+357 25023880
English English 简体中文
Open Account

Get started in the Magic Compass

New To Forex? Learn How to Trade at Magic Compass Academy

Don’t panic in being a Forex beginner and start something new, yes you might feel often overwhelmed with all that trading vocabulary, but live it on us…Our aim is to simplify trading concepts for you, so that you could make best use of market information and easily make smart trading decision. Experience real trading conditions on our Demo Platform and build the right knowledge foundation for effective Forex trading.


The first step in becoming a successful CFDs trader is to familiarize yourself with the most commonly used and searched for trading terms. To make it easier for you to get acquainted with CFDs trading terminology and to understand what each term means, we have compiled this glossary to list all the fundamental terms you should know, all in one place. And it is easy to navigate too, with the A to Z index.
  • ALL
  • A
  • B
  • C
  • D
  • E
  • F
  • G
  • H
  • I
  • J
  • K
  • L
  • M
  • N
  • O
  • P
  • Q
  • R
  • S
  • T
  • U
  • V
  • W
  • X
  • Y
  • Z
  • A
    Aggregate Risk
    Refers to the total exposure of a single individual or institution both spot and forward forex contracts.
    Refers to a strengthening or increase in value/price in response to market demand, rather than due to official action.
    Refers to the simultaneous sale and purchase of a financial instrument in different markets to profit from price differentials.
    Ask Price
    Refers to the rate at which the market is willing to sell a product. It is also known as the Offer Price. Trading on this price you go long on the underlying instrument.
    At Best
    Refers to an instruction to trade (both buy & sell orders) when a specific price is reached.
    At or Better
    Refers to an order to trade when a specific price is reached or crossed.
    Nickname for the Australian dollar.
    Symbol for the Australian Dollar. The AUD/USD (Australian Dollar / US Dollar) pair is one of the seven most popularly traded currency pairs in the forex market.
  • B
    Balance of Payments
    Refers to the record of a country’s claims of transactions with the rest of the world within a specific period of time. This includes transactions related to services, merchandise and capital flow.
    Base Currency
    Refers to the currency in which an investor or issue maintains their book of accounts. It is also the first currency in a currency pair, against which the value of the second currency is quoted. The most common base currency in forex trade is the US dollar, where currency quotes are in terms of the value of the second currency against the USD. For instance, US$1 = €0.837.
    Basis Point
    Refers to a smallest unit of change in price, usually one-hundredth of a percent.
    Bear Market
    Refers to a market witnessing an extended period of price declines, along with widespread pessimism.
    Bid/Ask Spread
    Refers to the difference between the bid price and the ask price.
    Bid Price
    Refers to the price at which a trader, investor or market is willing to buy a product. In forex, it refers to the price at which a trader is willing to pay for a base currency. Trading on this price you go short on the underlying instrument.
    Bollinger Bands
    Refers to a technical analysis tool that uses standard deviations to indicate support and resistance levels.
    Bretton Woods Accord
    Refers to an agreement, signed in 1944, establishing fixed rates of foreign exchange for major currencies. The agreement ended in 1971.
    Bull Market
    Refers to a market that has been witnessing a rise in prices over an extended period of time, and is characterized by high confidence and market rallies.
  • C
    Refers to the British Pound Sterling, or more specifically, jargon referring to the exchange rate of GBP/USD. The term is traced back to the 1800s, when the rate was transmitted to the US through a transatlantic cable.
    Symbol for the Canadian Dollar. The USD/CAD (US Dollar / Canadian Dollar) pair is one of the seven most popularly traded currency pairs in the forex market.
    Call Option
    Refers to currency trade that capitalizes on the interest rate difference between two countries, by selling one currency of a low interest rate and buying another of a high interest rate. The trader benefits from the difference in the two interest rates while the trade is open.
    Candlestick Chart
    Refers to a type of bar chart, used mainly to illustrate price movements over a period of time, including the opening and closing price.
    Capital Markets
    Refers to markets meant for medium- to long-term investment, most commonly more than one year.
    Carry Trade
    Refers to a trading strategy where an investor attempts to profit from the difference in interest rates by borrowing at a low interest rate to buy higher interest rate assets, or to long a currency that pays a high interest rate while shorting another with a lower interest rate.
    Symbol for the Swiss Franc. The USD/CHF (US Dollar / Swiss Franc) pair is one of the four major currency pairs in the forex market.
    Closing Price
    Refers to the price at which a financial instrument ended trade on a particular day, until trading commences on the following trading day.
    Refers to a buy or sell agreement and is a standard unit of trading in forex.
    Currency Pair
    Refers to the two currencies which make up a specific foreign exchange rate, such as the USD/EUR.
  • D
    Daily Chart
    Refers to any graphical representations of intraday currency price movements.
    Day Trading
    Refers to the opening and closing of a specific position on the same day or within the same trading session.
    Refers to the money put into an account to fund it.
    Refers to a decline in the value of a currency due to market movements.
    Refers to a contract between two or more parties that changes in value as the price of the underlying asset moves.
    Refers to the deliberate downward adjustment of the value of a specific currency, against the value of another, usually done via an official announcement.
  • E
    Economic Indicator
    Refers to a statistic that indicates economic growth and stability of a nation, issued by government of non-government institutions. Some common economic indicators are Gross Domestic Product (GDP), employment rate, industrial production, trade deficit, etc.
    End Of Day
    Refers to the process of valuing a trader’s account at the end of each trading day, using either an accrual system or mark-to-market. The former only shows the profit or loss realized on that day, while the latter uses closing market rates or revaluation rates to evaluation the net position the trader will start on the next trading day.
    Symbol for the Euro. The EUR/USD (Euro / US Dollar) pair is one of the four major currency pairs in the forex market.
    Exit Point
    Refers to the price at which a trader closes an open position. This is usually a predetermined point, based on a specific trading strategy and used to minimize risk.
    Refers to the invested amount that is vulnerable to market risk.
  • F
    Refers to the completion of the execution of an order.
    Fixed Exchange Rate
    Refers to the official exchange rate, determined by monetary authorities, for one or more currencies. A fixed exchange rate can, however, fluctuate between defined upper and lower bands.
    Floating Exchange Rate
    Refers to situations where the exchange rate is not fixed, but determined by market forces, such as supply and demand. Floating rates are also subject to intervention by monetary authorities.
    A forex deal that is set to commence on a future date, agreed upon by both parties involved in the contract.
    Fundamental Analysis
    Refers to the analysis of subjective information, both quantifiable and non-quantifiable, such as political or economic events, to determine future price movements of a currency.
    Futures Contract
    Refers to a standardized contract, entered into by two parties, with the intension of buying or selling a particular asset of a specified quantity or quality at a future date, although at a predetermined price.
  • G
    Refers to a group of seven nations, including Canada, France, Germany, Italy, Japan, United Kingdom and United States.
    Refers to the G7 countries plus Russia.
    A rapid market move where prices skip multiple levels without the occurrence of any trade. Gaps commonly follow news events or the release of economic data.
    Symbol for the British Pound. The GBP/USD (British Pound / US Dollar) pair is one of the four major currency pairs in the forex market.
    Gross Domestic Product refers to the total value of a nation’s output, income or expenditure occurring within the physical borders of the country.
    Gross National Product refers to the GDP plus income earned through work or investments abroad.
    Going Long
    Refers to investment or speculation in an asset over the long term with expectations of price increase in the asset.
    Going Short
    Refers to the selling of an asset not owned by the seller, with the expectation that the price of the asset will decrease in the near future.
    Another name for the USD/JPY (US Dollar / Japanese Yen) currency pair.
    Good-Till-Cancelled refers to refers to an order that is given to a dealer to either buy or sell an asset when a specific price is reached. The order will remain in place till it is executed or cancelled.
  • H
    Refers to a situation where a nation’s monetary policymakers believe that a higher interest rate is required, most often to either mitigate inflation and/or to restrain rapid economic growth.
    Refers to an investment position or a combination of positions that is adopted to reduce the risk of one’s primary position or the volatility of one’s portfolio.
    Refers to the highest and the lowest traded price of a specific financial instruments within a given trading day or period.
  • I
    Refers to an economic situation where there is continued rise in prices of consumer goods, often leading to an erosion in purchasing power.
    Initial Margin
    Refers to the initial amount required to initiate a position or the buying and selling of a certain amount of currency.
    Interbank Rate
    Refers to the interest rates charged by international banks for short term loans to other international banks.
    Interest Rate Swaps refer to an agreement to swap or exchange one’s interest rate exposure from fixed to floating or vice versa. The transaction involves the exchange of two parallel loans.
  • J
    Symbol for the Japanese Yen (Japan’s currency). The USD/JPY (US Dollar/Japanese Yen) pair is one of the four major currency pairs in the forex market.
  • K
    Another name for the New Zealand dollar.
  • L
    Leading Indicators
    Refer to economic variables that are expected to predict future economic activity, such as the Consumer Price Index, unemployment rate, Retail Sales, Producer Price Index, Prime Rate, Federal Funds Rate, etc.
    Also known as margin, leverage refers to the ratio of a transaction amount to the total capital available with the trader/investor.
    Limit Order
    Refers to an order to buy or sell at a predetermined price or a better one.
    Refers to the ability of a market accept large transactions, without any significant impact on price stability.
    Nickname for the Canadian dollar.
    Refers to a unit that is used to measure the amount of a specific deal. The value of a deals always corresponds to the number of lots.
  • M
    Refers to the ratio between an investor’s/trader’s available funds to his exposure. It is the collateral used to cover potential losses in forex trade.
    Margin Call
    Refers to a request from the broker/dealer for the investor to deposit additional funds or alternative collateral to guarantee performance on a position that has moved against the trader.
    Refers to the daily valuation of a trader’s books, using closing market rates or revaluation rates, to reflect the profits and/or losses accrued and to calculate the net position with which the trader will start the next trading session.
    Market Order
    Refers to an order to execute a trade at the best possible/current price.
  • N
    Net Position
    Refers to the amount of currency, bought or sold, that has not yet been offset by opposite transactions.
    Symbol for the New Zealand Dollar. The NZD/USD (New Zealand Dollar / US Dollar) pair is one of the seven most popularly traded currency pairs in the forex market.
  • O
    Open Position
    An active trade, subject to profits or losses, which has not been offset by an equal and opposite position.
    Refers to a derivative financial instrument that gives the right, although not the obligation, to buy (Call) or sell (Put) a product/currency pair, at a specific price before a predetermined date.
    Overnight Position
    Refers to a trade that remains open until the next trading day.
  • P
    Refers to the smallest unit of increment in exchange rate, usually equivalent to one basis point.
    Profit Taking
    Refers to the closing of a position to realize profits.
  • Q
    Refers to an indicative market price.
  • R
    Refers to recovery in price after a period of decline.
    Refers to the difference between the highest and lowest price of an asset during a specific trading session.
    A term used in technical analysis that refers to a specific price level that might act as a ceiling or a level that a currency is unlikely to cross.
  • S
    Spot Price
    Refers to the current market price.
    Refers to the difference between the bid and ask price of a currency, used to measure market liquidity, where narrower spread reflect higher liquidity.
    Stop Loss Order
    Refers to an order to buy or sell when a specific price is reached, in order to minimize losses.
    Support Levels
    Refers to a specific ceiling or floor price, at which a particular exchange rate will automatically correct itself.
    Nickname for the Swiss franc (CHF).
  • T
    Technical Analysis
    Refers to the process of analyzing market data, including price charts, trends and volume, to forecast the direction of future price movements.
    Refers to the minimum movement in price, up or down.
    Refers to price movement that leads to a net change in value of an asset.
  • U
    Refers to a new price quote for a currency that is higher than the preceding quote.
    US Prime Rate
    Refers to the interest at which US banks lend to their prime corporate clients.
    Symbol for the US Dollar. Also known as the greenback, it is considered the world’s most liquid currency. All the four major currency pairs include the USD.
  • V
    Refers to fluctuations in the price of an asset.
  • W
    Nickname for a highly volatile market, characterized by sharp price movements, followed by sharp reversals.
  • X
    Symbol of Gold Instrument.
    Symbol of Silver Instrument.
  • Y
    Refers to the return on an investment. Yield is usually mentioned as a percentage.
    The base unit of currency in China.
  • Z
    Zero Sum
    Refers to a profit on one side with a simultaneous loss on the other side, of the same amount, leading to the net change in wealth being zero.

*Please note that the Glossary is for educational purposes and cannot be used in the interpretation of our Terms and Conditions

Need Help? Live Chat
+357 25023880

From Magic Compass: Trading CFD products can result in the loss of the entire invested capital. Please trade responsibly.

Cookie Policy: The Magic Compass website uses cookies and by continuing using the website you consent to this. For more information please read ‘Cookies Disclosure’.        Accept

Cookie Policy: The Magic Compass website uses cookies and by continuing using the website you consent to this. For more information please read ‘Cookies Disclosure’.        Accept

Magic Compass Ltd is a Cyprus Investment Firm (CIF) supervised and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF License number 299/16 and Company registration number HE 341562.

Trading leveraged products such as CFDs involves significant risk and you may not only lose all of you invested capital but also sustain losses in excess of your deposited funds. You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. Trading leveraged products may not be suitable for all investors. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. You should seek independent financial advice prior to applying for opening a trading account with the Company. Information of the previous/past performance of CFDs is not a guarantee for its current and/or future performance. The use of historical data does not constitute a binding or safe forecast as to the corresponding future performance of the Financial Instruments to which the said information refers.
Please click here to read Magic Compass full Risk Disclosure. They should insert link to our Risk Disclosure.

We do not establish accounts to residents or passport holders of certain jurisdictions including Canada, USA and Belgium.