Learn · by Boris

Trading glossary

Every term from my videos and journal annotations, in plain English. Where I've made a video on it, there's a link.

Candlestick · Timeframe · Trend vs range · Support and resistance · Trading sessions · Paper trading · Liquidity · Liquidity sweep · Draw on liquidity · Break of structure · Fair value gap · Inversion FVG · Retest · SMT divergence · AMD · R and risk-to-reward · Prop firm and evaluation · Max drawdown · ES, NQ, MES and MNQ

The basics

Candlestick: One bar on a chart showing four prices for a period of time: where it opened, where it closed, and the highest and lowest points (the wicks). Green or hollow means it closed higher than it opened; red or filled means lower. ▶ Watch my video
Timeframe: How much time each candle covers: 1 minute, 5 minutes, 1 hour, 1 day. Higher timeframes show the big picture; lower timeframes show the detail used to time an entry. ▶ Watch my video
Trend vs range: A trend is price making higher highs and higher lows (up) or lower highs and lower lows (down). A range is price bouncing sideways between a ceiling and a floor. ▶ Watch my video
Support and resistance: Price levels where the market has reacted before. Support is a floor where buyers stepped in; resistance is a ceiling where sellers did. ▶ Watch my video
Trading sessions: The main parts of the trading day: Asia, London and New York. The London high or Asia low just means the highest or lowest price reached during that session. ▶ Watch my video
Paper trading: Trading a simulated account with fake money but real prices. It's how you practise a strategy without risking anything.

Price action ideas

Liquidity: Clusters of waiting orders, mostly stop losses, that sit just above obvious highs and just below obvious lows. Big players need those orders to fill their own trades. ▶ Watch my video
Liquidity sweep: When price pokes just past a high or low, triggers the stop losses sitting there, then quickly reverses. Also called a stop hunt or sweeping out liquidity.
Draw on liquidity: The level price looks likely to head for next, usually an untouched high or low with lots of stops resting beyond it.
Break of structure (BOS): When price breaks past the last significant high (in an uptrend) or low (in a downtrend), suggesting the trend is continuing. ▶ Watch my video
Fair value gap (FVG): A three-candle pattern from a fast move, where the wicks of the first and third candles don't overlap. The gap left behind is an area price often comes back to. ▶ Watch my video
Inversion FVG: A fair value gap that price closes straight through. It then flips its role: a bearish gap that gets closed above can act as support, and a bullish gap closed below can act as resistance. In my notes this is inversed.
Retest: When price breaks a level, then comes back to touch it before carrying on. Many traders wait for the retest, and a rejection from it, before entering.
SMT divergence: When two markets that normally move together, like ES and NQ, disagree at a key point. For example, NQ makes a lower low but ES doesn't. It can be a hint that the move is running out of steam.
AMD: Accumulation, manipulation, distribution: a way of describing a session. Price builds a range (accumulation), fakes a move one way, often sweeping liquidity (manipulation), then makes the real move the other way (distribution).

Risk and prop firms

R and risk-to-reward (RR): 1R is the amount you risk on a trade. Making 2.29R means you made 2.29 times what you risked. Risk-to-reward compares how far your target is to how far your stop is.
Prop firm and evaluation: A proprietary trading firm lets you trade its money if you pass an evaluation: hit a profit target without breaking its rules. You pay a fee for each attempt.
Max drawdown: The most your account is allowed to lose before the evaluation fails. A trailing drawdown moves up as your account makes new highs, so it can catch you out.
ES, NQ, MES and MNQ: Futures on the S&P 500 (ES) and Nasdaq-100 (NQ). NQ is $20 per point per contract, ES $50. The micros, MNQ and MES, are a tenth of that: $2 and $5.