Trading glossary
The main trading terms in plain words. To go deeper, start with the free “From zero” lessons.
- Address whitelist
- A list of addresses on an exchange that withdrawals may go to. It protects against withdrawing to someone else's address.
- Arbitrage
- Making money on the price difference of the same thing in two places: buy where it's cheaper, sell where it's more expensive.
- Ask
- A sell order. The best ask is the lowest price anyone will sell at right now.
- Backtest
- Testing a rule on past data: what would have happened if we had traded this way before.
- Bid
- A buy order. The best bid is the highest price anyone will pay right now.
- Breakout
- The price has gone through a level and held beyond it.
- Candle
- A bar on the chart for one stretch of time: where the price opened, where it closed, its high and its low.
- Challenge
- A paid evaluation at a prop firm: a profit target and loss limits you must not break.
- Correction (pullback)
- A temporary move against the main direction.
- Delta
- The difference between market buys and market sells over a period. Positive — buyers are more aggressive; negative — sellers are.
- DEMO
- The DEMO account in MAMAY: prices and fees are real, orders don't go to the exchange, and no real money is at risk.
- Deposit (account)
- The money in your trading account.
- Dividend
- A part of the company's profit that it pays out to shareholders.
- Drawdown
- The drop of an account from its peak to the next low. It shows what losses you have to withstand.
- False breakout
- The price went past a level, couldn't hold and came back. Those who entered on the breakout ended up in a loss.
- Fee
- What you pay the exchange for every trade — both on entry and on exit.
- Footprint
- A view of volume inside a candle: how much was bought and sold at each price over a minute or another period.
- Funding
- A regular payment between those who are long and those who are short on a perpetual futures contract. Who pays depends on whether the futures price is above or below spot.
- Futures
- A contract on the price of an asset. You don't receive the coin itself — you gain or lose on the price change. Lets you short and use leverage.
- Gap
- A jump in price: today trading opened noticeably higher or lower than it closed yesterday. Closed at 100 yesterday, opened at 108 today — an 8% gap up.
- Imbalance
- A stretch where price moved fast with almost no opposing trades. It often appears as a gap between neighboring candles.
- Impulse
- A fast, strong price move in one direction.
- Level
- A price where the market has already turned before. Support is below the price, resistance is above it.
- Leverage
- Money borrowed from the exchange. With 10x leverage, your $100 opens a $1,000 position: both profit and loss are ten times bigger.
- Limit order
- An order to "buy or sell at my price or better". It can wait in the order book and may never fill.
- Liquidation
- The exchange force-closes a position when the loss has eaten all the collateral. The collateral is lost.
- Liquidity
- How easy it is to buy or sell the size you need without moving the price. Little liquidity — hard to get in and out.
- Long
- Buying in the hope that the price will rise. Buy lower, sell higher.
- Margin
- Your own money that the exchange locks as collateral for a leveraged position.
- Market order
- An order to "buy or sell right now at the best available price". It fills immediately.
- Open interest
- How many futures positions are currently open in the market. Rising — new money is coming in; falling — money is leaving.
- Opportunity (arbitrage pair)
- A pair of trades in arbitrage: where we buy and where we sell.
- Order book
- The list of all buy and sell orders at every price at this very second.
- Perpetual futures
- A futures contract with no expiry date. Funding keeps its price close to spot.
- Position
- An open trade: what you have bought or sold and haven't closed yet.
- Premarket
- Trading before the exchange's main session opens. There are few participants, and the price moves easily.
- Profit Factor
- The sum of all profits divided by the sum of all losses. Above 1 — the trading is profitable.
- Prop firm
- A company that, after an evaluation, lets you trade its account and shares the profit with you.
- Record date
- The date on which you need to own the stock to receive the dividend. The next day the stock gets cheaper by roughly the size of the dividend.
- Revenge trading
- A trade right after a loss to win it back. Usually bigger than normal and without a plan.
- Scalping
- Trading small price moves: a trade lasts from seconds to minutes, with many trades a day.
- Screener
- A filtering program: it scans hundreds of stocks or coins and shows only those that match the given criteria.
- Setup
- A ready trading rule: under what condition to enter, in which direction, where the stop and the target are.
- Short
- Selling in the hope that the price will fall: you sell something borrowed, then buy it back cheaper. You make money when the price drops.
- Sigma (σ)
- A measure of the usual spread of a value. "2 sigma deviation" means the value is now unusually far from its average.
- Slippage
- The difference between the price you saw and the price at which the trade was actually filled.
- Spot
- Ordinary buying and selling of the coin or stock itself: you buy it — it's yours.
- Spread
- The difference between two prices. In the order book — between the best bid and the best ask. In arbitrage — between the price of the same asset on two venues.
- Stop
- A price chosen in advance at which the trade is closed at a loss, so the loss doesn't grow bigger.
- Target (take-profit)
- A price chosen in advance at which the trade is closed with a profit.
- Timeframe
- What stretch of time one candle on the chart shows: a minute, an hour, a day.
- Trade tape
- A stream of completed trades: price, size, side and time. It shows what has already happened, not just intentions.
- Trend
- A steady direction of the price: every new high and low is above the previous one — a rise; below — a fall.
- Volatility
- How much the price usually swings. High volatility — the price moves wide and fast.
- Volume
- How much money or how many units changed hands over a period. A move on high volume is more reliable than one on low volume.
- Wall
- A very large order in the order book at one price — many times bigger than its neighbors. It often acts as a wall for the price.
- Win rate
- The share of trades closed in profit. On its own it says nothing about profitability: what matters too is how much a winning trade brings and how much a losing one takes.