Trading glossary

Every trading word on our Learn pages, in a sentence or two.

A

ABCD pattern: Four turning points joined by three legs: a move from A to B, a pullback to C, and a second move to D. In AB=CD, the last leg equals the first.
Absorption: Heavy trading from market orders at a price that doesn’t move price through it, because large limit orders were waiting there.
Acceleration factor (AF): In the Parabolic SAR, the share of the gap to the extreme point that each new dot moves. It grows each time price makes a new extreme, up to a maximum.
Accumulation: In the Wyckoff method, a trading range after a fall, read as large traders buying before a rise.
ADX (average directional index): An indicator from 0 to 100 that measures how strongly price has been moving in one direction, up or down. It doesn’t show which direction.
Aggressor: In a trade, the order that arrived and traded straight away against an order already waiting in the book.
Anchored VWAP: VWAP started from a candle you choose, such as a big high or low, instead of the start of the session.
API: Short for application programming interface: a door into a system built for software. A bot uses a broker’s API to get prices and place orders.
Arbitrage: Buying one thing and selling a closely linked one at the same time, to gain from a gap between their prices.
Aroon: An indicator counting how many candles have passed since the highest high (Aroon Up) and lowest low (Aroon Down) of a recent stretch, each from 0 to 100.
Asian range: The highest and lowest prices made during the Asian trading hours, over times a trader chooses.
Ask (offer): The lowest price a seller is waiting to accept right now. It’s the best price you can buy at straight away. Also called the offer. Read the full guide
Automated trading: Software placing trades from rules you set, instead of you placing each order by hand. Also called algorithmic trading, or using a bot.
Average daily range (ADR): The average of each day’s high minus its low over the last few days, in the same units as price.
Average true range (ATR): An indicator that averages recent candles’ true ranges, so it shows how far price has been moving in each candle, in the same units as price. Read the full guide

B

Backtest: Running a strategy’s exact rules over past prices to see which trades they would have taken. Read the full guide
Backwardation: When later futures months are priced lower than nearer ones.
Base: A short pause of one or a few small-bodied candles just before a strong move. Its range is what traders mark as a supply or demand zone.
Base currency: The first currency in a pair, such as the euro in EUR/USD. The price is for one unit of it.
Base effect: A change in a 12-month rate caused by the month a year back dropping out of the window, rather than by the newest month.
Base line (kijun-sen): An Ichimoku line worked out like the conversion line, over a longer stretch. The original work used 26 candles. Read the full guide
Basis: The gap between a future’s price and the spot price of the thing it is on. It shrinks to nothing by expiry.
Basis point: One hundredth of a percentage point. A rise from 3.00% to 3.25% is 25 basis points.
Bearish: Falling, or expecting a fall. A bearish candle closed lower than it opened.
Bid: The highest price a buyer is waiting to pay right now. It’s the best price you can sell at straight away. Read the full guide
Blockchain: A shared record of every transfer of a cryptocurrency, kept by many computers at once rather than by one bank.
Body: The thick part of a candle, between its open and its close.
Bollinger Bands: A simple moving average with a band above and below it, set a number of standard deviations of the closes away. Created by John Bollinger. Read the full guide
Bollinger squeeze: A stretch where the Bollinger Bands are unusually narrow because price has gone quiet. Some traders call it a squeeze when the bands fit inside the Keltner Channels.
Bond yield: The return a bond pays measured against its price today. When a bond’s price falls its yield rises, and the other way round.
Bracket order: An entry order sent with a stop loss and a profit target attached. The two exits go live once the entry fills.
Break of structure (BOS): A candle closing past the latest swing high in an uptrend, or past the latest swing low in a downtrend. Read the full guide
Breaker block: An order block that price has closed through, then watched from the other side. Read the full guide
Breakeven: The price where a trade neither makes nor loses money before fees: its entry price. A stop moved there is called a breakeven stop.
Breakout: When price moves past a level, such as the top or bottom of a range, and keeps trading beyond it.
Broker: A firm that holds your trading account, passes your orders to the market and reports your trades back.
Bullish: Rising, or expecting a rise. A bullish candle closed higher than it opened.
Buy-side liquidity: In ICT’s terms, the buy orders traders think are waiting above an earlier high, such as stop losses on sell trades.
Buying climax (BC): A volume climax after a long rise: a wide candle makes a new high on a very big volume bar. The name comes from the Wyckoff method.

C

Calendar spread: The price gap between two contract months of the same future, or a trade that buys one month and sells another.
Camarilla pivots: Eight levels for the day, each the previous close plus or minus a set share of the previous day’s range. They are named H1 to H4 and L1 to L4.
Candle: One bar on a price chart. It shows where price opened and closed, and the highest and lowest it reached, in one stretch of time.
Candle range: A candle’s high minus its low: how far price travelled in that candle, wicks included.
Candlestick pattern: A named shape made by one or a few candles in a row, such as a doji or an engulfing candle. The name describes candles that already closed.
Carry trade: Holding a currency with a higher interest rate against one with a lower rate, to earn the gap. Price moves can be far bigger than the interest.
Cash settlement: A futures contract ending with only money changing hands: positions still open at expiry are closed at a final price and the difference is paid.
Central bank: The bank that runs a currency’s money system and sets its main interest rate, such as the US Federal Reserve or the Bank of England.
Central pivot range (CPR): A band of three lines for the day, from the previous day’s high, low and close: the pivot, the bottom central pivot (the high and low’s average), and the top central pivot.
CFTC: The Commodity Futures Trading Commission, the US government agency that regulates futures and options markets.
Chaikin money flow (CMF): A line from −1 to +1 showing whether recent candles closed near their highs or lows, weighted by volume.
Change in state of delivery (CISD): An ICT term: a candle closing past the opening price of the run of same-direction candles that led into a high or low.
Change of character (CHoCH): The first break against the trend. In an uptrend, a candle closing below the latest higher low. Read the full guide
Circuit breaker: An exchange rule that pauses or halts trading when price moves a set amount in a set time.
Clearing house: The body that stands between the buyer and the seller of every futures trade, so each side deals with it and not with each other. It collects margin and pays gains and losses each day.
CME Globex: CME Group’s electronic market, where its futures trade nearly around the clock from Sunday evening to Friday afternoon.
Colocation: Placing a firm’s computers in the same building as an exchange’s, so orders and prices travel the shortest distance.
Commission (fees): What your broker and the exchange charge for each contract you trade, often quoted per contract for the round trip: in and out.
Commitments of Traders report (COT): A weekly CFTC report that splits each US futures market’s open interest into groups of traders, long and short, as of Tuesday.
Commodity channel index (CCI): An oscillator by Donald Lambert that shows how far price is from its recent average, measured against how far it normally strays. It has no top or bottom.
Composite operator (Composite Man): Wyckoff’s imaginary single trader standing in for all the large ones, used to read a chart as one plan. Not a real person.
Compounding: Sizing trades from a balance that includes earlier results, so each gain or loss changes the size of the trades after it.
Consensus forecast: The figure economists expected an economic release to show, gathered before it comes out. Calendars list it beside the actual figure.
Consequent encroachment (CE): The halfway point of a fair value gap.
Consistency rule: A prop firm rule that limits how much of the total profit can come from one day. Each firm sets the share and how it’s measured.
Consolidation: A stretch where price pauses and moves in a narrower range after a move, often in smaller candles.
Consumer price index (CPI): A monthly US measure of how the prices of everyday goods and services have changed. It’s a measure of inflation.
Contango: When later futures months are priced higher than nearer ones, or a future is priced above the spot price.
Continuation pattern: A chart pattern named for a pause that completes if price breaks out the same way it was moving before, such as a flag. The name describes the shape, not what happens next.
Continuous contract: A chart made by joining one futures contract month to the next at each roll, so years of history show as one line. It isn’t a contract you can trade.
Contract multiplier (point value): The dollars one point of price is worth on one futures contract. On the E-mini S&P 500 it’s $50, and on the Micro E-mini $5.
Conversion line (tenkan-sen): An Ichimoku line: the highest high plus the lowest low of the last few candles, divided by two. The original work used 9 candles. Read the full guide
Copy trading: Placing the same trades on more than one account, often with software called a trade copier that repeats one account’s trades on others.
Core inflation: Inflation with food and energy prices left out, because those two swing a lot from month to month.
Corrective wave: In Elliott wave theory, a move against the larger trend, made of three waves labelled A, B and C, or five in a triangle.
Correlated markets: Markets whose prices have tended to move together, such as S&P 500 and Nasdaq-100 futures. The link can weaken at any time.
Correlation: A number from −1 to +1 for how closely two markets’ price changes have moved together. It describes the past and changes over time.
Cost of carry: What holding something until a futures contract ends would cost: interest, plus storage and insurance, minus anything it pays the holder.
Cross margin: One pool of margin shared by every position in an account, so a losing position can use the whole balance.
Cross pair (minor): A currency pair without the US dollar, such as EUR/GBP or EUR/JPY. Also called a cross or a minor pair.
Crypto exchange: A company that runs an order book where its customers buy and sell coins with each other. Most hold their customers’ coins for them.
Cryptocurrency (crypto): A digital currency not issued by a government or central bank, with who owns what recorded on a blockchain.
Cumulative delta (CVD): A running total of each candle’s delta, often starting again each session.
Cup and handle: A chart pattern named by William O’Neil: a rounded dip that climbs back near its starting high, then a smaller dip in the upper half, the handle.
Currency futures: Futures contracts on an exchange rate, such as CME’s euro futures. They have a fixed size and an end date, and trade on an exchange.
Currency pair: Two currencies priced against each other, such as EUR/USD. The price is how much of the second currency one unit of the first costs.

D

Daily loss limit: The most an account is allowed to lose in one trading day. It starts fresh each day, and each firm sets how it’s measured. Read the full guide
Day-trading margin: A lower margin some brokers ask for on trades opened and closed in the same day. The broker sets it, and it ends at the broker’s cut-off time.
Dealing range: ICT’s name for the range you measure premium and discount in, often from a swing low to a swing high.
Death cross: The name for the 50-day moving average crossing below the 200-day moving average on a daily chart. Some people use it for any pair.
Delta (volume delta): The volume traded at the ask minus the volume traded at the bid, over one candle.
Demo account (practice account): An account with pretend money, where a simulation decides your fills instead of the real market. Also called a simulated account.
Depth of market (DOM): A screen that shows the order book as a ladder: one row per price, with the contracts waiting to buy on one side and to sell on the other.
Directional indicator (+DI and −DI): Two lines behind the ADX. +DI measures upward movement and −DI downward movement, each as a share of the average true range.
Discount: In ICT’s terms, the bottom half of a range, below its halfway point.
Displacement: A strong, fast move in one direction, often one big candle. Read the full guide
Distribution: In the Wyckoff method, a trading range after a rise, read as large traders selling before a fall.
Divergence: When price and an indicator such as the RSI disagree: price makes a new low or high and the indicator doesn’t.
Doji: A candle that closes at, or very close to, the price it opened at, so it has almost no body.
Donchian Channels: Lines at the highest high and lowest low of the last few candles, with a middle line halfway between. Named after Richard Donchian.
Dot plot: A chart in the Federal Reserve’s projections where each official marks with a dot the interest rate they expect at the end of each year.
Double bottom: A double top upside down: two dips at about the same price with a rise between them, complete when a candle closes above the rise’s high. Read the full guide
Double top: A chart pattern of two peaks at about the same price with a dip between them, complete when a candle closes below the dip’s low (the neckline). Read the full guide
Dragonfly doji: A doji whose open, close and high are the same price, with a long lower wick. It looks like a T.
Draw on liquidity: In ICT’s terms, the price that price may be heading for next, such as an earlier high or low where orders may be waiting.
Drawdown: A fall in an account’s balance from a high point. On a funded account, it also names the loss limit the balance has to stay above.
Dynamic support and resistance: A line that moves with price, such as a moving average, treated as a level where price has turned before.

E

Economic calendar: A list of upcoming economic reports and announcements, with the date and time each one is published.
Efficiency ratio: Perry Kaufman’s measure of how straight price moved: the distance covered divided by the total of every move along the way, from 0 to 1.
Elliott wave: One move in Ralph Nelson Elliott’s wave pattern: five waves with the larger trend, labelled 1 to 5, then three against it, labelled A, B and C.
End-of-day drawdown: A trailing drawdown that only moves at the close: its line sits a set amount below the account’s highest closing balance.
Engulfing candle: A candle whose body covers the whole body of the candle before it, closing the other way. Read the full guide
Equal highs and equal lows: Two or more swing highs, or swing lows, at the same price or within a few ticks of each other. How close counts as equal is each trader’s choice.
Equilibrium: In ICT’s terms, the halfway point of a range: its high plus its low, divided by two.
Equity curve: An account’s balance drawn trade by trade, or day by day, showing the path to the total.
Evaluation (prop firm): A paid test account at a prop firm. You trade it to reach a profit target without breaking the firm’s rules, and its profit isn’t paid out.
Evening star: A three-candle pattern after a rise: a long green candle, a candle with a small body, then a red candle that closes well into the first candle’s body.
Exchange: An organised market with one order book for each thing it lists, where everyone’s orders are matched by the same rules. CME Group is a futures exchange.
Exhaustion: A word traders use for a move that seems to be running out of strength, such as after a long run of candles, or when trading dries up at the end of a move. It describes a reading, not a rule.
Exotic pair: A major currency against the currency of a smaller or emerging economy, such as USD/MXN or USD/ZAR.
Expectancy: The average result per trade over a list of trades: the total divided by the number of trades. It describes past trades, not the next one.
Expiry: The day a futures contract stops trading and is settled, in cash or by delivery.
Exponential moving average (EMA): A moving average that gives the newest closes more weight, so it reacts sooner than a simple one of the same length. Read the full guide
Extended trading hours (ETH): Futures trading outside the main stock market hours, such as overnight. Also called electronic trading hours.
Extreme point (EP): In the Parabolic SAR, the highest high since the dots went below price, or the lowest low since they went above it.

F

Fair value gap (FVG): A price range that a fast move skips over, found with three candles in a row whose first and third wicks don’t overlap. Read the full guide
False breakout: A move past a level, such as an earlier high or low, that doesn’t hold: price comes back to the other side.
Fed funds futures: Futures priced at 100 minus the average federal funds rate for a month, so the rate the market has priced in can be read off the price.
Federal funds rate: The interest rate US banks charge each other for overnight loans. The Federal Reserve sets a target range for it.
Fibonacci extension: A price level past the end of a move, measured as a share of the move from its start, such as 127.2% or 161.8%.
Fibonacci retracement: A drawing tool that marks set percentages of the way back through a move, such as 38.2%, 50% and 61.8%.
Fill: When an order trades. An order can fill all at once, in parts, or not at all.
Final settlement price: The price an exchange uses to close every open position in a cash-settled futures contract at expiry, worked out from the underlying.
First notice day: For a futures contract that can end in delivery, such as gold, the first day a seller can give notice that they will deliver.
Flagpole: The fast, strong move before a flag or pennant pattern. Also called the pole.
FOMC: The Federal Open Market Committee: the part of the US Federal Reserve that sets its main interest rate. It has eight scheduled meetings a year.
Footprint chart: A chart that shows, at every price inside a candle, the volume traded at the bid and the volume traded at the ask.
Forex (FX): Short for foreign exchange: the market where one currency is swapped for another. It’s traded between banks, brokers and other firms, not on one exchange.
Forward testing: Running a finished strategy, unchanged, on new prices as they arrive, and recording every trade.
Free margin: Equity minus the margin already set aside for open positions: what’s left for opening new ones.
Fresh zone: A supply or demand zone that price hasn’t come back to since it formed. Once price returns, traders call it tested.
Front month: The futures contract month nearest to expiry.
Fundamental analysis: Studying what sits behind a price: the economy, interest rates, supply and demand, or a company’s accounts.
Funded account: The account a prop firm gives you after you pass its evaluation. You can ask for payouts from its profit, under the firm’s rules.
Funding rate: The rate behind a regular payment between buyers and sellers of a perpetual future. When it’s positive, buyers pay sellers.
Futures contract: An agreement, traded on an exchange, to buy or sell a set amount of something at a price agreed now, on a set date later. Read the full guide
Futures curve: The prices of each contract month of one market on the same day, lined up in date order.

G

Gambler’s fallacy: The mistaken belief that after a run of one result, the other becomes more likely, when each result is independent.
Gap fill: When price trades back to the close before a gap, closing the empty space on the chart.
Going long: Buying first, to sell later. A long position gains if price rises and loses if it falls.
Going short: Selling first, to buy back later. A short position gains if price falls and loses if it rises.
Golden cross: The name for the 50-day moving average crossing above the 200-day moving average on a daily chart. Some people use it for any pair.
Gravestone doji: A doji whose open, close and low are the same price, with a long upper wick. It looks like an upside-down T.
Gross profit or loss: A trade’s result before commissions and fees are taken off.

H

Harami: A two-candle pattern where the second candle’s body sits inside the first candle’s longer body. Harami is an old Japanese word for pregnant.
Harmonic pattern: A zigzag of turning points, such as X, A, B, C and D, where each move is measured against another with Fibonacci ratios. The Gartley, bat, butterfly and crab are examples.
Hedger: A business or investor that trades futures to protect against a price change in something it owns, produces or needs to buy.
Heikin Ashi: Candles worked out from averages of ordinary candles, so a chart looks smoother. Their open and close aren’t prices that traded.
Hidden divergence: The reverse of regular divergence: price makes a higher low while the indicator makes a lower low, or the mirror at highs.
High-frequency trading: Automated trading that sends a great many orders very quickly, often holding each trade for seconds or less.
High-volume node (HVN): A bulge of long bars in a volume profile: prices where lots of trading happened.
Higher high (HH): A swing high above the swing high before it. Together with higher lows, it marks an uptrend.
Higher low (HL): A swing low above the swing low before it. Together with higher highs, it marks an uptrend.
Higher timeframe (HTF): A bigger candle size than the one you’re looking at. On a 5-minute chart, the 1-hour chart is a higher timeframe.
Hull moving average (HMA): Alan Hull’s moving average: twice a half-length weighted average minus a full-length one, smoothed again. It turns sooner than a simple average and can overshoot price.

I

Iceberg order: An order that shows only part of its size in the order book. When the shown part trades, more of it appears at the same price.
Ichimoku cloud: An indicator of five lines worked out from past highs and lows. The cloud is the space between its two leading spans, which are drawn ahead of price. Read the full guide
ICT: Inner Circle Trader, a trading educator whose names for chart patterns, like fair value gap, are now widely used.
Implied volatility: How much movement option prices are pricing in, worked out from those prices. It looks ahead, while measures like the ATR look back.
Impulse: A strong move in the direction of the trend. The smaller move back against it is the pullback.
In-sample: The part of the price history used to build and adjust a strategy’s rules. The part kept back to test them is out-of-sample.
Independent trades: Trades where one result has no effect on the chance of the next. Many sums about runs of losses assume this.
Index price: A coin’s price worked out from several spot venues at once. Perpetual futures measure themselves against it.
Inflation: The rate at which prices in general rise, given as a percentage change, most often over twelve months.
Initial balance (IB): The high and low of the first hour of the regular trading session. It’s a term from Market Profile.
Inside bar: A candle whose high and low both stay within the high and low of the candle before it.
Insurance fund: Money a crypto venue keeps to cover losses when a liquidated position closes at a worse price than its liquidation price.
Interest rate differential: The gap between two currencies’ interest rates. In forex, it decides the overnight swap and the gap between spot and futures prices.
Inverse fair value gap (IFVG): A fair value gap that a candle has closed through, then watched from the other side.
Island reversal: A group of candles cut off from the rest of the chart by a price gap on each side: a gap one way, then a gap back the other way.
Isolated margin: Margin set aside for one position only. If that position is liquidated, the rest of the account isn’t used.

J

Judas swing: ICT’s name for a false move early in a session: price runs one way from the open, then turns and moves the other way.

K

Keltner Channels: Lines above and below a moving average, set a number of average true ranges away. First described by Chester Keltner in 1960.
Kill zone: An ICT name for a window of clock time around a big session’s open, such as 2:00 to 5:00 am New York time. Sources give slightly different times. Read the full guide

L

Lagging indicator: An indicator built from past prices, so it changes after price has already moved.
Last point of support (LPS): In the Wyckoff method, the low of a pull back after price breaks above a range, when it holds above the old top.
Last price: The price of the most recent trade. Quote screens and most charts show it as the price.
Last trading day: The final day a futures contract can be traded. After it, every position still open is settled.
Latency: The delay between a signal and your order reaching the market, measured in milliseconds.
Law of large numbers: The more times something random is repeated, the closer the overall result tends to get to its true average.
Leverage: Holding a position worth more than the money put up for it. In futures, it’s the contract’s full value compared with the margin, and it makes losses bigger as well as gains.
Limit order: An order that only fills at a price you set or better. The price is promised, but a fill isn’t. Read the full guide
Liquidation: When a venue closes a leveraged position itself because the margin left in it has fallen below the minimum it asks for.
Liquidation price: The price at which a venue would close a leveraged position. The more leverage, the closer it is to the entry.
Liquidity: How easily you can buy or sell without moving the price. On charts, traders also use it for orders they think are waiting above highs and below lows.
Liquidity sweep: A quick move past an earlier high or low that then closes back inside it. Read the full guide
Liquidity void: A stretch of price that a fast, one-way run of candles crossed with very little trading, marked from where the run started to where it ended.
Live account (real account): A trading account at a broker with your own money in it, where orders go to the real market.
Look-ahead bias: A backtest mistake: using a price the strategy couldn’t have known yet at the moment it made its decision.
Losing run (losing streak): A row of losing trades one after another, with no win between them.
Lot: A forex trade size. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000.
Low-volume node (LVN): A dip of short bars in a volume profile, between busier prices: prices where little traded.
Lower timeframe (LTF): A smaller candle size than the one you’re looking at. On a 1-hour chart, the 5-minute chart is a lower timeframe.

M

MACD: Moving average convergence divergence: the gap between a faster and a slower exponential moving average of price. Read the full guide
Maintenance margin: The level a futures account has to stay above while a position is open. Falling below it can lead to a margin call.
Major pair: The US dollar against the euro, yen, pound, Swiss franc, or the Canadian, Australian or New Zealand dollar: the most traded currency pairs.
Margin: Money kept in a futures account as a deposit to cover losses on open contracts. It isn’t a fee or a down payment, and losses can be bigger than it.
Margin call: A broker’s request for more money when an account falls below its maintenance margin. The top-up is back to the initial margin, and brokers can close positions instead.
Margin level: Equity divided by the margin in use, as a percentage. Brokers use it to decide margin calls and stop outs.
Mark price: The price a crypto venue values open positions at, worked out from the index price, so one odd trade doesn’t decide it.
Market depth: How much is waiting to be bought and sold at prices near the current one. A thin order book has little depth.
Market maker: A firm that keeps orders waiting to buy and to sell at the same time, aiming to earn the spread between them.
Market order: An order to buy or sell straight away at the best price available. It fills, but the price isn’t promised. Read the full guide
Market Profile: A way of charting how much time price spent at each price during a session, developed by J. Peter Steidlmayer at the Chicago Board of Trade.
Market regime: A label for the kind of market price is in: trending or ranging, and quiet or busy.
Market structure: The pattern of swing highs and swing lows on a chart. Traders use it to say whether price is rising, falling or moving sideways.
Marking to market: Valuing open futures positions at each day’s settlement price, and paying the day’s gains and losses in cash.
Marubozu (full-body candle): A candle that is almost all body, with little or no wick at either end. The name is Japanese for close-cropped.
Matching engine: The exchange’s computer that pairs buy and sell orders and records each trade.
Maximum adverse excursion (MAE): How far price went against an open trade, at its worst, before the trade closed.
Maximum drawdown: The biggest fall from a high point in an account’s balance over a test or a stretch of trading.
Maximum favourable excursion (MFE): How far price went in a trade’s favour, at its best, before the trade closed.
Mean deviation: The average distance of a set of numbers from their average, ignoring whether each is above or below. The CCI uses it.
Mean reversion: The idea of price moving back towards an average or the middle of a range after moving away from it. It describes a way of reading price, not a rule.
Measured move: Marking the length of an earlier move again from a later point, such as a flag’s pole measured from its break. It marks a distance, not a forecast.
Micro contract: A smaller version of a futures contract. It moves in the same steps as the full-size one, but each step is worth less, often a tenth as much.
Midnight opening price: The price at 12:00 am New York time. ICT uses it as a reference level for the day.
Minimum trading days: A prop firm rule that an account must be traded on at least a set number of days, such as before it passes. Each firm sets its own.
Mitigation block: An order block that price closed through without first taking out an earlier high or low, then watched from the other side.
Momentum: How fast and how strongly price has been moving in one direction recently.
Money flow index (MFI): An oscillator from 0 to 100 comparing money flow (each candle’s average of high, low and close, times its volume) on rising candles with that on falling candles.
Money flow multiplier: Where a candle closed inside its own range, from +1 (at the high) through 0 (halfway) to −1 (at the low).
Monte Carlo simulation: Rebuilding a list of trade results many times, in a random order or by drawing trades at random, to see how different the path could have looked.
Morning star: A three-candle pattern after a fall: a long red candle, a candle with a small body, then a green candle that closes well into the first candle’s body.
Mother bar: The candle before an inside bar: the one whose range the inside bar fits inside.
Moving average: The average of the last few closing prices, worked out again on every candle and drawn as a line. Read the full guide
Moving average crossover: The moment a shorter moving average crosses a longer one: above it for a cross up, below it for a cross down.
Moving average envelope: Two lines drawn a fixed percentage above and below a moving average.
Moving average ribbon: Several moving averages of different lengths drawn on one chart, read by their order and the space between them.
Multiple timeframe analysis: Looking at the same market on more than one timeframe, such as a bigger one for the overall picture and a smaller one for detail. Also called top-down analysis.

N

Naked point of control: A point of control from an earlier session that price hasn’t traded back to since. Also called a virgin or untouched point of control.
Narrow range bar (NR4, NR7): A candle whose range, its high minus its low, is smaller than each of the candles just before it: three for an NR4, six for an NR7.
Neckline: In a head and shoulders pattern, the line through the two lows between the three peaks (or the two highs, in the inverse pattern). Read the full guide
Net position: Long contracts minus short contracts. Above zero is net long, below zero is net short.
Net profit or loss: A trade’s result after commissions and fees are taken off.
New day opening gap (NDOG): ICT’s name for the range between the 5:00 pm New York close of futures and the 6:00 pm reopen.
New week opening gap (NWOG): ICT’s name for the range between Friday’s 5:00 pm New York close of futures and Sunday’s 6:00 pm open.
New York close: 5:00 pm New York time, where the forex trading day ends and the next begins. Open trades are rolled to the next day then.
Non-farm payrolls (NFP): The number of jobs added or lost in the US outside farming, from the monthly jobs report of the Bureau of Labor Statistics.
Notional value: A futures contract’s full value: its price times the dollars per point. One MES at 6,000 stands for 6,000 × $5 = $30,000.

O

OCO (one cancels the other): Two orders linked so that when one fills, the other is cancelled, such as the stop and target of one trade.
OHLC: Open, high, low and close: the four prices a candle or bar shows for its stretch of time. Read the full guide
On-balance volume (OBV): A running total of volume that adds a candle’s volume when it closes above the close before, and takes it away when it closes below.
Open interest: The number of futures contracts that are still open: bought or sold, and not yet closed or settled.
Opening drive: A session that moves hard one way straight from the open, with small pullbacks, and doesn’t trade back to the opening price.
Opening gap: The space between the last price before a market pauses and the first price when it reopens.
Opening price: The first price traded in a session: the open of the session’s first candle.
Opening range: The highest and lowest prices in the first minutes of a trading session, over a length of time you choose.
Optimal trade entry (OTE): ICT’s name for a zone on a pull back, between 62% and 79% of the way back through the last swing, with 70.5% as a named level inside it.
Order block: The last candle that moved the other way before a strong move, often marked as a zone traders watch. Read the full guide
Order book: The list of every order waiting to buy or sell a contract, and at what price.
Order flow: Trade-by-trade market data that shows, for each trade, whether it happened at the bid or the ask. Delta and footprint charts are built from it.
Order queue: The line of limit orders waiting at one price. Orders that arrived earlier at that price fill first.
Oscillator: An indicator drawn in its own panel that swings up and down around a middle line or between set limits, such as the RSI.
Out-of-sample: History kept back while a strategy’s rules are built, then used once to test the finished rules unchanged. The part used to build them is in-sample.
Outside bar: A candle whose high is above the high of the candle before it and whose low is below that candle’s low.
Over the counter (OTC): Traded directly between two sides, such as a bank and a broker, rather than on an exchange. Spot forex is traded this way.
Overbought: A label for an oscillator reading near the top of its scale, such as RSI above 70. It describes a strong recent rise, not what comes next.
Overfitting: Tuning a strategy’s rules so closely to one stretch of past prices that they describe that stretch’s quirks more than anything that carries on. Read the full guide
Overnight range (ONH and ONL): The high and low a futures market makes outside the day session, before the next day session opens.
Oversold: A label for an oscillator reading near the bottom of its scale, such as RSI below 30. It describes a strong recent fall, not what comes next.
Overtrading: Taking more trades, or bigger ones, than your own trading plan allows.

P

Paper trading: Following a strategy’s trades without real money, on a demo account or on paper, to see how it behaves.
Parabolic SAR: A row of dots from J. Welles Wilder that trails price and speeds up towards it. SAR stands for stop and reverse: when price reaches the dots, they flip to the other side.
Payoff ratio: The average win divided by the average loss, from the same list of trades. It leaves out how many trades won and lost.
Payout: Money taken out of a funded account’s profit, following the firm’s payout rules.
Payout buffer: Profit that has to stay in a funded account after a payout. Whether there is one, and its size, is set by each firm.
Peg: The fixed price a stablecoin aims to hold, such as one dollar. When its price moves well away, people say it has lost its peg.
Percentile: Where a reading ranks among others. A reading at the 80th percentile is higher than 80% of them, or close to it.
Perpetual future (perp): A crypto futures contract with no expiry date. A regular funding payment keeps its price close to the coin’s own price.
Physical delivery: A futures contract ending with the real thing changing hands: the seller delivers it and the buyer pays its full value.
Pine Script: TradingView’s own programming language, used to write the indicators and strategies that run on its charts.
Pip: The step forex prices are counted in: 0.0001 on most currency pairs, and 0.01 on pairs priced in Japanese yen.
Pip value: What one pip is worth in money for a given trade size. It’s worked out in the quote currency, then changed into the account’s currency.
Pipette (fractional pip): A tenth of a pip: the fifth decimal place on most currency pairs, or the third on yen pairs.
Pivot point: A price level worked out from the previous day’s high, low and close: the three added and divided by three. Levels above it are R1 to R3, and below it S1 to S3.
Point of control (POC): The price where the most volume traded over a stretch of time: the longest bar in a volume profile.
Point value: What a move of one whole point is worth for one futures contract. Tick value is the tick size times the point value.
Polarity flip (role reversal): When a broken level swaps jobs: old resistance is watched as support, or old support as resistance.
Poor high and poor low: In Market Profile, a top or bottom row with two or more letters and no single prints beyond it, so the edge of the profile is flat.
Position: What you hold between opening a trade and closing it: how many contracts or shares, and whether you bought or sold first.
Position size: How many contracts, shares, lots or coins a trade uses.
Potential reversal zone (PRZ): In harmonic patterns, the area around point D where several of the pattern’s ratio measurements land close together.
Power of three (AMD): ICT’s name for a day, or other stretch of time, read as three parts: accumulation near the open, manipulation (a false move one way) and distribution (the main move the other way).
Premium: In ICT’s terms, the top half of a range, above its halfway point.
Previous day high and low (PDH and PDL): The highest and lowest prices of the last trading day, marked on today’s chart as levels to watch.
Price channel: Two parallel lines with price moving between them: one through the swing lows and one through the swing highs.
Price gap: An empty space on a chart where a candle opens away from the last close, with no trading in between. In futures it mostly appears after a pause in trading.
Price limit: The furthest an exchange lets a futures price trade from a reference price in one period. At the limit, traders say the market is limit up or limit down.
Price to earnings ratio (P/E): A share’s price divided by the company’s yearly profit per share.
Price-time priority (FIFO): A matching rule: the best price fills first, and at the same price the order that arrived first fills first. Also called first in, first out.
Pro rata matching: A matching rule where orders waiting at the same price share each fill in proportion to their size.
Profit factor: Everything a list of trades won, divided by everything it lost. Above 1, more was won than lost.
Profit split: The share of a funded account payout that goes to the trader, with the rest kept by the firm. Each firm sets its own split.
Profit target: In a prop firm evaluation, the amount of profit the account has to reach to pass. Each firm sets its own.
Prop firm: A proprietary trading firm: a company that lets traders trade its accounts under its own rules. Each firm sets how you get an account, such as by passing an evaluation.
Pullback: A short move against the trend before it carries on, such as a few falling candles during a rise.

Q

Quote currency: The second currency in a pair, such as the US dollar in EUR/USD. The price, and any profit or loss, is in it.

R

R (R-multiple): A result measured in units of the amount at risk. If a trade risks 4 points, 1R is 4 points and a 6-point gain is +1.5R.
Range (trading range): A stretch where price moves sideways between a roughly level high and a roughly level low.
Range bar: A bar that finishes when the distance from its high to its low reaches a set size, however long that takes. Every bar is the same height.
Range extension: Price trading past the initial balance high or low after the first hour of the session. It’s a term from Market Profile.
Rate of change (ROC): An indicator showing how far price has moved over a set number of candles, as a percentage of where it was.
Realised volatility: How much a price actually moved over a past period, worked out from its changes. Implied volatility looks ahead instead.
Reference rate: A price an index provider works out from trades on several venues at a set time. Crypto futures are settled against one.
Regular trading hours (RTH): The hours the main stock market is open. For US markets that’s 9:30 am to 4:00 pm, New York time. Futures also trade outside them.
Rejection block: An ICT name for the band between a long wick’s tip and the candle’s body, at a swing high or low.
Relative volume: Volume compared with what’s normal for that market: against the average of recent candles, or the same time on earlier days.
Renko chart: A chart of fixed-size bricks with no wicks and no time axis. A new brick forms only when price closes a full brick past the last one.
Repainting: When an indicator’s mark or value changes after it was first drawn, from reading a candle that hadn’t closed yet.
Reportable position: A position in one futures market at or above the size the CFTC sets for that market. Firms report every such position to the CFTC each day.
Resistance: A price area above the market where rising prices have stopped and turned down before. Read the full guide
Retest: When price comes back to a level or line it has just broken through, this time from the other side.
Retracement: A pull back against the last move, measured as a percentage of that move: 0% is where the move ended and 100% is where it started.
Revenge trading: Taking a trade to win back a loss just made, rather than because the plan’s conditions were met.
Revision: A change to a figure already published, made when more data comes in. Each US jobs report revises the payroll figures for the two months before.
Risk of ruin: The chance, worked out from assumed figures, that a run of losses takes an account down to a set level where trading stops.
Risk per trade: The most money a trade is planned to lose if its stop loss is hit, before slippage and fees. Each trader chooses their own.
Risk to reward ratio: What a trade stands to lose at its stop compared with what it stands to make at its target. It describes the plan, not the odds. Read the full guide
Rollover (the roll): Moving from a futures contract that’s about to expire to the next contract month.
Round trip: Both sides of a trade together: the order that opens it and the order that closes it. A fee per side is charged twice in a round trip.
Rounding bottom: A slow, curved turn from falling to rising that looks like a bowl. Upside down, it’s a rounding top.
RSI (relative strength index): An indicator from 0 to 100 that compares the size of recent gains with recent losses. Read the full guide
Runner: The part of a trade left open after a partial profit has been taken, aimed at a further exit.

S

Sample size: How many trades a test is based on. A small sample can look very different from a larger one just by chance.
Scaling out (partial profits): Closing a trade in parts, at more than one price, instead of all at once.
Scaling plan: A prop firm rule that sets how many contracts an account may hold at once, in steps tied to its balance. Each firm sets its own steps.
Seasonal adjustment: Taking the ordinary pattern of the seasons out of a figure, such as extra shop jobs before Christmas, so one month can be compared with the next.
Seasonality: How a market moved, on average, at a given time of year, month, weekday or time of day in past data. It describes the past only.
Sell-side liquidity: In ICT’s terms, the sell orders traders think are waiting below an earlier low, such as stop losses on buy trades.
Selling climax (SC): A volume climax after a long fall: a wide candle makes a new low on a very big volume bar. The name comes from the Wyckoff method.
Session and day filter: A rule about time added to a setup, so it only counts in the sessions, days or hours you choose.
Settlement price: The price an exchange sets for each futures contract at the end of each trading day. Open positions are valued at it.
Share (stock): A small part of a company, bought and sold on a stock exchange.
Silver Bullet (ICT): An ICT setup: a fair value gap that forms inside a set one-hour window, such as 10:00 to 11:00 am New York time, and price coming back into it.
Simple moving average (SMA): A moving average where every close in the window counts the same: add them up and divide by how many there are. Read the full guide
Single print: A row in a Market Profile with only one letter: only one period traded at that price.
Slippage: The difference between the price you expected and the price your order filled at.
SMT divergence: ICT’s name for two related markets disagreeing at a high or low: one goes past its earlier high or low, and the other doesn’t.
Speculator: Someone who trades to try to gain from price changes, rather than to protect a business against them.
Spinning top: A candle with a small body and wicks on both sides. Its body is bigger than a doji’s.
Spoofing: Placing orders you mean to cancel before they trade, to give a false picture of the order book. It is against the law in US futures.
Spot forex: Currencies bought and sold at today’s price, not a future date’s. At a retail broker, an open trade is rolled to the next day each evening.
Spot market: Where the thing itself is bought and sold for delivery now, such as a coin, rather than a contract on its price.
Spread (bid-ask spread): The gap between the ask and the bid: the ask minus the bid. Read the full guide
Stablecoin: A cryptocurrency built to keep a steady price, most often one US dollar. Most do it by holding reserves.
Stacked imbalance: On a footprint chart, several imbalances on the same side at prices next to each other.
Standard deviation: A measure of how spread out a set of numbers is. The more the closes differ from their average, the bigger it is.
Static drawdown: A drawdown line set once, a fixed amount below the starting balance, that never moves.
Stochastic oscillator: An indicator from 0 to 100 that shows where the latest close sits inside the recent high to low range. Read the full guide
Stop loss: An order that closes a trade if price reaches a level you set against it. It aims to limit the loss, but in a fast market it can fill at a worse price.
Stop order: An order that waits until price reaches a trigger you set, then becomes a market order (or a limit order, for a stop-limit). Read the full guide
Stop out: The margin level at which a broker starts closing a trader’s positions itself. Each broker sets its own level.
Supply and demand zone: A price zone marked where price paused before a strong move away. Demand zones sit below price, supply zones above it.
Support: A price area below the market where falling prices have stopped and turned up before. Read the full guide
Survivorship bias: Testing only on markets or companies that still exist today, leaving out the ones that closed or failed, which can make results look better.
Swap (forex rollover): What a forex broker charges or pays for each night a position is open at 17:00 New York time. It comes from the gap between two interest rates, plus the broker’s own charge.
Swing failure pattern (SFP): A candle that trades past an earlier swing high or low and closes back on the side it came from.
Swing high: A peak on the chart: a candle whose high is above the highs of the candles on both sides of it.
Swing low: A dip on the chart: a candle whose low is below the lows of the candles on both sides of it.

T

Take profit (target): An exit order that closes a trade when price reaches a level you choose in your favour.
TD Sequential: Tom DeMark’s method of counting candles. Its first part counts nine closes in a row, each past the close four candles before.
Technical analysis: Studying a market’s own record of price, volume and time, mostly on a chart.
Three black crows: Three long red candles in a row after a rise, each closing lower than the last and near its own low.
Three drives pattern: Three pushes in the same direction, each reaching a little further than the last, with a pull back between each, measured with Fibonacci ratios.
Three white soldiers: Three long green candles in a row after a fall, each closing higher than the last and near its own high.
Tick: The smallest step a price can move. On many stock index futures that’s 0.25 of a point. Read the full guide
Tick chart: A chart where each candle holds a set number of trades, however long they take, instead of a set amount of time.
Tick value: What one tick is worth in money for one futures contract. On the E-mini S&P 500 it’s $12.50. Read the full guide
Tick volume: The number of times the price changed during a candle, shown as volume on many forex charts. It counts price changes at one broker, not the amount traded.
Time and sales (the tape): A running list of every trade in a contract: its time, price and size, and whether it traded at the bid or the ask.
Timeframe: How much time each candle covers, such as 1 minute or 1 hour.
TPO (time price opportunity): In Market Profile, one letter standing for one period of time, often 30 minutes, at one price that traded in that period.
Trade journal: A record of each trade, written at the time: the market, times, prices, size, result and notes on why it was taken.
Trade review: Reading back over a journal at a set time and comparing what happened with what the trading plan said.
Trading bot: Software that places trades by following rules written in advance: it reads prices, checks the rules and sends orders to a broker when they’re met.
Trading day: The day an exchange counts trades in. For CME stock index futures it starts at 5pm US Central time the evening before and ends at 4pm.
Trading plan: A written set of rules made before trading: what you trade and when, what has to happen before a trade, where you get out, how much each trade risks and when you stop.
Trading session: A stretch of the trading day with a set start and end, such as the hours a big stock exchange is open.
Trailing drawdown: A loss limit that sits a set amount below an account’s highest balance. It moves up with new highs and never moves down. Read the full guide
Trailing stop: A stop that follows price as it moves your way, at a set distance, and never moves back.
Treasuries: Debt issued by the US government: bills, notes and bonds. Futures on Treasury notes and bonds trade at the CME.
Trend: Price moving mostly one way. An uptrend makes higher highs and higher lows; a downtrend makes lower highs and lower lows.
Trend following: Trading in the direction price has already been moving, such as buying after a new high.
Trendline: A straight line drawn through two or more rising swing lows, or falling swing highs, and carried on to the right.
Triangle pattern: A chart pattern where a line through the highs and a line through the lows close in on each other. Ascending, descending and symmetrical triangles differ in which line slopes.
Triple bottom: A triple top upside down: three dips at close to the same price, complete when a candle closes above the line over the rises between them.
Triple top: A chart pattern with three peaks at close to the same price and two dips between them, complete when a candle closes below the line under the dips.
True range: The largest of a candle’s high minus its low, its high minus the close before it, and the close before it minus its low. It counts gaps between candles. Read the full guide
Turtle soup: A false breakout of a 20-candle low or high, from Connors and Raschke’s 1995 book Street Smarts.
Tweezer top and bottom: Two candles side by side with matching highs (a tweezer top) or matching lows (a tweezer bottom).
Two-bar reversal: Two candles side by side that close opposite ways, the second closing back past where the first opened. Definitions differ on how far past.
Typical price (HLC3): A candle’s high, low and close added together and divided by three. TradingView calls it HLC3. Most VWAP lines are built from it. Read the full guide

U

Unemployment rate: The share of the labour force without a job and looking for one. The labour force is everyone working plus everyone looking for work.
Unrealised profit and loss: Profit or loss on a trade that’s still open. It becomes realised when the trade closes.
Upthrust: A move above the top of a trading range that falls back inside it. The mirror of a Wyckoff spring.
US dollar index (DXY): One number for the US dollar against six currencies, weighted most to the euro. ICE publishes it, and many charts show it as DXY.
UTC (Coordinated Universal Time): The world’s reference time. It never changes for summer, so it matches London in winter and is an hour behind it in summer.

V

Value area: The band of prices round the point of control that holds a set share of the volume, 70% by convention. Its edges are the value area high and low.
Virtual private server (VPS): A computer in a data centre that you rent and control over the internet, so a program can run there instead of at home.
VIX: Cboe’s volatility index: how much movement S&P 500 option prices imply over the next 30 days, given as a yearly percentage.
Volatility: How much and how quickly price moves. A market that swings a lot is called volatile.
Volume: How many contracts or shares traded in a stretch of time, such as one candle.
Volume climax: A candle with far more volume than the candles before it, at the end of a long move.
Volume profile: Bars on the side of a chart showing how many contracts traded at each price over a stretch of time.
VWAP: Volume weighted average price: the average price traded since a starting point, where prices with more volume count for more. Read the full guide
VWAP bands: Lines above and below VWAP, a chosen number of standard deviations, or a chosen percentage, away from it.

W

Walk-forward testing: Building rules on one window of history, testing them on the stretch just after it, then moving both windows on and doing it again.
Wedge pattern: A chart pattern where lines through the swing highs and swing lows both slope the same way, up or down, and close in on each other.
Weighted moving average (WMA): A moving average where newer closes count more: over n candles the newest counts n times and the oldest once, divided by the total of the weights.
Whipsaw: A run of signals that quickly reverse, such as moving averages crossing back and forth when price moves sideways.
Wick: The thin lines above and below a candle’s body. Their tips are the highest and lowest prices in that candle.
Wide range bar (WRB): A candle whose high-to-low range is much bigger than the candles before it.
Williams %R: An oscillator from 0 to −100 showing where the latest close sits in the recent high to low range. 0 is a close at the top, −100 at the bottom.
Win rate: The percentage of trades that made money. It doesn't show how big the wins or losses were.
Wyckoff method: Richard Wyckoff’s way of reading price and volume, built around trading ranges read as accumulation or distribution.
Wyckoff spring: A move below the bottom of a trading range that turns back up into the range. A term from Richard Wyckoff’s method.

Y

Yield curve: The yields of one borrower’s bonds lined up from shortest to longest. When short-dated yields are above long-dated ones, it’s called inverted.

Z

Z-score: How many standard deviations a close sits from the average of recent closes: (close − average) ÷ standard deviation.