Trader's Mini-Glossary: Simple Definitions for Common Terms

Bookmark this page. Short, plain-English explanations you'll actually remember.

Trend The general direction of price over time (up, down, sideways).

Support A price area where buyers tend to step in and price often bounces.

Resistance A price area where sellers tend to appear and rallies often stall.

Breakout Price moving out of a well-defined range/level with momentum.

Pullback A temporary move against the prevailing trend (a dip in an uptrend).

Reversal A change in the prevailing trend (up → down or down → up).

Volatility How much price moves around its average; higher = more swings.

ATR (Average True Range) A volatility indicator that measures average daily range.

Beta How much an asset moves vs a benchmark (e.g., vs index). >1 = more volatile.

Gap When price opens significantly above/below the prior close, leaving a “hole”.

Liquidity How easily you can buy/sell without moving the price much.

Slippage The difference between expected price and actual fill price.

Spread Difference between best bid and ask; tighter spreads are cheaper to trade.

MA (Moving Average) An average of past prices; smooths the chart (e.g., 20/50/200 DMA).

RSI Momentum indicator (0–100). Above ~60 = strong; below ~40 = weak (context matters).

MACD Momentum indicator using EMAs; crossovers hint at trend shifts.

VWAP Volume-weighted average price; intraday “fair value” reference.

RRR (Risk-Reward Ratio) Potential gain vs the loss you accept (e.g., 2:1).

Stop-loss Pre-defined exit level to cap losses if the trade is wrong.

Take-profit Pre-defined exit to book gains at a target.

Position sizing How many shares/contracts you buy so that risk per trade stays fixed.

Drawdown Peak-to-trough decline in equity (or price) before a new high.

Correlation How two assets move together. Positive = same direction; negative = opposite.

Diversification Spreading risk across assets/sectors/strategies to reduce variance.

Hedging Offsetting risk in one position with another (e.g., long stock, long put).

Market order Buys/sells immediately at current best price.

Limit order Buys/sells at a specified price or better; may not fill.

Stop order Triggers a market/limit order once a price level is hit.

Leverage Using borrowed funds/margin to control a larger position. Increases risk.

Margin call Broker demand for more funds when equity falls below maintenance levels.

Fundamentals Company/economy basics (earnings, growth, inflation, rates, etc.).

Technical analysis Using price/volume/indicators to make trading decisions.

Sentiment The market's collective mood (risk-on vs risk-off).

Backtest Testing a strategy on historical data to see how it might have performed.

Overfitting When a strategy is too tailored to past data and fails in real trading.

Edge A repeatable reason your trades have a positive expectancy over time.

Keep learning: See the Heatmaps to visualize trends, build scans on the Screeners, and deep-dive a symbol on the Instrument page.