Learn / Glossary
Trading glossary
Plain definitions of the words you'll meet in your first lessons. 22 terms, written to be understood without a finance degree.
A
- AskOrder Types
- The lowest price a seller is currently willing to accept for an asset. Also called the 'offer'.
B
- BacktestStrategies
- Testing a strategy's rules on past price data to see how they would have performed.
- BidOrder Types
- The highest price a buyer is currently willing to pay for an asset.
- BreakoutStrategies
- Price moving decisively out of a range or pattern.
C
- CandlestickCharts
- A chart symbol showing a period's open, high, low and close. The body spans open to close; the wicks reach the high and low.
D
- DrawdownRisk Management
- The decline from a portfolio's peak value to a subsequent low, usually expressed as a percentage.
L
- LeverageRisk Management
- Using borrowed capital to increase position size beyond what your own capital would allow. It magnifies both gains and losses.
- Limit OrderOrder Types
- An order to buy or sell at a specific price or better; it may not fill immediately, or at all.
- LiquidityMarket Structure
- How easily an asset can be bought or sold without significantly moving its price.
M
- Market OrderOrder Types
- An order to buy or sell immediately at the best currently available price.
- Mean ReversionStrategies
- The tendency of stretched prices to drift back towards their average, and strategies that bet on it.
- Moving AverageIndicators
- The average closing price over a set number of periods, recalculated each period.
P
- Position SizeRisk Management
- The amount of capital or number of units committed to a single trade.
R
- R MultipleRisk Management
- A trade's result divided by the amount risked. Risking €50 and making €100 is +2R.
- RSIIndicators
- The Relative Strength Index: a 0 to 100 measure of recent gains against recent losses.
- ResistanceCharts
- A price area where rises have repeatedly stalled because sellers stepped in.
- Risk/Reward RatioRisk Management
- The potential loss on a trade compared to its potential gain, e.g. risking €1 to make €3 is a 1:3 ratio.
S
- SpreadOrder Types
- The difference between the bid and ask price. A narrower spread generally means a more liquid market.
- Stop-LossRisk Management
- An instruction to close a position automatically once price reaches a level that limits further loss.
- SupportCharts
- A price area where falls have repeatedly stopped because buyers stepped in.
T
- TrendlineCharts
- A line connecting swing lows in an uptrend, or swing highs in a downtrend.
V
- VolatilityMarket Structure
- A statistical measure of how much an asset's price fluctuates over a given period.
Education, not financial advice. Definitions are simplified for beginners.