In order to succeed at anything in life, you must learn to talk the talk. The same goes for the foreign exchange market. Traders have developed their own language so that people who are "not in the club" have a hard time understanding what is being said. This language also helps traders speak to each other more rapidly to share ideas and trades. You must learn these common terms if you ever wish to understand the ideas of other traders.

Ask Price - this is what traders are selling the currency for, this is what you pay when you are selling or going short

Base Currency - first currency in the currency pair

Basis Point - 1 hundreth of a percent used with interest rates. The difference between 3.01% and 3.00% is 1 basis point

Bid Price - this is what traders are bidding for a currency, this is what you pay when you go long or buy the currency

Bear Market - bear market is simply another term for long downtrend

Breakout - when a currency pair makes a strong move above or below resistance or support respectively.

Bull Market - bull market is another term for a long uptrend

Conditional Order - An order placed with logic, if this occurs then go long or short. Useful in the forex market since it is impossible to watch the chart 24 hours a day.

Consolidation - consolidation occurs when a currency trades in a range after uptrending or downtrending. It usually happens when some traders take profits and others see an opportunity to get in on the continuing uptrend or downtrend.

Currency Nicknames
greenback / buck - the US Dollar (USD)
cable / sterling - the British Pound (GBP)
single currency - the euro (EURO)
Swissy - the swiss franc (CHF)
loonie - the canadian dollar (CAD)
Aussie - the Australian dollar (AUD)
kiwi - the New Zealand dollar (NZD)

Flat - this means you are staying out of trades for the moment

Going Long - this means you are buying the currency pair because you think that the exchange rate will rise

Going Short - this means you are selling the currency pair because you think that the exchange rate will sink

Leverage - leverage is the amount of buying power you can achieve. leverage can be up to 400:1 in some forex accounts, meaning for every dollar you deposit you can control 400 dollars of currency.

Lot - a standard lot is 100,000 units of currency, then you can have mini lots of 10,000 and micro lots of 1,000

Liquid - the forex market is extremely liquid, this means that it is extremely easy to get your orders filled since there's so much volume

Limit Order - this is in order set a specific price, and it is only executed if the currency reaches that price.

Pip - The smallest unit of fluctuation for a currency pair, this is usually the 4th decimal place except for Japanese pairs which fluctuate on the 2nd decimal place.

Oscillator - A technical indicator that measures volatility

Moving Average - A technical indicator that measures prices movement averaged over time this provides a "smoothed out" indication of price behavior.

Majors - This is what the most commonly traded currency pairs are called Euro/USD, USD/JPY, USD/CHF, GBP/USD, AUD/USD, USD/CAD

Margin - margin is the actual amount of money you have available to purchase Forex lots

Margin call - the dreaded margin call you should never have one of these. Basically this happens when you no longer have enough margin in your account to cover your trade. If you ever get a margin call it is because did not properly plan the trade with risk management, a stoploss and a proper lot amount.

Market Order - this is an order placed immediately at the current market price

Quote Currency - The second currency in a currency pair

Rally - this is when a price moves up quickly after it has been in decline

Range - the distance between resistance (highest price) and support (lowest price) for a given time period

Resistance - resistance is a price area that the currency exchange rate can't seem to break above

Rollover - rollover occurs at 5 PM EST on any trades that are held at this time, basically this just indicates that your trade have been moved to the start of a new trading day

Round Trip - When you buy and sell a currency this is one full round trip

Spread - This is the cost in pips of a trade you make. You will always start a trade with a loss equal to the spread. Spreads are usually around 3 pips

Stop-loss Order - The order that you should always set when you first open a trade. Placed at the price at which you automatically sell out of a losing trade

Support - support is a price area where the currency exchange rate can't seem to break below

Trend - a trend is defined as a pattern of pattern of higher highs and higher lows for an uptrend, and a pattern of lower lows and lower highs for a downtrend.

Volatility - a measure of how much the the currency price is fluctuating over a certain amount of time. During highly volatile times it isn't uncommon for a currency to move 100 to 200 pips in a short amount of time.

Whipsaw - a highly volatile market where the price moves every which way and it is very difficult to find a good trade.