Glossary
Trading terminology, abbreviations, and definitions
6
- 6.1 Trend Indicators
- View in context
- 6.2 Momentum Indicators
- View in context
- 6.3 Volatility Indicators
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- 6.4 Volume & Order Flow Indicators
- View in context
- 6.5 Breadth & Market Health
- View in context
- 6.6 Oscillators Deep Dive
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- 6.7 Moving Average Variants
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- 6.8 Return Indicators
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7
- 7.1 Candlestick Patterns
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- 7.2 Multi-Bar Patterns
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- 7.3 Chart Patterns
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- 7.4 Algorithmic / Programmatic Patterns
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- 7.5 Pattern Reliability & Failure Modes
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- 7.6 Pattern Context Requirements
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- 7.7 Pattern Completion Criteria
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A
- Absorption
- When one side absorbs the other's orders without price moving (hidden liquidity) View in context
- After-Hours (AH)
- Trading that occurs after regular market hours View in context
- Alpha
- Returns in excess of what would be expected given beta exposure View in context
- Analysis Paralysis
- Inability to act due to overthinking or excessive analysis View in context
- Asian Session
- Primary forex trading hours when Tokyo markets are open View in context
- Ask / Offer
- The lowest price a seller is willing to accept View in context
- Average Directional Index (ADX)
- Measures trend strength regardless of direction View in context
- Average True Range (ATR)
- A volatility measure showing the average range of price movement over a period View in context
B
- Backwardation
- When futures prices are lower than expected spot price View in context
- Balance
- A market state where buying and selling pressure are roughly equal View in context
- Beta
- A measure of an asset's volatility relative to a benchmark View in context
- Bid
- The highest price a buyer is willing to pay View in context
- Bollinger Bands (BB)
- Volatility bands placed above and below a moving average View in context
- Break of Structure (BOS)
- When price breaks beyond the most recent swing point in the trend direction View in context
- Breakout
- A price move beyond a defined support or resistance level View in context
C
- Change of Character (CHoCH)
- When price breaks structure against the prevailing trend; potential reversal signal View in context
- Commodity Channel Index (CCI)
- Momentum oscillator measuring deviation from average price View in context
- Confirmation Bias
- Seeking information that confirms existing beliefs while ignoring contradictory data View in context
- Contango
- When futures prices are higher than expected spot price View in context
- Contract Size
- The notional value represented by one futures contract View in context
- Correlation
- A measure of how two assets move in relation to each other View in context
- Cumulative Delta
- The running total of delta over time View in context
D
- Delta
- The net difference between buying and selling volume View in context
- Depth of Market (DOM)
- A display showing the quantity of buy and sell orders at different price levels View in context
- Doji
- A candlestick with open and close at nearly the same price; signals indecision View in context
- Drawdown
- The peak-to-trough decline in account equity before a new high is reached View in context
E
- E-mini (ES, NQ)
- Smaller-sized futures contracts designed for retail traders View in context
- E-mini (ES, NQ)
- Smaller-sized futures contracts designed for retail traders View in context
- E-mini (ES, NQ)
- Smaller-sized futures contracts designed for retail traders View in context
- Engulfing
- A candle that completely engulfs the prior candle's body; reversal signal View in context
- Evening Star
- Three-candle bearish reversal pattern View in context
- Exhaustion
- The depletion of buying or selling pressure, often at extremes View in context
- Expectancy
- The average expected return per trade, combining win rate with average win/loss size View in context
- Expected Shortfall (ES / CVaR)
- The expected loss given that loss exceeds VaR View in context
- Exponential Moving Average (EMA)
- A moving average that gives more weight to recent prices View in context
F
- Fade
- A counter-trend trade expecting price to reverse View in context
- Fair Value Gap (FVG)
- A price imbalance created by strong momentum; area where price may return to rebalance View in context
- FOMO
- Fear Of Missing Out; emotional urge to enter trades without proper setup View in context
G
- Gap
- A price discontinuity between one session's close and the next session's open View in context
- Gap Fill
- When price moves back to fill the gap from a previous session View in context
H
- Hammer
- Small body with long lower wick; bullish reversal signal at support View in context
- High Volume Node (HVN)
- A price level with significant volume accumulation View in context
- Higher High (HH)
- A swing high that exceeds the previous swing high (uptrend indicator) View in context
- Higher Low (HL)
- A swing low that is higher than the previous swing low (uptrend indicator) View in context
I
- Ichimoku Cloud
- A comprehensive indicator showing support, resistance, trend, and momentum View in context
- Initial Balance (IB)
- The price range established in the first hour of trading View in context
- Initial Margin
- The minimum deposit required to open a new position View in context
- Inside Bar
- A bar with range entirely contained within the prior bar; consolidation View in context
K
- Kelly Criterion
- A formula for optimal position sizing to maximize long-term growth View in context
- Keltner Channels
- Volatility-based bands using ATR around an EMA View in context
L
- Leverage
- The use of borrowed capital to increase potential returns (and risk) View in context
- Liquidity
- The ease with which an asset can be bought or sold without significantly affecting price View in context
- London Session
- Primary forex trading hours when London markets are open View in context
- Loss Aversion
- The tendency to prefer avoiding losses over acquiring equivalent gains View in context
- Low Volume Node (LVN)
- A price level with minimal volume; often acts as price magnet View in context
- Lower High (LH)
- A swing high that is below the previous swing high (downtrend indicator) View in context
- Lower Low (LL)
- A swing low that is below the previous swing low (downtrend indicator) View in context
M
- Maintenance Margin
- The minimum equity required to keep a position open View in context
- Margin
- The deposit required to open and maintain a leveraged position View in context
- Marubozu
- A full-body candle with no wicks; strong directional conviction View in context
- Maximum Drawdown (Max DD)
- The largest peak-to-trough decline in account value View in context
- Mean Reversion
- The expectation that price will return to an average or fair value level View in context
- Micro (MES, MNQ)
- Even smaller contracts (1/10th of E-mini size) View in context
- Micro (MES, MNQ)
- Even smaller contracts (1/10th of E-mini size) View in context
- Micro (MES, MNQ)
- Even smaller contracts (1/10th of E-mini size) View in context
- Money Flow Index (MFI)
- Volume-weighted RSI; measures buying and selling pressure View in context
- Morning Star
- Three-candle bullish reversal pattern View in context
- Moving Average Convergence Divergence (MACD)
- Trend-following momentum indicator showing relationship between two EMAs View in context
N
- New York Session
- Primary forex trading hours when US markets are open View in context
O
- On-Balance Volume (OBV)
- A cumulative volume indicator based on whether price closes up or down View in context
- Opening Range (OR)
- The high and low established during the first minutes of trading (typically 5-30 min) View in context
- Outside Bar
- A bar with range exceeding the prior bar in both directions View in context
- Overnight High / Low (ONH / ONL)
- The highest and lowest prices reached during the overnight (Globex) trading session View in context
- Overnight Session (Globex)
- Futures trading session outside regular market hours View in context
P
- Paper Trading
- Simulated trading without real money to practice and develop skills View in context
- Parabolic SAR (PSAR)
- Stop and reverse indicator used for trailing stops View in context
- Pin Bar
- A bar with long wick showing price rejection; reversal signal View in context
- Point
- A standard unit of price movement (varies by instrument) View in context
- Point of Control (POC)
- The price level with the highest traded volume in a session; represents fair value View in context
- Position Sizing
- The process of determining how many shares/contracts to trade based on risk parameters View in context
- Pre-Market (PM)
- Trading that occurs before regular market hours View in context
- Profit and Loss (PnL)
- The realized or unrealized gains or losses on positions View in context
- Pullback
- A temporary retracement against the prevailing trend View in context
R
- Recency Bias
- Overweighting recent events in decision-making View in context
- Regular Trading Hours (RTH)
- The main US trading session (typically 9:30 AM - 4:00 PM ET for equities) View in context
- Relative Strength Index (RSI)
- Momentum oscillator measuring speed and magnitude of price changes View in context
- Resistance
- A price level where selling pressure is expected to overcome buying pressure View in context
- Retest
- When price returns to a previously broken level to confirm the break View in context
- Revenge Trading
- Attempting to recover losses through impulsive, often oversized trades View in context
- Reward-to-Risk Ratio (R:R)
- The ratio of potential profit to potential loss on a trade View in context
- Risk of Ruin
- The probability of losing a specified percentage of capital (often 50% or total loss) View in context
- Rollover
- Moving positions from an expiring contract to the next active contract View in context
- Rotation
- Range-bound price movement oscillating around a central price View in context
S
- Session High / Low
- The highest and lowest prices during a specific trading session View in context
- Settlement
- The official daily closing price used for margin calculations View in context
- Sharpe Ratio
- Risk-adjusted return measure: (Return - Risk Free Rate) / Volatility View in context
- Shooting Star
- Small body with long upper wick; bearish reversal signal at resistance View in context
- Signal Type Classifications
- View in context
- Simple Moving Average (SMA)
- The arithmetic mean of prices over a specified period View in context
- Slippage
- The difference between expected execution price and actual fill price View in context
- Sortino Ratio
- Like Sharpe but only penalizes downside volatility View in context
- Spread
- The difference between the bid and ask prices View in context
- Standard Deviation (Std Dev / Sigma)
- A measure of volatility showing dispersion from the mean View in context
- Stochastic Oscillator (Stoch)
- Momentum indicator comparing closing price to price range over time View in context
- Stop Loss (SL)
- A predetermined price level at which a losing position is automatically closed View in context
- Summary
- View in context
- Support
- A price level where buying pressure is expected to overcome selling pressure View in context
T
- Take Profit (TP)
- A predetermined price level at which a winning position is automatically closed View in context
- Tick Size
- The minimum allowable price movement for an instrument View in context
- Tilt
- Emotional state where rational decision-making is compromised View in context
- Time and Sales (T&S / L2)
- A real-time record of executed trades showing time, price, and size View in context
- Trend Day
- A session dominated by directional movement with minimal pullbacks View in context
- True Open
- The opening price of the regular trading session View in context
V
- Value Area (VA)
- The price range containing approximately 70% of session volume View in context
- Value Area High / Low (VAH / VAL)
- Upper and lower boundaries of the price range containing 70% of session volume View in context
- Value at Risk (VaR)
- The maximum expected loss at a given confidence level View in context
- Volume Profile
- A display showing volume traded at each price level View in context
- Volume-Weighted Average Price (VWAP)
- The average price weighted by volume; used as a benchmark for execution quality View in context
W
- Win Rate
- The percentage of trades that are profitable View in context
Z
- Z-Score
- The number of standard deviations a value is from the mean View in context