Gold & Forex Trading Glossary

Trading has its own language, and for beginners that language can be intimidating. This glossary defines the terms you will encounter most often when trading gold and forex, written so anyone can understand them. Bookmark this page and refer back whenever you hit a word you do not know. Where a term is covered in more depth elsewhere on the site, we link to the full guide.

Ask price: The price at which you can buy an asset. It is always slightly higher than the bid price; the gap between them is the spread.
ATR (Average True Range): An indicator that measures how much an asset typically moves over a period. Traders use it to set stop losses and take profits that fit current volatility. Our dashboard uses ATR to place risk levels automatically. See our indicators guide.
Bid price: The price at which you can sell an asset. It is always slightly lower than the ask price.
Bollinger Bands: A volatility indicator that plots bands above and below a moving average. When the bands squeeze together, a large move often follows.
Broker: A company that gives you access to the market and executes your trades. Always choose a regulated broker with a solid reputation.
Bullish / Bearish: Bullish means you expect price to rise; bearish means you expect it to fall. A "bull market" trends up; a "bear market" trends down.
Candlestick: A chart element showing the open, high, low, and close price for a period. Green (or white) candles usually mean price closed higher; red (or black) mean it closed lower.
CFD (Contract for Difference): A contract that lets you speculate on price movements without owning the underlying asset. Most retail gold trading is done via CFDs.
Confluence: When several independent indicators or signals point to the same conclusion. Confluence increases confidence and is the core principle behind our eight-factor signal scoring.
Drawdown: The drop from a peak in your account balance to a subsequent low, usually expressed as a percentage. Managing drawdown is central to survival — see our risk management guide.
DXY (US Dollar Index): A measure of the US dollar's strength against a basket of major currencies. Because gold is priced in dollars, a rising DXY often pressures gold lower.
EMA (Exponential Moving Average): A moving average that weights recent prices more heavily, making it react faster to change. Used to identify trend direction.
Entry: The price at which you open a trade.
FOMC: The Federal Open Market Committee — the US Federal Reserve body that sets interest rates. FOMC announcements cause major gold volatility.
Fundamental analysis: Analysing an asset based on economic data, news, and events (interest rates, inflation, geopolitics) rather than charts. See what moves gold.
Gap: A jump in price between one candle's close and the next candle's open, often caused by news released while the market was closed.
HOLD: On our dashboard, a state meaning conditions are mixed or weak and no trade is recommended. Respecting HOLD keeps you out of low-quality setups.
Leverage: Borrowed capital that lets you control a large position with a small deposit. It amplifies both gains and losses, so it must be used carefully.
Liquidity: How easily an asset can be bought or sold without moving its price. Gold is most liquid during the London and New York sessions.
Long: A buy position — you profit if the price rises.
Lot: A standardised trade size. For gold, one standard lot is typically 100 ounces, where a $1 price move equals $100 profit or loss. Use our position size calculator to size trades correctly.
MACD: Moving Average Convergence Divergence — a momentum indicator that signals shifts in trend strength and direction.
Margin: The deposit required to open a leveraged position. If your losses eat into it too far, you may face a margin call.
Margin call: A broker's demand for more funds when your account can no longer support open positions. Positions may be closed automatically to prevent further loss.
MetaTrader 5 (MT5): A popular trading platform. Our bot can run locally connected to MT5 for broker-exact gold prices.
M15: The 15-minute chart timeframe — each candle represents 15 minutes. Our signals focus on M15. See the M15 strategy guide.
NFP (Non-Farm Payrolls): A monthly US employment report released on the first Friday of each month. It frequently triggers sharp gold moves.
Pip: The smallest standard price increment used to measure movement. For gold, brokers vary in how they define a pip, so many traders measure moves in dollars per ounce instead.
Probability (signal): On our dashboard, the estimated likelihood that price continues in a given direction based on current conditions. Higher is stronger, but never a guarantee.
Range / Ranging market: A market moving sideways between support and resistance rather than trending. Trend strategies struggle in ranges.
Risk-to-reward ratio: The ratio between how much you risk and how much you aim to gain. A 1:2 ratio means risking $1 to make $2. Check yours with our risk-to-reward calculator.
RSI (Relative Strength Index): A momentum indicator scaled 0–100 that flags overbought (above 70) and oversold (below 30) conditions.
Scalping: A style of very short-term trading that aims to capture small moves many times a day.
Short: A sell position — you profit if the price falls.
Slippage: The difference between the price you expected and the price you actually got, common during fast markets and news events.
Spread: The difference between the bid and ask price — effectively a cost of trading. Spreads on gold widen during illiquid hours and around news.
Stop loss (SL): A preset price at which a losing trade closes automatically to protect your capital. Never trade without one.
Support & Resistance: Price levels where the market has historically stopped falling (support) or rising (resistance). Traders watch them for reactions.
Swap (Rollover): An interest fee charged or paid for holding a leveraged position overnight.
Take profit (TP): A preset price at which a winning trade closes automatically to lock in gains.
Technical analysis: Analysing price charts and indicators to make trading decisions, as opposed to fundamental analysis.
Trend: The general direction of price — up, down, or sideways. "The trend is your friend" reflects that trading with the trend is usually easier.
Volatility: How much and how quickly price moves. Gold is a relatively volatile market, which creates both opportunity and risk.
Whipsaw: A sharp move in one direction followed quickly by a reversal, often stopping out traders on both sides. Common in choppy, low-ADX conditions.
XAUUSD: The ticker symbol for gold priced in US dollars. "XAU" is the code for one troy ounce of gold; "USD" is the US dollar.

Ready to put these terms into practice?

Watch live gold signals with entry, stop, and target — free, no signup.

Open Gold Signal Bot