Managed Forex Glossary:

• Automatic Execution
  The order is executed automatically without dealer intervention or involvement.

• Automated Trading
  A style of trading that involves neither human decision making nor involvement, but uses a pre-programmed strategy based on technical or fundamental analysis to automatically execute trades via an automated software or "expert advisor" (EA).

• Base Currency
  The first currency in the pair is the base currency. In the case of EUR/USD the EUR would be considered the base pair.

• Buy Quote / Offer Price
  The buy quote is displayed on the right and is the price at which you can buy the base currency. It is also referred to as the market maker's ask or offer price. For example, if the EUR/USD quotes 1.4200/03, you can buy 1 Euro at the offer price of US$1.4203.

• Carry Trading
  A style of trading whereby the trader attempts to profit from holding a currency with a higher rate of interest and selling a currency with a lower rate of interest, profiting from the daily interest rate differential of the position.

• Counter Currency
  The second currency in the pair is the counter currency. In the case of EUR/USD, the USD is the counter currency.
  

• Counterparty
  One of the participants in a transaction.

• Currency Pair
  As in the example above there are always two currencies that make up an exchange rate. When one is bought, the other is sold, and vice versa.

• Currency Pair Terminology
  EUR/USD = "Euro"
  USD/JPY = "Dollar Yen"
  GBP/USD = "Cable" or "Sterling"
  USD/CHF = "Swiss"
  USD/CAD = "Dollar Canada" (CAD referred to as the "Loonie")
  AUD/USD = "Aussie"
  NZD/USD = "Kiwi"

• Dealing Desk
  A dealing desk provides pricing, liquidity and execution of trades.
  

• Discretionary Trading
  A style of trading that uses human judgement and decision making in every trade.   

• Drawdown
  The decline in account balance from peak to valley, until the account surpasses the previous high, usually measured in percentage terms.
  

• ECN Broker
  ECN is an acronym for Electronic Communications Network. A Forex ECN broker does not have a dealing desk but instead provides a marketplace where multiple market makers, banks and traders can enter in competing bids and offers into the platform and have their trades filled by multiple liquidity providers in an anonymous trading environment. The trades are done in the name of your ECN broker, thereby providing you with complete anonymity. A trader might have their buy order filled by liquidity provider "A", and close the same order against liquidity provider "B", or have their trade matched internally by the bid or offer of another trader. The best bid and offer is displayed to the trader along with the market depth which is the combined volume available at each price. A greater number of marketplace participants providing pricing to the ECN broker leads to tighter spreads. ECN's typically charge a small fee for matching trades between their clients and liquidity providers.
  

• Exchange Rate
  An exchange rate is the value of one currency expressed in terms of another. For example, if EUR/USD is 1.4200, 1 Euro is worth US$1.4200.

• Foreign Exchange
  The simultaneous transaction of one currency for another.
  

• Foreign Exchange Market
  The Foreign exchange market is a large, growing and liquid financial market that operates 24 hours a day. There is not a centralized exchange for this market. The primary market for currencies is the “interbank market” where banks, insurance companies, large corporations and other large financial institutions manage the risks associated with fluctuations in currency rates. The spot market involves buying and selling currencies at the current market rate.

• GTC Order
  Good Till Cancelled. An order stays in the market until it is either filled or cancelled.

• ISO Currency Codes
  USD = US Dollar | EUR = Euro | JPY = Japanese Yen | GBP = British Pound
  CHF = Swiss Franc | CAD = Canadian Dollar | AUD = Australian Dollar
  NZD = New Zealand Dollar
  

• Leverage
  Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage magnifies both gains and losses.  To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account. For example, if you have $10,000 of margin in your account and you open one standard lot of USD/JPY (100,000 units of the base currency) for $100,000, your leverage ratio is 10:1 ($100,000 / $10,000). If you open one standard lot of EUR/USD for $150,000 (100,000 x EURUSD 1.5000) your leverage ratio is 15:1 ($150,000 / $10,000).

• Limit Entry Order
  An order to buy below the market or sell above the market at a pre-specified level, believing that the price will reverse direction from that point.

• Limit Order
  An order to buy or sell at a pre-specified price level.

• Long Position
  A position in which the trader attempts to profit from an increase in price. i.e. Buy low, sell high. Opposite for a Short Position.
  

• Lot
  The standard unit size of a transaction. Typically, one standard lot is equal to 100,000 units of the base currency, 10,000 units if it's a mini, or 1,000 units if it's a micro. Some dealers offer the ability to trade in any size, down to as little as 1 unit.

• Margin
  The deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1. If a trader's account falls below the minimum amount required to maintain an open position, he will receive a "margin call" requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.
  

• Market Maker
  A market maker provides pricing and liquidity for a particular currency pair and stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of your trade and has the option of either holding that position or partially or fully offsetting it with other market participants, managing their aggregate exposure to their clients. If a market maker chooses to keep the trader's position without offsetting it in the market, the trader's profit is the market maker's loss and vice versa, leading to a possible conflict of interest between the trader and his market maker. A market maker earns their commission from the spread between the bid and offer price.
  

• Market Order
  An order to buy or sell at the current market price.

• Micro Account
  Micro lots are considered 1,000 units of the base currency. An example of this is $0.10 for EUR/USD.

• Mini Account
  Mini lots are considered 10,000 units of the base currency. An example of this would be $1 for EUR/USD.

• Non Dealing Desk
  A non-dealing desk broker does not have a dealing desk but instead uses external liquidity providers to provide pricing and liquidity for its clients. The liquidity providers send in competing bids and offers into the platform, resulting in the best bid and offer being displayed to the client. Some no-dealing desk brokers may display the market depth which is the amount of liquidity available at each price. A greater number of liquidity providers providing pricing to the no-dealing desk broker leads to tighter spreads. A no-dealing desk broker may increase the spread to earn its commission.

• OCO Order
  One Cancels Other. An order whereby if one is executed, the other is cancelled.

• Pip
  The smallest price increment or reduction a currency can make.

• Pip Value
  The value of a pip can be either fixed or variable depending on the currency pair. e.g. The pip value for EUR/USD is always $10 for standard lots, $1 for mini-lots and $0.10 for micro lots.
  

• Position Trading
  A style of trading that involves taking a longer term position that reflects a longer term outlook. Trades can last from weeks to months.

• Resistance
  Resistance is a technical price level where sellers outweigh buyers, causing prices to bounce off a temporary price ceiling.
  

• Rollover
  A spot transaction is generally due for settlement within two business days (the value date). The cost of rolling over a transaction is based on the interest rate differential between the two currencies in a transaction. If you are long (bought) the currency with a higher rate of interest you will earn interest. If you are short (sold) the currency with a higher rate of interest you will pay interest. Most brokers will automatically roll over your open positions allowing you to hold your position indefinitely.
  

• Sell Quote / Bid Price
  The sell quote is displayed on the left and is the price at which you can sell the base currency. It is also referred to as the market maker's bid price. For example, if the EUR/USD quotes 1.4200/03, you can sell 1 Euro at the bid price of US$1.4200.

• Short Position
  A position in which the trader attempts to profit from a decrease in price. i.e. Sell high, buy low.

• Slippage
  The difference between the order price and the executed price, measured in pips. Slippage often occurs in fast moving and volatile markets, or where there is manual execution of trades.
  

• Spread
  The difference between the bid and offer price is the spread. For example, if EUR/USD quotes read 1.4200/03, the spread is the difference between 1.4200 and 1.4203, or 3 pips. In order to break even on a trade, a position must move in the direction of the trade by an amount equal to the spread.

• Standard Account
  A standard lot size is generally 100,000 units of the base currency. An example of this would be $10 for EUR/USD.
  Stop-Entry Order

• Stop-Entry Order
  An order to buy above the market or sell below the market at a pre-specified level, believing that the price will continue in the same direction.

• Stop-Loss Order
  An order to restrict losses at a pre-specified price level.
  

• Support
  Support is a technical price level where buyers outweigh sellers, causing prices to bounce off a temporary price floor.

• Swing Trading
  A style of trading that involves seeking to profit from short to medium term swings in trend. Trades can last from hours to days.