A plain English reference to the terms you will come across when trading forex and configuring your system.
A currency pair quotes two different currencies, with the value of one quoted against the other. The first listed currency is the base currency, and the second is the quote currency.
It indicates how much of the quote currency is needed to purchase one unit of the base currency. Currencies are identified by a three letter ISO code, so for the US dollar the ISO code is USD.
A pip is the smallest value change in a currency pair’s exchange rate. Because prices move in tiny increments, they are quoted in a standardised unit called pips.
For example, if EUR/USD moves from 1.2250 to 1.2251, that is one pip. Because traders are often highly leveraged, even a single pip move can mean significant profit or loss.
A spread is the difference between the buy (offer) and sell (bid) prices quoted for an asset. It is a key part of trading cost, as brokers and market makers quote their prices in the form of a spread.
The price to buy an asset will always be slightly higher than the underlying market, while the price to sell will be slightly below.
Forex is traded in specific amounts called lots, the number of currency units you will buy or sell. A standard lot is 100,000 units of currency.
There are also mini, micro and nano lots at 10,000, 1,000 and 100 units respectively.
Leverage allows you to trade a much larger position with a smaller amount of capital. With 1:30 leverage, a $100,000 position may only require around $3,333 in your account.
Leverage magnifies both gains and losses, which is why risk management is essential.
Going long means buying in expectation the market will rise. Going short means selling in expectation it will fall.
Forex traders can profit in either direction, unlike many share markets where you typically profit only when prices rise.
A Take Profit order automatically closes a position once the market reaches a predefined level of profit.
Quantara systems use configurable Take Profit points so trades are closed to plan without manual intervention.
An averaging system opens additional positions as the market moves, adjusting the average entry price of the overall position.
It is one of the core system types available across Quantara packages.
You don’t need to master every term. Our software handles the mechanics, and our team helps configure it with you.