A

Ask

The price at which the market (or your broker) is willing to sell a currency or instrument to you. It is the higher of the two quoted prices and is what you pay when you open a long position.

B

Base currency

The first currency in a pair. In EUR/USD the base is the Euro — the price you see (e.g. 1.0850) is how many US Dollars one Euro costs. Buying the pair means buying the base and selling the quote.

Bid

The price the market is willing to pay you for a currency or instrument. It is the lower of the two quoted prices and is what you receive when you close a long position or open a short.

Broker

A regulated company that gives retail traders access to forex and CFD markets through a trading platform. Brokers either route your order to external liquidity (STP/ECN, like LHFX) or fill it internally — the model determines pricing transparency.

C

CFD (Contract for Difference)

A leveraged derivative that lets you speculate on the price movement of an asset (forex, crypto, indices, commodities, stocks) without owning the underlying. You profit or lose the difference between open and close prices, multiplied by your position size.

Currency pair

Two currencies quoted against each other, written as BASE/QUOTE (e.g. GBP/USD). The price tells you how many units of the quote currency one unit of the base buys. All forex trades involve a pair.

D

Day trading

A short-term style where positions are opened and closed within the same trading day, avoiding overnight swap costs and weekend gap risk. Day traders typically rely on technical analysis and trade higher volumes at smaller targets.

Drawdown

The peak-to-trough drop in your account equity over a given period, usually expressed as a percentage. Maximum drawdown is one of the most important risk metrics — a 50% drawdown requires a 100% gain to recover.

E

ECN (Electronic Communication Network)

An execution model where your order is matched against the best available price from a pool of external liquidity providers (banks, institutions, other traders). ECN brokers charge a commission and offer raw spreads. LHFX operates an ECN model.

Equity

The real-time value of your account if you closed every open position right now — balance plus or minus floating profit and loss. Margin requirements are calculated against equity, not balance.

F

Forex (FX)

Short for foreign exchange — the global market where currencies are traded against one another. It trades 24 hours a day, five days a week, with daily volume exceeding $7.5 trillion across major financial centres.

H

Hedging

Opening a position specifically to offset risk on another. In forex this often means holding equal long and short positions on the same pair, or using a correlated instrument to neutralise exposure to a specific currency or commodity.

L

Leverage

A multiplier that lets you control a larger position than your deposit alone would allow. 1:500 leverage means $200 of margin can control $100,000 of currency exposure. Higher leverage amplifies both gains and losses proportionally.

Liquidity

How easily an instrument can be bought or sold without moving its price. Highly liquid pairs like EUR/USD have tight spreads and absorb large orders; exotic pairs have wider spreads and can slip on bigger trades.

Long position

A trade that profits when the price goes up. Going long means buying the base currency (or instrument) at the ask price, expecting to sell it later at a higher bid.

Lot

A standardised position size. One standard lot is 100,000 units of the base currency; a mini lot is 10,000 units; a micro lot is 1,000 units. Lot size combined with leverage determines how much each pip is worth in your account.

M

Margin

The amount of your own capital your broker sets aside as collateral to keep a leveraged position open. With 1:100 leverage, a $100,000 position requires $1,000 in margin. The rest is borrowed for the duration of the trade.

Margin call

An alert that your account equity has dropped close to the minimum required to keep your positions open. If equity falls further, the broker will start force-closing positions (the stop-out level) to prevent your account from going negative.

Market order

An instruction to buy or sell at the best available price right now. Market orders execute immediately but the fill price may differ slightly from what you saw a moment ago — see slippage.

P

Pip

Short for 'percentage in point' — the standard unit of price movement in forex. For most pairs (e.g. EUR/USD at 1.0850) a pip is 0.0001; for JPY pairs (e.g. USD/JPY at 145.20) a pip is 0.01. Pip value depends on your lot size.

Q

Quote currency

The second currency in a pair — what the base is priced in. In USD/JPY the quote is the Japanese Yen, and the price (e.g. 145.20) shows how many Yen one US Dollar costs.

S

Scalping

A very short-term trading style aiming for small profits (a few pips) across a high number of trades, often held for seconds or minutes. Scalping requires tight spreads, fast execution, and low commissions — which is why STP/ECN brokers are preferred.

Short position

A trade that profits when the price goes down. Going short means selling the base currency at the bid price, expecting to buy it back later at a lower ask. You can short freely in forex and CFDs — no borrowing required.

Slippage

The difference between the price you expected and the price you actually filled at. It happens during fast-moving markets or low liquidity. Slippage can work for or against you; consistently negative slippage is a sign of poor execution.

Spread

The gap between the bid and ask price of an instrument, quoted in pips. It is the main cost of trading on most retail accounts. Tight spreads (sub-pip on EUR/USD) come from deep liquidity and direct market access.

Stop loss

A pending order that automatically closes a position once the price reaches a level worse than your entry. Stop losses cap downside on every trade and are the single most important tool for managing risk.

STP (Straight Through Processing)

An execution model where the broker passes every client order directly to external liquidity providers, with no dealing-desk intervention. The broker's interest is aligned with the client because it earns on volume, not on client losses. LHFX is an STP broker.

Swap (rollover)

The overnight interest charged or credited when you hold a position past 5pm New York time. It reflects the interest-rate differential between the two currencies in the pair. Swap-free Islamic accounts replace this with a fixed admin fee.

T

Take profit

A pending order that automatically closes a position once the price reaches a level better than your entry. Combined with a stop loss, it defines your risk-reward ratio before the trade starts.

V

Volatility

How much an instrument's price moves over a given period. Higher volatility means larger swings — and bigger opportunities and risks. Volatility is the input that drives stop-loss placement, position sizing, and option pricing.