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Every trader, especially beginners, needs to understand the basic terminology used in trading.
Words like pip, leverage, lot, and candlestick may seem confusing at first, but learning them is essential for trading confidently and avoiding mistakes.
This article provides a simple, beginner-friendly glossary of the most important trading terms for Forex, stocks, and futures.
The smallest price movement in a currency pair (commonly used in Forex trading).
Example: If EUR/USD moves from 1.1050 to 1.1051, that 0.0001 change is 1 pip.
Standardized trade size.
Standard lot = 100,000 units of currency (in Forex).
Mini lots and micro lots allow beginners to trade smaller amounts.
Borrowed capital used to increase potential returns.
Can amplify profits but also losses, so use carefully.
Difference between the buy (ask) price and the sell (bid) price.
Brokers often profit from the spread instead of charging a commission.
A type of chart that shows price movement over a period.
Includes open, high, low, and close prices, visually showing market sentiment.
Stop Loss: Automatically closes a trade at a set loss to limit risk.
Take Profit: Automatically closes a trade at a set profit.
The money required to open a leveraged position.
Always monitor your margin to avoid a margin call.
Market Order: Buys or sells immediately at current price.
Limit Order: Buys or sells at a specified price.
Trailing Stop: Moves the stop loss as the trade becomes profitable.
For a complete list of trading terms and definitions, visit our Essential Trading Terms forum.
Use Flashcards: Write terms and definitions on cards to study regularly.
Practice in Demo Accounts: See the terms in action by placing trades.
Join Discussions: Ask questions and read posts in our Getting Started in Trading forum.
Keep a Glossary: Maintain a personal trading journal with terms you learn over time.
Start practicing in a demo account to understand how terms apply in real trading.
Participate in forum discussions to reinforce your knowledge.
Review the glossary periodically to ensure you remember essential terms before moving to live trading.
For structured guidance, trusted recommendations, and proven learning tools, visit the Beginner Trader Reference Library to explore hundreds of books and resources designed to fast track your trading education.Β
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