Forex strategy terms, defined plainly
Short, jargon-free definitions for the words used across these lessons. Where a term has a lesson behind it, the entry points to the page that develops it.
Currency pair
Two currencies quoted as a ratio - the price tells you how much of one it takes to buy the other. Every forex trade is a position in a pair, never a single currency on its own.
Pip
The smallest standard increment a pair's price moves in; the unit most forex strategies measure their stop and target distances in.
Leverage
Borrowed exposure that lets a small deposit control a much larger position, magnifying both gains and losses - the single biggest reason FX risk rules come before everything else.
Forex trading strategy
A written rule set deciding which pairs to trade, in which sessions, on what trigger, and where to exit, applied the same way each time so the results can be measured. See: how a forex strategy works.
Trend-following strategy
A plan that enters in the direction a pair is already moving and rides it until the move stalls; one of the three core strategy families. See: trend-following strategies.
Range strategy
A plan that buys near the bottom and sells near the top of a pair stuck between two levels, betting it stays boxed in rather than breaking out. See: range-trading strategies.
Breakout strategy
A plan that enters when a pair pushes decisively past a level it had been respecting, betting the break starts a fresh move. See: breakout strategies.
Stop
The pre-decided level that admits the idea was wrong and closes the trade to cap the loss, fixed before any emotion is attached to it.
Position sizing
Choosing how much of the account a single trade may risk - on leverage, the rule that matters most for staying solvent. See: forex risk management.
Conviction grade
An A-to-D label marking how strong a call is relative to its own model's measured return distribution; there is no E grade. See: how a forex strategy works.
Drawdown
The deepest peak-to-trough fall in an account or strategy over a period - a more honest read on risk than the headline return.
Cryptographic timestamp
A hash of a call written to a public ledger at publication, proving the entry, target, stop and grade existed in that exact form before the outcome was known. See: how to verify a forex strategy.