There’s far more Forex jargon than can be covered in just one article, but this article will also help to fill in more of the most common Forex jargon for beginners. No matter what the group (doctors, astronomers, basketball players, poker players, etc.) each group has its own distinctive lingo. The Forex is no exception, and the sooner you learn some of the lingo, the easier it will be to follow tutorials, learn how to trade, and start holding your own in conversations with other professional traders. So without any further delay:
“Lots.” This is more than lingo, and not a word referring to a lot of something. Lots are specifically the bulk amounts of currency required for trading in the Forex market, most currencies are priced in lots of $100,000.
“Margin.” This is the minimum amount of money needed to put up to place a trade with a broker. As long as you have this minimum amount in your account you can trade. When your account falls below that margin amount, all your open positions in the Forex market are closed out.
“Margin Call.” A margin call is made when, due to losses, your account falls below the allowed minimum for a broker account. When this happens the broker makes a margin call, which will close out all your open positions in the Forex market.
“Limit Order.” This is an order to execute a trade only if it hits a specific price or better.
“Carry Trade.” Depending on what Forex traders you hang around with, you could hear this one a lot. A carry trade is a trade where you choose a currency pair in which you go interest positive, meaning that you are earning daily interest on your trade because of the difference in interest rates between the two nations.
“Counter-Trend.” Many people think this means trending downward, but that is NOT correct. A counter trend market is a market that is not trending either way, meaning all movements are basically staying within the same channeled area.
“GTC Order.” Good Till Cancelled Order. This is an order placed for a currency pair that will remain in play until the trader shuts that position down.
“OCO Order.” One Cancel Other. A type of trade using two orders that are set up by trigger values. When a currency pair hits a trigger, that trade goes into effect while the other is automatically cancelled.