Forex glossary

The Australian Securities and Investments Commission — Australia’s Tier-1 corporate and financial-services regulator. ASIC enforces client-money segregation and has tightened retail leverage limits in recent years.

The bid is the price at which you can sell; the ask (or offer) is the price at which you can buy. The gap between them is the spread.

A Contract for Difference lets you speculate on the price movement of an asset (forex, indices, commodities, crypto) without owning it. CFDs are leveraged and carry a high risk of rapid loss.

A request to your card issuer or bank to reverse a payment made to a broker — sometimes the only way to recover funds from an unregulated firm that blocks withdrawals.

A scam that copies the name, registration number and address of a genuinely regulated firm to appear legitimate. Regulators publish clone warnings — always cross-check the exact website and contact details against the official register.

A separate per-trade or per-lot charge, common on ECN/raw-spread accounts. A "zero commission" account usually just bundles the cost into a wider spread, so always compare the all-in cost.

Two currencies quoted against each other, e.g. GBP/USD. The first is the base currency and the second the quote currency; the price shows how much quote currency one unit of base is worth.

The Cyprus Securities and Exchange Commission — an EU (Tier-2) regulator popular with brokers passporting services across Europe under MiFID. Offers investor compensation but lighter capital rules than Tier-1 authorities.

The peak-to-trough drop in your account equity, usually shown as a percentage. A key measure of risk and of a strategy’s worst losing streak.

Electronic Communication Network — a model that routes your orders directly to a pool of liquidity providers, typically giving raw spreads plus a transparent commission and no dealing-desk conflict.

Your account balance plus or minus the running profit/loss of all open positions — the real-time value of your account if you closed everything now.

The Financial Conduct Authority — the United Kingdom’s financial regulator and one of the strictest (Tier-1) authorities in the world. FCA-regulated brokers must segregate client funds and are covered by the Financial Services Compensation Scheme (FSCS), which protects eligible clients up to £85,000 if the firm fails.

The foreign-exchange market — the global marketplace for trading currencies in pairs (e.g. EUR/USD). It is the largest and most liquid financial market in the world.

Opening an offsetting position (or a correlated one) to reduce the risk of an existing trade. Some jurisdictions restrict simultaneous long/short hedging on the same instrument.

A fund that reimburses eligible clients up to a set limit if a regulated broker fails (e.g. the UK’s FSCS at £85,000, or the EU’s ICF). Offshore licences usually have no such scheme.

Know Your Customer — the identity-verification checks (ID, proof of address) a regulated broker must perform before you can trade or withdraw. A broker that lets you deposit large sums with no KYC is a red flag.

Borrowed capital that lets you control a larger position than your deposit. 1:100 leverage means $1,000 controls $100,000 — amplifying both gains and losses. Higher leverage is riskier, which is why Tier-1 regulators cap it for retail traders.

How easily an instrument can be bought or sold without moving its price. High liquidity (e.g. EUR/USD) means tight spreads and reliable fills; low liquidity means slippage and gaps.

A standardised trade size. A standard lot is 100,000 units of the base currency; a mini lot is 10,000 and a micro lot is 1,000. Lot size determines the cash value of each pip.

MetaTrader 4 — the long-standing industry-standard forex platform, known for charting, expert advisors (automated trading) and broad broker support.

MetaTrader 5 — the successor to MT4 with more timeframes, additional order types, an economic calendar and support for more asset classes such as stocks and futures.

The deposit required to open and maintain a leveraged position. It is set aside as collateral; if your account can no longer support open trades you face a margin call.

A warning that your account equity has fallen close to the minimum needed to keep positions open. You must add funds or close trades — otherwise the broker may start liquidating positions.

A broker (dealing desk) that quotes its own prices and often takes the other side of client trades. Legitimate and regulated, but creates a potential conflict of interest that ECN/STP models avoid.

The National Futures Association — the self-regulatory body for the US derivatives and forex industry, working alongside the CFTC. US retail forex rules are among the toughest globally, including tight leverage caps and strict reporting.

A safeguard that stops your account balance going below zero, so you can never owe the broker more than you deposited even after a violent market gap. Mandatory for retail clients under many Tier-1 and EU regimes.

Instructions for how a trade should execute: a market order fills immediately at the current price, while limit and stop orders trigger only when price reaches a level you set. Stop-loss and take-profit orders manage risk automatically.

"Percentage in point" — the standard smallest price move in a currency pair, usually the 4th decimal place (0.0001), or the 2nd decimal for JPY pairs. Spreads and profits are commonly measured in pips.

A proprietary trading firm that funds traders with its own capital, usually after an evaluation "challenge," and shares the profits. Not a broker — but a growing route for retail traders to access larger capital.

A broker licensed and supervised by a financial authority (such as the FCA, ASIC or NFA). Regulation typically requires the firm to hold client money in segregated accounts, meet minimum capital rules, and submit to audits — giving traders legal recourse if something goes wrong. Always verify a licence on the regulator’s own public register, never a link supplied by the broker.

When a broker rejects your order at the requested price and offers a new one because the market moved. Frequent requotes can indicate poor execution or a dealing-desk model working against you.

Straight-Through Processing — the broker passes your orders to liquidity providers without a dealing desk, so it does not take the opposite side of your trade.

Client money held in bank accounts kept separate from the broker’s own operating funds. This means your deposit cannot legally be used to run the business and is protected if the broker becomes insolvent.

The difference between the price you expected and the price your order actually filled at, common during volatile news events or thin liquidity. Can be positive (better) or negative (worse).

The difference between the bid (sell) and ask (buy) price of an instrument — effectively the broker’s built-in fee on each trade. A tighter spread means a lower cost to enter and exit.

The level at which a broker automatically closes your losing positions because your margin has run too low. It protects both you and the broker from the account going deeply negative.

Also called the rollover — an interest adjustment credited or debited for holding a leveraged position overnight, based on the interest-rate difference between the two currencies. Can be positive or negative.

Trust Broker Hub’s 0–10 rating combining regulation quality, verified reviews, transparency of trading conditions, operating history and complaint record — designed to summarise how safe a broker is at a glance. See our methodology.

A classic scam pattern where deposits are easy but withdrawals are delayed, hit with surprise "fees" or "taxes," or refused outright. A regulated broker cannot lawfully withhold your funds without cause.