Trading glossary

103 terms, in plain English, each linked to the lesson that explains it.

Apex

Where a triangle's lines meet. Triangles →

ATR

Average true range: typical candle size over 14 candles. ATR: measuring volatility →

Bar Replay

Practising on history with the future hidden. Practise with Bar Replay and the Journal →

Body

The part of a candle between open and close. What one candle tells you →

Break of structure (BOS)

A close beyond the last swing in the trend's direction — continuation. Break of structure and change of character →

Breakeven stop

Moving the stop to the entry (plus fees) after a move in your favour. Stops and targets →

Candle

One period of price: open, high, low, close. What one candle tells you →

Change of character (CHoCH)

The first close beyond a swing against the trend — an early reversal warning. Break of structure and change of character →

Channel

Parallel boundaries through swing highs and lows. Channels, ranges and flags →

Climax volume

An outsized volume spike, often near the end of a move. Volume and order flow →

Confirmation

The next candle closing in the pattern's direction. Reading candles: context beats shape →

Convergence / confluence

Several independent reasons pointing at the same price. Candles with Western tools →

Cup and handle

A rounded base between two equal rims, then a shallow handle; confirms above the rim. Cup and handle →

Dark-cloud cover

Red candle closing below the midpoint of a long green one, after a rally. Piercing line and dark-cloud cover →

Divergence

Price and an oscillator disagree (e.g. higher high in price, lower high in RSI). RSI and divergence →

Doji

A candle whose open and close are (almost) equal: indecision. Doji: when nobody wins →

Double top / bottom

Two equal highs (lows) with a swing between. Double top and double bottom →

Dragonfly doji

Doji with a long lower wick: sellers rejected. Doji: when nobody wins →

Engulfing

A second body that covers the first, in the opposite colour. Engulfing patterns →

Equal highs / lows

Highs (lows) at the same price: an obvious stop cluster. Liquidity: where the stops are →

Expectancy

Average R per trade: win% × avg win − loss% × avg loss. R-multiples and expectancy →

Extension

Projection of a swing beyond its end (127.2%, 161.8%) for targets. Fibonacci retracements and extensions →

External / internal structure

Major swings on the direction timeframe vs the smaller swings inside a leg. Structure in depth: swings that matter →

Fakeout

A breakout that fails and returns inside the range. Ranges, breakouts and fakeouts →

Fibonacci retracement

The 38.2 / 50 / 61.8% pullback levels of a swing. Fibonacci retracements and extensions →

Flag / pennant

A short pause after a sharp move (the pole). Channels, ranges and flags →

FOMC / CPI / NFP

US rate decision / inflation / jobs releases — high-impact for crypto. News, macro events and the calendar →

FOMO

Fear of missing out — chasing moves. Psychology: the biases that cost money →

Forming / confirmed

A pattern before / after its breakout close. How chart patterns work — and repainting →

Fresh zone

A zone price has not returned to yet. Supply and demand zones →

Funding rate

Periodic payment between longs and shorts that keeps a perpetual near spot. Perpetual futures and funding →

Golden / death cross

50 average crossing above / below the 200; lagging. Moving averages →

Gravestone doji

Doji with a long upper wick: buyers rejected. Doji: when nobody wins →

Guardrails

Hard limits: daily loss, trades per day, cool-down, max risk, max open positions. Discipline: guardrails, checklist and journal →

Hammer

Small body, long lower wick, after a decline. Hammer and hanging man →

Hanging man

The hammer shape after a rally — a warning that selling appeared. Hammer and hanging man →

Harami

A small body inside the previous large body: momentum stalls. Harami and the inside bar →

Head and shoulders

Shoulder, higher head, shoulder; inverse at bottoms. Head and shoulders →

Higher high / higher low

The building blocks of an uptrend. Trend: higher highs and higher lows →

Inside bar

A candle entirely inside the previous candle's range. Harami and the inside bar →

Invalidation

The price at which a setup is proven wrong — where the stop goes. Trading a confirmed pattern →

Inverted hammer

The shooting-star shape after a decline; needs strong confirmation. Shooting star and inverted hammer →

Isolated / cross margin

Margin per position vs shared across the account. Leverage, margin and liquidation →

Leverage

Position size ÷ margin. Changes margin and liquidation distance, not risk at the stop. Leverage, margin and liquidation →

Limit order

An order at a better price that waits to fill. Placing a trade →

Liquidation

The exchange force-closing a position whose margin is exhausted. Leverage, margin and liquidation →

Liquidation cascade

Forced closes pushing price into more forced closes. Liquidation cascades and open interest →

Liquidity

Resting orders — especially stop-losses — clustered at obvious prices. Liquidity: where the stops are →

Loss aversion

Feeling losses more than equal gains — holding losers, cutting winners. Psychology: the biases that cost money →

MACD

12 EMA minus 26 EMA, with a 9 EMA signal line and a histogram. MACD and momentum →

Margin

Collateral locked to hold a leveraged position. Leverage, margin and liquidation →

Marubozu

A candle with no wicks: one side controlled the whole period. Spinning tops and marubozu →

Measured move

A pattern's height projected from the breakout as a rough target. How chart patterns work — and repainting →

MFE / MAE

Maximum favourable / adverse excursion: how far a trade went for / against you. Practise with Bar Replay and the Journal →

Morning / evening star

Three-candle reversal: push, stall, reverse. Morning star and evening star →

Neckline

The line a pattern must close through to confirm. How chart patterns work — and repainting →

Open interest

The number of open futures contracts. Liquidation cascades and open interest →

Order book

Resting limit orders to buy and sell at each price. Volume and order flow →

Out-of-sample

Data not used while building a strategy, kept for testing it. Testing ideas honestly →

Overbought / oversold

RSI above 70 / below 30 — not a signal on its own. RSI and divergence →

Overfitting

Tuning a strategy to past noise so it fails on new data. Testing ideas honestly →

Paper trading

Simulated fills on live prices, no real money. Placing a trade →

PDH / PDL

Previous day's high / low. PWH / PWL: previous week's. Support and resistance →

Perpetual future

A futures contract with no expiry that tracks the spot price via funding. Perpetual futures and funding →

Piercing line

Green candle closing above the midpoint of a long red one, after a decline. Piercing line and dark-cloud cover →

Point of control (POC)

The price with the most traded volume in a profile. VWAP and volume profile →

Position size

(account × risk %) ÷ distance to the stop. Risk per trade and position size →

Protected low

The swing low that started the latest new high; an uptrend must hold it. Structure in depth: swings that matter →

R / R-multiple

Result measured in units of the amount risked. R-multiples and expectancy →

Range

Sideways market bounded by support and resistance. Ranges, breakouts and fakeouts →

Repainting

A tool redrawing history with information that was not available at the time. How chart patterns work — and repainting →

Resistance

A price area where selling has stepped in before. Support and resistance →

Retest

Price returning to a broken level from the other side. Ranges, breakouts and fakeouts →

Rising / falling three methods

A rest of small counter-candles inside a big trend candle, then continuation. Continuation: windows and three methods →

Risk per trade

The % of the account lost if the stop is hit. Risk per trade and position size →

Role reversal

A broken resistance acting as support (or the reverse) on the retest. Support and resistance →

RSI

Relative Strength Index: recent up-closes vs down-closes, 0–100. RSI and divergence →

Session

The Asia, London and New York trading periods. Sessions and time of day →

Shooting star

Small body, long upper wick, after a rally. Shooting star and inverted hammer →

Short squeeze

A rally driven by shorts being forced to buy back. Liquidation cascades and open interest →

Slippage

Difference between the expected and the actual fill price. R-multiples and expectancy →

SMA / EMA

Simple / exponential moving average of closing prices. Moving averages →

Spinning top

Small body with wicks both sides — losing momentum. Spinning tops and marubozu →

Stop entry

An order that enters when price breaks through a level. Placing a trade →

Supply / demand zone

The base of quiet candles before a strong move away. Supply and demand zones →

Support

A price area where buying has stepped in before. Support and resistance →

Sweep / stop run

A push beyond an obvious level that triggers stops and reverses back inside. Liquidity: where the stops are →

Swing high / low

A peak (trough) with lower highs (higher lows) on both sides; NexusCore uses 5 candles each side. Trend: higher highs and higher lows →

Tape

The stream of executed trades. Volume and order flow →

Three black crows

Three strong falling candles after a high. Three white soldiers and three black crows →

Three white soldiers

Three strong rising candles after a low. Three white soldiers and three black crows →

Timeframe

How much time one candle covers (1m, 4h, 1D…). Timeframes and top-down reading →

Top-down analysis

Reading the higher timeframe for direction, the middle for location, the lower for timing. Timeframes and top-down reading →

Trading plan

Written rules for markets, setups, entries, exits, risk and review. Write your trading plan →

Trailing stop

A stop that follows price at a set distance, only tightening. Placing a trade →

Triangle

Converging boundaries: ascending, descending or symmetrical. Triangles →

Tweezers

Candles with matching highs or lows. Tweezer tops and bottoms →

Value area

The price range holding ~70% of a profile's volume. VWAP and volume profile →

Volume

How much traded in a candle — participation, not direction. Volume and order flow →

VWAP

Volume-weighted average price of the session. VWAP and volume profile →

Wedge

Converging boundaries sloping the same way. Wedges →

Wick (shadow)

The thin line above or below the body: prices reached but not held. What one candle tells you →

Window

Japanese term for a price gap. Continuation: windows and three methods →