Currency pairs are two countries' currencies combined to trade. The first currency of a currency pair is called the "base currency," and the second is called the "quote currency." Some examples of currency pairs include EURUSD, GBPJPY, NZDCAD, etc. 

A currency pair that does not contain USD is known as a cross pair.

• Bid price: The price at which the base currency is bought by a broker and sold by a trader
• Ask price: The price at which the base currency is sold by a broker and bought by a trader.

Buy orders open at the ask price and close at the bid price. Sell orders open at the bid price and close at the ask price.

The spread is the difference between a trading instrument's bid and ask prices, and it is commonly the main source of profit for market maker brokers. 

The value of spread is usually set in pips, but on MetaTrader platforms, it is shown in points. It is recommended that you read more about spreads and how dynamic and stable spreads differ.

In most forex instruments, a pip represents a price change value at the 4th decimal place, while a point at the 5th decimal place denotes the minimum price change value.

1 pip = 10 points.
If a price changes from 1.11115 to 1.11135, it is measured as 2 pips or 20 points.

A pip size highlights the pip's position in an instrument's price. For example, if the price is 1.11115, the pip size is 0.0001 because it is the fourth decimal.

The pip value is how much money will be earned or lost if the price changes by 1 pip. To calculate the pip value:

Pip Value = Number of Lots x Contract size x Pip size.

The following table summarizes the pip sizes for trading instruments with different price formats.

Try out our trading calculator which can calculate these values for you.

Lot refers to the quantity at which orders are counted. A standard lot typically equals 100,000 units of the base currency symbol.

Other lot types include:

• Standard lot: 1 lot = 100 000 units
• Mini lot: 0.1 lot = 10 000 units
• Micro lot: 0.01 lot = 1 000 units
• Nano lot: 0.001 lot = 100 units

A contract size is a fixed amount of base currency symbol in 1 lot, commonly fixed at 100,000 (depending on trading instruments' symbols).

Margin is the amount of funds a broker withholds to open and keep an order open and is calculated in the trading account currency.

Leverage is the ratio of equity to loan capital and impacts the margin held when an order is opened. Exness offers unlimited leverage on some trading instruments for trading accounts that meet the equity criteria. Still, it is essential to understand how unlimited leverage works before using this feature.

The higher the leverage, the lesser the margin required.

Read more on how leverage impacts margin requirements.

Balance is the calculated total of all completed transactions on a trading account, including deposits and withdrawals. It can be the amount of funds you have before opening orders or after closing all open orders; the balance does not change while orders are open.

Equity is the balance of a trading account plus or minus total rolling profit or loss and swap charges.

Equity = Balance +/- Floating Profit/Loss + Swaps

While the broker holds a margin for open orders, the free margin is the funds remaining in the trading account that are not held and are free to use for new orders.

Equity = Margin + Free Margin

Profit or loss is the difference between an order's closing and opening price. Learn how to calculate profit and loss.

Profit/Loss = difference of closing and opening price (in pips) x Pip Value

• Buy orders make a profit when the closing price (bid) is higher than the opening price (ask). If the closing price is lower than the opening price, the buy order suffers a loss.
• Sell orders make a profit when the closing price (ask) is lower than the opening price (bid). If the closing price is higher than the opening price, the sell order suffers a loss.

Margin level is the ratio of equity to margin denoted in %.

Margin level = (Equity / Margin) x 100

A margin call is an alert sent to a trading platform warning that it may be necessary to deposit funds or close a few order(s) to avoid a stop out. This notification is sent once the margin level drops to a certain amount, known as the margin call.

Stop out is the automatic closing of orders, even hedged orders, when the margin level drops to the stop out level (0%).

At Exness, margin call and stop levels are based on trading account types. 

Order types are divided into market orders and pending orders

Market orders are executed immediately as they are activated and include buy and sell as the primary orders.

• Buy : Opens with the ask price and closes at the bid price.
• Sell : Opens with the bid price and closes at the ask price.

In volatile markets, slippage may significantly affect the filled orders, where prices can be either higher or lower than the intended market price in the terminal window.

Pending orders are used to automate trading. When a certain price or level is reached, these orders execute automatically.

Both opening and closing orders may be pending.

There are 2 types of pending orders: Stop Orders and Limit Orders.

• Limit orders: Pending orders where the client's requested price is better than the current market price
• Stop orders:   Pending orders where the client's requested price is worse than the current market price.
• MT5 terminal has additional order types Buy stop limit and Sell stop limit, where a stop order triggers a limit order.

Refer to the available order types to learn about order and execution types in detail.