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Bid
TradingPrice at which the broker/dealer is willing to buy.
Bid/Ask Spread (or "Spread")
TradingThe distance, usually measured in pips, between the bid and ask price. A tighter spread is better for the trader — it means lower transaction costs.
Cost of Carry (also "Interest" or "Premium")
TradingThe cost, often quoted in dollars or pips per day, of holding an open position. See also Premium.
Currency Futures
Market StructureFutures contracts traded on an exchange, most typically the Chicago Mercantile Exchange (CME). Always quoted in terms of the currency value with respect to the US Dollar. Parameters of the futures contract are standardized by the exchange.
Drawdown
RiskThe magnitude of a decline in account value, in percentage or dollar terms, measured from peak to subsequent trough.
EBS
Market Structure"Electronic Brokerage System" — one of the major electronic platforms on which banks trade with each other. Historically considered the definitive indicator of where currencies (particularly EUR/USD and USD/JPY) are really trading. Today, EBS shares the interbank market with Refinitiv/LSEG Matching and other venues.
Forex
Market StructureShort for "Foreign Exchange." Refers generally to the foreign exchange trading industry and/or the currencies themselves.
Fundamental Analysis
AnalysisMacro or strategic assessments of where a currency should be trading based on any criteria other than the price action itself. Common inputs include the economic condition of the country the currency represents, monetary policy decisions, interest rates, and inflation data.
Leverage
RiskThe amount, expressed as a multiple, by which the notional amount traded exceeds the margin required to trade.
Limit
TradingAn order to buy at a specified price when the market moves down to that price, or sell at a specified price when the market moves up to that price. Compare to Stop and Market Order.
Liquidity
Market StructureA function of volume and activity in a market — the efficiency and cost-effectiveness with which positions can be traded and orders executed. A more liquid market provides more frequent price quotes at a smaller bid/ask spread.
Margin
RiskThe amount of funds required in a client's account in order to open or maintain an open position.
Margin Call
RiskA requirement by the broker to deposit more funds in order to maintain an open position. Sometimes "margin call" means that a position without sufficient funds on deposit will be closed out automatically by the broker — this procedure allows the client to avoid further losses or a debit account balance.
Market Order
TradingAn order to buy or sell immediately at the current market price — buying at the current Ask, selling at the current Bid.
Pip
TradingThe smallest standard price increment in a currency pair. Often referred to as a "tick" in futures markets.
1.0850 → 1.0851 is one pip.In USD/JPY, a move from
148.51 → 148.52 is one pip.
Premium (also "Interest" or "Cost of Carry")
TradingThe cost, often quoted in dollars or pips per day, of holding an open position. Identical to Cost of Carry.
Rollover
Market StructureThe process of moving from an expiring futures contract to the next contract month. In spot forex, "rollover" also refers to the daily interest charge or credit applied to positions held overnight.
Spot Foreign Exchange
Market StructureOften called the "interbank" market. Refers to currencies traded between two counterparties, often major banks. Spot Foreign Exchange is generally traded on margin and is the primary market this website focuses on. Generally more liquid and more widely traded than currency futures, particularly by institutions and professional money managers.
Stop
RiskAn order to buy at the market only when the market moves up to a specific price, or sell at the market only when the market moves down to a specific price. Most commonly used as a "stop-loss" — to cap losses on an existing position.
Technical Analysis
AnalysisAnalysis applied to the price action of the market itself to develop trading decisions, irrespective of fundamental factors. Tools include chart patterns, indicators (moving averages, RSI, MACD), and support/resistance levels.
Tick
TradingThe smallest price increment in a futures or CFD price. Often called a "pip" in the currency markets.
42,150 → 42,151 is one tick.In S&P 500 e-mini, a move from
5,840.00 → 5,840.25 is one tick.
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If you've encountered terminology not covered here, our specialists will explain it in plain language.
Looking for currency pair symbols?
The complete list of major and cross pairs traded on GCI's platforms — with their nicknames and quote conventions — lives on the Forex Market Overview lesson.
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Come back to it whenever you see an unfamiliar term in market commentary.
You've finished Lesson 02
Now you know the vocabulary. The next lesson covers how to actually build a trading strategy.