Trading glossary

• ADX — An indicator that measures the STRENGTH of the trend, not its direction. Below 20 there is no trend: it is a range.
• ATR — Average True Range: it measures how much an asset moves on average. It is used to place stops that breathe with volatility.
• BOS — Break of Structure: price breaks the previous high or low, confirming the trend continues.
• Break-Even — Moving the stop to your entry price. From then on, the trade can no longer lose money.
• CHOCH — Change of Character: price breaks the last low in an uptrend (or the reverse). It is the first warning of a reversal.
• Divergence — When price makes a new extreme but the indicator does not follow. It warns that the move is running out of strength.
• Dividend — The share of profit a company distributes to shareholders. It is not free money: the price drops when it is paid.
• Drawdown — The fall from your account’s peak to the valley that follows. Every profitable system goes through it.
• ETF — A fund that trades on an exchange like a share and tracks an index or a basket of assets.
• Expectancy — How much you make on average per trade, in R. It is the number that says whether your system wins or loses long term.
• Fair Value Gap — A gap left when price moves so fast that it does not trade in a balanced way. The market usually returns to fill it.
• Fakeout — A false breakout: price pierces a level, triggers the stops and turns around.
• Leverage — Trading with more money than you have, lent by the broker. It multiplies gains and losses alike.
• Liquidity — The orders piled up in the market, above all stops. Large operators need them to get in without moving price.
• Lot — The size of your trade. It defines what each pip is worth: more lots, more money per move.
• Max Drawdown — The worst fall an account or system has suffered. It measures your real risk and your resilience.
• Moat — The durable competitive advantage that protects a company from rivals. It leaves a mark in high, stable margins.
• Order Block — The last opposite candle before a strong impulse. It marks the zone where an institution built its position.
• PER — How many years of earnings you pay for a share. It only makes sense compared with companies in the same sector.
• Pip — The smallest unit of price movement. Your gains and losses are measured in pips.
• POC — Point of Control: the price with the most traded volume. It acts as a magnet and as a powerful support or resistance.
• Resistance — A zone where price has been rejected downward several times: sellers show up there.
• Retest — When price comes back to touch a level it has just broken. Entering there avoids most false breakouts.
• ROE — The return a company gets on its capital. High and sustained is the sign of a good business.
• RSI — An oscillator that measures whether an asset is overbought or oversold, and where divergences show up.
• Slippage — The gap between the price you asked to trade at and the one you actually got. It spikes around news releases.
• Spread — The gap between the price you buy at and the one you sell at. It is the cost of entering: the moment you open, you are already down by that amount.
• Stop Loss — The order that closes your trade when price proves your idea wrong. It is set before entering, never after.
• Support — A zone where price has bounced upward several times: buyers show up there.
• Swap — A charge (or credit) for holding a position overnight. It is usually negative, and on Wednesdays it is charged triple.
• Take Profit — The order that closes your trade when it reaches your profit target.
• Trailing Stop — A stop that follows price as it advances in your favour, but never goes back. It protects gains while letting the trend run.
• VWAP — The session’s volume weighted average price. Institutions use it to know whether they are buying expensive or cheap today.
• Win Rate — The percentage of winning trades. On its own it means nothing: read it alongside the ratio.