Mastering forex trading requires fluency in its unique language. Below, we break down key terminologies and abbreviations with clear examples to enhance your trading literacy.
Core Trading Concepts
BOS (Break of Structure)
A Break of Structure (BOS) occurs when price breaches a prior low or high, signaling potential trend continuation.
Example: If EUR/USD drops below yesterday’s low, it indicates a bearish BOS.
dBOS (Double Break of Structure)
A dBOS happens when price consecutively breaks two lows or highs, reinforcing momentum.
Example: GBP/JPY breaking two weekly highs suggests strong bullish momentum.
mBOS (Minor Break of Structure)
An mBOS refers to smaller timeframe breaks, useful for intraday traders.
Example: A 15-minute chart showing a break of a 1-hour low.
Advanced Trading Strategies
OB (Order Block)
An Order Block (OB) is the last opposing candle(s) before a sharp price move.
- Bullish OB: Final sell candle before a rally.
- Bearish OB: Final buy candle before a decline.
👉 Learn how institutions exploit OBs
AOI (Area of Interest)
AOIs are zones where price may reverse due to historical reactions.
Example: A support level holding multiple bounces becomes an AOI.
POI (Point of Interest)
Synonymous with Decision Point (DP), a POI marks critical reversal or breakout areas.
Market Dynamics
IMB (Imbalance)
An Imbalance reflects unequal buying/selling pressure, creating "gaps" price often revisits.
Key Trait: Non-overlapping wicks indicate true imbalance.
LQ (Liquidity)
Liquidity pools attract institutional orders, fueling trends.
- BSL: Buy-side liquidity above highs.
- SSL: Sell-side liquidity below lows.
INF (Inefficiency)
Gaps or large candles showing inefficiency signal pending retracements.
Institutional Trading (IT) Indicators
Identify smart money activity via:
- SHC (Stop Hunt Candles)
- Fake-outs
- Large volume ranges
👉 Spot institutional footprints like Wyckoff schematics
Frequently Used Abbreviations
| Term | Meaning | Example |
|---|---|---|
| HH/HL | Higher High/Low | Uptrend marker |
| LH/LL | Lower High/Low | Downtrend marker |
| Fib | Fibonacci levels | 61.8% retracement |
| TF | Timeframe (e.g., H4) | 4-hour chart |
Wyckoff Method (WKF)
Key phases:
- Accumulation (WAS): Whales gather positions.
- Distribution (WDS): Positions are offloaded.
- SOS/SOW: Signs of strength/weakness.
FAQ Section
Q: How do I trade BOS effectively?
A: Confirm with volume and higher timeframe alignment before entering.
Q: What’s the difference between AOI and POI?
A: AOIs are broader zones; POIs are precise price levels.
Q: Why do imbalances matter?
A: They reveal market "unfairness" price often corrects.
Master these terms to decode market narratives and align with institutional strategies. Bookmark this guide for quick reference!