, not spent, and freed up again when you close the trade.

An order that closes your trade automatically at a set loss — your seatbelt.

An order that closes your trade automatically at a set profit — the mirror image of a Stop Loss.

Getting filled at a worse (or better) price than requested, common in fast markets.

The overnight interest paid or earned for holding a trade open past the broker's daily cutoff time — often just called "rollover."

Identity verification (ID card, proof of address) — required before withdrawals.

An Introducing Broker (IB) is a partner or firm that refers traders to a brokerage and earns a commission from that broker based on the referred clients' trading activity. The IB introduces traders but does not execute trades or hold client funds itself.

A-book brokers pass your trades to the market; B-book brokers take the other side internally.