Glossary

Opening and closing trades within the same day, never holding overnight.

Example: You buy a stock at 10:00 and sell it at 14:30 the same day.

Holding trades for a few days to a few weeks to capture a larger move.

Example: You buy on Monday after a price pullback and sell the following Thursday.

Very short trades — seconds to minutes — aiming for tiny gains many times.

Example: Entering and exiting 20 times in a morning for small gains each.

Holding trades for months, based on long-term trends.

Example: Buying in January and planning to review in June.

Price levels where the price has repeatedly stopped falling (support) or rising (resistance).

Example: A price bounced up from $50 three times — $50 is considered support.

The general direction of price over time: up, down or sideways.

Example: Higher highs and higher lows over several weeks suggest an uptrend.

A chart bar showing the open, high, low and close price for a period.

Example: A green daily candle means the price closed higher than it opened that day.

The average price over the last N periods, drawn as a smooth line.

Example: A 20-day moving average shows the average closing price of the last 20 days.

How much of an asset was traded during a period.

Example: A price jump with very high volume shows strong participation.

A pre-decided exit price that limits how much you can lose on a trade.

Example: You buy at $100 and set a stop at $95 — your maximum loss is $5 per share.

A pre-decided exit price where you lock in gains.

Example: You buy at $100 and set a take profit at $110.

Choosing how much to buy so that a stop loss only costs a small, planned % of your capital.

Example: With $1,000 and 1% risk, you can lose $10. A $5 stop means 2 shares.

Potential gain divided by potential loss for a trade.

Example: Risk $5 to possibly make $15 = 1:3 risk/reward.

Borrowed exposure that multiplies both gains and losses.

Example: 10x leverage: a 5% move against you becomes a 50% loss.

The money you deposit as collateral to open a leveraged position.

Example: To open a $1,000 position with 10x leverage, you put up $100 as margin.

Fear Of Missing Out — jumping into a trade because the price is already moving fast.

Example: A coin is up 30% today and you buy just because everyone is talking about it.

Trading impulsively to 'win back' a recent loss.

Example: After losing $50 you immediately open a bigger trade to recover it.

Taking too many trades, often from boredom or excitement.

Example: Planning 2 trades a day and ending up doing 12.

Following your own rules even when emotions say otherwise.

Example: Exiting at your stop loss even though you 'feel' the price will come back.

Anything you can buy or sell in a market: a stock, a currency pair, a crypto coin, a commodity.

Example: Apple shares, EUR/USD and Bitcoin are all assets.

The short code used to identify an asset on an exchange.

Example: AAPL is Apple's ticker; BTC is Bitcoin's.

Buying an asset hoping its price will go up, then selling it later.

Example: You buy at $100 and sell at $110: a $10 gain per unit.

Selling an asset you borrowed, hoping to buy it back cheaper later.

Example: You short at $100 and buy back at $90: a $10 gain per unit.

The price at which you open a trade.

Example: You enter a long position at $42.50.

The price at which you close a trade, for a gain or a loss.

Example: You exit at your target of $47.

How much money a trade made or lost. 'Unrealized' while still open, 'realized' after closing.

Example: Bought 10 at $20, sold at $22: P/L is +$20.

How much and how fast a price moves up and down.

Example: A coin that moves 10% in a day is more volatile than one moving 1%.

How easily you can buy or sell an asset without moving its price much.

Example: Big stocks trade millions of shares a day — highly liquid.

A period where prices are generally rising.

Example: Many stocks making new highs for months.

A period where prices are generally falling, often 20%+ from the top.

Example: Indexes dropping steadily over a year.

The total value of a company's shares: share price × number of shares.

Example: 1 billion shares at $50 = $50B market cap.

A basket that tracks a group of assets to show how a market is doing.

Example: The S&P 500 tracks 500 large US companies.

A share of company profits paid to shareholders.

Example: A company pays $0.50 per share every quarter.

A raw material traded in markets, like gold, oil or wheat.

Example: Gold is often called a 'safe haven' commodity.

The foreign-exchange market, where currencies are traded in pairs.

Example: EUR/USD at 1.10 means 1 euro costs 1.10 dollars.

An order to buy or sell immediately at the best available price.

Example: You click buy and get filled at $50.02.

An order to buy or sell only at a chosen price or better.

Example: Buy limit at $48: it fills only if price reaches $48.

An order that becomes a market order once a set price is reached. Often used for stop-losses.

Example: Sell stop at $45 on a stock you bought at $50.

A stop-loss that moves with the price as the trade goes in your favour.

Example: A 5% trailing stop rises as the price climbs.

When your order actually executes.

Example: Your limit order at $30 was filled for 100 shares.

The difference between the price you expected and the price you got.

Example: You expected $20.00 but filled at $20.08.

Bid is the highest price buyers offer; ask is the lowest price sellers accept.

Example: Bid $9.98 / Ask $10.00.

The gap between the bid and the ask — a hidden cost of every trade.

Example: Bid $9.98, ask $10.00: the spread is $0.02.

The live list of buy and sell orders waiting at each price.

Example: Lots of buy orders stacked at $100.

How much of your account you're willing to lose on one trade, usually a small percentage.

Example: Risking 1% of a $5,000 account = $50.

How far your account has fallen from its highest point.

Example: Account went from $10,000 to $8,500: a 15% drawdown.

Borrowed money that lets you control a bigger position than your cash. It multiplies gains and losses.

Example: 10× leverage: $100 controls $1,000.

The money your broker holds as a deposit when you use leverage.

Example: You need $200 margin to open a $2,000 position.

A broker's demand to add funds because losses ate into your margin; they may close positions.

Example: Your leveraged trade drops and the broker closes it automatically.

Spreading money across different assets so one bad trade or sector hurts less.

Example: Not putting your whole account in one stock.

The average amount you can expect to win or lose per trade over many trades.

Example: (Win rate × avg win) − (loss rate × avg loss).

The chance of losing so much you can't keep trading.

Example: Risking 20% per trade makes ruin very likely after a few losses.

Taking too many trades, often out of boredom or emotion.

Example: Ten trades in a day when your plan allows two.

How much time each bar or candle on a chart represents.

Example: On a 1-hour chart, each candle is one hour.

The thin line on a candle showing the highest and lowest prices reached.

Example: A long upper wick: price went up but got pushed back down.

How many units traded during a period.

Example: A breakout on high volume is seen as stronger by many traders.

When price moves beyond a support or resistance level.

Example: Price closes above a $50 resistance it touched three times.

A temporary move against the main trend.

Example: In an uptrend, price dips for two days before rising again.

When a trend changes direction.

Example: A long uptrend turns into lower highs and lower lows.

A period where price moves sideways in a narrow range.

Example: Price stays between $20 and $22 for two weeks.

A jump between one bar's close and the next bar's open with no trades in between.

Example: A stock closes at $30 and opens at $33 after news.

A calculation drawn on a chart (like RSI or moving averages) to help read price.

Example: RSI above 70 is often called 'overbought'.

Relative Strength Index: a 0–100 indicator of how strong recent moves were.

Example: RSI under 30 is often described as 'oversold'.

A shape on a chart that traders recognize, like triangles or double tops.

Example: A 'double top' shows price failing twice at the same high.

Fear of missing out — jumping into a trade because price is moving fast.

Example: Buying after a huge green candle because 'everyone is'.

Trading right after a loss to win the money back quickly.

Example: Doubling size after losing to 'get even'.

Only noticing information that agrees with what you already think.

Example: Reading only bullish posts about an asset you own.

Losses feel worse than equal gains feel good, so people hold losers too long.

Example: Refusing to close a losing trade hoping it comes back.

Following your plan and rules even when emotions say otherwise.

Example: Skipping a trade because the checklist wasn't met.

An emotional state where frustration leads to bad decisions.

Example: Three losses, then impulsive trades without a plan.

Judging trades by whether you followed your plan, not just by profit.

Example: A losing trade that followed every rule is still a good trade.

A company that lets you buy and sell assets through an account.

Example: You open an account, deposit money and place orders in their app.

The marketplace where buyers and sellers meet.

Example: The New York Stock Exchange, or a crypto exchange.

Practising with fake money in a simulated account.

Example: Trying a strategy for a month before risking real cash.

Costs your broker charges per trade or per month.

Example: $1 per trade × 100 trades = $100 in fees.

Government oversight that sets rules for brokers to protect customers.

Example: Checking a broker is licensed in your country.

The smallest amount a broker requires to open an account.

Example: Some brokers need $0, others $1,000+.

The time it takes for a trade's money and assets to officially change hands.

Example: Many stock trades settle one business day after the trade.

Many countries tax trading profits; rules vary by place.

Example: Keeping your journal helps when reporting gains.