The price at which the broker sells to you — i.e. the price at which you can buy.
The ask (sometimes 'offer') is the higher of the two prices in a quote. Buy orders fill at the ask. The difference between bid and ask is the spread.
Also called: ask, offer
Open full pageThe price at which the broker buys from you — i.e. the price at which you can sell.
The bid is the lower of the two prices in a quote. When you place a sell order, you sell at the bid. The bid moves up and down as liquidity providers update their willingness to buy.
Also called: bid
Open full pageA flat or per-lot fee charged in addition to the spread — typical on ECN/STP raw-spread accounts.
ECN brokers usually charge commission instead of (or alongside) marking up the spread. Standard rate: ~$3.50 per side per standard lot, so $7 round-turn per lot. Compare on a total-cost basis (spread + commission) rather than spread alone.
ECN account: 0.1-pip raw spread + $7 round-turn commission per 1.0 lot. Total cost on EUR/USD ≈ 0.1 pip + 0.7 pip = 0.8 pips effective.
A spread that the broker keeps constant regardless of market conditions — wider but predictable.
Fixed-spread brokers absorb the volatility of raw market spreads themselves. The trade-off: average spreads are wider, but you don't get burned by sudden widening during news. Mostly offered by market-maker brokers.
Open full pageThe standard FX position size — 1 lot = 100,000 units of the base currency.
'Lot' originally meant 100,000 units (a 'standard lot'). Modern brokers also offer mini lots (10,000 = 0.10 standard), micro lots (1,000 = 0.01 standard), and nano lots (100 = 0.001 standard).
Also called: standard lot, trade size
Open full pageThe chosen position size for a trade — drives pip value and therefore total risk.
Lot size is the most important variable a trader controls. Pick it deliberately for each trade based on account size, risk per trade, and stop distance.
Open full page1,000 units of the base currency — 0.01 standard lots. Pip value ≈ $0.10.
Micro lots make FX accessible to accounts as small as $100. Essential for beginners who want to learn on live capital without risking serious money.
Also called: 0.01 lot
Open full page10,000 units of the base currency — 0.10 standard lots. Pip value ≈ $1.
Mini lots let smaller accounts ($1,000–$10,000) trade with reasonable position sizing relative to risk. Most retail platforms allow size in 0.01 increments down to micro lots.
Also called: 0.1 lot
Open full page100 units of the base currency — 0.001 standard lots. Pip value ≈ $0.01.
Nano lots are offered by a handful of brokers (notably cent-account brokers) for traders testing strategies on live capital with negligible risk. Mostly a demo-to-live bridge tool.
Also called: 0.001 lot
Open full pageThe smallest standard price change in a currency pair — usually the 4th decimal place (or 2nd for JPY pairs).
'Pip' stands for 'point in percentage' (or 'price interest point'). On EUR/USD at 1.0800, a 1-pip move takes price to 1.0801. On USD/JPY at 150.00, a 1-pip move takes price to 150.01.
Also called: point
Buy EUR/USD at 1.0800, sell at 1.0850. That's a 50-pip profit. On a 1-lot trade, P&L = 50 × $10 = $500.
Pip value (USD pairs) = (0.0001 / Exchange rate) × Lot size in base currency
JPY pairs are quoted to 2 decimal places, so a pip is 0.01 (not 0.0001). Always check the broker's pip definition before sizing a trade.
The dollar (or account-currency) value of a 1-pip move on a given position size — drives position sizing math.
Pip value depends on three things: lot size, the pair's quote currency, and your account's base currency. For a USD-account trading EUR/USD: 1 standard lot = $10/pip. 1 mini lot = $1/pip. 1 micro lot = $0.10/pip.
Also called: pip cost
Pip value = (Pip size / Exchange rate) × Lot size in base currency
1/10 of a pip — the 5th decimal place (or 3rd for JPY pairs) on a 5-digit broker.
Pipettes appeared when brokers moved from 4-decimal pricing to 5-decimal pricing for tighter spreads. EUR/USD at 1.08001 → 1.08002 = a 1-pipette (0.1-pip) move.
Also called: fractional pip, 5-digit pricing
Open full pageA complete trade cycle — entry plus exit. Commissions are usually quoted on a round-turn basis.
Spread is paid once per round turn (already baked into the bid-ask gap). Commission is also conventionally quoted per round turn (e.g. '$7 per lot round-turn' = $3.50 per side).
Also called: round trip
Open full pageThe difference between the price you expected on an order and the price it actually filled at.
Slippage happens when the market moves between the moment your order is sent and the moment it's executed. It can be negative (filled worse than expected) or positive (filled better — yes, that's possible).
Also called: execution slippage
You click Buy EUR/USD at 1.0800 (market). Between the click and the fill, the ask jumps to 1.0803. You're filled at 1.0803 — 3 pips of negative slippage.
Slippage = fill price − expected price
Backtests almost always under-estimate slippage. Add a realistic slippage assumption (typically 0.5–2 pips for majors, more for exotics) to forward-test EAs.
The difference between the bid (sell) and ask (buy) price — your unavoidable cost on every round-turn trade.
The spread is the broker's compensation for providing liquidity. Tighter spreads = lower trading costs. Spreads can be fixed (broker-defined) or variable (driven by underlying market liquidity); they typically widen during news, weekend opens, and low-liquidity sessions.
Also called: bid-ask spread, dealer spread
EUR/USD bid 1.08000, ask 1.08008. Spread = 0.8 pips. On a 1.0-lot trade, the spread cost = 0.8 × $10 = $8.
Spread = Ask − Bid Spread cost ($) = Spread (pips) × Pip value × Lots
Backtests usually run on bid-only data. Always factor in spread when comparing strategy results to live execution.
100,000 units of the base currency — the original 'lot' size in retail FX.
A standard lot of EUR/USD = €100,000 notional. At a typical pip value of $10/pip, a 50-pip stop = $500 risk. Standard lots are still common on professional accounts but mini/micro lots dominate retail.
Also called: 1.0 lot
Open full pageThe interest credit or debit applied when a position is held overnight — reflects interest rate differentials between the two currencies.
When you hold a position past the 17:00 New York rollover, the broker pays or charges you the differential between the two currencies' interbank rates, minus a spread (usually negative for both sides).
Also called: rollover, overnight interest, carry
AUD/JPY at 5% AUD rate vs 0.1% JPY rate. Long AUD/JPY 1 lot, holding overnight → ~ $13 credit per day, before broker markup.
The smallest price increment for a given instrument — for major FX pairs typically 0.00001 (pipette) on 5-digit brokers.
Tick size matters for execution: prices can only move in tick-size increments. On most FX pairs the tick size equals one pipette. On futures and other instruments it varies and is set by the exchange.
Open full pageThe dollar value of a one-tick price move at a given lot size — the most granular form of pip value.
For most FX pairs on 5-digit brokers, tick value = pip value / 10. A 1.0-lot EUR/USD position has tick value ≈ $1 per pipette ($10 per pip).
Open full pageOn Wednesdays, brokers charge three days of swap to cover the weekend — Wednesday rollover prices Wed/Thu/Fri/Sat/Sun.
FX settles T+2, so positions opened Wednesday settle Friday. Holding past Wednesday's rollover means the settlement date jumps to Monday, covering Wed/Thu/Fri/Sat/Sun — three swap charges.
Hold a EUR/USD short overnight Wednesday → roughly 3× the normal swap is debited at the 17:00 NY rollover.
A spread that changes with market liquidity — tight in normal conditions, wider during news and low-liquidity sessions.
Variable spreads reflect the actual cost of liquidity in real time. Cheaper than fixed on average, but can blow out during NFP, FOMC, or weekend opens. Standard at ECN/STP brokers.
Also called: floating spread
Open full pageGold priced in US dollars — traded on FX platforms as a 'CFD' or 'spot metal' alongside currency pairs.
Most FX brokers offer XAU/USD with leverage similar to major pairs. Gold's drivers (real yields, USD strength, inflation expectations, geopolitical risk) overlap with FX themes — many FX traders include gold in their daily watchlists.
Also called: XAUUSD, Gold, Gold/USD
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