63 terms
A
B
- BacktestingTesting a trading strategy's rules on historical price data to estimate how it would have performed, before risking real money on it.
- BasisThe difference between a futures price and the spot price of the same asset, often quoted as a percentage or as an annualised rate.
- Bid-ask spreadThe gap between the highest price a buyer is offering (the bid) and the lowest price a seller is asking (the ask). You pay it every time you trade with market orders.
- Bitcoin dominanceBitcoin's share of the total crypto market capitalisation, used to judge whether money is flowing into Bitcoin or into altcoins.
- BreakoutA move of price through a support or resistance level or out of a range, often on rising volume, that traders trade in the direction of the break.
C
D
- Daily loss limitThe maximum amount you allow yourself, or a prop firm allows you, to lose in one trading day. Once it is hit, trading stops until the next day.
- Day tradingOpening and closing trades within the same day, so no position is held overnight. Holding times range from minutes to hours.
- Dollar-cost averaging (DCA)Investing a fixed amount at regular intervals regardless of price, so you buy more units when the price is low and fewer when it is high.
- DrawdownThe decline from a peak in your account balance or equity to a later low, usually shown as a percentage of the peak.
E
F
- Fair value gap (FVG)A three-candle pattern in which the wicks of the first and third candles do not overlap, leaving a price area that was traded through quickly. Traders expect price to revisit it.
- FakeoutA move through a support or resistance level that quickly reverses back inside, trapping the traders who entered on the break.
- FOMOFear of missing out: the urge to enter a trade because price is moving fast and you do not want to miss it, rather than because your setup is there.
- Funding rateA periodic payment between longs and shorts on a perpetual future that keeps its price close to spot. When it is positive, longs pay shorts; when it is negative, shorts pay longs.
H
I
L
- LeverageTrading a position larger than your margin by borrowing the difference from the exchange. At 10× leverage, $1,000 of margin controls a $10,000 position.
- Limit orderAn order to buy or sell at a specific price or better. It only fills if the market reaches that price, and it usually pays the lower maker fee.
- Liquidation priceThe price at which the exchange force-closes a leveraged position because the margin left no longer covers the maintenance requirement.
- LiquidityHow easily an asset can be bought or sold quickly without moving its price much. Liquid markets have tight spreads and deep order books.
- Liquidity sweepA quick move beyond an obvious high or low that triggers the stop orders clustered there, often followed by a reversal.
- Long squeezeA sharp drop caused by leveraged longs being forced to sell, through stop losses and liquidations, which pushes price lower and forces more longs out.
M
- MACDAn indicator built from the difference between two exponential moving averages, usually 12 and 26 periods, plus a 9-period signal line. It shows trend direction and momentum.
- Maintenance marginThe minimum equity a futures position must keep to stay open. If your margin falls to this level, the position is liquidated.
- Maker and taker feesExchanges charge a lower fee on orders that add liquidity to the order book (makers) and a higher fee on orders that remove it (takers).
- Mark price vs last priceThe last price is the most recent trade on one exchange. The mark price is a fair-value price, built from spot prices on several exchanges, that futures exchanges use for unrealised P&L and liquidations.
- Market orderAn order to buy or sell immediately at the best price available. It fills as long as there is liquidity, but the price is not guaranteed, and it pays the taker fee.
- Market structure (BOS and CHoCH)The pattern of swing highs and lows that defines a trend. A break of structure (BOS) continues the trend; a change of character (CHoCH) is the first break against it.
- Max drawdownThe largest peak-to-trough decline over a period. It shows the worst loss you would have sat through if you had started at the worst possible moment.
O
- Open interestThe total number or value of futures contracts that are still open. It rises when new positions are opened and falls when positions are closed or liquidated.
- Order blockIn price-action trading, the last opposite-coloured candle, or small zone, before a strong move that breaks structure. Traders expect price to react when it returns there.
- Order bookThe live list of buy orders (bids) and sell orders (asks) waiting at each price on an exchange, showing how much can be traded at each level.
- OvertradingTaking more trades than your strategy calls for, often out of boredom, a need for action or to recover losses, which raises costs and lowers the quality of your trades.
P
- Paper tradingPractising trading with simulated money in real market conditions, so you can test a strategy or a platform without financial risk.
- Perpetual futuresFutures contracts with no expiry date. A funding mechanism keeps their price close to spot, so traders can hold leveraged longs or shorts for as long as they like.
- Position sizingDeciding how large a position to open so that hitting your stop loss costs a set amount, usually a fixed percentage of your account.
- Post-only orderA limit order that is cancelled instead of filling if it would execute immediately. It guarantees you only add liquidity and pay the maker fee.
- Profit factorGross profit divided by gross loss over a set of trades. Above 1 the strategy made money; below 1 it lost.
- Prop firmA proprietary trading firm that gives traders access to its capital, or to a simulated funded account, in exchange for a share of the profits, once they pass an evaluation.
- Prop firm challengeThe evaluation a trader must pass to get a funded account: reach a profit target without breaking the daily loss or maximum drawdown rules, sometimes within a time limit.
R
- R-multipleA trade's profit or loss expressed as a multiple of the amount you risked on it. Risk $100 and make $250, and the trade is +2.5R.
- Reduce-only orderAn order that can only shrink or close an existing position. If it would increase the position or flip it to the other side, the exchange cancels or trims it.
- Revenge tradingTaking impulsive trades right after a loss to win the money back, usually with bigger size and no proper setup.
- Risk of ruinThe probability that a strategy loses enough to reach a level you define as ruin, such as a 50% drawdown, given its win rate, reward-to-risk and risk per trade.
- Risk-reward ratioThe distance from entry to target divided by the distance from entry to stop. A trade that risks $2 to make $6 has a 1:3 risk-reward, often written as 3:1 reward to risk.
- RSI (Relative Strength Index)A momentum oscillator from 0 to 100 that compares recent gains with recent losses. Readings above 70 are traditionally called overbought and below 30 oversold.
S
- ScalpingA short-term trading style that aims to take many small profits from minor price moves, with positions held from seconds to a few minutes.
- Sharpe ratioThe average return above the risk-free rate divided by the volatility of returns. It measures how much return a strategy earns per unit of risk.
- Short squeezeA sharp rally caused by short sellers being forced to buy back, through stop losses and liquidations, which pushes price higher and forces more shorts out.
- SlippageThe difference between the price you expected and the price you actually got on an order, usually caused by fast markets or thin order books.
- Stop lossAn order that closes your position once price reaches a level you set, capping the loss on a trade.
- Stop-limit orderA conditional order that places a limit order once a trigger price is reached. You control the worst price you accept, but the order may not fill.
- Support and resistancePrice levels where buying (support) or selling (resistance) has repeatedly stopped a move. Traders use them to plan entries, stops and targets.
- Swing tradingA trading style that holds positions for several days to a few weeks to capture a larger move, or swing, within a trend.
T
- Take profitAn order that closes all or part of a position at a set price in profit, locking in the gain without you having to watch the screen.
- TiltA state of frustration or emotional overload, usually after losses, in which a trader stops following their rules and makes increasingly poor decisions.
- Trading journalA record of every trade with its entry, exit, size and result, plus the reasons and emotions behind it, used to find what works and what to stop doing.
- Trailing drawdownA maximum loss limit, common at prop firms, that moves up as your account makes new highs, so the floor follows your best balance instead of staying at the starting level.
- Trailing stopA stop loss that follows price as it moves in your favour, by a set distance or percentage, and stays put when price moves against you.
V
W
Track these numbers on your own trades
Sync Binance, Bybit, OKX, Bitget or Hyperliquid with a read-only key and Flowsense tracks your R, win rate, expectancy, drawdowns, fees and funding automatically. Free for 30 trades a month.
Your next 100 trades can be your best.
Import your history tonight. Get your first AI review this Sunday.