Glossary

General

Trading

Trading is the buying and selling of financial instruments such as stocks, futures, options, crypto, or forex with the goal of making profit on price movements. The difference with investing is that trading is usually focused on shorter-term transactions, where positions are often opened and closed within days, hours, or even minutes.

Daytrading

Daytrading is a form of trading where all positions are opened and closed on the same day, before the market closes. Daytraders try to profit from intraday price movements and avoid holding positions overnight. This form of trading requires a lot of discipline, good risk management, and often a lot of screen time during the trading day.

Swingtrading

Swingtrading is a trading style where positions are held for multiple days to weeks to profit from larger price movements. Swingtraders often use technical analysis to identify swing highs and swing lows and try to catch the "swing" in the price. This is a middle ground between daytrading and long-term investing.

TA / Technical analysis

Technical analysis (TA) is a method of analyzing markets through price charts, patterns, indicators, and volume. Technical analysts believe that historical price movements can help predict where the price is going. This contrasts with fundamental analysis (FA), which looks at company figures, news, and economic factors.

FA / Fundamental analysis

Fundamental analysis (FA) is a method of determining the intrinsic value of an asset by looking at financial figures, company results, industry trends, economic factors, and news. Fundamental analysts try to determine whether an asset is under- or overvalued based on these factors.

Bullish

Bullish means you have a positive expectation about the price direction of an asset. A bullish trader or market expects the price to rise. The term comes from a bull that attacks with its horns upward.

Bearish

Bearish means you have a negative expectation about the price direction of an asset. A bearish trader or market expects the price to fall. The term comes from a bear that strikes downward with its claws.

Backtesting

Backtesting is testing a trading strategy on historical data to see how the strategy would have performed in the past. By backtesting a strategy, you can analyze the win rate, risk-reward ratio, and other statistics before trading with real money. It's important to remember that historical performance is no guarantee of future results.

Losing streak

A losing streak is a series of consecutive losing trades. Losing streaks are inevitable in trading, even for profitable traders. It's important to limit your risk per trade so that a losing streak doesn't damage your account too much.

Winning streak

A winning streak is a series of consecutive winning trades. Although winning streaks feel good, it's important not to become overconfident and forget your risk management.

Broker

A broker is a financial intermediary that makes it possible to trade on the markets. Brokers offer trading platforms, order execution, and access to various markets. You usually pay commission or spread to your broker for their services.

Trading account

A trading account is an account with a broker that you use to trade. You deposit money into your trading account and use it to open positions. There are different types of accounts such as cash accounts, margin accounts, and funded accounts.

Margin account

A margin account is a trading account where you can borrow money from the broker to trade more than your own capital. This is called "trading on margin" or "with leverage". Margin trading increases both your potential profits and losses.

Funded account

A funded account is a trading account that is financed by a prop trading firm (proprietary trading company). You usually go through an evaluation process, and if you pass, you get access to the company's capital to trade. You share the profits with the company according to a pre-agreed percentage.

Commission

Commission is a fee you pay to your broker for each trade you execute. Some brokers charge a fixed commission per trade, others charge a percentage of the trade value.

Blowing up your account

Blowing up your account means you lose your entire trading account through losing trades. This often happens when traders take too much risk, don't respect their stop loss, or trade emotionally. It's important to limit your risk per trade to prevent this.

Watchlist

A watchlist is a list of assets you keep an eye on for potential trading opportunities. You add tickers to your watchlist that interest you based on your analysis, and check them regularly for setups.

Logging

Logging means keeping track of and recording all your trades in a trading journal. By logging your trades, you can recognize patterns, analyze your performance, and learn from your mistakes. Logging is essential for every serious trader.

Trading journal

A trading journal is a system in which you record all your trades with details such as entry, exit, stop loss, take profit, strategy, emotions, and screenshots. This helps you objectively analyze and improve your performance. Every profitable trader has such a journal. TradeLogger is specifically built for this, is from Dutch origin, and will be available soon! Sign up quickly for the waitlist to be among the first to use it.

Stock

A stock is a certificate of ownership of a portion of a company. When you buy a stock, you become a co-owner of that company. Stocks are traded on exchanges such as the NYSE, NASDAQ, or Euronext Amsterdam.

Ticker

A ticker is a unique code that identifies a specific financial instrument. For example: AAPL for Apple, TSLA for Tesla, or ES for the E-mini S&P 500 future. Tickers are used to quickly identify assets on trading platforms and in analyses.

Future

A future is a financial contract where you are obligated to buy or sell an asset on a predetermined date and price. Futures are used for hedging or speculation. Popular futures are the E-mini S&P 500 (ES), NQ (NASDAQ), or CL (crude oil).

Option

An option is a financial contract that gives you the right (but not the obligation) to buy (call option) or sell (put option) an asset at a predetermined price (strike price) before or on a certain date (expiration date). Options are complex instruments with many risks.

Derivatives

Derivatives are financial instruments whose value depends on an underlying asset. Examples are futures, options, swaps, and CFDs. The term "derivative" comes from the fact that the value is "derived" from the underlying asset.

Crypto

Crypto is short for cryptocurrency, digital currencies that use cryptography. Well-known cryptos are Bitcoin (BTC), Ethereum (ETH), and many others. Crypto trading happens 24/7, unlike traditional markets that have trading hours.

Forex

Forex is short for Foreign Exchange, the trading of currencies. Forex trading means buying and selling currency pairs such as EUR/USD, GBP/USD, or USD/JPY. The forex market is the largest financial market in the world and trades 24 hours a day.

ETF

ETF stands for Exchange Traded Fund, an investment fund that is traded on the exchange like a stock. ETFs usually track an index, sector, or theme and offer diversification in one tradable instrument. Examples are SPY (S&P 500) or QQQ (NASDAQ 100).

Commodities

Commodities are raw materials such as gold, oil, coffee, wheat, or cotton that are traded on commodity markets. Commodities can be traded via futures, ETFs, or direct investments.

Indexes

An index is a statistical measurement that shows the performance of a group of assets. Well-known indexes are the S&P 500, NASDAQ, Dow Jones, or the AEX in the Netherlands. Indexes are used as benchmarks to compare the performance of individual assets or portfolios.

Market cap

Market cap (market capitalization) is the total value of all outstanding shares of a company. It is calculated by multiplying the number of outstanding shares by the current share price. Market cap is used to categorize companies: large cap, mid cap, or small cap.

Earnings

Earnings are the financial results that a company periodically announces, usually quarterly. Earnings reports contain information about revenue, profit, and outlook. Earnings can cause large price movements if they are better or worse than expected.

Market hours / Market open

Market hours are the times when the exchange is open for trading. For US markets (NYSE, NASDAQ), regular market hours are from 9:30 AM to 4:00 PM Eastern Time. In the Netherlands, market hours for Euronext Amsterdam are from 9:00 AM to 5:30 PM Central European Time.

Premarket

Premarket is the trading period before regular market hours. For US markets, premarket is usually from 4:00 AM to 9:30 AM Eastern Time. Premarket trading usually has lower volume and higher spreads, which brings more risk.

Aftermarket

Aftermarket is the trading period after regular market hours. For US markets, aftermarket is usually from 4:00 PM to 8:00 PM Eastern Time. Like premarket, aftermarket usually has lower volume and higher spreads.

Trade

Trade

A trade is a single transaction where you open a position and later close it. A trade consists of an entry, an exit, and usually a stop loss and take profit. The result of a trade can be a win, loss, or break-even.

Long

Going long means you buy an asset with the expectation that the price will rise. You profit from rising prices. The term comes from "long position" which means you own the asset.

Short

Going short means you sell an asset you don't own, with the expectation that the price will fall. You profit from falling prices. Going short is riskier than going long because losses can theoretically be unlimited.

Win

A win (also called "winning trade" or "profitable trade") is a trade where you exit with profit. Your exit price is higher than your entry price in a long trade, or lower in a short trade. The goal of trading is to have more wins than losses, or to make your wins larger than your losses.

Loss

A loss (also called "losing trade") is a trade where you exit with a loss. Your exit price is lower than your entry price in a long trade, or higher in a short trade. Losses are inevitable in trading, even for the best traders.

BE / Break-even

Break-even (BE) means your trade closes without profit or loss. Your exit price equals your entry price (plus costs). Some traders move their stop loss to break-even after the trade has made a certain profit to eliminate risk.

Winrate / Hitrate

Winrate or hitrate is the percentage of your trades that are profitable. For example: if you win 60 out of 100 trades, your winrate is 60%. Winrate alone doesn't tell the whole story - a trader with 40% winrate can still be profitable with a good risk-reward ratio.

RU / Risk Unit

Risk Unit (RU) is a standard measure for your risk per trade. By always using the same number of risk units, you can take consistent risk regardless of the ticker or market conditions. For example: 1 RU = 1% of your account, or 1 RU = $100.

RR / Risk-reward

Risk-reward (RR) ratio is the ratio between your potential profit and your risk in a trade. For example: if you risk $100 to win $200, your RR ratio is 1:2. A higher RR ratio means you need to win fewer trades to be profitable.

SL / Stop loss

Stop loss (SL) is an order that automatically closes your position if the price moves against you to a predetermined price. A stop loss limits your losses and is essential for risk management.

TP / Take profit / Target

Take profit (TP) or target is a predetermined price where you take your profit and close your position. Placing a take profit helps you realize profits before the price reverses.

Partials

Partials means you close part of your position while leaving the rest open. For example: you close 50% of your position at your first take profit, and let the other 50% run for a higher target. Partials help you lock in profits while still being able to profit from further price movements.

Play

Play is an informal term for a trading setup or opportunity. Traders say, for example, "this is a good play" when they see an interesting setup. The term is mainly used in the daytrading community.

Charts

Chart

A chart is a visual representation of price movements over time. Charts usually show the open, high, low, and close prices for different time periods. There are different chart types such as candlestick charts, bar charts, or line charts.

Timeframe

A timeframe is the time period that each candlestick or bar on a chart represents. For example: on a 5-minute chart, each candlestick represents 5 minutes of price movement. Timeframes range from seconds to years.

Daily

Daily means you're looking at a daily chart, where each candlestick represents one day. Daily charts are often used for swing trading or to identify the larger trend.

Intraday

Intraday means "within the day" and refers to trading or analysis on shorter timeframes than daily, such as hours, minutes, or seconds. Intraday trading all happens on the same day.

1D

1D stands for 1 Day, a timeframe where each candlestick represents one day. This is the same as "Daily".

4H

4H stands for 4 Hours, a timeframe where each candlestick represents 4 hours. This is a popular timeframe for swing trading.

1H

1H stands for 1 Hour, a timeframe where each candlestick represents one hour. Hourly charts are often used for intraday trading.

15m

15m stands for 15 minutes, a timeframe where each candlestick represents 15 minutes. This is a popular timeframe for daytrading.

5m

5m stands for 5 minutes, a timeframe where each candlestick represents 5 minutes. This is a commonly used timeframe for daytrading.

2m

2m stands for 2 minutes, a timeframe where each candlestick represents 2 minutes. This is a shorter timeframe for faster daytrading.

1m

1m stands for 1 minute, a timeframe where each candlestick represents 1 minute. This is a very short timeframe, often used for scalping.

Candles

Candle / Candlestick

A candle or candlestick is a visual representation of price movement in a certain period. Each candlestick shows the open, high, low, and close (OHLC) prices. Green or white candles usually mean the price rose (close > open), red or black candles mean the price fell (close < open).

Body

The body of a candlestick is the thick part between the open and close price. The body shows the difference between where the price opened and where it closed. A large body means strong price movement, a small body means little movement.

Wick

The wick (also called "shadow") is the thin line above and/or below the body of a candlestick. The wick shows the highest and lowest prices that were reached during that period, but where the price did not close. Long wicks can indicate rejection of certain price levels.

Spike

A spike is a sudden large price movement that often manifests as a large wick on the candlestick. Spikes can be caused by news, large orders, or technical problems. Spikes are often temporary and the price often returns to the level before the spike.

Doji

A doji is a candlestick where the open and close price are almost equal, resulting in a very small or no body. A doji can indicate uncertainty in the market and possible trend reversal. There are different types of dojis such as the standard doji, long-legged doji, or gravestone doji.

Hammer candle

A hammer is a candle with a small body, a long wick on one side, and little to no wick on the other side. The candle looks like a hammer and can indicate a possible reversal. The hammer candle usually appears at the end of a trend.

Shooting star

A shooting star is a bearish reversal candlestick pattern with a small body at the bottom, a long upper wick, and little to no lower wick. The pattern looks like a falling star and can indicate a possible top and reversal downward. The shooting star usually appears at the end of an uptrend.

Morning star

A morning star is a bullish reversal candlestick pattern that consists of three candles: a large red candle, a small candle (doji or spinning top) with gaps on both sides, and a large green candle. The pattern can indicate a possible bottom and reversal upward after a downtrend.

Engulfing

An engulfing pattern (also called "engulfing candle") is a reversal pattern where the body of the second candle completely "engulfs" or "eats" the body of the first candle. A bullish engulfing (green candle eats red candle) is bullish, a bearish engulfing (red candle eats green candle) is bearish.

Inside bar

An inside bar is a candlestick pattern where the high and low of a candle fall completely within the high and low of the previous candle (the "mother bar"). Inside bars can indicate consolidation and a possible breakout in the direction of the trend.

Outside bar

An outside bar (also called "engulfing bar") is a candlestick pattern where the high and low of a candle fall completely outside the high and low of the previous candle. Outside bars can indicate volatility and possible trend change.

Price movements

Trend

A trend is the general direction in which the price moves over a certain period. There are three types of trends: uptrend (rising), downtrend (falling), and sideways/range (horizontal). Trends can be identified on different timeframes.

Uptrend

An uptrend is a rising trend where the price makes higher highs and higher lows. In an uptrend, the general expectation is that the price will continue to rise, although there can always be pullbacks.

Downtrend

A downtrend is a falling trend where the price makes lower highs and lower lows. In a downtrend, the general expectation is that the price will continue to fall, although there can always be rallies.

Range

A range is a period where the price moves between clear support and resistance without a clear trend. In a range, the price "hangs" between these levels.

Price action

Price action is the analysis of pure price movements without indicators. Price action traders look at candlestick patterns, support/resistance levels, and how the price reacts to these levels.

HOD / High of day

High of day (HOD) is the highest price an asset has reached during the current trading day. HOD is an important level because it often acts as resistance. Traders look for breaks above HOD for potential breakouts.

LOD / Low of day

Low of day (LOD) is the lowest price an asset has reached during the current trading day. LOD is an important level because it often acts as support. Traders look for breaks below LOD for potential breakdowns.

PMH / Premarket high

Premarket high (PMH) is the highest price an asset has reached during the premarket session, before regular market hours. PMH can act as resistance during the regular trading day.

PML / Premarket low

Premarket low (PML) is the lowest price an asset has reached during the premarket session, before regular market hours. PML can act as support during the regular trading day.

HL / Higher low

Higher low (HL) is a pattern where a new low is higher than the previous low. Higher lows are a sign of an uptrend and can indicate increasing buying pressure.

HH / Higher high

Higher high (HH) is a pattern where a new high is higher than the previous high. Higher highs are a sign of an uptrend and can indicate continuation of the rising trend.

LH / Lower high

Lower high (LH) is a pattern where a new high is lower than the previous high. Lower highs are a sign of a downtrend and can indicate increasing selling pressure.

LL / Lower low

Lower low (LL) is a pattern where a new low is lower than the previous low. Lower lows are a sign of a downtrend and can indicate continuation of the falling trend.

Level

A level is a specific price level that is important for trading. Levels can be support, resistance, round numbers, or other psychological levels. Traders use levels to place entries, stop losses, and take profits.

Zone

A zone is an area around a level where the price may react. Instead of an exact price, a zone is a range of prices. Zones are used because the price doesn't always react exactly at a level, but often nearby.

Support

Support is a price level below which the price has difficulty falling because there is buying pressure. Support acts as a "floor" from which the price bounces. When support breaks, the price can fall further.

Resistance

Resistance is a price level above which the price has difficulty rising because there is selling pressure. Resistance acts as a "ceiling" that the price hits. When resistance breaks, the price can rise further.

Supply / Supply zone

Supply (supply zone) is an area where there are many sellers, resulting in falling prices. Supply zones are areas where previous selling occurred and where the price may fall again when it returns.

Demand / Demand zone

Demand (demand zone) is an area where there are many buyers, resulting in rising prices. Demand zones are areas where previous buying occurred and where the price may rise again when it returns.

Test

A test is when the price approaches a level or zone to see if the level holds. For example: the price tests support to see if buyers defend the level. Tests can result in a bounce (rejection) or a break (breakthrough).

Retest

A retest is when the price returns to a level that was previously broken, but now from the other side. For example: after resistance is broken and becomes support, the price tests this former resistance level (now support) to confirm that the level holds.

Bounce

A bounce is when the price bounces off a support or demand zone and moves upward. Bounces are bullish signals and can be good entry points for long trades.

Rejection

A rejection is when the price approaches a level or zone but is rejected and moves in the opposite direction. For example: the price approaches resistance, makes a long wick, and falls again. Rejections are often seen as candlestick patterns with long wicks.

Consolidation

Consolidation is a period where the price moves in a narrow range without a clear direction. During consolidation, the market "breathes" and often prepares for the next big movement. Consolidation can result in a breakout or breakdown.

Gap

A gap is an opening in the price chart where the price "jumps" without having traded between the previous close and the new open. Gaps can occur due to news, earnings, or other events outside trading hours.

Gap up

Gap up means the price opens higher than the previous close, creating an upward gap. Gap ups are usually bullish, but can also be "filled" when the price returns to the level before the gap.

Gap down

Gap down means the price opens lower than the previous close, creating a downward gap. Gap downs are usually bearish, but can also be "filled" when the price returns to the level before the gap.

Pullback

A pullback is a temporary counter-movement in the direction opposite to the trend. For example: in an uptrend, the price can temporarily fall (pullback) before rising again. Pullbacks are a normal part of trends and can be good entry points.

Rally

A rally is a strong rise in price, usually after a period of declines. Rallies can be short or long and can have various causes such as positive news, earnings, or technical factors.

Drop

A drop is a strong fall in price, usually after a period of rises. Drops can be short or long and can have various causes such as negative news, earnings, or technical factors.

Base

A base is a period of consolidation or sideways movement where the price builds a foundation before making the next big movement. During a base, the price usually moves in a narrow range without a clear direction. Bases can occur after a rally or drop, and can indicate a pause before the trend continues or reverses.

How do Rally, Drop, and Base combine?

Rally, drop, and base often form patterns in the market. A common pattern is "rally-base-drop" or "drop-base-rally": the price first makes a strong movement (rally or drop), then consolidates in a base, and then makes the next movement. Traders use these patterns to identify potential entry points, for example by entering at the end of a base when the price breaks out of the consolidation.

Liquidity grab

A liquidity grab is when large players (institutions) drive the price briefly to a level where many stop losses or limit orders are placed, to "grab" them before the price moves in the opposite direction. Liquidity grabs are often seen as spikes or wicks on charts.

Volatility

Volatility is a measure of how fast and how much the price moves. High volatility means large and fast price movements, low volatility means small and slow movements. Volatility is often measured with indicators such as ATR.

Liquidity

Liquidity is the degree to which an asset can be quickly bought or sold without significantly affecting the price. High liquidity means a lot of trading and small spreads, low liquidity means little trading and large spreads.

Float

Float is the number of shares that are actually available for trading on the open market, excluding shares held by insiders or institutional investors. A low float can lead to higher volatility because there are fewer shares available to trade.

Chart patterns

Head and shoulders

Head and shoulders is a bearish reversal chart pattern that consists of three tops: a left shoulder, a higher head, and a right shoulder. The pattern can indicate a possible trend reversal from bullish to bearish when the "neckline" is broken.

Inverse head and shoulders

Inverse head and shoulders (inverted head and shoulders) is a bullish reversal chart pattern that consists of three bottoms: a left shoulder, a lower head, and a right shoulder. The pattern can indicate a possible trend reversal from bearish to bullish when the neckline is broken.

Double top

A double top is a bearish reversal pattern where the price reaches approximately the same high level twice but doesn't break through. The pattern looks like an "M" and can indicate a possible reversal downward when the "valley" between the two tops is broken.

Double bottom

A double bottom is a bullish reversal pattern where the price reaches approximately the same low level twice but doesn't break through. The pattern looks like a "W" and can indicate a possible reversal upward when the "peak" between the two bottoms is broken.

Triple top

A triple top is a bearish reversal pattern where the price reaches approximately the same high level three times but doesn't break through. It's a stronger version of a double top and can indicate strong resistance at that level.

Triple bottom

A triple bottom is a bullish reversal pattern where the price reaches approximately the same low level three times but doesn't break through. It's a stronger version of a double bottom and can indicate strong support at that level.

Bull flag

A bull flag is a bullish continuation pattern that looks like a flag on a flagpole. It consists of a strong rise (the pole), followed by a light consolidation or pullback (the flag), and then a continuation of the rise. Bull flags are continuation patterns, not reversal patterns.

Bear flag

A bear flag is a bearish continuation pattern that looks like a flag on a flagpole. It consists of a strong fall (the pole), followed by a light consolidation or rally (the flag), and then a continuation of the fall. Bear flags are continuation patterns, not reversal patterns.

Wedge

A wedge is a chart pattern where the price moves between two converging trendlines. There are rising wedges (usually bearish) and falling wedges (usually bullish). Wedges can result in breakouts when the price breaks out of the pattern.

Cup and handle

Cup and handle is a bullish continuation pattern that looks like a cup with a handle. The pattern consists of a rounded bottom (the cup) followed by a light pullback (the handle), and then a breakout upward. Cup and handle patterns can indicate continuation of an uptrend.

Channel

A channel is a chart pattern where the price moves between two parallel trendlines. There are ascending channels, descending channels, and horizontal channels. Traders can buy at the lower line and sell at the upper line in a channel.

Orders

Order

An order is an instruction to your broker to buy or sell an asset. There are different types of orders such as market orders, limit orders, and stop orders. Orders can be placed for entries, exits, stop losses, or take profits.

Share

A share is a certificate of ownership of a portion of a company. When you buy a share, you become a co-owner of that company. The number of shares you own determines your ownership percentage.

Position

A position is an open trade where you own an asset (long) or have sold it (short). Your position remains open until you close it by placing the opposite order.

Entry

Entry is the moment you open a trade by taking a position. Your entry price is the price at which you open your position. A good entry is crucial for a profitable trade.

Exit

Exit is the moment you close a trade by closing your position. Your exit price is the price at which you close your position. Exits can occur at take profit, stop loss, or manually.

Buy order

A buy order is an order to buy an asset. Buy orders are used to open long positions or close short positions.

Sell order

A sell order is an order to sell an asset. Sell orders are used to close long positions or open short positions.

Market order

A market order is an order that is immediately executed at the current market price. Market orders guarantee execution but not the exact price, which can lead to slippage. Market orders are used when speed is more important than price.

Limit order

A limit order is an order that is only executed at a specific price or better. A buy limit order is only executed at the limit price or lower, a sell limit order is only executed at the limit price or higher. Limit orders guarantee the price but not execution.

Stop order

A stop order (also called "stop market order") is an order that becomes a market order when a certain price is reached. Stop orders are often used for breakout entries or stop losses. A buy stop is triggered when the price rises above a certain level, a sell stop when the price falls below a certain level.

Stop-limit order

A stop-limit order combines a stop order with a limit order. When the stop price is reached, a limit order is placed. This gives more control over the execution price but doesn't guarantee that the order will be executed if the price moves quickly past the limit price.

Trailing stop

A trailing stop is a stop loss that automatically moves with the price in the profitable direction, but not in the losing direction. For example: if your trailing stop is 50 cents below the current price and the price rises, the stop loss moves up. Trailing stops help you protect profits while giving room for further movement.

Bracket order

A bracket order is a combination of orders that automatically places a stop loss and take profit when your entry order is executed. Bracket orders help you automatically manage your risk without having to manually place stop loss and take profit.

Spread

Spread is the difference between the bid price (at which you can sell) and the ask price (at which you can buy). The spread is the cost you pay to the broker for executing a trade. The smaller the spread, the better.

Slippage

Slippage is the difference between the expected price of an order and the actual execution price. Slippage can occur with market orders, especially during high volatility or low liquidity. Slippage can be both positive (better price) and negative (worse price).

Fill

Fill means your order has been executed. When your order is "filled", you have actually bought or sold the asset at the execution price.

Orderbook

The orderbook shows all pending buy and sell orders for an asset at different price levels. The orderbook shows the bid and ask prices and the volume at each level. Level 2 data provides detailed orderbook information.

Strategy

Plan / Tradeplan

A plan or tradeplan is a written document that describes your trading strategy, rules, risk management, and goals. A good tradeplan helps you stay disciplined and avoid emotional decisions.

Strategy

A strategy is a set of rules and criteria that determine when you open and close a trade. Trading strategies can be based on technical analysis, fundamental analysis, or a combination. Examples are breakout strategies, reversal strategies, or scalping strategies.

Entry strategy

An entry strategy determines when and how you open a trade. It defines the conditions that must be met before you take a position, such as specific candlestick patterns, breaks of levels, or indicator signals.

Exit strategy

An exit strategy determines when and how you close a trade. It defines when you take profit (take profit) or limit loss (stop loss), and can also contain rules for partials or trailing stops.

Breakout

A breakout is when the price breaks through an important level or zone, such as resistance or a consolidation pattern. Breakouts can indicate continuation of a trend or the beginning of a new movement. Breakout strategies try to catch these movements.

Breakdown

A breakdown is when the price breaks through an important level or zone downward, such as support or a consolidation pattern. Breakdowns are bearish and can indicate continuation of a downtrend or the beginning of a new falling movement.

Fakeout / False breakout

A fakeout or false breakout is when the price breaks through a level but quickly returns, causing traders who followed the breakout to be "fooled". Fakeouts can result in losses for traders who enter too early.

Break and retest

Break and retest is a strategy where you wait for the price to break through a level and then return to test that level (retest) before entering. This gives confirmation that the level has now become support or resistance and can provide better entry points with less risk.

ORB / Opening Range Breakout

Opening Range Breakout (ORB) is a strategy where you use the first 5, 15, or 30 minutes of the trading day as a "range", and then trade on breaks above or below this range. ORB strategies try to catch the first big movement of the day.

Reversal

A reversal is when the price changes direction, for example from an uptrend to a downtrend. Reversal strategies try to identify these turning points and trade at the beginning of a new trend. Reversals can be bullish (upward) or bearish (downward).

Dip buy

Dip buy means you buy an asset during a temporary decline (dip) in an uptrend, with the expectation that the price will rise again. Dip buying is a strategy to enter during pullbacks in a trend.

Sell the rip

Sell the rip means you sell an asset during a temporary rise (rip) in a downtrend, with the expectation that the price will fall again. "Sell the rip" is a strategy to enter during rallies in a falling trend.

Scalping

Scalping is a trading style where you go in and out of positions very quickly, often within seconds or minutes, to make small but frequent profits. Scalpers usually use very short timeframes (1m, tick charts) and try to profit from small price movements.

Indicators

Volume

Volume is the number of shares, contracts, or units traded in a certain period. Volume is an important indicator because it shows the strength behind price movements. High volume at a breakout can indicate strong movement, low volume can indicate weakness.

Momentum

Momentum is the speed and strength of a price movement. Momentum indicators measure how strong a trend is and whether it's accelerating or decelerating. High momentum can indicate continuation of a movement, declining momentum can indicate possible reversal.

VWAP

VWAP stands for Volume Weighted Average Price, the volume-weighted average of the price throughout the day. VWAP is calculated by dividing the total value of all transactions by the total volume. VWAP is often used as a dynamic support/resistance level and as a benchmark for institutional traders.

9EMA

9EMA stands for 9-period Exponential Moving Average, a moving average that gives more weight to recent prices. The 9EMA is a popular indicator for daytrading because it reacts quickly to price changes. EMAs are often used to identify trends and give entry/exit signals.

SMA's

SMA stands for Simple Moving Average, a moving average that calculates the average price over a certain number of periods. Popular SMAs are the 20, 50, and 200 SMA. SMAs are used to identify trends, find support/resistance, and signal crossovers.

ATR

ATR stands for Average True Range, an indicator that measures volatility by looking at the average of the true range over a certain period. ATR is used to determine stop loss distances and to determine whether the market is calm or volatile. High ATR means high volatility, low ATR means low volatility.

RSI

RSI stands for Relative Strength Index, a momentum oscillator that measures whether an asset is overbought (too expensive) or oversold (too cheap). RSI ranges from 0 to 100, where above 70 is often considered overbought and below 30 as oversold. RSI is used to identify possible reversal points.

MACD

MACD stands for Moving Average Convergence Divergence, a trend-following momentum indicator that shows the relationship between two moving averages. MACD consists of a MACD line, signal line, and histogram. MACD is used to identify trend changes, momentum, and possible entry/exit signals.

Emotions

FOMO

FOMO stands for Fear Of Missing Out, the fear of missing an opportunity. In trading, FOMO means you open a trade because you're afraid of missing the movement, often without good analysis or setup. FOMO usually leads to bad entries and losses.

Chasing

Chasing means you open a trade while the price has already moved far, because you want to "chase" the movement. Chasing usually leads to bad entries because you enter at the end of a movement instead of the beginning.

Revenge trading

Revenge trading means you open a new trade immediately after a losing trade out of frustration or to "win back" your loss. Revenge trading is emotional trading and usually leads to more losses.

Overtrading

Overtrading means you open too many trades, often without good setups or because you "have to do something". Overtrading can lead to losses because you're not selective and take too much risk.

Fear

Fear in trading can manifest as closing profitable trades too early, not taking good setups, or forgetting your stop loss. Fear is often caused by previous losses or uncertainty. Fear can hinder your trading and lead to missed opportunities.

Greed

Greed in trading can manifest as not closing profitable trades because you "want more", forgetting your take profit, or taking too much risk. Greed can lead to losses because profits are not realized before the price reverses.

Overconfidence

Overconfidence means you're too self-assured after a series of wins and think you're infallible. Overconfidence can lead to ignoring your rules, taking too much risk, or ignoring risk management. Overconfidence is often a precursor to large losses.

Distraction

Distraction means you're not fully focused on your trading, which can lead to missed setups, forgotten stop losses, or bad decisions. Trading requires full attention and focus. Distraction can come from phones, social media, or other activities during trading.

Frustration

Frustration in trading arises when things don't go as planned, for example due to losses, missed opportunities, or technical problems. Frustration can lead to emotional trading, forgetting your rules, or giving up your strategy. It's important to recognize and control frustration.

Discipline

Discipline in trading means you follow your trading plan and rules, regardless of emotions or external influences. Discipline is essential for profitable trading because it helps you avoid emotional decisions and stay consistent. Without discipline, it's difficult to be profitable in the long term.

Patience

Patience in trading means you wait for the right setups and don't trade out of boredom or FOMO. Patient traders only take trades that meet their criteria and avoid overtrading. Patience is an important quality for profitable trading because it helps you be selective and only take the best opportunities.