Glossary
106 terms defined, drawn from the vocabulary of the course. Filter by area, or browse the whole set — each definition fits in two sentences and says what actually matters.
Pip
The smallest standard price move on a currency pair: the fourth decimal place on most pairs, the second on yen pairs. From 1.0850 to 1.0851: one pip.
Point
The unit of movement on indexes and commodities. On the CAC 40 as a CFD, one point is often worth €1 per contract.
Lot
The unit of volume. A standard lot is 100,000 units of the base currency; a mini lot 10,000, a micro lot 1,000.
Spread
The gap between the buy price and the sell price at a given moment. It is the main source of income for many brokers, and the reason a position always starts at a loss.
Leverage
A mechanism that lets you control a position larger than your capital. It does not change expectancy: it shortens the distance between the position and liquidation.
Margin
The share of your capital the broker locks up to keep a leveraged position open.
Margin call
The automatic closing of positions when available capital falls below a threshold. It happens at the worst moment, on the most violent moves.
Long
A buy position: you gain if the price rises.
Short
A sell position: you sell an asset you do not own, betting on a fall.
Timeframe
The period each candle covers: one minute, one hour, one day. The higher timeframe gives the direction, the lower one the moment to enter.
Candle
A chart shape that condenses four prices for one period: open, close, high, low.
Wick
The thin line above or below the body of a candle. It measures the ground attempted, then given up.
Body
The rectangle of a candle, between the open and the close. It measures the net ground covered.
Volatility
The size of price swings. It says nothing about direction, only about the scale of the moves.
Liquidity
How easily you get in and out without moving the price. An illiquid market shows a price you will not necessarily get out at.
Session
A period of activity tied to a major financial center. The London–New York overlap concentrates most of the daily volume.
CFD
Contract for difference: a derivative that replicates an asset's price move without holding it. Subject to strict European rules.
Slippage
The gap between the price asked for and the price actually obtained. Negligible in calm periods, considerable during a data release.
Stop-loss
An order that closes a position automatically at a price decided in advance. It is the only mechanism that makes the maximum loss certain rather than hoped for.
Take-profit
An order that closes the position at the target set before entry.
Position size
The quantity to commit. It is calculated like this: amount risked ÷ (distance to the stop × value of the point).
The 1% rule
Never accept losing more than 1% of your capital on a single position. It applies to the loss, never to the amount committed.
R
The unit of risk. A 2R trade aims for a gain equal to twice the loss accepted. Thinking in R makes trades comparable.
Reward-to-risk ratio
The ratio between the target and the stop. At 2R, one win in three is enough to break even.
Expectancy
(Win rate × average gain) − (loss rate × average loss). The only metric that tells you whether a method is profitable.
Drawdown
The dip between a peak in your capital and the low that follows. Every profitable method produces them.
The asymmetry of losses
Losing p% means you have to make back p ÷ (1 − p). Lose half and you have to double to get back to break-even.
Losing streak
A run of losing trades. It is not an anomaly: its frequency is calculated from the win rate.
Break-even
Moving the stop to the entry price, which removes the risk. Done too early, it turns winners into flat trades.
Trailing stop
A stop that moves up as the price advances. It captures long moves at the cost of never getting out at the high.
Daily limit
A cap on cumulative losses beyond which the session stops. It intercepts the reflex to win it back.
Correlation
The tendency of two assets to move together. Three correlated positions expose you almost like one triple-sized position.
Negative balance protection
A European regulatory guarantee that stops you owing money beyond your deposit.
Segregation of funds
The obligation on the broker to hold client deposits in accounts separate from its own.
Trend
A sequence where each low and each high forms higher than the previous ones — or lower in a downtrend. A checkable criterion, not a visual impression.
Range
A market with no direction, swinging between two levels. It is the most common state.
Support
A zone below the price where buyers turned out to be more numerous, halting the fall.
Resistance
A zone above the price where sellers took back control.
Breakout
The crossing of a level that was containing the price. Often followed by a retest.
False breakout
A brief crossing followed by a return into the range. It is explained by the stops that pile up at obvious levels.
Retest
The price coming back to a broken level, from the other side. It offers a far tighter stop than an immediate entry.
Polarity flip
A broken support becomes resistance, and the other way round. One of the easiest setups for a beginner to read.
Pullback
A temporary counter-move inside a trend. This is where entries are placed.
Impulse leg
A clean move in the direction of the trend, separated from the next one by a pullback.
Moving average
The average price over n periods. It restates the price with a lag; it creates no information.
RSI
An indicator that measures the speed of recent moves. Often misused as a standalone reversal signal.
Fibonacci
Retracement levels at 23.6%, 38.2%, 50%, 61.8% and 78.6%. No study establishes that they govern the markets; their effect comes from collective attention.
Confluence
Several independent reasons coinciding at the same place. Stacking filters improves each trade but reduces the total result.
Price action
Reading price without indicators. Universal and highly subjective, so hard to measure.
Rejection candle
A small body and a long wick on one side only: an attempt pushed back. Its value depends entirely on the level where it appears.
Engulfing candle
A candle whose body completely covers the body of the previous one, in the opposite direction.
Backtesting
Replaying a method on past data. Without a reserved sample, it mostly measures your ability to adjust the rules after the fact.
Fundamental analysis
The study of causes: rates, growth, earnings. For a short-term trader, it mostly serves as a safety filter.
Smart Money Concept (SMC)
An approach that reads the chart as the trace left by large players: where they had to buy or sell in size. It predicts nothing; it describes a structure, after the fact and in a checkable way.
BOS (Break of Structure)
A high is taken out, or a low broken through, in the direction of the trend in progress. The trend is confirmed by it.
CHoCH (Change of Character)
The first break in the direction opposite to the trend. It is the signal that the trend is changing, and the only thing that separates it from a BOS is that direction.
Order Block
The last candle in the opposite direction before a marked impulse leg. Orders are assumed to have been left pending there, which explains why price often comes back to it before moving on.
FVG (Fair Value Gap)
A price imbalance: an interval crossed so fast that no trading took place in it. You spot it on three candles, when the high of the first stays below the low of the third.
Liquidity (in the SMC sense)
A second meaning worth knowing: here the word does not mean how easily you get in and out, but the orders pending at a given level — typically the stops clustered beyond an obvious high. A large player needs that other side in order to build a position. See Liquidity for the everyday sense.
Liquidity sweep
Price briefly runs past an obvious high or low, triggers the stops sitting there, then turns back the other way. It is not a breakout, it is the opposite.
Inducement (IDM)
A decoy: a small high or low placed so as to attract entries before the real move. The term describes an observed effect, not a proven intention.
Swing high / Swing low
A local high or low: a high, or a low, that stands out from the few candles surrounding it on each side. These are the points used to define structure.
Market structure
The sequence of highs and lows. It is bullish as long as each one forms higher than the previous one, bearish in the opposite case. All the rest of the vocabulary hangs off it.
HH / HL / LH / LL
Higher High, Higher Low, Lower High, Lower Low: a higher high, a higher low, a lower high, a lower low. The shorthand notation for structure.
Premium / Discount
The upper half and the lower half of a move, separated by its midpoint. The idea: you look to sell in the upper half and buy in the lower half, rather than the other way round.
Mitigation
Price returning into a zone it left behind — an Order Block or an FVG — before carrying on. The zone is said to be mitigated once it has been revisited. It is the Retest, applied to a zone rather than to a line.
Market order
Immediate execution at the best price available. Execution certain, price uncertain.
Limit order
Buying below the current price, or selling above it. You wait for the price to come to you; the price is guaranteed, the execution is not.
Stop order
Buying above the current price, or selling below it. You follow the price as it breaks a level; the execution is likely, the price is not guaranteed.
Buy limit
A buy order placed below the current price, to buy cheaper.
Buy stop
A buy order placed above the current price, to buy the upside breakout.
Sell limit
A sell order placed above the current price, to sell higher.
Sell stop
A sell order placed below the current price, to sell the downside breakout.
Order book
The list of buy and sell orders pending at each price level.
Scalping
A very short-term style, a few minutes per position. Costs weigh enormously here.
Day trading
Positions opened and closed within the same session.
Swing trading
Positions held from a few days to a few weeks. The most reasonable starting point for a beginner.
Position trading
A horizon of several weeks to several months.
Demo account
An account with fake money that reproduces execution conditions. It makes the motions automatic but does not prepare you for the emotion.
Regulator
The authority that oversees brokers: the AMF in France, CySEC, BaFin, FCA. Always check the official register, never the broker's website.
Swap
Cost or gain from holding a position from one day to the next, driven by the interest rate gap between the currencies.
Economic calendar
List of upcoming releases. The minimum use: open nothing in the thirty minutes around a major release.
Blockchain
A shared ledger on which strangers can agree without a referee. Nothing more, nothing less.
Double spending
The problem Bitcoin solved first: stopping a digital value from being spent twice without a trusted third party.
Private key
The signature that gives access to the funds. Never share it. Lose it and the funds are gone for good.
Recovery phrase
A sequence of words that restores a wallet. On paper, in two separate places, never in digital form.
Proof of work
Consensus based on a cost in computation, and therefore in electricity. Bitcoin's mechanism.
Proof of stake
Consensus based on tokens locked up as collateral. Adopted by Ethereum in 2022, cutting its consumption by more than 99%.
Halving
The halving of new bitcoin creation, roughly every four years.
Smart contract
A program stored on a blockchain that runs automatically. Immutable once deployed: a flaw cannot be fixed.
Stablecoin
A token pegged to a currency. It is worth what its reserves are worth; the word "stable" guarantees nothing.
Gas
Execution fees on Ethereum. Highly variable: on a small amount, they can account for a major share of the transaction.
Hardware wallet
A dedicated device that keeps the private key offline. Recommended once the amounts become significant.
Rug pull
A scam where a token's creators pull out, all at once, the funds that make it tradable.
On-chain analysis
The study of the ledger's public data. It gives context over months, never an entry point.
Unlimited approval
Permission given to a contract to spend your tokens with no cap. Revoke it regularly.
Loss aversion
A loss is felt about twice as intensely as an equivalent gain. This imbalance is built in; willpower does not correct it.
Revenge trading
Taking a position straight after a loss, to make it back. The mechanism that empties accounts fastest.
Fear of missing out
A late entry into a move that is already well under way, where the reward-to-risk ratio is the worst of the whole run.
Overtrading
Taking too many positions, or positions that do not meet every criterion. It erodes the account instead of collapsing it.
Overconfidence
After a run of wins, sizes go up and criteria loosen. The run always ends.
Confirmation bias
The tendency to keep only what confirms the idea you already have. A chart overloaded with lines is the ideal ground for it.
Trading journal
A record of every position. Without it, there is no measurable expectancy and no possible progress.
Trading plan
A document written outside session hours, containing rules a third party can check. Without it, every decision gets renegotiated under pressure.
Tilt
A state where decisions no longer follow any rule. You recognize it by a feeling of urgency.
Discipline
Not a moral quality, but the result of practical constraints set with a cool head.