Trading terms, in plain English.
136 terms used in the lessons, each with a short definition and the lessons that explain it.
A
- Accumulation
A sideways phase after a fall in which large players quietly build positions before price moves higher.
- ATR (average true range)
The average size of a price bar over a period, usually 14 bars. A simple way to measure how much a market normally moves.
B
- Backtest
Testing a set of trading rules on past charts to see how they would have worked.
- Bias
Your expected direction for a market over a time frame: bullish, bearish or neutral. A bias is a starting point, not an entry signal.
- Blown account
A trading account that has lost all, or nearly all, of its money.
Explained inWhy shortcuts sell- Bond yield
The return an investor earns on a bond. Yields rise when bond prices fall. Short-term yields follow rate expectations, long-term yields follow inflation and growth.
- Brain fog
A slow, heavy feeling where you can’t concentrate. It often comes from your senses being overstimulated all day.
Explained inWhy focus feels so hard- Breakeven
The point where a trade neither wins nor loses. Moving the stop to breakeven means the trade can no longer lose money.
- Breakout
When price leaves a range or crosses a key level with conviction.
- Brent and WTI
The two benchmark oil prices. Brent is the European benchmark, WTI (West Texas Intermediate) the US one.
Explained inGold and oil
C
- Capitulation
The moment when the last holders give up and sell in panic. It often marks the end of a fall.
- Catalyst
An event that can set a move in motion, such as a data release, a central bank decision or a speech.
- Central bank
The institution that sets a country’s key interest rate and controls the money supply, like the Fed, the ECB or the Bank of England.
- Choppy market
A market without a clear trend that keeps swinging back and forth. Trend systems lose money here, range systems can work.
- Commission
The fee a broker charges per trade, on top of the spread.
- Commodity currency
A currency of a country that exports a lot of raw materials, like AUD, CAD or NZD. It often moves with commodity prices and global growth.
- Confirmation bias
Looking only for information that agrees with what you already believe and ignoring the rest.
Explained inStay objective- Consensus (forecast)
The average forecast of economists for a data release. The market reacts to the gap between the actual number and the consensus.
- Correlation
How closely two markets move together. Trades in correlated pairs are partly the same bet.
Explained inThe 2 pair traps- COT report
The Commitments of Traders report from the US CFTC. Published every Friday, it shows how large traders were positioned on the Tuesday before.
- Credit rating
A grade from an agency such as S&P or Moody’s that rates how likely a country or company is to repay its debt.
- Currency pair
Two currencies quoted against each other, like EUR/USD. Buying the pair means buying the first currency and selling the second.
- Currency strength
A ranking of how much each currency has gained or lost against the others over a period.
D
- Deflation
Falling prices across the economy. People delay spending because things get cheaper, which can push the economy into a downward spiral.
Explained inInflation and deflation- Delayed gratification
Waiting for a bigger reward later instead of grabbing a small one now. In trading, it means sticking to your plan rather than taking a quick win.
Explained inThe market will humble you- Distribution
A sideways phase after a rise in which large players sell their positions to late buyers before price falls.
- Divergence (macro)
When two economies move in different directions, for example one central bank raising rates while another cuts. Currencies often trend on divergence.
- Divergence (momentum)
When price makes a new high or low but an indicator such as RSI does not. A warning that the move is losing strength.
- Dopamine
A brain chemical linked to reward and anticipation. Quick hits such as feeds and notifications train the brain to seek more of them.
- Dopamine baseline
Your normal level of dopamine when you are resting and nothing exciting is happening. A healthy baseline supports focus, and saying no to quick, effortless rewards helps raise it.
- Dopamine detox
A set period, such as 60 days, when you say no to fast dopamine on purpose: little to no social media, little alcohol and sugar, and good routines.
Explained in7 hours back every day- Drawdown
The drop from the account’s highest point to its lowest point before it recovers. A 50% drawdown needs a 100% gain to get back.
- DXY (US Dollar Index)
An index of the dollar against six currencies, weighted mostly to the euro. A quick way to see whether the dollar is broadly strong or weak.
E
- Economic calendar
A schedule of upcoming data releases and central bank events, with forecasts and previous values.
- Economic cycle
The repeating pattern of growth, peak, contraction and recovery that every economy goes through.
- Edge
A repeatable advantage that makes money over many trades, proven by your own records rather than by a few wins.
- Ego
The need to feel right, or above the market and other traders. When ego is in charge, you try to force the outcome and stop learning from your mistakes.
- EMA (exponential moving average)
A moving average that gives more weight to recent prices. A 21 EMA follows price closely, a 100 or 200 EMA shows the bigger trend.
- Emotional regulation
Noticing what you feel and choosing how to respond, instead of reacting on impulse. It starts with knowing your own triggers.
Explained inEmotions beat willpower- Equity curve
A line showing your account balance over time. A smooth curve is easier to trade, and to keep trading, than a wild one.
Explained inThe equity curve you can actually trade- European Exchange Rate Mechanism (ERM)
A European system, set up before the euro, that kept member currencies inside agreed bands against each other. The UK left it in September 1992.
Explained inBreaking the Bank of England- Execution threshold
The minimum set of conditions that must be true before you enter. When they are met you act, without waiting for perfect.
Explained inYour execution threshold
F
- Fade
Trading against a move you think has gone too far, for example selling after an overreaction to a headline.
- Fakeout
A breakout that fails and returns into the range, trapping traders who followed it.
- Fast and long-term dopamine
Fast dopamine is an instant reward that takes no effort, like scrolling or sugary snacks. Long-term dopamine is the reward you earn through effort, like finishing hard analysis.
- Feedback loop
A repeating cycle of try, review, adjust and repeat. Each round tells you what to correct before the next attempt.
- Fiat money
Money that has value because a government declares it, not because it is backed by gold. All major currencies today are fiat money.
- Fibonacci retracement
Levels at fixed percentages of a move (38.2%, 50%, 61.8%) that traders use to look for pullback entries.
- Fiscal policy
How a government taxes and spends. It is separate from the central bank, which runs monetary policy.
- FOMO
Fear of missing out: chasing a move because it is running without you, usually at the worst price.
- Forecast
The expected value of a data release, usually the consensus of economists. Compared with the actual number to measure the surprise.
- Fundamental analysis
Studying the economy, central banks, politics and money flows to judge where a currency should go and why.
G
- GDP
Gross domestic product: the total value of everything an economy produces. The broadest measure of growth.
- Geopolitics
Wars, elections, sanctions and trade disputes that change how investors see risk in a country or region.
H
- Hawkish and dovish
Hawkish: a central bank leans towards higher rates to fight inflation. Dovish: it leans towards lower rates to support growth.
- Hedge fund
An investment fund that uses many strategies, including short selling and leverage, to make money in rising and falling markets.
I
- Inflation
The rate at which prices rise. Central banks usually aim for about 2% a year.
- Invalidation
The price or event that proves your idea wrong. That is where your stop belongs.
Explained inWrite a thesis you can review- ISM and PMI
Surveys that ask purchasing managers whether business is getting better or worse. Above 50 means expansion, below 50 contraction. A leading indicator.
K
- Key interest rate
The rate a central bank sets for lending to banks. It drives borrowing costs across the economy and is one of the biggest drivers of a currency.
L
- Leading indicator
Data that tends to change before the wider economy does, such as business surveys or new orders.
Explained inWhat matters changes with the cycle- Leverage
Trading a bigger position than your deposit allows by borrowing from the broker. It multiplies gains and losses alike.
- Liquidity
How easily you can buy or sell without moving the price. FX is most liquid when London and New York are open.
- Long and short
Long means you buy and profit if price rises. Short means you sell and profit if price falls.
M
- MAE (maximum adverse excursion)
How far a trade moved against you before it closed. It shows whether your stops are too tight or too wide.
Explained inHow far did it go against you?- Mark-down
The falling phase of the market cycle, after distribution, when sellers are in control.
- Mark-up
The rising phase of the market cycle, after accumulation, when buyers are in control and price trends higher.
- Market cycle phases
A way of reading the market in four phases: accumulation, mark-up, distribution and mark-down. Based on the work of Richard Wyckoff.
- Market structure
The pattern of highs and lows on the chart. It tells you whether a market trends or ranges, and where the key levels are.
- Mean reversion
The idea that price tends to return to an average after stretching too far. Range trading is built on it.
- Mentor
An experienced trader who reviews your decisions and tells you honestly what to fix, so mistakes get corrected before they become habits.
- MFE (maximum favourable excursion)
How far a trade moved in your favour before it closed. It shows how much profit was available.
Explained inHow far did it go your way?- Momentum candle
A large candle with a big body that shows strong buying or selling. Used as a trigger in the momentum system.
- Money supply
The total amount of money in an economy. More money chasing the same goods tends to push prices up.
N
- Narrative
The story the market currently trades, for example “the Fed will cut soon”. Data that fits the story moves price more.
- Network effect
When a platform becomes more valuable the more people use it. It is one reason leaving social media can feel like falling behind.
Explained inThe comparison trap- NFP (Non-Farm Payrolls)
The monthly US jobs report. It counts how many jobs were added outside farming and is one of the biggest market-moving releases.
- Noise
Information that moves your attention but not the market, or moves the market only for minutes.
O
- Overbought and oversold
When price has risen (or fallen) so far, so fast, that a pullback becomes likely. Not a signal on its own.
Explained inFading an overreaction- Overtrading
Taking too many trades, often out of boredom or to make up for losses. Every extra trade adds cost and mistakes.
P
- Pain trade
The move that hurts the most traders, usually against a crowded position. It is often fast because so many have to close at once.
Explained inThe pain trade- Pip
The smallest standard price step in a currency pair. For most pairs it is the fourth decimal (0.0001), for yen pairs the second (0.01).
- Position size
How big your trade is. It should follow from how much of the account you are willing to lose and where your stop is.
- Positioning
How traders are already invested. When everyone is on the same side, there is no one left to push price further.
- Priced in
When the market already expects something, so it barely moves when it happens. Only the surprise moves price.
- Process
The repeatable work behind your trades: your daily habits, your preparation and how consistently you follow your plan. Unlike a single result, it is in your control.
- Pullback
A short move back against the main direction before price carries on. Waiting for one often gives a better entry than chasing the move.
Q
- Quantitative easing (QE)
A central bank creates new money to buy bonds. It pushes yields down and adds money to the system, which usually weakens the currency.
R
- Range
A market that moves sideways between a ceiling and a floor instead of trending.
- Reaccumulation
A pause inside an uptrend where large players add to positions before the next leg higher.
Explained inMark-up and reaccumulation- Recession
A period in which the economy shrinks instead of growing, usually with rising unemployment.
- Rejection candle
A candle that pushes into a level and gets pushed back, leaving a long wick. It shows the level is holding.
Explained inTrigger, session and exits- Repainting indicator
An indicator that changes its past signals after the fact, so it looks perfect on old charts and fails live.
Explained inWhy most traders stay stuck- Reserve currency
A currency that central banks and companies around the world hold in large amounts. The US dollar is the main one.
Explained inThe US dollar- Resilience
Your ability to bounce back after losses and setbacks. Like any skill, it improves with repetition, feedback and practice.
Explained inWhy you’re scared of being wrong- Retail trader
A private individual trading their own money, as opposed to banks and funds.
- Retest
When price comes back to a level it just broke, to check whether the level now holds from the other side.
- Revenge trading
Jumping into a new trade straight after a loss to win the money back. It usually makes the loss bigger.
- Risk exposure
How much of your account is at risk across all open trades, including trades that share the same currency.
- Risk management
The rules that limit how much you can lose: risk per trade, total exposure, stops and when to stand aside.
- Risk to reward
How much you can win compared with how much you risk. At 1:2 you aim to make 2 for every 1 you risk.
- Risk-on and risk-off
Risk-on: investors feel confident and buy stocks and higher-yielding currencies. Risk-off: they get nervous and move into safe havens.
- Round number
Prices like 1.1000 or 150.00 where many orders cluster. They often act as support or resistance.
Explained inEntry area and trigger- RSI (relative strength index)
A momentum indicator between 0 and 100. Readings above 70 are often called overbought, below 30 oversold.
S
- Safe haven
An asset investors buy when they are scared, such as the Japanese yen, the Swiss franc, gold or US government bonds.
- Scaling in
Building a position in steps instead of all at once, adding as the trade proves itself.
- Scenario planning
Deciding in advance what you will do in each likely outcome of an event, before the event happens.
- Sentiment
The mood of the market: how traders feel and how they are positioned. It often decides the timing of a move.
- Session recap
A short summary of what moved the market in a trading session and why.
- Shiny object syndrome
Jumping from strategy to strategy because the next one looks better, so you never master any of them.
- Short selling
Selling something you do not own to buy it back cheaper later. In FX every trade is long one currency and short another.
- Slippage
When your order fills at a worse price than you asked for, usually in fast markets or around news.
Explained inWhy big money needs ranges- Smart Bias
The weekly outlook for each major currency in Prime Terminal, built from growth, inflation, central banks, trend and positioning.
- Smart money
Large, well-informed players such as banks and funds whose orders are big enough to move the market.
- Soft landing
When a central bank slows inflation with higher rates without pushing the economy into a recession.
Explained inSame data, opposite reactions- Spread
The gap between the buy price and the sell price. It is a cost you pay on every trade, and it widens when the market is quiet or nervous.
- Spring
A quick false break below the bottom of a range that traps sellers, followed by a fast recovery. Often seen near the end of accumulation.
Explained inAccumulation- Starter position
A small first entry, for example a quarter of the full size, that you add to once the trade confirms.
- Stop-loss
An order that closes your trade at a set price to limit the loss. It belongs where your idea is proven wrong, not at a random distance.
- Support and resistance
Price areas where buying (support) or selling (resistance) stepped in before. Old resistance often turns into new support after a break.
- Swap
The interest you pay or receive for holding a currency position overnight.
T
- Take-profit
An order that closes your trade at a set price to lock in the gain.
- Technical analysis
Studying the price chart, levels and indicators to judge where and when to act.
- Tightening and easing
Tightening means raising rates or reducing the money supply. Easing means cutting rates or adding money to the system.
- Tilt
A state where emotions take over after losses or frustration and you stop following your rules.
Explained inMorals protect your capital- Trade thesis
A short written reason for a trade: what you expect, why, what could confirm it and what would prove it wrong.
- Trading journal
A record of every trade with the reason, the numbers and a review. The basis for improving with facts instead of feelings.
- Trading sessions
The Asian, London and New York trading hours. Most volume, and most clean moves, come in London and New York.
- Trading styles
How long you hold trades: scalping (minutes), day trading (hours), swing trading (days) and position trading (weeks or longer).
- Trend
A market that makes higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend).
V
- Value area (VAH and VAL)
The main high-volume zone of a volume profile, where most of the trading took place. VAH (value area high) marks its top, VAL (value area low) its bottom.
Explained inSkip the middle- Volatility
How much and how fast price moves. High volatility means bigger swings, so your stop and position size must fit.
- Volume
The amount being traded over a period. Rising volume at a price level shows that a lot of buying or selling is happening there.
- Volume profile
A chart tool that shows how much was traded at each price. Busy prices often act as support or resistance.
Explained inSkip the middle
W
- Watchlist
A short list of markets and ideas you are following. A reason to watch, not an obligation to trade.
- Win rate
The share of trades that make money. On its own it says little: a 40% win rate can be very profitable with the right risk to reward.
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