Glossary
The words traders use.
Plain-English definitions — save yourself an hour of Googling.
- Ask
- The lowest price a seller is willing to accept.
- Bid
- The highest price a buyer is willing to pay.
- Break of Structure (BOS)
- Price breaking a prior swing high or low, signaling a shift in trend.
- Candlestick
- A price chart element showing open, high, low, and close over one period.
- Drawdown
- The peak-to-trough decline in an account or trading system.
- Fair Value Gap (FVG)
- An imbalance between three candles that price often revisits.
- Funded Account
- A trading account backed by a prop firm after passing an evaluation.
- Liquidity Sweep
- A rapid move that takes out stops before reversing.
- Long
- A position that profits when price rises.
- Market Structure
- The pattern of highs and lows that defines the trend.
- Order Block
- A zone of institutional orders that often acts as future support or resistance.
- PDT Rule
- US rule limiting sub-$25K margin accounts to 3 day trades in 5 rolling days.
- Position Size
- The number of shares or contracts sized to a specific risk amount.
- Risk/Reward (R:R)
- The ratio of potential profit to potential loss on a trade.
- Short
- A position that profits when price falls.
- Stop-Loss
- A predefined exit price that limits loss on a trade.
- Support / Resistance
- Price levels where buyers or sellers have historically stepped in.
- Tilt
- Emotional trading state that causes rule violations, often after a loss.
- Volume
- The number of shares or contracts traded in a period.