Account Terminology

Balance is the total money in your account after all closed positions, excluding open trades. It only changes when you close trades, deposit, or withdraw. Balance represents your realized account value, while equity includes unrealized profit/loss.

Equity is your current account value including unrealized profits/losses (Balance + Floating P/L). It represents what you would have if you closed all positions right now. Equity fluctuates constantly and is used to calculate margin level and free margin.

An exchange rate is the price of one currency in terms of another (e.g., EUR/USD = 1.0850 means 1 Euro costs $1.0850). Rates fluctuate constantly based on interest rates, economic data, central bank policy, and market sentiment.

Leverage allows you to control a large position with a small amount of capital. For example, 1:100 leverage means you can control $100,000 with just $1,000. While leverage magnifies profits, it equally magnifies losses, making risk management essential.

A lot is a standardized unit of trade size. A standard lot is 100,000 units of base currency, mini lot is 10,000, and micro lot is 1,000.

Lot size is the standardized unit for forex trades. A standard lot is 100,000 units, mini lot is 10,000 units, and micro lot is 1,000 units. Your lot size determines how much each pip movement is worth - for example, 1 pip = $10 for a standard lot of EUR/USD.

Margin is the amount of money required in your trading account to open and maintain a leveraged position. It acts as a good-faith deposit while you control a much larger position. Understanding margin is essential for managing risk and avoiding margin calls.

Notional value is the total value of a leveraged position - the full amount of currency you're controlling, not just the margin you deposited. For example, 1 standard lot (100,000 units) has a notional value of $100,000, even if you only put up $1,000 margin.

A pip (Percentage in Point) is the smallest price movement in forex trading. For most currency pairs, a pip is the 4th decimal place (0.0001), while for JPY pairs it's the 2nd decimal place (0.01). Pips measure profit, loss, and price changes.

A pipette is a fractional pip - one-tenth of a pip. While a pip is the 4th decimal place for most pairs (0.0001), a pipette is the 5th decimal place (0.00001). Brokers use pipettes to offer more precise pricing and tighter spreads.

Rollover (swap) is the interest paid or earned for holding a position overnight, based on the interest rate differential between the two currencies. You earn if buying higher-rate currency, pay if buying lower-rate currency. Rollover happens at 5 PM EST.

A tick is the smallest possible price movement of a trading instrument. In forex, a tick equals a pipette (the 5th decimal place for most pairs, or 3rd decimal for JPY pairs). It represents the minimum price fluctuation brokers can quote.