Glossary
Trading glossary: terms with worked examples
The definitions the Trading OS journal calculates with, plus worked examples, common mistakes, and links to calculators and lessons.
Risk and results
R-multiple1R is the amount you lose if the stop is hit. A trade's result in R is the profit or loss divided by that risk — so trades on any account size compare fairly.Risk/Reward Ratio (RR)How many times farther the target is from entry than the stop: 1:2.5 means 2.5R of target per 1R of risk. RR is planned before the trade; R is the actual result.Win RateThe share of winning trades among closed ones. On its own it says nothing about profit: read it together with the average R of wins and losses.Profit FactorThe sum of all profits in R divided by the sum of all losses in R. Above 1 means net positive; Trading OS computes it in R, not money.ExpectancyThe average result of one trade in R, wins and losses included. Positive over a large sample means the system earns on average; negative means it loses, however many wins there are.DrawdownThe fall of the equity curve from its last peak. Max drawdown is the worst such fall: how much you gave back in your worst stretch.BreakevenThe stop is moved to the entry price: if price comes back, the trade closes near zero. It counts as neither a win nor a loss in Winrate.Stop-lossThe price where the trade closes at a 1R loss. It goes where the trade idea breaks, not where it "doesn't hurt".Take-profitThe price where the trade closes in profit. A sensible target is the nearest liquidity in the trade's direction, not a round number of R.InvalidationThe price at which the trade idea is no longer valid. The stop goes beyond it — plus a small buffer.Daily stopThe loss for the day after which you stop trading until tomorrow. It protects you from a streak where each decision is worse than the last.Partial closeClosing part of the position before the final target. It reduces the spread of outcomes — and the trade's average R.Trailing stopA stop moved along behind price — only in the direction of profit. Moving the stop away from price is not trailing, it is adding risk.Sample sizeHow many trades stand behind a number. On 10–20 trades, Winrate and PF swing on a single trade; conclusions about a setup need several dozen.Equity curveThe running result trade by trade — in R or in money. Its slope is the expectancy, its dips are the drawdowns.Missed RMFE minus the actual result: how many R of the trade's peak the exit did not capture. A large miss across the sample is a question for your exit rules.Exit efficiencyWhat share of the way to the peak (MFE) the exit captured, from 0 to 100%. It measures the exit, not the entry.StreakHow many trades in a row closed the same way: +3 is the third win in a row, −2 the second loss. Long losing streaks are normal even for a profitable system.Trade reviewChecking a trade against the plan, not the result: was there a setup, where was the stop, what was the mistake. In Trading OS a closed trade goes into the weekly review queue.
Position and leverage
Risk Per TradeThe share of your account you lose if the stop is hit. It is chosen before the trade and sets the position size — not the other way round.Position SizeHow many coins you buy or sell. The formula: risk in money ÷ distance to the stop — then the stop costs exactly 1R.LeverageHow many times larger the position is than the collateral. Leverage does not change the trade's risk — the stop and size do; it only sets how much collateral is locked and where liquidation sits.Liquidation PriceThe exchange force-closes the position when the margin can no longer hold it. It uses the mark price; with a proper stop it never gets that far.MAE and MFEHow far price moved against you inside the trade, in R. It shows where a sufficient stop would really have been. How far price moved in your favour inside the trade, in R. Computed from minute candles strictly between entry and exit.Market orderAn order to "fill now at the best available price". It fills for sure, but the price may be worse than what you saw — that is slippage.Limit orderAn order to "buy no higher" or "sell no lower" than a set price. The price is guaranteed, the fill is not: the market may not get there.Stop order (stop-market)An order that sleeps until a trigger price and then fills at market. That is how a stop-loss usually works: the exit is guaranteed, the price is not.Stop-limit orderOnce triggered, it places a limit order instead of a market one. The price is controlled, but if the market jumps past the limit, the order does not fill.Maker / taker feeA maker adds liquidity to the book (a limit order) and pays less; a taker removes it (market, stop-market) and pays more. The fee is charged on position size, not on risk.SpreadThe difference between the best buying price (ask) and selling price (bid). A market entry and an instant exit cost at least one spread.SlippageThe difference between the price you expected and the fill price. It happens with market and stop orders — more often in fast moves and thin books.Funding rateA payment between longs and shorts on perpetual futures, usually every 8 hours. A positive rate means longs pay shorts; negative means the reverse.MarginThe collateral the exchange locks for a position: size ÷ leverage. If losses eat the margin down to the maintenance level, liquidation follows.Isolated vs cross marginIsolated — only the position's own collateral backs it, and that is what liquidation takes. Cross — the position draws on the whole free balance, and liquidation can take more.Mark priceA price averaged across several exchanges used for unrealised PnL and liquidation. It protects you from being liquidated by one stray print.Order bookThe list of resting buy (bid) and sell (ask) limit orders by price. A market order fills by "eating" orders from the book.Perpetual futuresA futures contract with no expiry: you can hold it as long as you like, and funding keeps its price near spot. It allows shorting and leverage.
Prop trading
Prop Firm RulesA company that lets you trade its capital after an evaluation and keeps a share of the profit. What a breach does depends on the limit and the firm: breaking the max loss closes the account, while the daily limit fails the evaluation at some firms and only halts the day at others.Daily Loss LimitThe maximum loss per day under prop rules — measured from the starting balance or the day's opening balance. The consequence depends on the firm: at FTMO a breach fails the evaluation, at Topstep it only halts trading for the rest of the day.Trailing DrawdownThe account floor: breaking it fails the evaluation or closes the funded account at any firm. It can be static (from the starting balance) or trailing — following the balance peak at the end of the day or intraday.Prop evaluationThe evaluation stage at a prop firm: hit the profit target without breaking limits within the allowed days. Usually paid, in one or two phases.Profit target (prop)The profit, as a percent of the starting balance, you need to make during the evaluation. A funded account usually has no target.Consistency ruleA cap on the best day's share of total profit — for example, no more than 30–50%. It stops you passing the evaluation on one lucky trade.Minimum trading daysHow many days with trades (or profitable days) you need before passing or a payout. Days count, not trades.Profit splitThe share of a funded account's profit the trader receives — for example, 80%. The firm keeps the rest.
Market structure
SetupA repeatable set of conditions you enter on — for example, "sweep + MSS". In the journal one setup is one tag, otherwise its stats are meaningless.Market Structure ShiftA candle close beyond the last swing that led into the sweep: after lows are taken — above the last lower high. A wick does not count — it takes a body.Fair Value Gap (FVG)The gap between the wick of the first and the wick of the third candle, left by an impulse: almost no two-way trading happened there. Price sometimes returns to that zone — but it does not have to.Order Block (OB)The last opposite-colour candle before an impulse. A zone for the stop and the entry: price moving beyond it cancels the impulse idea.Liquidity SweepA spike beyond an obvious high or low where stops sit, followed by a close back inside. A sweep on its own is a hypothesis, not an entry signal.BOS and CHoCHA close beyond the last swing in the trend's direction: above the high in an uptrend, below the low in a downtrend. A BOS confirms the direction continues. The first close against the trend beyond the last significant swing: in an uptrend, below the last HL. It signals a possible change, not a finished reversal.Smart Money ConceptsSMC (smart money concepts) is an approach to reading a chart through a set of linked ideas: liquidity, market structure (BOS/CHoCH), fair value gaps, and order blocks. It's a descriptive vocabulary for price action, not a ready-made proven system.Trading SessionsA window of trading hours by region: Asia, London, New York. Price behaves differently in each, so stats are split by session too.CandlePrice over one time slot: open, high, low and close (OHLC). The body runs from open to close, the wicks reach the extremes.WickThe part of a candle beyond its body: price got there but did not hold into the close. A long wick at a level is a common trace of stops being taken.TimeframeThe length of one candle on the chart: 15m is 15 minutes, 1h an hour, 4h four hours. The same market looks different on different timeframes.Higher timeframe (HTF)A timeframe above the one you trade — used for direction and key levels. Entries are found on the lower timeframe (LTF), context comes from the higher one.LongA trade on a rise: buy now, sell higher later. Profit is the price difference; the loss comes if price drops to the stop.ShortA trade on a drop: sell now, buy back cheaper. On futures you do not need to own the coin — the position opens against margin.TrendThe direction of structure: in an uptrend highs and lows rise, in a downtrend they fall. A trend lives until its last significant low (or high) is broken.RangeA stretch where price moves between a high and a low without a new direction. Its edges are where stops pile up.Level (support / resistance)A price the market has already turned from: below — support, above — resistance. A level is a decision point, not a wall.Impulse (displacement)A sharp move of large candles in one direction. An impulse is what leaves an FVG and shows who is stronger right now.Swing high / lowA local high or low price turned from. Swings make up structure: stops go behind them and breaks are counted against them.HH / HL / LH / LLShorthand for structure: HH and HL are highs and lows above the previous ones (up), LH and LL below (down). A change in the sequence is the first sign of a turn.Close confirmationThe rule: a level counts as broken only when a candle body closes beyond it. A wick beyond it is a spike, not a break.Premium / discountSplitting a range in half: the upper half is premium (expensive), the lower half discount (cheap). Longs are sought in discount, shorts in premium.LiquidityA cluster of orders in one place — most often stops behind obvious highs and lows. Large players need opposing orders to fill, so price often travels there.Equal highs / lowsTwo or three extremes at almost the same price. They look like solid support or resistance, so stops pile up behind them.False breakoutPrice moved beyond a level but failed to hold and came back. For those who bought the breakout it is a stop; for the sweep model it is a reason to wait for an MSS.BreakoutA candle close beyond a level that had been holding price. A real breakout holds: price does not come back through the level.RetestPrice returns to a broken level and bounces off it. Former resistance becomes support — and offers an entry with a nearby stop.Asian rangeThe high and low of the Asian session (00:00–06:00 UTC). The range edges are the nearest liquidity for London and New York.Return to zone (mitigation)Price comes back into the FVG or OB after the impulse. Model entries are looked for here — with a stop beyond the zone or beyond the sweep.POI — point of interestA zone marked in advance where you are prepared to look for an entry: an FVG, an OB, a range edge, liquidity. You do not enter just because price is there — you wait for confirmation.Entry modelA chain of steps from idea to order: zone → sweep → MSS → entry from the FVG → stop beyond the sweep → target. The rules are mechanical, so they can be tested on history.A+ setupYour setup in its strictest form — when every checklist condition is met. It is defined from your journal: the conditions under which your trades are actually better.Early entryEntering before the model has confirmed: on the sweep without an MSS, inside an unclosed candle. The journal tracks it as its own mistake, priced in R.Entry checklistA short list of conditions you check before the click. One item missing — no trade.No-trade conditionsSituations written down in advance in which you do not enter, even if the setup "looks like it". A trade skipped by the rules is a result too.ConfluenceSeveral independent reasons behind one trade: higher-timeframe direction, session, liquidity, a zone. Coincidences alone give no edge — check them in your journal.
Psychology
EdgeA positive expectancy after fees over a large sample of your trades on a specific setup. An edge is never guaranteed: the journal shows it, and it can disappear.TiltA state after a losing streak or feeling wronged by the market, when you decide to get even rather than by plan. Size grows, filters fall away.FOMOEntering not on a setup but because the move is already happening without you. It is usually an entry far from the stop — big risk, tiny size, or both.Revenge TradingA trade opened to win back a fresh loss right away. Usually without a setup, faster than normal and with bigger risk.Outcome biasAn evaluation error: a winning trade is judged good, a losing one bad. A correct trade by plan can lose, a rule break can win.OvertradingMore trades than your model produces: entries out of boredom, excitement or "to get it back". Fees and mistakes grow faster than results.
Plan versus outcome — for every trade
The Trading OS journal keeps the planned RR and the actual R of each trade side by side and computes expectancy from real results.
No sign-up — the journal runs in your browser; an account is only needed for sync.