Pip (Percentage in Point)
The standardized unit of price measurement representing the fourth decimal place (0.0001) in most currency pairs.
In forex trading, positions are sized in standard (100k), mini (10k), or micro (1k) lots. One pip on a standard EUR/USD lot equals exactly $10.00. Calculating precise pip value is mandatory to honor the 1.5% risk cap.
Pip Value = (0.0001 ÷ Exchange Rate) × Lot Size
Example: On a EUR/USD 2-lot trade ($200k notional), a 20-pip stop loss equals exactly $400 of dollar risk.
Forex Lot Sizing Calibration
The exact number of contract units entered to align stop-loss distance with the strict 1.5% capital cap.
Never enter a standard lot simply because account margin permits it. Professional execution calculates lot size backward from the invalidation price level to ensure risk never exceeds 1.5%.
CBA Rule: Lot size must always be calibrated backward from the stop-loss distance to equal Account Balance × 0.015.
London & New York Session Overlap
The 4-hour window (8:00 AM – 12:00 PM EST) when both London and New York banking centers are open concurrently.
This period represents over 50% of daily global forex transaction volume, featuring the tightest spreads, cleanest liquidity sweeps, and highest institutional price follow-through.
CBA Rule: Primary foreign exchange setups are filtered to execute during the London/NY session overlap for optimal liquidity fill.
US Dollar Index (DXY)
The benchmark geometric index measuring the value of the US Dollar relative to a basket of 6 major foreign currencies.
The Euro comprises 57.6% of the DXY weighting. A strengthening DXY typically correlates with downward liquidity pressure on EUR/USD, commodities, and risk assets including Bitcoin.
Central Bank Interest Rate Differentials
The gap between the benchmark policy interest rates set by two respective central banks.
Capital globally flows toward higher-yielding currencies with stable macroeconomic fundamentals (the 'Carry Trade'). Long-term macro currency trends are driven fundamentally by interest rate divergence between the Federal Reserve, ECB, BOJ, and BOE.
Commitment of Traders (COT) Report
A weekly regulatory report published by the CFTC detailing commercial and non-commercial institutional positioning.
By reviewing commercial hedgers versus non-commercial speculators, traders can identify extreme positioning skews where the smart money is heavily net-long or net-short prior to macro turning points.