Glossary
- Trailing stop
A trailing stop moves the stop loss with the price as a trade goes your way and never moves back. Percent trails, R ladders and activation levels.
- Take profit
A take profit closes a position when the price reaches a target in your favour. Single and partial take profit, and how targets are set in R or percent.
- Stop loss
A stop loss is an order that closes a position when the price reaches a set level, capping the loss of a trade. How it works and why bots need one.
- Slippage
Slippage is the difference between the expected price of an order and the price it fills at. Why it happens and how backtests should include it.
- R-multiple
R is the risk of a trade, the distance from entry to stop loss. R-multiples measure wins, losses and targets in units of that risk.
- Paper trading
Paper trading runs a strategy with virtual money on live prices, so you can see how it behaves in the current market before risking real funds.
- Order block
An order block is the last opposite candle before a strong move that breaks structure, used as a zone where price may react when it returns.
- Market structure
Market structure is the pattern of swing highs and lows that defines a trend. Breaks of structure and changes of character explained.
- Liquidation
Liquidation is the forced close of a futures position when its margin can no longer cover the loss. How the liquidation price works and how to avoid it.
- Leverage
Leverage lets a futures position control more value than the margin behind it. How it changes margin and liquidation, and why it magnifies losses.
- Funding rate
The funding rate is a periodic payment between longs and shorts on perpetual futures that keeps the contract price close to the spot price.
- Fair value gap
A fair value gap is a three-candle price gap left by a strong move, where the first and third candles' wicks do not overlap. How traders use FVGs.
- Drawdown
Drawdown is the fall of an account or strategy from its highest value to a later low. Why maximum drawdown matters more than total return.
- Backtesting
Backtesting runs a trading strategy on historical market data to see how it would have performed, trade by trade, before risking real money.