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Definitions

1. What are Currency pairs?

Currency pairs are the combinations of different currencies traded against each other.

The exchange rates of these currency pairs are based on a calculation which gives the equivalent value of one currency to its counterpart in a pair.

For example, for the EUR/USD currency pair we are looking at how many US dollars one euro can buy. The higher the value of the EUR, the higher the exchange rate too.

Exchange rates are floating, which means they change constantly depending on a variety of socioeconomic and political factors.

2. What are Major currency pairs?

Also known as the Majors, these currency pairs are made up of two major currencies,  i.e. the US Dollar, Japanese yen, Swiss franc, British pound and the Euro. They are the most frequently traded pairs in the forex market and therefore the most liquid.

Currency pairs may differ between brokers.

A list of the currently available currency pairs at FXTM can be found in our Contract specifications page.  

3. What are Minor currency pairs?
  • Minors or Crosses are pairs that consist of a combination of one of the major currencies along with another currency or two less traded currencies.
  • Some examples of Minor currency pairs:
    • Euro vs. Danish krone (EUR/DKK)
    • Australian dollar vs. Swedish krone (AUD/SEK)
    • British pound vs. New Zealand dollar (GBP/NZD)

Currency groups may differ between brokers.

A list of the currently available currency pairs at FXTM can be found in our Contract specifications page.   

4. What is an Exotic currency?

A currency which is thinly traded. Trading volume for exotic currencies is usually low and trading them is typically quite expensive as the spreads are often high.

Exotics are not major currencies, but an exotic currency pair may consist of one of the four major currencies (USD, EUR, GBP, JPY) along with a currency of a developing economy (IQD, THB, UYU) or two currencies of two developing economies.

Currency pairs may differ between brokers.

A list of the currently available currency pairs at FXTM can be found in our Contract specifications page.

5. What does hedging mean?

Hedging is a risk management method used by many traders to limit or counterbalance the probability of loss when trading.

In forex this can be done by opening a position and then opening another position in the opposite direction, so whichever way the price moves you will have eliminated a degree of risk.

6. What is an STP broker?

STP stands for Straight through Processing, which means that STP brokers process clients' orders immediately by passing them directly to liquidity providers without filtering them through a Dealing Desk.

There is no intercessor between the client and the liquidity provider seeing as no Dealing Desk is involved and this is something which traders and investors usually prefer.

7. What is an ECN broker?

ECN stands for Electronic Communications Network. An ECN broker is one who uses ECNs so their clients can have direct access to liquidity providers and other market participants.

Typically, ECN brokers offer the best bid/ask spreads to clients because quotations are taken from many market participants.

8. What is a Margin Account?

An account where the broker lends the client money to buy securities.

The margin given is collateralized by both cash and the purchased securities and if there is a significant drop in the value of the investment in question, the account holder has to either deposit more funds or sell part of the investment they have made.

When using a Margin account you are essentially using leverage.

9. What does Support (Support Level) mean?

The Support Level is the level at which most buyers enter a trade and is typically the line at which the price of a security finds difficult to fall below.

The Support Level is also a good way to test the price of a security because if the price falls below the Support Level the security is wiped out and if it bounces back up it will signify that buyers have entered the trade and it will be reconfirmed.

10. What does Resistance (Resistance Level) mean?
The Resistance Level is the level the price of a security reaches but finds it difficult to exceed because the number of sellers for that security begins to surpass the number of buyers.
11. What does Immediate or Cancel order (IOC) mean?
This is an order type whereby the order is either executed immediately or else cancelled automatically altogether.
12. What does Over-the-counter (OTC) mean?
Over-the-counter refers to trading via a dealer rather than on a centralized exchange like AMEX or the NYSE. Investors trade instruments such as CFDs over-the-counter as they cannot be traded on a formal exchange.
13. What does Buy Limit Order mean?

This is an order placed by investors when they are willing to buy a security at a specific price and no higher.

By placing this type of order the investor secures a guarantee that they will pay the 'limit' price or less to purchase the security they want. Please note however that the guarantee here is for the price only and not for the actual filling of the order, so if the price specified is not reached, the order won't be filled.

For example: If the current EUR/USD rate is 1.25, you can place a Buy Limit Order for 1.24. As soon as the rate for EUR/USD reaches 1.24, your order will be executed at that price.

14. What does Stop Order mean?

A Stop order or Stop-loss order is placed to buy or sell a security as soon as its price exceeds a specific level.

Investors place these orders to have a predetermined entry/exit point set, as this can both limit losses and lock in profits even in high paced markets. The point at which the price exceeds the specified entry/exit point is the point when the stop order turns into a market order.

15. What does Market Order mean?
A Market Order is placed when you want to buy or sell an investment at the best currently available price. These orders are usually executed successfully as there are no limitations on the buy/sell price or timeframe of execution.
16. What does Cancelled Order mean?
A Cancelled Order is literally when an order has been made to buy or sell a security but is then cancelled before it is executed. Sometimes an order cannot be executed because of parameter limitations.
17. What does Good Till Cancelled (GTC) mean?

This order type refers to orders placed to buy/sell a security at a specified price but then the investor decides to cancel the order.

In MT4, the pending order can be set with an expiration date/time or without such a limit.

18. What is the difference between Instant Execution and Market Execution?

Instant execution refers to orders that are executed at the price shown on your screen. If the price you want is available, the trade is executed, but if the price changes then there will be a re-quote.

Market execution on the other hand is an order that is executed at the best currently available price. This means that there won't be any re-quotes, however there is no guarantee that the price of execution will be the one you saw on your screen.

19. What is Swap?
Swap is the difference in the interest rates of the Central Banks for each currency plus the broker's commission when the positions are carried forward overnight. The swap can be positive or negative depending on the interest rates of the currencies in question.
20. When is the Swap calculated?

Swap is calculated at 23:59:59 – 00:00:00 (EET), Monday to Friday.

In the Forex spot market the delivery of a security or commodity is settled on the second working day after the deal. Therefore when calculating the swap for any orders held from Wednesday to Thursday, the charge will be 3 times the normal size as it includes the fees for the weekend.

21. What does CFD mean?

CFD stands for Contract for Difference.

CFDs are contracts between buyers and sellers agreeing that the seller will pay the buyer the difference between the current value of a security and its value at the time the agreement was made.

Moreover, a CFD is a speculative instrument and while trading CFDs on other assets the trader does not become the owner of this asset in reality.

22. What is a Pip?

Pip stands for Percentage in Point and it is the measurement used to express a change in the exchange rate between two currencies.

We provide currency pairs priced to five or three decimals and the pip change is seen in the 4th or 2nd decimal respectively.

23. If margin is expressed as a percentage, what is the equivalent leverage?
Margin-Based Leverage
Expressed as ratio
Margin Required of
Total Transaction Value
400:10.25%
200:10.50%
100:11.00%
50:12.00%
33:13.03%
20:15.00%
24. What is Leverage?

Leverage is the ability to trade larger amounts of currency with a smaller deposit amount. For example with a $200 deposit and a leverage of 1:500, a trader could trade up to $100,000 worth of currency.

Trading on Leverage allows traders to control large amounts of capital and therefore can provide a faster Return on Investment, however, if not used in conjunction with a proper risk management strategy can incur heavy losses as well.

25. What is a Term/Quote currency?
The Term or Quote currency is the second currency quoted in a currency pair. For example, in the EUR/USD pair, the Term/Quote currency would be the USD.
26. What is a Base currency?
The Base currency is the first currency quoted in a currency pair. For example, in the GBP/CHF pair, the Base currency would be the GBP.
27. What does Equity mean?
The Equity of an account represents the total account balance including any credit, floating profit or loss generated from currently open positions. 
28. What is Margin?
Margin is the amount of funds needed/used to open a position.
29. What is Free Margin?
This is the amount of available funds in your account that can be used as a margin for new positions.
30. What is Margin Level?
Margin Level is the ratio of your equity to your margin.
31. What is Spread?
Spread is the difference, usually indicated in pips, between the Bid and Ask price.
32. What does Ask mean?

This is the minimum price at which a broker/dealer is willing to sell a security. This is the same as the “offer” price.

Clients’ Buy orders in MT4 are opened with the Ask price.

33. What does Bid mean?

This is the maximum price at which a broker/dealer is willing to buy a security.

Sell orders of the client are opened with the Bid price in MT4.

34. Trades are not being placed. Why would this happen?

This may happen due to various reasons. For example, because you do not have enough free margin available in your account, or you have hit the maximum number of lots/trades set for your account.

If this persists, please contact your Account Manager or if you wish to close a position call the Dealing Department directly. You can get in touch directly with our Dealing Desk via the Closing/Modifying a Position landline

35. What if the service provider I choose is trading with a different leverage?
The leverage they are trading with will not have an effect on the trades being opened on your account. The higher the leverage set on your account, the less margin you will require to open a position, however the greater the risk too.
36. What is forex?
Forex trading is the international exchange market which facilitates the exchange of one currency for another at the exchange rate of a specific moment in time. The forex market is the largest and most liquid financial market in the world, with a daily turnover over $5.3 trillion.
37. What is Stop out?

Stop out is the automatic close of all trades when the margin level of the account falls to or below a specified amount, thus protecting your equity and preventing your account from falling into a negative balance.

With ForexTime, the stop out level for the standard.MT4 account is 20% and for ECN.MT4 and MT5 accounts it is 50% (changes to 100% during the last trading hour of the trading session on Friday). Please note that during periods of high market volatility the equity of the account can fall into a negative balance.

38. What is Margin call?

Margin call is an alert when the margin level of the account falls below a specified level.

Your least profitable position will be highlighted in RED on the trading platform as a notification that you may need to deposit more funds to your account in order to maintain your positions and prevent your equity from reaching the stop out level. Margin call is 40% on our standard MT4 accounts and 80% on our ECN accounts.