Trading Glossary: 300+ Essential Terms
Plain English definitions for 300+ trading terms, from basic market concepts to advanced futures and platform terminology.
Trading has its own language. This glossary defines 300+ essential terms in plain English, organized A to Z. Definitions describe concepts, not a tested trading strategy. Contract rules, platform calculations and retail prop programme terms can differ; follow the linked primary documentation for those distinctions.
A
Absorption: A description of substantial aggressive trading with limited price movement during a defined interval. It is an interpretation of executions, not proof of a participant's identity or a coming reversal.
Account Balance: An account ledger value generally reflecting booked transactions, deposits, withdrawals and realized results, rather than current floating profit or loss. Platform conventions and futures settlement can differ; distinguish balance from equity and available cash. MetaTrader account fields
Accumulation: Building a position over time. A sideways chart alone cannot establish that informed participants are buying or that a breakout will follow.
Activation Fee: A charge some retail prop programmes apply when starting a subsequent account stage. Amount, recurrence and whether that stage is simulated or live depend on the programme.
Algorithm (Algo): A defined procedure or set of rules. In trading it can generate signals, size positions or execute orders; an algorithm is not necessarily fully automated or profitable.
API (Application Programming Interface): A set of protocols that allows trading software to communicate with brokers, exchanges, or data providers programmatically. Used for automated trading and custom integrations.
Ask Price: An offered selling price; the best displayed ask is the lowest offer in the quoted market. A marketable buy may execute there or at other available prices depending on routing, quantity and changing quotes. FINRA order types
At the Money (ATM): An option whose strike is equal or close to the relevant underlying price. Some conventions use the forward price instead of spot; ATM is not a general synonym for a trade at breakeven.
Average Down: Adding to a long position at lower prices, reducing its average entry price before costs. The larger quantity increases exposure and can amplify subsequent losses.
Average True Range (ATR): An average of true range over a chosen window, using the platform's smoothing method. It describes recent range in price units and does not guarantee a future range or suitable stop distance.
Averaging Up: Adding to a long position at higher prices, increasing the average entry price before costs. It increases exposure; whether the overall position is profitable depends on all entries and costs.
B
Backfill: Historical data loaded into a chart when you first connect to a data feed or change timeframes. Quality of backfill varies by provider.
Backtesting: Applying specified trading rules to historical data using a simulation model. It estimates results under its data, timing, fill and cost assumptions rather than proving what a live account would have earned. TradingView simulation documentation
Backwardation: A futures market condition where near-term contracts trade at a higher price than longer-dated contracts. The opposite of contango. Common in commodity markets during supply shortages.
Bar Chart: A price chart displaying the open, high, low, and close (OHLC) of each period as a vertical bar with horizontal notches. An alternative to candlestick charts.
Basis: A quoted difference between related cash and futures prices; check the sign convention, asset grade and location. Convergence near delivery depends on the contract and deliverable asset, not a guarantee that every quoted basis reaches zero.
Bear Market: A sustained period of declining prices, generally defined as a 20%+ decline from recent highs. The opposite of a bull market.
Bear Trap: A retrospective description of a move below a reference level followed by a reversal higher. The pattern does not establish that anyone intentionally lured short sellers.
Bid Price: A quoted buying price; the best displayed bid is the highest bid in the quoted market. A marketable sell may execute there or at other available prices depending on quantity and market conditions.
Blow Up / Blown Account: Informal language for a severe account loss or a programme account being terminated after a rule breach. A failed simulated evaluation is distinct from a personal brokerage account losing its full value.
Bollinger Bands: Bands placed around a moving average using a selected multiple of a rolling standard deviation. A touch or breach describes position relative to those settings, not a guaranteed reversal.
Breakeven: A result of zero net gain or loss after the costs included in the calculation. A stop at the entry price does not guarantee breakeven after fees, financing and slippage.
Breakout: When price moves decisively beyond a defined level of support or resistance. Breakout traders enter trades when price breaks these key levels.
Bull Market: A sustained period of rising prices. The opposite of a bear market.
Bull Trap: A retrospective description of a move above a reference level followed by a reversal lower. It does not prove deliberate deception or predict the next occurrence.
Buying Power: An account-specific estimate of additional positions permitted under current margin and risk rules. It varies with the instrument and existing exposures and is not the amount safely available to lose.
Buy the Dip: Buying after a price decline in anticipation of a recovery. The decline can continue; the phrase does not specify a complete entry, sizing or exit rule.
C
Call Option: An option giving its holder a right linked to buying the underlying at the strike, subject to exercise style and settlement terms. A rise in the underlying does not guarantee profit after premium, time effects and costs. FINRA options overview
Candlestick Chart: A chart representing open, high, low and close for each interval. Body colors are configurable, and identical candles can conceal different intrabar price paths.
Capital: Resources committed to an activity or available to support losses. A simulated programme's displayed notional balance is not necessarily money owned by or available to the participant.
Carry Trade: A position intended to earn a financing or yield differential, such as borrowing one currency to hold another. Exchange-rate moves, funding costs and liquidation can outweigh the carry.
CEX (Centralized Exchange): A trading venue operated by a central organization, commonly used to describe crypto platforms. Custody arrangements, product permissions and regulatory status require entity-specific checks.
Channel: Two roughly parallel reference lines around price movement. An ascending or descending channel describes a selected historical pattern; price is not required to remain between the lines.
Chart Pattern: A named configuration of historical prices used to form a trading hypothesis. A recognizable shape does not itself demonstrate predictive value.
Circuit Breaker: A trading pause or related control triggered under venue-specific rules. Thresholds, duration and affected instruments differ; a halt does not guarantee orderly prices when trading resumes.
CL (Crude Oil Futures): The NYMEX WTI Light Sweet Crude Oil futures contract, with a contract size of 1,000 barrels. It has physical-delivery terms; verify the selected expiry and broker closeout requirements. CME WTI specifications
Clearing: Post-trade processes that establish and manage obligations, including netting and risk management. A central counterparty interposes itself for trades it clears; not every transaction is centrally cleared.
CME Group: An exchange group whose markets include CME, CBOT, NYMEX and COMEX. The group, its individual exchanges and its clearing organization are distinct concepts.
Co-location: Placing trading servers physically close to exchange matching engines to minimize latency. Used by high-frequency and institutional traders for speed advantages.
Commissions: Broker or intermediary transaction charges. Separate commissions from exchange, clearing, regulatory, data and platform fees; rates depend on the contract, account and current schedule.
Commitment of Traders (COT): CFTC position reports commonly called Commitments of Traders. Legacy, Disaggregated and Traders in Financial Futures reports use different trader categories; publication and position dates are not the same. CFTC report definitions
Confirmation: An additional observation consistent with a trading hypothesis. Its value must be tested; two indicators responding to the same input are not necessarily independent evidence.
Consistency Rule: A programme-specific test of how results or activity are distributed across days or trades. A best-day share is one version; thresholds, calculation periods and consequences differ.
Consolidation: A description of prices moving within a relatively contained range over a selected interval. It does not specify the direction or timing of the next move.
Contango: An upward-sloping futures curve in which later expiries trade above nearer expiries, under the comparison being made. Curve shape can change and is not a guaranteed normal state for every market.
Contract: An agreement defining rights and obligations. A futures contract specifies terms such as underlying reference, multiplier, expiry and cash or physical settlement.
Correlation: A statistical measure of association, often calculated between return series. Specify method and sample period; correlation can change and does not imply causation.
CPI (Consumer Price Index): An index measuring changes in prices paid by consumers for a specified basket under a statistical agency's methodology. Country, series, release calendar and revisions matter; a release does not guarantee a particular market reaction.
CQG: A provider of market-data and trading technology. Access, supported connections and account permissions depend on the selected broker and product.
Credit Spread: In options, a combination opened for a net premium receipt; a vertical credit spread uses options of the same type and expiry at different strikes. Its modeled payoff differs from the operational exposure that assignment or an incomplete position can create. In bonds, credit spread has a separate yield meaning. OIC assignment guide
Cumulative Delta: A running sum of volume classified as buyer-initiated minus seller-initiated over a selected period. Every execution has both sides; the classification does not identify who controls the market.
Cup and Handle: A chart pattern described as a rounded decline and recovery followed by a smaller consolidation. A subsequent breakout is a condition some methods require, not an inevitable outcome.
Currency Correlation: The measured association between currency-pair returns over a specified sample. Shared currencies can influence the relationship, but its magnitude and sign are not permanently fixed.
Curve Fitting: Choosing rules or parameters that fit a historical sample closely, potentially capturing noise rather than a durable relationship. Poor future performance is a risk, not a logical certainty for every fitted model.
D
Daily Loss Limit: A programme or account limit on losses over a defined trading day. Balance/equity treatment, fees, reset timezone and whether a breach pauses or terminates access must be checked in the actual rules.
Dark Pool: A trading venue or system where pre-trade interest is not publicly displayed in the same way as a lit order book. It is not necessarily a registered exchange, and nondisplay does not remove all reporting or regulatory obligations.
Day Trade / Day Trading: Opening and closing exposure within a trading day under the relevant definition. Sessions can cross calendar dates, and regulatory definitions and account restrictions depend on the product and jurisdiction.
Dead Cat Bounce: A brief recovery in a declining market before the downtrend resumes. Named because "even a dead cat will bounce if dropped from high enough."
DeFi (Decentralized Finance): Financial applications using blockchain-based protocols and smart contracts. A decentralized label does not eliminate governance, administrator, oracle, interface or custody dependencies.
Delivery: Meeting a contract's physical-delivery obligations under its rules. Many futures are physically deliverable even when retail traders normally close positions before delivery; closing out is not the same as cash settlement.
Delta (Options): A model sensitivity of option value to a small change in the underlying, with other inputs held constant. Ordinary long vanilla calls generally have positive delta and puts negative delta; position sign, model and reporting units matter.
Delta (Order Flow): Buyer-initiated volume minus seller-initiated volume under a feed or platform classification. Positive delta does not mean trades lacked sellers or guarantee that price will rise. CME order functionality
Demo Account: An account simulating trading results. Data can be live, delayed or generated, and fills can differ from real execution; subscriptions or evaluation fees may still involve real money.
Depth of Market (DOM): An interface displaying the market-depth data delivered by its feed, often with order-entry controls. Coverage can omit hidden orders, venues or deeper levels.
DEX (Decentralized Exchange): A trading protocol commonly using smart contracts, order books or liquidity pools. Noncustodial execution does not eliminate smart-contract, governance or interface risks.
Distribution: Reducing or transferring a position over time; in chart analysis, also a proposed interpretation of a range. The chart alone does not prove informed selling or a coming breakdown.
Divergence: A difference between selected price and indicator behavior, such as a higher price high with a lower indicator high. It is an observation, not proof of an imminent reversal.
Double Bottom: A chart pattern with two approximate lows separated by a rebound. Some methods require a break above the intervening high; neither the shape nor that trigger guarantees a reversal.
Double Top: A chart pattern with two approximate highs separated by a decline. Some methods require a break below the intervening low; the interpretation remains uncertain.
Drawdown: A decline from a prior peak in a specified account or return measure. A hypothetical fall from $50,000 to $45,000 is $5,000 or 10%; cash flows and balance-versus-equity conventions affect account calculations.
Drawdown, EOD (End-of-Day): A trailing-threshold method whose reference or floor is recalculated at a defined daily close. Breach monitoring can still occur intraday; EOD does not mean intraday losses are ignored.
Drawdown, Intraday: A threshold method that can update its high-water reference during the session, sometimes using unrealized equity. Reference values, stop-trailing levels and breach rules are programme-specific.
Drawdown, Static: A loss floor set under fixed-reference rules rather than continuously following new profits. Withdrawals, resets or other contract events can still affect the applicable limit.
Drawdown, Trailing: A loss threshold that follows a specified high-water reference under the programme's rules. It may use balance or equity, update at different times and stop trailing at a defined level.
Drawdown Buffer: The difference between the value used for breach monitoring and the applicable loss floor. Include relevant fees and open PnL; the rule may treat touching the floor as a breach.
E
EA (Expert Advisor): A MetaTrader program that can analyze information or automate trading actions. Permissions, events and implementation determine what it actually does; it is distinct from a one-off script.
Economic Calendar: A schedule of upcoming economic reports and events (CPI, NFP, FOMC, GDP, etc.) with time, actual/expected values. Essential reference for news-aware traders.
Edge: A proposed positive expected net outcome under specified assumptions. Evidence of an edge requires more than a high win rate and remains uncertain outside the observed sample.
Entry: The price and moment at which you open a trade position. Entry criteria are the specific conditions that must be met before you take a trade.
EOD (End of Day): End of the trading day. Many prop firm rules reference EOD drawdowns and position closing requirements.
Equity: A marked account value incorporating open-position results and relevant adjustments. Balance plus unrealized PnL is a simplified illustration; credits, fees, blocked amounts and settlement conventions can alter the platform formula.
Equity Curve: A time series of account equity or strategy value. Deposits, withdrawals, valuation frequency and omitted open losses can change its appearance; smoothness alone does not prove reliable profitability.
Equity High: The highest equity observed under a selected measurement convention. A prop rule may use a different high-water reference or update frequency, so its floor need not follow this value.
ES (E-mini S&P 500): CME E-mini S&P 500 futures. The multiplier is $50 per index point and the ordinary outright tick is 0.25 points, worth $12.50 per contract. CME contract fact card CME current index FAQ
Evaluation: A programme stage requiring specified objectives and rule compliance, often in simulation. Passing can lead to another simulated stage or eligibility review rather than immediate live trading.
Evaluation Fee: A charge for access to a programme evaluation, which may recur or be supplemented by reset or activation charges. Payment does not guarantee passing, a refund or a reward.
Exchange: An organized venue governed by trading and listing rules. CME, CBOT, NYMEX and COMEX are individual exchanges within CME Group; a broker or software platform is a different role.
Exchange-Traded Fund (ETF): A fund whose shares trade on an exchange. It may track an index or be actively managed; diversification, leverage and holdings depend on the particular fund. SEC ETF statement
Exhaustion: A trader's interpretation that a move is losing momentum or participation. Price and volume alone cannot establish that all potential buyers or sellers have acted.
Expectancy: An estimated average result per trade. For a win/loss model: win probability times average win minus loss probability times average loss, with costs handled consistently. Sample estimates do not guarantee future profit.
Expected Value (EV): A probability-weighted average of possible outcomes under a model. Positive modeled EV does not guarantee profit in a finite sample or prove that the probabilities are correct.
Expiration: The contract-defined end of an option's exercise life or a derivative's trading/contract period. Last trading, exercise, delivery and settlement dates can differ; check the exact contract.
Extrinsic Value: Option premium above intrinsic value under the quoted convention. Time, volatility, rates and other inputs affect it; a quoted premium does not necessarily decline smoothly each day.
F
Fair Value Gap (FVG): A chart-analysis label commonly applied to a three-candle non-overlap zone. It does not mean trades had only buyers or only sellers, prove fair value, or guarantee that price will return.
Fibonacci Retracement: Reference levels drawn between selected price extremes using ratios associated with Fibonacci analysis. The commonly included 50% level is not a Fibonacci ratio; no level guarantees support or resistance.
Fill: When your order executes successfully. "I got filled at 4700.25" means your trade executed at that price.
Fill or Kill (FOK): An order that must be executed immediately and in its entirety, or it is canceled completely. No partial fills allowed.
FIX Protocol (Financial Information eXchange): A standardized messaging protocol used for real-time electronic exchange of trading information between brokers, exchanges, and institutions.
Flag Pattern: A consolidation following a sharp move, described as a flag beside a pole. Continuation is a trading hypothesis, not an inevitable resolution.
FOMC (Federal Open Market Committee): The Federal Reserve committee that directs open-market policy and sets the target range for the federal funds rate. It does not directly set every borrowing or market interest rate. Federal Reserve policy overview
Footprint Chart: A display of executed volume grouped by price and interval, often split by aggressor classification. Coverage and classification depend on the feed and platform.
FOMO (Fear of Missing Out): The anxiety of watching a market move without being in the trade, often leading to chasing entries at bad prices.
Forex (Foreign Exchange): Trading one currency against another. Cash currency transactions, OTC leveraged contracts and exchange-traded currency derivatives have different structures and rules.
Forward Contract: A bilateral agreement defining a future transaction or settlement, commonly negotiated OTC. Terms can be customized, and collateral, clearing and counterparty arrangements vary.
Front Month: The nearest listed futures expiry under the convention being used. It need not be the most actively traded or the appropriate contract to hold near delivery.
Fundamental Analysis: Analyzing the intrinsic value of an asset based on economic data, financial statements, industry trends, and macroeconomic conditions. Contrasted with technical analysis.
Funded Account: A commercial label that can refer to a simulated account with conditional real rewards or an actual live trading account. The agreement, not the label or displayed notional balance, establishes the arrangement. Topstep programme stages Topstep simulated-account parameters
Funded Trader: A participant in an account or programme marketed as funded. This does not by itself prove live market execution, ownership of the displayed capital or guaranteed payment.
Funding Rate: A periodic transfer mechanism used by some perpetual derivatives to influence their relationship with a reference price. Positive rates commonly mean longs pay shorts, but calculation, timing and caps are venue-specific.
Futures: Standardized derivative contracts with defined settlement obligations, commonly exchange traded and centrally cleared. They can settle in cash or by physical delivery and do not require outright ownership of the underlying.
G
Gamma (Options): A model sensitivity describing how delta changes with a small underlying-price change, holding other inputs constant. Gamma varies with moneyness, time and volatility; position quantity and direction affect portfolio exposure.
Gap: A discontinuity between observed prices or chart intervals. A chart gap can reflect session settings or missing data, so it does not always prove that no trading occurred anywhere in that range.
Gas Fee: A blockchain transaction-processing charge under the network's rules. Fees can include amounts paid to validators and amounts burned; treatment differs across networks.
GC (Gold Futures): The COMEX Gold futures contract with a size of 100 troy ounces. It has physical-delivery specifications and is distinct from smaller or cash-settled gold products. CME Gold specifications
Going Long: Holding a positive exposure, often through buying an asset or derivative. The effect of a price move depends on the instrument; a long put is long an option but generally has negative underlying-price exposure.
Going Short / Short Selling: Taking negative exposure, such as borrowing and selling shares or selling a futures contract. Futures short positions do not require borrowing the underlying; costs and potential losses depend on the instrument.
Good 'Til Canceled (GTC): An order intended to remain working beyond the current session until filled or canceled, subject to broker or venue expiry limits and other cancellation events. It is not necessarily valid indefinitely.
Greeks: Model sensitivities used to describe derivative exposures, including delta, gamma, theta, vega and rho. They are local approximations with reporting conventions, not guarantees of a future price change. OIC option Greeks
Grind: A slow, steady price movement in one direction without sharp pullbacks. Also describes the daily routine of a disciplined trader.
H
Harmonic Patterns: Advanced chart patterns (Gartley, Butterfly, Bat, Crab) defined by precise Fibonacci ratios between swing points. Used to identify potential reversal zones.
Head and Shoulders: A bearish reversal chart pattern showing three peaks, where the middle peak (head) is highest, flanked by two lower peaks (shoulders). A break below the neckline signals a potential downtrend.
Heat Map: A visual representation using color intensity to show relative strength or weakness across multiple instruments, sectors, or price levels simultaneously.
Hedging: Taking an exposure intended to offset a specified risk. A hedge can be imperfect because of basis, quantity, timing or product differences and can introduce costs and other risks.
Hidden Divergence: A named price/indicator pattern, such as a higher price low alongside a lower oscillator low. Some methods interpret it as continuation; that interpretation is not a guaranteed outcome.
High-Frequency Trading (HFT): Automated trading that relies heavily on rapid data processing and order activity. Speed and message rates vary, and its effects on market conditions can matter to other participants.
Holding Period: The length of time a position is kept open, from entry to exit. Scalpers hold for seconds to minutes; swing traders hold for days to weeks.
I
Iceberg Order: An order that displays only part of its total size, with replenishment governed by venue or platform rules. The visible quantity does not identify the owner or reveal all remaining liquidity.
Impermanent Loss: The difference between a liquidity-pool position's value and a defined hold-the-assets benchmark as relative token prices change, before or with fees as specified. The shortfall can exist before withdrawal and need not reverse; the name does not mean the loss is harmless or temporary. Uniswap liquidity risks
Implied Volatility (IV): A volatility input inferred from an option's price using a pricing model. It reflects market pricing of risk as well as expectations and need not equal subsequent realized volatility.
Indicator: A calculated measure using inputs such as prices, volume or other data. Settings and inputs determine what it measures; a label such as overbought does not prove mispricing.
Inside Bar: A candle whose high-low range lies within the preceding candle's range under the chosen equality convention. It describes the observed range, not the timing or direction of a future breakout.
Interest Rate Differential: A difference between specified interest rates. Match currency, maturity and credit basis; a policy-rate gap is not automatically the carry paid by a retail broker.
Intraday: Within a single trading session. An "intraday trader" opens and closes all positions within the same trading day.
Intrinsic Value: For an ordinary call, max(underlying price minus strike, 0); for a put, max(strike minus underlying price, 0), before the contract multiplier. It is distinct from the total premium.
Iron Condor: An options combination commonly formed from a put credit spread and a call credit spread with the same expiry. Its defined terminal payoff assumes the intended legs remain in place; assignment and execution can create additional operational exposure.
Island Reversal: A chart pattern where a group of candles is isolated by gaps on both sides, forming an "island." A bearish island reversal gaps up then gaps down; a bullish island reversal gaps down then gaps up.
J
Journal (Trading Journal): A record of decisions, orders, executions and context. It can support review and error detection, but keeping a journal does not establish an improvement in returns.
K
Kelly Criterion: A position-sizing framework that maximizes expected logarithmic wealth under a specified probability model. Estimation error and changing outcomes can make full-model allocations hazardous; it is not a universal recommended risk percentage. Kelly's original paper
Key Level: A price reference selected from prior behavior, such as a session high or repeated turning area. Its future importance is a hypothesis rather than an established barrier.
Knife Catch: Attempting to buy an instrument during a sharp decline, hoping to time the exact bottom. High risk because the decline may continue.
L
Latency: Delay between specified events, such as sending an order and receiving an acknowledgement. Network round-trip time, quote age and execution delay differ; low latency does not guarantee a fill.
Leverage: Economic exposure larger than the capital supporting it. A hypothetical $10,000 linear exposure supported by $1,000 equity is 10:1; derivative leverage need not involve borrowing the remaining amount.
Limit Down: A lower price boundary under a venue's price-limit rules. Reaching it can restrict executable prices or trigger a pause depending on the contract and session; a universal full-day halt should not be assumed.
Limit Order: An instruction to buy at a specified price or lower, or sell at that price or higher. It can execute immediately if marketable, rest unfilled or fill partially; touching the limit does not guarantee execution.
Limit Up: An upper price boundary under venue rules. The applicable limits and whether trading pauses or continues within a band depend on the product and session.
Liquidation: Closing or disposing of a position. Forced liquidation can occur under broker or programme rules for margin, risk, expiry or other reasons, potentially without prior notice.
Liquidity: The ability to transact a specified quantity at a reasonable cost and price impact. Spreads, depth and resiliency vary over time; a liquid-market label does not guarantee an immediate fill.
Liquidity Pool: Assets supplied to a protocol for functions such as automated market making. Fee income is conditional and must be considered alongside price divergence, contract and other risks.
Live Account: An account used for actual financial positions or transactions rather than simulated execution. Capital ownership, legal entity and account terms remain separate questions.
Long: See "Going Long."
Loss Aversion: A behavioral concept describing disproportionate sensitivity to losses relative to comparable gains in some decision settings. It does not diagnose an individual or explain every losing trade.
Lot: A quantity convention used for an instrument. In common retail forex terminology a standard lot is 100,000 base-currency units, but contract and broker specifications govern the actual unit.
Low Float: A relatively small quantity of shares available for public trading under the data provider's definition. It can contribute to liquidity and volatility risks but does not determine future price movement.
M
MACD (Moving Average Convergence Divergence): A popular trend-following indicator showing the relationship between two exponential moving averages. Used to identify momentum and potential trend changes.
Margin: Collateral or equity required under an account's rules. Futures margin is a performance bond, while securities margin can involve borrowing; amounts vary with product, position, broker and market conditions. CME margin explanation
Margin Call: A notice or requirement to remedy a margin deficiency. Firms can have liquidation rights without first providing a call or waiting period; read the account agreement. FINRA margin calls
Market Depth: Displayed quantities at price levels within a particular feed's coverage. It can omit hidden liquidity, other venues or prices beyond the supplied range.
Market Hours: The sessions during which a particular product can trade. Check the exchange and broker calendar for maintenance breaks, holidays, timezones and daylight-saving effects.
Market Maker: A participant that quotes buying and selling interest, sometimes under venue obligations. Spreads are a potential revenue source, not guaranteed profit after inventory and adverse-selection risk.
Market on Close (MOC): An order intended for execution at a venue's official closing process, often a closing auction. Submission, cancellation and execution rules are venue-specific.
Market Order: An order prioritizing execution against available prices. It does not guarantee a particular price, immediate completion or execution during a halt, rejection or lack of liquidity.
Market Structure: In chart analysis, the arrangement of trends, ranges and swings. In market design, the term also covers venues, participants and trading rules; specify which meaning is intended.
Maximum Adverse Excursion (MAE): The most unfavorable marked move during a trade, measured from entry under specified price and cost conventions. Historical MAE can inform research but does not establish an optimal future stop.
Maximum Drawdown: The largest observed peak-to-trough decline in a specified value series. A programme's allowed loss threshold is a separate contractual rule that may use different measurements.
Maximum Favorable Excursion (MFE): The most favorable marked move during a trade under a selected measurement convention. It is not necessarily an executable profit that could have been captured.
Mean Reversion: A hypothesis or model that a specified variable tends back toward a reference level. Prices need not revert to a fixed historical average, and the reference itself can change.
MES (Micro E-mini S&P 500): CME Micro E-mini S&P 500 futures, with a $5-per-point multiplier and a 0.25-point outright tick worth $1.25. Smaller size than ES does not establish suitability or limited loss.
Micro Futures: A naming convention for smaller futures contracts relative to specified counterparts. Multipliers and settlement rules must be checked individually; not every micro product follows the same size ratio.
Micro Lot: In common retail forex terminology, 1,000 base-currency units. Pip value also depends on the pair, account currency and exchange rate; a small unit does not remove leverage risk.
Minimum Trading Days: A programme requirement for activity on a specified number of qualifying days. Evaluation days, profitable days and payout days can have different definitions and thresholds.
MNQ (Micro Nasdaq): CME Micro E-mini Nasdaq-100 futures, with a $2-per-index-point multiplier, one tenth of NQ's. Its ordinary outright tick is 0.25 points, worth $0.50.
Momentum: The rate of price change. Strong momentum means price is moving quickly in one direction. Momentum traders enter in the direction of the existing trend.
Monte Carlo Simulation: Repeated sampling from a specified model to explore possible outcomes. Results depend on distribution and dependence assumptions and cannot identify every possible worst-case loss.
Moving Average (MA): An indicator that smooths price data by calculating the average price over a set period. Common: 20-period, 50-period, 200-period moving averages.
Moving Average Crossover: An event where one moving average crosses another. Terms such as golden cross describe chosen settings; a crossover is not evidence by itself of profitable future direction.
N
Naked Option: An uncovered short option position lacking the appropriate offsetting asset or protective structure. Uncovered calls can have theoretically unlimited loss; collateral requirements do not by themselves cap the contractual risk.
NFP (Non-Farm Payroll): Common shorthand for US nonfarm payroll employment data within the BLS Employment Situation release. Use the published release calendar rather than assuming it always occurs on the first Friday. BLS release calendar
NinjaTrader: A brand offering futures brokerage and trading-platform products, including desktop software. Broker access, add-ons and prop-programme compatibility require current account-specific checks.
Noise: Variation treated as uninformative under a particular model or research question. Observed price movement cannot be identified as meaningless with certainty merely because it occurs on a short timeframe.
Notional Value: A reference exposure calculated from contract price, multiplier and quantity where applicable. Hypothetically, one ES contract priced at 5,000 has $250,000 notional value; this is not its margin requirement or a complete risk measure.
NQ (E-mini Nasdaq-100): CME E-mini Nasdaq-100 futures, with a $20-per-index-point multiplier. The reference is Nasdaq-100, not the broader Nasdaq Composite.
No-Trade Zone: A predefined time, condition, or price area where a trader deliberately avoids taking trades. Common no-trade zones include the first 5 minutes after open or periods around major news releases.
O
Open Interest: Outstanding derivative contracts not closed or otherwise extinguished, counted once per matched long-short contract. A change in open interest does not establish market direction or trend durability.
Open Position: A trade that has been entered but not yet exited. Your position is "open" from entry to exit.
Order Block: A chart-analysis label for a zone selected under a particular method, including some ICT-style approaches. A candle pattern alone cannot verify institutional orders or guarantee a future reaction.
Order Flow: Order and execution activity within an observed market or feed. Analysis can classify transactions and depth changes, but generally cannot reveal every participant's identity or complete intention.
Order Routing: The path and decisions used to send an order toward an execution venue or counterparty. Routing, risk checks and market conditions can affect outcomes; not every order goes to an exchange.
Oscillator: An indicator that moves around a reference or within a range. Some are bounded, such as RSI; others, such as CCI, do not have fixed numerical limits.
Overbought: A label for an indicator or price meeting a chosen upper-condition threshold, such as an RSI setting. It does not prove an asset is overvalued or must decline.
Over-Leveraging: Exposure judged excessive relative to a defined risk budget or financial capacity. It can magnify losses, but no universal ratio or unsupported ranking of causes defines it.
Overnight Position: A trade held past the end of a trading session into the next day. Some prop firms prohibit overnight positions.
Oversold: A label for a selected lower-condition threshold in an indicator or price measure. It does not prove undervaluation or guarantee a rebound.
Out of the Money (OTM): An options term. A call option is OTM when the underlying price is below the strike price; a put option is OTM when the underlying price is above the strike price. OTM options have no intrinsic value.
P
Paper Trading: Simulated trading used to practice or research. Execution assumptions can differ from live markets, and software or access fees may still be real expenses.
Payout: A payment from a programme or account under its terms. A retail prop reward may be based on simulated performance rather than withdrawal of owned live trading profits; eligibility and approval conditions matter.
Payout Cycle: A programme-defined period or sequence relevant to requesting a payment. Its start, reset, qualifying days and relationship to consistency tests vary.
Pennant: A chart pattern of converging reference lines after a sharp move. A continuation interpretation must be tested rather than assumed.
Pip (Percentage in Point): A conventional forex price unit: commonly 0.0001 for many pairs and 0.01 for yen-quoted pairs. Fractional-pip quotes mean a pip need not be the smallest available increment.
Platform: Software for functions such as analysis, data display or order entry. A platform is not automatically a broker, and supported instruments depend on its connections and permissions.
Point of Control (POC): In a volume profile, the price bin with the greatest recorded volume in the selected sample. Bin size, feed and session settings affect it; it is not a guaranteed price magnet.
Position: A trade currently held (either long or short). Your position size is the number of contracts or shares you are holding.
Position Sizing: Selecting quantity based on exposure and a defined risk budget. For a linear position, stop distance times value per point times quantity estimates planned price risk before costs and imperfect execution.
Premium (Options): The price paid by the buyer to the seller for an options contract. Comprised of intrinsic value and extrinsic value.
Price Action: Analysis of observed price behavior, often emphasizing bars, swings and reference levels. It can be used with other data or indicators and does not reveal participant motives directly.
Profit Factor: Gross winning results divided by the absolute value of gross losing results for a defined sample. Cost treatment matters; a value above one before costs does not prove net or future profitability, and no-loss samples make the ratio undefined or uninformative.
Profit Sharing: See "Profit Split."
Profit Split: A stated division of eligible results or rewards between parties. An 80/20 trader/firm split illustrates 80% and 20%, but order conventions, deductions, caps and eligibility must be read in the agreement.
Profit Target: A planned profit exit or a programme's required result threshold. Reaching a target does not guarantee an order fill, passing every rule or receiving a payment.
Prop Firm: See "Proprietary Trading Firm."
Proprietary Trading Firm (Prop Firm): Traditionally, a business trading its own capital. Retail evaluation businesses also use the label for programmes that may involve paid simulation and conditional rewards; passing does not automatically create a live capital allocation.
Psychology (Trading Psychology): The study of how attention, beliefs and emotions relate to trading decisions. Psychological explanations do not replace evaluation of strategy, costs and market conditions.
Pullback: A temporary price decline within an ongoing uptrend (or a temporary rise within a downtrend). Traders often enter on pullbacks to join the prevailing trend at better prices.
Put Option: An option giving its holder a right linked to selling the underlying at the strike, subject to exercise style and settlement terms. A falling underlying does not guarantee a profit after premium and other pricing effects.
Pyramiding: Adding to an existing position as it moves favorably, under a chosen sizing rule. Later additions need not be smaller, and total risk can increase unless it is explicitly controlled.
Q
Quantitative Trading (Quant): Using mathematical models, data and statistical methods to develop or operate trading decisions. Model selection and implementation still involve human choices and uncertainty.
Quantower: Trading and analysis software with connection-specific capabilities. Verify the current broker, feed, licensing and account permissions instead of assuming universal prop-programme support.
R
Range: The difference between the high and low price of a candle, session, or period. An "inside range day" is a day where price stayed within the prior day's high and low.
Relative Volume (RVOL): Volume compared with a chosen historical baseline. A ratio of 2 means twice that baseline, but lookback, partial-session adjustment and time-of-day treatment depend on the calculation.
Replication (Sim-Funded): A programme label sometimes associated with simulated trading and potential real rewards. Sim-funded is not a standardized legal account type, and replication can have other meanings; read the actual agreement.
Reset: Restarting an evaluation or account stage under a provider's rules. Fees, eligibility and whether it is cheaper than a new evaluation must be verified for the selected programme.
Resistance: A price reference associated with earlier stalls or reversals. It is not a ceiling guaranteed by an observable excess of sellers, since each execution includes a buyer and seller.
Retail Trader: An individual participating outside an institutional trading role. Trading a retail evaluation does not establish ownership of a prop firm's advertised capital.
Retracement: A temporary reversal in the direction of the prevailing trend. Often measured using Fibonacci levels (38.2%, 50%, 61.8%).
Revenge Trading: Trading impulsively after a loss in an attempt to recover the lost money quickly. A destructive behavior driven by emotion rather than strategy.
Reward-to-Risk Ratio: Potential reward divided by the defined planned risk. For example, a $200 target relative to a $100 planned loss is 2:1 before costs and execution differences.
Risk Management: The systematic process of identifying, analyzing, and responding to trading risks. Includes position sizing, stop-losses, daily loss limits, and risk-reward ratio rules.
Risk of Ruin: A modeled probability of reaching a specified capital or operational failure threshold. It depends on the assumed outcome distribution, dependence, sizing and costs; it is not a certainty derived from win rate alone.
Risk-Reward Ratio (RR): A potentially ambiguous label: some writers quote risk:reward and others reward:risk. State the amounts explicitly; $100 planned risk for $200 potential reward is 1:2 risk:reward or 2:1 reward:risk.
Rho (Options): Model sensitivity to an interest-rate change, commonly quoted per one percentage-point move. A change from 4% to 5% is one percentage point; confirm the platform's scaling and position units.
Rithmic: A provider of market-data and execution technology. A compatible platform still needs the appropriate broker connection, entitlements and programme permissions.
Risk-Free Rate: A reference rate used to approximate a low-default-risk return for a specified currency and horizon. It is a modeling benchmark, not proof that an investment has no inflation, price or reinvestment risk.
Roll / Rolling: Closing exposure in one derivative expiry and opening another to change or maintain the horizon. Contract-price differences, execution costs and timing mean rolling does not preserve an identical position for free.
RSI (Relative Strength Index): A bounded momentum measure comparing smoothed gains and losses over a selected period. Conventional 70/30 thresholds are descriptive settings, not guaranteed reversal points.
RSI Divergence: When RSI moves in the opposite direction of price. Bearish divergence: price makes a higher high but RSI makes a lower high. Bullish divergence: price makes a lower low but RSI makes a higher low.
RTH (Regular Trading Hours): A session label whose definition depends on the product, exchange, data provider and chart template. US cash-equity hours are often used as a reference, but should not be assumed to define every futures RTH session.
RTY (Russell 2000 Futures): Futures contract tracking the Russell 2000 small-cap index. Each point = $50. CME RTY specifications
Runaway Gap: A retrospective label for a gap within a continuing move. Whether a gap is continuation or exhaustion may only become clear after later prices are observed.
S
Scalping: A short-holding-period style seeking relatively small price moves. It is distinct from institutional high-frequency trading; costs and execution quality can have a large effect on results.
Scaling: Increasing or reducing a position in stages, or changing programme limits under a separate scaling plan. Scaling in is not restricted to winning positions and can increase risk.
Scaling Plan: Programme-specific rules for changing notional account size, position limits or live allocations. Increases and eligibility are conditional; a larger displayed balance need not be additional owned capital.
Session: A defined trading or analysis period. Exchange sessions, broker risk days and regional labels can use different boundaries and timezones.
Settlement: Discharging trade obligations. Futures also undergo periodic marking to market; final settlement may involve cash or physical delivery according to the contract. Retail participation does not change a deliverable contract into cash settlement.
Sharpe Ratio: Mean excess return divided by the standard deviation of the corresponding return series under a stated convention. Frequency, annualization, costs and sample quality matter; a high sample ratio is not proof of low tail risk or future performance. Sharpe's original paper
Short: See "Going Short."
Sim Account / Simulated Account: A practice account using simulated (not real) capital. Used for learning and evaluation at prop firms.
Slippage: The difference between a chosen reference price and the executed price. It can be favorable or adverse; reference timing, quantity, liquidity and order type affect its measurement.
Smart Order Routing (SOR): Automated selection of execution routes using configured factors such as price, liquidity and venue rules. It does not guarantee the best eventual fill in every market condition.
Sortino Ratio: A return measure relative to a chosen target, scaled by a downside-deviation measure. Target, observation frequency and formula conventions matter; it is not universally more precise or superior to Sharpe.
Spoofing: In the relevant US futures prohibition, bidding or offering with intent to cancel before execution. A cancellation alone does not establish that intent or prove unlawful conduct. CFTC spoofing explanation
Spread: The difference between two quoted prices, often the best ask minus best bid. It is one component of trading cost; the term can also describe multi-leg positions or yield differences.
Staking: Committing eligible tokens to a proof-of-stake mechanism directly or through a service. Rewards, lockups, slashing and counterparty risks depend on the arrangement; it is not equivalent to insured deposit interest.
Standard Deviation: The square root of variance, measuring dispersion around a mean in the units of the input series. Specify whether inputs are prices, returns or another measure before interpreting it as volatility.
Stochastic Oscillator: An indicator comparing the close with a selected high-low range, often smoothed. Conventional 80/20 thresholds do not guarantee overvaluation, undervaluation or reversal.
Stop-Loss: A planned exit condition or associated order intended to limit an adverse result. Actual loss can exceed the plan because of gaps, slippage, outages or nonexecution.
Stop-Loss, Hard: An entered protective order rather than an unsubmitted intention. Its storage, trigger and execution behavior depend on the broker, venue and order type; it does not guarantee a price.
Stop-Loss, Mental: An intended exit that has not been entered as an order. Acting on it requires the trader and an available execution route, introducing decision and connectivity dependence.
Stop Order: An order activated when the specified trigger condition is met. A stop-market becomes a market order and a stop-limit becomes a limit order; trigger conventions and protections differ by venue.
Strike Price: A contract price used in an option's exercise or cash-settlement calculation. Exercise style and settlement method determine whether underlying delivery occurs.
Supply and Demand Zone: A chart reference drawn around prior price behavior under a particular method. It does not directly measure all supply or demand or guarantee a reaction on a revisit.
Support: A price reference associated with earlier rebounds or pauses. It can fail and does not reveal a guaranteed floor or the intentions of all participants.
Swap Rate: In retail forex, commonly an overnight financing adjustment whose calculation includes provider terms, currency rates and possible markups. A swap rate has other meanings in interest-rate derivatives; it is not always a simple policy-rate difference.
Swing High: A local high under a specified lookback and confirmation rule. A definition requiring later lower highs can only be confirmed after those later observations occur.
Swing Low: A local low under a specified lookback and confirmation rule. Requiring later higher lows introduces a confirmation delay that historical charts can conceal.
Swing Trading: Holding trades for multiple days or weeks, aiming to capture "swings" in a trend. Requires overnight holding permission at prop firms.
Symmetrical Triangle: A chart pattern formed by converging trendlines where the slope of the highs and lows converge toward a point. Can break in either direction; traders wait for the breakout to determine bias.
T
Take Profit: An intended favorable exit level or related order. Reaching the displayed level does not guarantee execution or a particular net profit.
1-Step Evaluation: An evaluation structure with one required assessment phase. Subsequent checks and account stages can still apply; one phase does not guarantee easier rules or faster completion.
2-Step Evaluation: An evaluation structure with two required assessment phases. Targets, loss limits and subsequent simulated or live stages vary by programme.
Tape Reading: The skill of analyzing time and sales data (the "tape") to gauge real-time order flow, identifying large trades, speed of execution, and buyer/seller aggression.
Technical Analysis: Analyzing price charts and indicators to make trading decisions, based on the premise that historical price patterns tend to repeat.
Theta (Options): Model sensitivity to the passage of time, commonly quoted per day with other inputs held constant. Sign and magnitude depend on the option or position; decay does not accelerate identically for every contract.
Tick: A minimum permitted price increment under the instrument and trade-type rules. For ordinary outright ES it is 0.25 points ($12.50), and for MES 0.25 points ($1.25); tick can also mean a data update in another context.
Tick Size: The minimum price increment for an instrument. Varies by contract.
Tilt: An emotional state where frustration or anger from recent losses impairs decision-making, leading to irrational trades. Borrowed from poker terminology.
Time and Sales: A feed's chronological record of reported executions, with fields such as time, price and quantity. Coverage, aggregation, corrections and timestamps determine what is visible.
Timeframe: The interval used to group observations on a time-based chart. Tick, volume and range bars use different completion rules and need not represent equal durations.
Tradovate: A futures brokerage and trading-platform brand. Products, supported connections and programme access must be checked for the actual account and current offering.
Trailing Stop: An exit order whose trigger follows favorable movement according to a selected rule. It can still execute beyond the trigger or fail to fill depending on order type; it does not guarantee locked-in profit.
TradingView: A charting and analysis platform with broker integrations for supported accounts. A chart or published symbol does not by itself establish order-entry access or a prop firm's permission.
Trend: A directional price movement over time. Uptrend: higher highs and higher lows. Downtrend: lower highs and lower lows.
Trend Following: A trading strategy that enters trades in the direction of an established trend, aiming to ride it until it shows signs of reversal.
Triangle Pattern: A chart configuration bounded by converging reference lines. Ascending, descending and symmetrical labels describe geometry, not guaranteed breakout direction.
True Range: The greatest of: current high minus current low, absolute value of current high minus previous close, or absolute value of current low minus previous close. The basis for the ATR indicator.
U
Underlying: The asset, index, rate or other reference on which a derivative is based. It need not be a directly purchasable security; ES references the S&P 500 index.
Unrealized PnL: A marked gain or loss on an open position under the platform's valuation convention. It is not necessarily the amount executable immediately after spread, costs or market impact; settlement practices can also book results before a position is closed.
V
Value Area: A volume-profile range constructed to include a selected proportion of recorded volume, commonly 70%. Algorithm, binning and feed matter; the label does not establish fair value or guaranteed reversion.
Variance: A measure of squared dispersion around a mean under a specified population or sample formula. Standard deviation is its square root; return variance is expressed in squared return units.
Vega (Options): Model sensitivity to implied volatility, commonly quoted per one percentage-point change. Moving from 20% to 21% is one percentage point, not a 1% relative increase; confirm scaling and contract units.
Volatility: Variation in a specified price or return series over a defined period, or an implied measure inferred from options. Measurement settings matter, and greater volatility does not establish direction or profitability.
Volume: Quantity executed during a period, such as shares or contracts, counted under the feed's convention. High volume does not by itself validate a breakout or identify trader intent.
Volume Profile: A histogram of recorded volume grouped by price over a selected sample. Feed coverage, price binning and session settings affect the result.
Volume Weighted Average Price (VWAP): The sum of price times associated volume divided by total volume over a defined sample. Feed coverage and calculation method matter; being above or below VWAP is not proof of sentiment or future direction.
VPS (Virtual Private Server): A remotely hosted virtual machine. It can run compatible software independently of a local computer, but uptime, execution latency and account permission are not guaranteed. Topstep API restrictions
W
Wash Trade: A transaction or arrangement lacking a bona fide market position or risk transfer under the applicable rule. Matching opposite orders alone is not sufficient to resolve intent or legality; this differs from the tax term wash sale. CME wash-trade rule
Wedge Pattern: A chart configuration with converging boundaries sloping in the same direction. A rising or falling wedge does not guarantee a bearish or bullish outcome.
Whipsaw: A rapid price move in one direction followed by an immediate reversal. Common in choppy, range-bound markets and during news events.
Wick (Shadow): The part of a candle extending from its body toward the high or low. It records price range outside the open-close interval, not verified rejection or participant intent.
Win Rate: Winning trades divided by total trades under a stated treatment of breakeven trades and costs. A hypothetical 50% rate means half qualified as wins; average gains, losses and costs determine the net result.
Walk-Forward Analysis: Repeated development on one historical window followed by evaluation on a later window. It helps separate fitting and testing but can still suffer from leakage, repeated selection and unrealistic costs.
X, Y, Z
Yield Curve: Yields plotted against maturities for a specified set of debt instruments. Credit quality, currency and instrument type affect comparisons; an inverted curve does not guarantee a recession on a fixed schedule.
YM (Dow Jones Futures): E-mini Dow Jones futures contract. Each point = $5.
ZB (30-Year Treasury Bond Futures): CBOT Treasury Bond futures, commonly called the classic bond contract. Its deliverable basket uses eligible bonds with at least 15 and less than 25 years remaining maturity at the contract-defined date, so the nickname does not mean delivery of a newly issued 30-year bond. CME deliverable-basket guide
Zero-Sum Game: A setting where participant gains and losses sum to zero under the defined accounting. Matched futures price gains and losses offset before costs, while hedging benefits and wider economic outcomes are separate questions.
For worked explanations, see market types, options mechanics and order-flow data. The update date records this written glossary review; it does not certify every provider's current commercial terms.