Trading Glossary: Plain-Language Definitions

Plain-language definitions for the Socratic Trading Academy Learn section, written in our own words. Alphabetical. Each entry links to the lesson where the term is explained. Some standard definitions, such as those of an order or a futures contract, necessarily use common industry phrasing. Entries about futures, options and margin describe leveraged products. Leverage can cause losses larger than the amount invested.

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0DTE option. An option traded on its expiration day, with zero days to expiration. Its time value is small and its price can change very quickly. Learn more: Options Basics: Calls, Puts, Strikes and Expiration.

32nds (bond price quoting). A convention for quoting some bond and Treasury futures prices in points and thirty-seconds of a point rather than decimals. Learn more: Interest Rate Futures: Treasury and SOFR Contracts Explained.

Absorption. An order flow description: heavy aggressive trading on one side with little price movement, often read as large passive orders taking the other side. An interpretation, not a proven fact. Learn more: Order Flow Basics.

Acceptance. In auction terms, price spending time and trading meaningful volume at a level, suggesting the market treats it as a fair price while that acceptance lasts. Learn more: Auction Market Theory Basics.

Accumulation/distribution line. A running total of volume weighted by where each bar closes within its range. Despite the name, it does not identify who bought or sold. Learn more: OBV, Accumulation/Distribution and Relative Volume.

Adjusted price. A historical price changed to account for splits and, on many charts, dividends, so that past prices compare fairly with current ones. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Advance-decline line. A running total of the number of advancing stocks minus declining stocks each day, used as a breadth measure. Learn more: Sectors, Indexes and Market Breadth.

Aggressive order. An order that trades immediately against waiting orders, such as a market order or a limit order priced to cross the spread. See also aggressor. Learn more: Order Flow Basics.

Aggressor. The side of a trade that crossed the spread to trade immediately, using a market order or a marketable limit order. Learn more: Order Flow Basics.

Alert fatigue. Ignoring or missing notifications because there are too many of them. Learn more: Alerts as Reminders of Your Own Levels.

AM settlement. Settlement based on opening prices on the morning after the last trading day, used by some index options. Learn more: Index Options, ETF Options and Options on Futures Compared.

American-style option. An option that can be exercised on any business day up to and including expiration. Most US stock and ETF options are American-style. Learn more: Options Basics: Calls, Puts, Strikes and Expiration.

Anchor point. The bar a reader chooses as the start of an anchored calculation, such as anchored VWAP. Learn more: Anchored VWAP: Averaging From a Chosen Starting Point.

Anchored VWAP. A VWAP calculated from a starting point the user chooses, such as a swing low, instead of the start of the session. Learn more: What Is VWAP? Session vs Anchored VWAP Explained.

Annualized rate. A rate for a shorter period restated as if it continued for a full year, such as quarterly GDP growth reported at an annual rate. Learn more: GDP, PMI and Retail Sales: Measuring Economic Growth.

Ask (offer). The lowest price at which someone is currently waiting to sell. Learn more: How Markets Work.

Ask volume. Volume that traded at the ask price, usually read as buyer-initiated. Learn more: Order Flow Basics.

Assignment. The notice to an option seller that a buyer has exercised, so the seller must fulfill the obligation: deliver or buy the underlying, or pay cash for cash-settled options. Learn more: Exercise, Assignment and Settlement.

ATR (average true range). An indicator that averages the size of recent bars, including gaps, as a measure of how much price has been moving. Learn more: Technical Indicators Explained.

Auction Market Theory (AMT). A framework that describes markets as continuous two-way auctions moving to find prices where trade can happen. Learn more: Auction Market Theory Basics.

Authorized participant. A large trading firm allowed to create and redeem ETF shares directly with the fund in large blocks, which helps keep the ETF price close to its NAV. Learn more: How ETFs Work: Creation, Redemption, NAV and Costs.

Backwardation. A forward curve in which later futures months are priced lower than nearer months. Learn more: Commodity Futures: How Crude Oil and Gold Contracts Work.

Balance sheet. A financial statement showing what a company owns (assets), owes (liabilities) and the shareholders’ equity left over, on one date. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Bar delta. Ask volume minus bid volume for a single bar. It describes which side crossed the spread more during that bar, not how many buyers or sellers there were. Learn more: Bid/Ask Volume Charts.

Bar replay. A practice mode on some charting platforms that hides later bars and reveals them one at a time from a chosen past point. Learn more: Bar Replay for Practice: Uses and Limits.

Base rate. How often something happens across all cases that meet a definition, not just memorable examples. Learn more: Why Chart Patterns Fail: Base Rates, Hindsight and Context.

Basis. The difference between a futures price and the price or level of its underlying. It narrows toward zero as expiration approaches. Learn more: Equity Index Futures: E-mini and Micro Contracts Compared.

Basis point. One hundredth of a percentage point (0.01%). A yield change from 4.00% to 4.25% is 25 basis points. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Bollinger squeeze. A squeeze labels low recent width under a declared criterion, such as a chosen historical-width threshold or Bollinger bands inside a specified Keltner channel. These definitions need not agree. It is not a quantified waiting-time or directional forecast; no frequency of a subsequent expansion is measured in the accompanying lesson. It does not show which way price will move. Learn more: Bollinger Bands, Keltner Channels and ATR.

Bond yield. The return a buyer earns on a bond at today’s price if it is held to maturity. When a bond’s price falls, its yield rises, and the reverse. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Borrow fee. The cost of borrowing shares for a short sale, usually quoted as an annual rate. It can rise sharply for hard-to-borrow stocks. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Breakaway gap. A gap that moves price out of a range or base, often on higher volume. The label is applied after the fact. Learn more: Price Gaps Explained: Opening, Breakaway and Exhaustion Gaps.

Breakeven (options). The underlying price at expiration at which an option position neither gains nor loses, counting the premium paid or received. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Brick size. The price move needed to draw one new brick on a Renko chart. A smaller move may fail to add a completed brick under the declared rule. Learn more: Heikin-Ashi, Renko and Range Bars.

Broker. A firm that accepts customer orders, routes them to trading venues, holds customer cash and positions and reports to regulators. Learn more: Exchanges, Brokers and Clearing: Who Does What in a Trade.

b-shaped profile. A profile with heavy volume near the bottom and a thin tail above. Learn more: Volume Profile Explained.

Backtesting. Applying written rules to past data to see how they would have behaved. Results depend heavily on data quality, costs, fill assumptions and how many versions were tried. Learn more: Trading Plans, Journaling and Honest Backtesting.

Balance. A market state in which price rotates within a range because buyers and sellers broadly agree on value. Learn more: Auction Market Theory Basics.

Balanced day (rotational day). A session in which price rotates within a range for most of the day, usually leaving a bell-shaped profile with value near the middle. Learn more: Opening Types and Day Types.

Bar (candle, candlestick). One unit on a price chart summarizing the open, high, low and close for a set period. A candlestick draws it with a body between open and close and wicks to the high and low, usually shaded by whether it closed up or down. Learn more: Candlestick Anatomy.

Bear, bearish. Describing falling prices, or a view that prices will fall. Learn more: Reading Candlesticks as Behavior.

Bell-shaped profile (D-shaped). A profile with most volume or time in the middle and thinner ends, usually describing a balanced session. Learn more: Volume Profile Explained.

Bid. The highest price at which someone is currently waiting to buy. Learn more: How Markets Work.

Bid volume. Volume that traded at the bid price, usually read as seller-initiated. Learn more: Order Flow Basics.

Bid-ask spread. The difference between the best bid and the best ask. It is one of the implicit costs of trading immediately. Learn more: How Markets Work.

Bid/ask volume chart (footprint chart). A chart showing bid and ask volume at each price inside each bar. Platforms use different names; Footprint is a registered trademark of its owner. Learn more: Order Flow Basics.

Body. The thick part of a candlestick, between the open and the close. Learn more: Candlestick Anatomy.

Bollinger Bands. A moving average with an upper and a lower line set a chosen number of standard deviations away from it, describing how spread out recent prices have been. Learn more: Technical Indicators Explained.

Bracket order. An entry order linked to two exit orders, a stop and a target, so that when one exit fills the other is canceled. How brackets work differs between platforms. The stop side can fill at a worse price than its trigger, for example in a fast market or a gap. Learn more: Order Types Explained.

Break of structure (BOS). Price moving beyond a previous swing point in the direction of the existing trend sequence. Learn more: Market Structure Explained.

Breakout. A move beyond a prior high, low or range boundary. Learn more: Chart Patterns Explained.

Bull, bullish. Describing rising prices, or a view that prices will rise. Learn more: Reading Candlesticks as Behavior.

Butterfly spread. A three-strike option position, such as buying one call at a low strike, selling two at a middle strike and buying one at a high strike. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Buying tail. In a TPO profile, a short run of rows near the session low, each holding only one or two letters. The profile alone does not establish a quick departure or brief dwell. A description of how the low formed, not evidence that the low holds. Learn more: Excess, Poor Highs and Lows, and Single Prints Explained.

Calendar spread. The price difference between two months of the same futures contract, or a position that holds one month and the opposite position in another. Learn more: Futures Expiration, Rollover and Continuous Charts.

Call option. An option giving the holder the right, but not the obligation, to buy the underlying at the strike price. Learn more: What You Can Trade.

Called away. When shares under a sold call are delivered to the call holder through assignment. Learn more: Covered Calls and Cash-Secured Puts.

Carry. The cost or benefit of holding a position over time from financing, interest or storage, separate from price changes. Learn more: Currency Futures: How They Compare With Spot Forex.

Cash account. A brokerage account in which purchases are paid in full with settled funds and no borrowing is allowed. Learn more: Account Types and the Pattern Day Trader Rule.

Cash flow statement. A financial statement showing cash coming in and going out over a period, split into operating, investing and financing activities. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Cash settlement. Settling a futures or option contract with a cash payment based on a final settlement value, with no delivery of the underlying. Learn more: Futures Contract Specifications.

Cash-secured put. Selling a put option while holding enough cash to buy the shares at the strike if assigned. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Central bank. The institution that manages a country’s or region’s money and banking system and sets its main policy interest rate, such as the Federal Reserve or the European Central Bank. Learn more: Central Banks and Interest Rates: How Policy Reaches Markets.

Change of character (CHoCH). A shift in the swing sequence, for example the first lower low after a series of higher lows. Learn more: Market Structure Explained.

Channel. Two roughly parallel lines drawn along the highs and lows of a sloping or sideways move. Learn more: Chart Patterns Explained.

Chart clutter. So many drawings and indicators on a chart that it becomes hard to read and easy to find matches after the fact. Learn more: Drawing Tools: Lines, Zones and Keeping Charts Clean.

Chart layout. The arrangement of a chart screen: price pane, scales, header, toolbars, indicator panes and any saved settings. Learn more: Charting Platforms and the Chart Layout.

Chart pattern. A named shape that traders draw on price, such as a flag or triangle. Patterns are drawn by eye and described differently by different writers. Learn more: Chart Patterns Explained.

Charting platform. Software or a website that draws price charts and offers tools such as indicators and drawings. It may or may not be linked to a broker. Learn more: Charting Platforms and the Chart Layout.

Cheapest-to-deliver. The deliverable bond that is least costly for the seller of a Treasury futures contract to deliver. It strongly influences the futures price. Learn more: Futures Contract Specifications.

Clearing fee. A fee charged for clearing a futures or other exchange trade, usually passed on by the broker per contract. Learn more: Trading Sessions and Costs.

Clearinghouse. An organization that stands between both sides of a matched trade, collects margin and manages the default of a member. Learn more: Exchanges, Brokers and Clearing: Who Does What in a Trade.

Climactic volume. Volume far above normal, often after a long or fast move. Learn more: Trading Volume Explained.

Close. The last traded price of a bar or session. For futures, see also Settlement price. Learn more: Candlestick Anatomy.

Close location. Where the close sits within a bar’s range, often described as a share of the range from the low. Learn more: Candlestick Anatomy.

Closing auction. A single-price auction at the end of the regular session that sets a stock’s official closing price on its listing exchange. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Collar. A position that owns shares, buys a put and sells a call, limiting both losses below the put strike and gains above the call strike. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Commercial trader. In the legacy COT report, a reportable trader classified as using futures to hedge a business. Learn more: The Commitments of Traders Report.

Commission. The fee a broker charges per trade or per contract. Learn more: Trading Sessions and Costs.

Commitments of Traders report. A weekly CFTC report showing open interest in futures and options broken down by type of trader. Learn more: Commodity Futures: How Crude Oil and Gold Contracts Work.

Composite profile. A volume or TPO profile combining several sessions into one histogram. Learn more: Volume Profile Explained.

Confirmation bias. The tendency to notice and remember information that supports what one already believes. Learn more: Trading Psychology.

Consensus estimate. The average or median of analysts’ forecasts for a figure such as EPS or revenue, or of economists’ forecasts for an economic release. Different providers can show different consensus figures. Learn more: Earnings Reports and Guidance.

Consolidated feed. A market data feed that combines quotes and trades from many US exchanges; used to calculate the NBBO. Learn more: Reading a Quote: NBBO, Level 1 and Level 2.

Consumer Price Index (CPI). A monthly measure of the prices urban consumers pay for a basket of goods and services, published in the United States by the Bureau of Labor Statistics. Learn more: Inflation Reports: CPI, PCE and PPI Explained.

Contango. A forward curve in which later futures months are priced higher than nearer months, often reflecting storage and financing costs. Learn more: Commodity Futures: How Crude Oil and Gold Contracts Work.

Continuous chart. A chart that joins successive futures contract months into one series. It can be unadjusted, with gaps at each roll, or back-adjusted, with older prices shifted to remove the gaps. Learn more: Futures Expiration, Rollover and Continuous Charts.

Continuous contract. A chart that joins successive futures contract months into one series using a rolling rule. Learn more: Trading Volume Explained.

Contract. In futures, one standardized agreement to buy or sell a set quantity of an asset on a future date. Learn more: What You Can Trade.

Contract month. The month in which a particular futures contract expires. Learn more: What You Can Trade.

Contract size. The quantity of the underlying that one contract covers, such as a number of barrels, bushels or index units. Related to the multiplier but not the same thing. Specifications vary by contract and are set by the exchange. Learn more: What You Can Trade.

Conversion factor. A number the exchange assigns to each deliverable bond to adjust the Treasury futures invoice price for differences in coupon and maturity. Learn more: Futures Contract Specifications.

Core inflation. An inflation measure that leaves out food and energy prices, which swing a great deal, to show the underlying trend more clearly. Learn more: Inflation Reports: CPI, PCE and PPI Explained.

Correlation. A measure, from −1 to +1, of how closely two series moved together over a chosen period. It looks back and can change. Learn more: The Dollar, Oil and Gold: How Macro Markets Connect.

Cost basis. What was paid for a position, usually including certain costs, used to calculate a realized gain or loss. Learn more: Tax Concepts for Traders.

Covered call. A position that owns shares and sells a call option on them. It gives up gains above the strike in exchange for the premium. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Creation unit. The large block of ETF shares, often tens of thousands, that an authorized participant creates or redeems in one transaction. Learn more: How ETFs Work: Creation, Redemption, NAV and Costs.

Credit spread and debit spread. A spread that collects more premium than it pays is a credit spread; one that pays more than it collects is a debit spread. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Cumulative delta. A running total of delta through a session. Learn more: Order Flow Basics.

Currency futures. Exchange-listed futures on exchange rates, commonly quoted in US dollars per unit of the foreign currency, with standard sizes and set expirations. Learn more: Currency Futures: How They Compare With Spot Forex.

Currency pair. A quote for two currencies, showing how many units of the second (quote) currency buy one unit of the first (base) currency, such as EUR/USD. Learn more: Forex and Crypto Basics: Pairs, Pips and 24-Hour Markets.

Custody. Who holds an asset on an investor’s behalf. In crypto, assets can be held by an exchange or in a wallet the owner controls. Learn more: Forex and Crypto Basics: Pairs, Pips and 24-Hour Markets.

Daily loss limit. A planned daily loss threshold, set in advance, after which a person stops trading for that day—not a maximum-loss guarantee. Learn more: Building a Trading Plan Document.

Dark pool. An alternative trading system that does not display orders publicly before trades. Trades are reported afterward. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Data mining (in testing). Searching many rules or patterns in past data until some look good by chance. Learn more: Seasonality in Futures: Patterns, Causes and Limits.

Day trader. A trader who opens and closes positions within the same session. Learn more: Auction Market Theory Basics.

Day type. A label describing how a completed session unfolded, such as balanced, trend, double-distribution or neutral. Learn more: Opening Types and Day Types.

Debit spread. An option spread that costs a net premium to open. Its maximum loss on the intact matched expiry payoff is that cost, before fees; unequal exercise or resulting stock can lose more. Learn more: Vertical Spreads: Defined-Risk Payoffs With Two Strikes.

Delta. Ask volume minus bid volume for a bar or price level. Learn more: Order Flow Basics.

Delta divergence. A mismatch between price and delta, for example price reaching a new high while cumulative delta stays below its earlier peak. An observation about two series, not a forecast. Learn more: Reading Delta and Imbalance on a Bid/Ask Volume Chart.

Depth of market (DOM). A display of resting buy and sell orders at prices around the current market; also called the ladder. Learn more: Order Flow Basics.

Divergence. When price and an indicator move in different directions, such as price making a higher high while RSI makes a lower high. It describes momentum and does not forecast a turn. Learn more: RSI and Stochastic Oscillators: What Overbought Really Means.

Dividend. A payment a company makes to its shareholders, usually in cash and often quarterly. Dividends are decided by the company’s board and can be cut or stopped. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Dividend yield. The annual dividend per share divided by the share price, as a percentage. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Doji. A candlestick whose open and close are equal or almost equal, so the body is very small. Learn more: Reading Candlesticks as Behavior.

Donchian channel. Lines at the highest high and lowest low over a lookback period, such as 20 bars. Learn more: Bollinger Bands, Keltner Channels and ATR.

Dot plot. The chart in the Federal Reserve’s Summary of Economic Projections showing each FOMC participant’s view of the appropriate policy rate path. It is published four times a year. Learn more: Central Banks and Interest Rates: How Policy Reaches Markets.

Double top (double bottom). Two highs (or lows) at a similar price with a pullback between them. The pullback low (or high) is often called the neckline. Learn more: Chart Patterns Explained.

Double-distribution day. A session that builds value in one area, moves quickly, and builds value in a second area. Learn more: Opening Types and Day Types.

Drawdown. A decline from a peak in account value or in a price series, usually measured in percent until a new peak is made. Learn more: Risk Management Arithmetic.

Drawing tool. A chart tool for adding your own marks, such as horizontal lines, trendlines, rectangles and notes. Drawings are not market data. Learn more: Drawing Tools: Lines, Zones and Keeping Charts Clean.

Drying volume. Gradually declining volume, for example during a pullback or quiet period. Learn more: Trading Volume Explained.

Duration. A measure of how much a bond’s price changes for a change in yields. Longer duration means larger price changes for the same yield move. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Early assignment. Assignment of an American-style short option before its expiration date. Learn more: Exercise, Assignment and Settlement.

Earnings per share (EPS). Net income divided by the number of shares. Diluted EPS also counts shares that could be created from options and convertible securities. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Earnings quality. How closely a company’s reported profit reflects cash and repeatable business activity rather than one-off items or accounting choices. Learn more: Revenue, Margins and Earnings Quality: Reading Beyond EPS.

Earnings surprise. The difference between a company’s reported results and the consensus estimate, often shown as a percentage. A positive surprise is called a beat and a negative one a miss. Learn more: Earnings Reports and Guidance.

Earnings yield. Earnings per share divided by the share price: the inverse of the P/E ratio. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

EBITDA. Earnings before interest, taxes, depreciation and amortization. It is not a cash measure and leaves out the cost of replacing equipment. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

Economic calendar. A schedule of upcoming economic releases and other events, with their publication times. Learn more: Economic Events and Headlines.

EDGAR. The SEC’s free online system for company filings, such as 10-K, 10-Q and 8-K reports. Learn more: Reading Primary Sources.

Electronic trading hours (ETH). The futures trading hours outside the regular daytime session, often called the overnight session. Learn more: Futures Trading Hours, Settlement Prices and Price Limits.

Elongated profile. A thin profile spread over a wide range, usually describing a directional session. Learn more: Volume Profile Explained.

Engulfing pattern. Two candles in which the second body covers the whole range of the first body, in the opposite direction. Learn more: Reading Candlesticks as Behavior.

Enterprise value (EV). An estimate of the value of a whole business: market capitalization plus debt minus cash, with some further adjustments. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

ETF (exchange-traded fund). A fund that trades on an exchange like a stock, often tracking an index. Learn more: What You Can Trade.

ETF option. An option on shares of an exchange-traded fund. Exercise delivers shares, and most are American-style. Learn more: Index Options, ETF Options and Options on Futures Compared.

European-style option. An option that can be exercised only at expiration. Many cash-settled index options are European-style. Learn more: Options Basics: Calls, Puts, Strikes and Expiration.

Evening star. A three-candle shape: a large up candle, a small-bodied candle, then a large down candle. The mirror of the morning star. Learn more: Reading Candlesticks as Behavior.

Event volatility. The extra implied volatility that options spanning a scheduled event, such as an earnings release, may embed. It is a useful context label, not a measured universal pre-earnings pattern. Learn more: Volatility Skew and Term Structure.

Excess. Profile-reading term for a tail at a session extreme (a buying tail or selling tail), read as the visible end of an auction in that direction. How many rows make a tail is a convention that differs between authors and platforms. Learn more: Excess, Poor Highs and Lows, and Single Prints Explained.

Exchange. A regulated marketplace that lists products, matches buy and sell orders under published rules and publishes trades and quotes. Learn more: Exchanges, Brokers and Clearing: Who Does What in a Trade.

Exchange fee. A fee an exchange charges for each trade or contract. Learn more: Trading Sessions and Costs.

Ex-dividend date. The first trading day on which a buyer of a stock is no longer entitled to the next dividend. The price usually opens lower by about the dividend amount, other things equal. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Execution. The filling of an order, including the price and speed at which it is filled. Learn more: Order Types Explained.

Exercise. An option buyer using the right the option gives: buying the underlying at the strike with a call, or selling it at the strike with a put. Learn more: Exercise, Assignment and Settlement.

Exhaustion gap. A gap near the end of a long move that is later filled. It can only be named in hindsight. Learn more: Price Gaps Explained: Opening, Breakaway and Exhaustion Gaps.

Expectancy. The average result per trade over many trades, combining how often outcomes occur with their sizes. It describes a past sample and is not a promise about the future. Learn more: Risk Management Arithmetic.

Expected move. A model-based estimate of the size of a price move, in either direction, implied by option prices over a set period. It is not a forecast of direction or a boundary. Learn more: Implied Volatility and the Expected Move Explained.

Expense ratio. A fund’s annual operating costs as a percentage of its assets, taken from the fund’s value day by day rather than charged separately. Learn more: How ETFs Work: Creation, Redemption, NAV and Costs.

Expiration. The date a futures or options contract stops trading and is settled. Learn more: What You Can Trade.

Exponential moving average (EMA). A moving average that gives more weight to recent bars than older ones. Learn more: Technical Indicators Explained.

Extended hours. Trading outside the main daytime session; for index futures, much of the near-24-hour schedule. Learn more: Trading Sessions and Costs.

Facilitate trade. In auction terms, the idea that price moves to find levels where buyers and sellers are both willing to do business. Learn more: Auction Market Theory Basics.

Fair value (futures). A theoretical futures price that adjusts the underlying’s level for interest costs and expected dividends up to expiration. Published fair values are estimates. Learn more: Equity Index Futures: E-mini and Micro Contracts Compared.

False break (fakeout). A move beyond a level that quickly returns inside it. Learn more: Chart Patterns Explained.

Federal funds rate. The interest rate at which US banks lend reserves to each other overnight. The FOMC sets a target range for it. Learn more: Central Banks and Interest Rates: How Policy Reaches Markets.

Fibonacci extension. Levels projected beyond the end of a prior move at set ratios, such as 161.8%, used as reference points if price moves past the old high or low. Learn more: Fibonacci Retracements and Extensions.

Fibonacci retracement. Levels drawn at set percentages of a prior move, commonly 23.6%, 38.2%, 50%, 61.8% and 78.6%, used to mark where a pullback might be watched. The levels are a convention, not a law of markets. Learn more: Fibonacci Retracements and Extensions.

Fill. A completed order, or the price at which it was completed. Learn more: Order Types Explained.

First notice day. The first day on which holders of a physically delivered futures contract can be notified that delivery will be made. Learn more: Futures Expiration, Rollover and Continuous Charts.

Fixed-fractional sizing. A sizing method in which each position risks the same share of the current account, so dollar amounts shrink after losses and grow after gains. Learn more: Risk of Ruin: How Losing Streaks and Bet Size Interact.

Flag. A short, often sloping consolidation after a sharp move (the pole). Learn more: Chart Patterns Explained.

Flip (role reversal). A level that acted as resistance later acting as support, or the reverse. Learn more: Support and Resistance Zones.

Float. The shares of a company available for public trading, excluding shares held by insiders and other restricted holders. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

FOMC. The Federal Open Market Committee, the Federal Reserve body that sets US monetary policy. It holds eight scheduled meetings a year. Learn more: Central Banks and Interest Rates: How Policy Reaches Markets.

FOMO (fear of missing out). The uneasy pull to join a move that others seem to be catching, which can pull decisions away from a written plan. Learn more: Trading Psychology.

Form 10-K and 10-Q. The annual (10-K) and quarterly (10-Q) reports US-listed companies file with the SEC, including financial statements and notes. The annual statements are audited. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Form 8-K. A report US-listed companies file with the SEC to announce major events, such as earnings releases, leadership changes or acquisitions. Learn more: Reading Primary Sources.

Forward curve. The set of futures prices for successive contract months of the same product. Learn more: Commodity Futures: How Crude Oil and Gold Contracts Work.

Free cash flow. Operating cash flow minus capital expenditure. It is not a standardized accounting term, so calculations differ between sources. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Front month. The futures contract month with the most activity, usually the nearest to expiration. Learn more: Trading Volume Explained.

Futures commission merchant (FCM). A firm that accepts futures orders and holds customer funds for futures trading, registered with the CFTC and a member of the NFA. Learn more: Exchanges, Brokers and Clearing: Who Does What in a Trade.

Futures contract. A standardized, exchange-traded agreement to buy or sell an asset at a set price on a future date. Learn more: What You Can Trade.

Gamma. An option Greek: the estimated change in delta for a $1 change in the underlying price. It is highest for at-the-money options near expiration. Learn more: The Option Greeks in Plain Language.

Gap. A price area with no trading between one bar or session and the next, because the next one opens above the prior high or below the prior low. Some writers use “gap” more loosely for any difference between the prior close and the next open. Learn more: Opening Types and Day Types.

Gap fill. Price returning to the level it gapped away from, closing the empty space on the chart. Many gaps fill; many do not. Learn more: Price Gaps Explained: Opening, Breakaway and Exhaustion Gaps.

Gap open. An open above the prior session’s high or below its low, which leaves a gap. See gap. Learn more: Opening Types and Day Types.

Gap risk. The risk that price moves past a level with no trades in between, so stops or limits fill far from their prices or not at all. Learn more: Overnight and Gap Risk: When Prices Jump Past a Stop.

Golden cross and death cross. Names for a 50-day moving average crossing above (golden) or below (death) a 200-day moving average. Both come well after the price turn. Learn more: Moving Averages in Depth: SMA, EMA, Lag and Crossovers.

Good faith violation. In a cash account, selling a security bought with funds that had not yet settled before those funds settled; brokers can restrict the account. Learn more: Account Types and the Pattern Day Trader Rule.

Greeks. Sensitivity estimates from an option-pricing model, such as delta, gamma, theta and vega, each holding the other inputs fixed. Learn more: The Option Greeks in Plain Language.

Gross domestic product (GDP). The market value of the final goods and services produced in an economy over a period. Real GDP removes the effect of price changes. Learn more: GDP, PMI and Retail Sales: Measuring Economic Growth.

Guidance. A company’s own forecast for future results, such as revenue or EPS for the next quarter or year. Companies are not required to give it. Learn more: Earnings Reports and Guidance.

Hammer. A candlestick with a small body near the top of its range and a long lower wick. Learn more: Reading Candlesticks as Behavior.

Hard to borrow. A stock whose shares are scarce in the lending market, so borrowing them for a short sale costs more or is not possible. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Head and shoulders. A shape with three peaks, the middle one highest, and a neckline drawn through the lows between them. An inverse version is drawn upside down. Learn more: Chart Patterns Explained.

Hedger. A participant who trades to offset a price risk they already have in a business or portfolio. Learn more: How Markets Work.

Heikin-Ashi. A candle type built from averages of the current and prior bars. It smooths small reversals, lags the market, and its open and close may not be traded prices. Learn more: Heikin-Ashi, Renko and Range Bars.

Hidden divergence. Price makes a higher low while an indicator makes a lower low, or price makes a lower high while the indicator makes a higher high. Learn more: Divergence in Depth: Regular, Hidden and Why Most Go Nowhere.

High. The highest traded price of a bar or session. Learn more: Candlestick Anatomy.

High-volume node (HVN). A price area in a profile with much more volume than its neighbors. Learn more: Volume Profile Explained.

Higher high (HH). A swing high above the previous swing high. Learn more: Market Structure Explained.

Higher low (HL). A swing low above the previous swing low. Learn more: Market Structure Explained.

Higher timeframe. A longer bar period used for broader context, such as daily versus 5-minute. Learn more: Timeframes and Multi-Timeframe Analysis Explained.

Hindsight bias. The tendency to see past outcomes as more predictable than they were before they happened. Learn more: Why Chart Patterns Fail: Base Rates, Hindsight and Context.

Histogram (MACD). The bars showing the difference between the MACD line and its signal line. Learn more: Technical Indicators Explained.

Historical volatility. Volatility calculated from past price changes over a chosen window, usually shown as an annualized percentage. Also called realized volatility. Learn more: Implied Volatility and the Expected Move Explained.

Holding period. How long a position was held. Many tax systems treat gains differently depending on it; ask a tax professional. Learn more: Tax Concepts for Traders.

Iceberg order. An order that displays only part of its size and reveals more as the visible part fills. Learn more: Order Flow Basics.

Imbalance. A word with two meanings. (1) In auction terms, a market state in which one side is more eager and price moves directionally to find new participants. (2) In order flow tools, a price where volume on one side was much larger than on the other, by a ratio the user sets; some tools compare across the same row, many compare diagonally. Check which meaning a writer intends. Learn more: Auction Market Theory Basics.

Impersonation scam. A fraud in which someone poses as a real firm, regulator or well-known person to gain trust or money. Learn more: Common Trading Scams: Beyond Gurus.

Implied rate. The interest rate implied by a rate futures price, such as 100 minus the price for SOFR futures. Learn more: Interest Rate Futures: Treasury and SOFR Contracts Explained.

Implied volatility (IV). The volatility figure that makes an option-pricing model match an option’s current market price. It is derived from the price, not observed. Learn more: Implied Volatility and the Expected Move Explained.

In the money, at the money, out of the money. Terms for where a strike sits relative to the underlying price. A call is in the money when the price is above the strike; a put is in the money when the price is below it. Learn more: Option Premium: Intrinsic Value, Time Value and Moneyness.

Income statement. A financial statement showing a company’s revenue, costs and profit over a period, such as a quarter or a year. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Index. A number that tracks the combined value of a group of stocks or other assets. Learn more: What You Can Trade.

Index futures. Futures contracts whose value tracks a stock index. Learn more: What You Can Trade.

Index option. An option on an index level. It settles in cash because an index cannot be delivered. Learn more: Index Options, ETF Options and Options on Futures Compared.

Indicator input. A setting that changes an indicator’s calculation, such as its length in bars, price source or smoothing method. Learn more: Adding Indicators and Reading Their Settings.

Indicator template. A saved set of indicators and their inputs that can be applied to other charts. Learn more: Saving Layouts, Templates and Watchlists.

Initial balance (IB). The range of the first part of a session, commonly the first hour. Learn more: Opening Types and Day Types.

Initial balance range. The initial balance high minus the initial balance low. Comparing it with recent sessions, or expressing range extension as a multiple of it, makes sessions easier to compare. A measurement, not a target. Learn more: Initial Balance and Range Extension.

Initial jobless claims. The weekly count of new applications for US unemployment insurance, published by the Department of Labor on Thursdays. Learn more: The Jobs Report: Payrolls, Unemployment and Wages.

Initial margin. The deposit required to open a futures position. Learn more: What You Can Trade.

Initial public offering (IPO). The first sale of a company’s shares to the public, after which they begin trading on an exchange. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Initiative activity. Buying above value or selling below value; trading in the direction away from accepted prices. Learn more: Auction Market Theory Basics.

In-sample data. The part of historical data used to build and tune a set of rules. Learn more: Overfitting and Repainting.

Inside bar and outside bar. An inside bar has a high below and a low above the prior bar’s. An outside bar has a higher high and a lower low than the prior bar. Learn more: Candlestick Anatomy: Open, High, Low, Close and Wicks.

Interest rate differential. The gap between interest rates in two currencies. It helps explain why currency futures prices differ from spot. Learn more: Currency Futures: How They Compare With Spot Forex.

Intrinsic value. What an option would be worth if exercised immediately, never less than zero: price minus strike for a call, strike minus price for a put. Learn more: Option Premium: Intrinsic Value, Time Value and Moneyness.

Inventory correction. An early regular-hours move back toward the prior settlement after a one-sided overnight session. It is a label for a move already under way. Learn more: Overnight Inventory and the Overnight High and Low.

Inverse ETF. An ETF that aims to return the opposite of an index’s return, usually for a single day. Over longer periods its return can differ a great deal from the opposite of the index. Learn more: Leveraged and Inverse ETFs: Daily Reset and Volatility Decay.

Iron condor. A four-option position that sells an out-of-the-money put spread and an out-of-the-money call spread on the same underlying and expiration. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

IV crush. A sharp fall in implied volatility after an expected event, such as an earnings report. It is not guaranteed after every announcement. In the ordinary vanilla pricing model, lowering volatility while holding other inputs fixed reduces call value, but the actual total premium change also reflects underlying price, time, rates, dividends, exercise features and market bid/ask conditions. Learn more: Earnings Reports and Guidance.

IV rank. Where current implied volatility sits within its own high-low range over a lookback period, from 0 at the low to 100 at the high. IV percentile is a related measure. Learn more: Implied Volatility and the Expected Move Explained.

Journal. A written record of what you observed, did and learned, used for review. Learn more: Trading Plans, Journaling and Honest Backtesting.

Keltner channel. Bands drawn a multiple of ATR above and below a moving average. Bollinger Bands use standard deviation instead. Learn more: Bollinger Bands, Keltner Channels and ATR.

Labor force participation rate. The share of the working-age population that is working or looking for work. Learn more: The Jobs Report: Payrolls, Unemployment and Wages.

Lagging indicator. An indicator built from past prices that reacts after price moves. Learn more: Technical Indicators Explained.

Last trading day. The final day a futures or option contract month can be traded before it expires. Learn more: Futures Expiration, Rollover and Continuous Charts.

Level 1 quote. A quote showing the best bid and ask with their sizes, the last trade and basic daily statistics. Learn more: Reading a Quote: NBBO, Level 1 and Level 2.

Level 2 data. Market data showing several displayed price levels on each side of the book, with size at each. Hidden orders are not shown. Learn more: Reading a Quote: NBBO, Level 1 and Level 2.

Leverage. Controlling a large position with a smaller amount of capital, which magnifies both gains and losses. Learn more: What You Can Trade.

Leveraged ETF. An ETF that aims for a multiple of an index’s daily return; inverse ETFs aim for the opposite of the daily return. Because they reset daily, results over longer periods can differ substantially from the multiple. Learn more: What You Can Trade.

Limit order. An order to buy at or below, or sell at or above, a specified price. Learn more: Order Types Explained.

Limit up-limit down. The US rule that sets price bands around a stock’s recent average price and pauses trading briefly if the stock cannot trade back inside them. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Line chart. A chart that connects closing prices only, leaving out each period’s open, high and low. Learn more: Chart Types: Candles, Bars, Lines and Their Settings.

Liquidity. How easily a market can absorb trades without the price moving much. Learn more: How Markets Work.

Liquidity sweep. A fast move that trades through a level, fills orders resting beyond it and then trades back. The label is applied after price returns. Learn more: Liquidity, Sweeps and Stop Runs: A Descriptive Look.

Locate. The confirmation a broker must have that shares can be borrowed before it accepts a customer’s short sale. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Long. Holding a position that gains if price rises. Learn more: How Markets Work.

Long volatility. A position that tends to gain from larger price moves or rising implied volatility, such as a bought straddle. Learn more: Straddles and Strangles: Payoffs Built From Volatility.

Look-ahead bias. Using information in a test that would not have been available at the time of the decision. Learn more: Trading Plans, Journaling and Honest Backtesting.

Losing streak. A run of consecutive losing results. Long streaks occur more often than intuition suggests, even with balanced odds. Learn more: Risk of Ruin: How Losing Streaks and Bet Size Interact.

Loss aversion. The tendency to feel a loss more strongly than a gain of the same size. Learn more: Trading Psychology.

Low. The lowest traded price of a bar or session. Learn more: Candlestick Anatomy.

Low-volume node (LVN). A price area in a profile with much less volume than its neighbors. Learn more: Volume Profile Explained.

Lower high (LH). A swing high below the previous swing high. Learn more: Market Structure Explained.

Lower low (LL). A swing low below the previous swing low. Learn more: Market Structure Explained.

Lower timeframe. A shorter bar period used for detail, such as 1-minute versus hourly. Learn more: Timeframes and Multi-Timeframe Analysis Explained.

MACD. An indicator built from the difference between two moving averages and a smoothed line of that difference. Learn more: Technical Indicators Explained.

Maintenance break. A short daily pause in electronic futures trading, often in the late afternoon Central Time. Learn more: Futures Sessions and Timeframes.

Maintenance margin. The minimum account level required to keep a futures position open after it has been opened. Learn more: What You Can Trade.

Managed money. A COT category of professional money managers, such as commodity trading advisers and commodity pools. Learn more: The Commitments of Traders Report.

Margin account. A brokerage account that allows borrowing against securities and short selling, with interest and maintenance requirements. Learn more: Leverage and Margin Across Stocks, Futures and Options.

Margin (futures). A good-faith deposit held to cover potential losses on a futures position, not a down payment and not a loan. Exchanges set minimums and brokers can require more. See also initial margin, maintenance margin and margin call. Learn more: What You Can Trade.

Margin call. A demand from a broker to add funds when an account falls below the required margin; the broker may close positions if it is not met. Learn more: What You Can Trade.

Market breadth. How widely a market move is shared across stocks, measured with counts such as advancing and declining stocks or new highs and new lows. Learn more: Sectors, Indexes and Market Breadth.

Market capitalization. The total market value of a company’s shares: share price times shares outstanding. Learn more: Sectors, Indexes and Market Breadth.

Market maker. A firm that regularly quotes both a bid and an ask in a market, providing liquidity and earning from the spread, among other sources. Learn more: How Markets Work.

Market order. An order to buy or sell immediately at the best available price. Learn more: Order Types Explained.

Market structure. The pattern of swing highs, swing lows, trends and ranges on a chart. Learn more: Market Structure Explained.

Market-by-order data (MBO). Order book data that lists individual resting orders at each price, as published by some exchanges, instead of one aggregated total per price (market-by-price data). Learn more: Reading the DOM Honestly.

Market-value-weighted index. An index in which each stock counts in proportion to its market value, often adjusted for float, so the largest companies have the most influence. Learn more: Sectors, Indexes and Market Breadth.

Market-wide circuit breaker. A US rule that halts trading across stock markets after the S&P 500 falls by set percentages from the prior close: 7%, 13% and 20%. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Mark-to-market. Revaluing open futures positions at each day’s settlement price and moving the resulting gains and losses between accounts in cash. Learn more: Futures Margin and Daily Mark-to-Market Explained.

Maximum adverse excursion (MAE). The largest open loss a trade reached before it closed. Learn more: Reviewing Your Own Trade Statistics: Expectancy, MAE and MFE.

Maximum favorable excursion (MFE). The largest open gain a trade reached before it closed. Learn more: Reviewing Your Own Trade Statistics: Expectancy, MAE and MFE.

Measured move. A method of projecting the height of a range or pattern from its breakout point to mark a reference level. It describes how a level is measured, not what price will do. Learn more: Breakouts, False Breakouts and Retests in Price Action.

Micro contract. A smaller version of a futures contract with a fraction of the standard contract size. Learn more: What You Can Trade.

Moneyness. Where an option’s strike sits relative to the underlying price: in the money, at the money or out of the money. Learn more: Option Premium: Intrinsic Value, Time Value and Moneyness.

Morning star. A three-candle shape: a large down candle, a small-bodied candle, then a large up candle. Learn more: Reading Candlesticks as Behavior.

Moving average. The average price over a set number of past bars, recalculated each bar. Learn more: Technical Indicators Explained.

Moving average crossover. The point where a faster moving average crosses a slower one. It always comes after the price turn that caused it. Learn more: Moving Averages in Depth: SMA, EMA, Lag and Crossovers.

Multiple testing. Trying many variations of an idea on the same data, which makes it likely that some look good by chance alone. Learn more: Trading Plans, Journaling and Honest Backtesting.

Multiple timeframe analysis. Reading the same market on two or more bar periods for context and detail. Learn more: Timeframes and Multi-Timeframe Analysis Explained.

Multiplier (contract multiplier). The number that turns a price move into a dollar value for one contract: dollar change = price change × multiplier. Related to contract size but not the same thing. Specifications vary by contract. Learn more: What You Can Trade.

Naked point of control. A prior session’s point of control that no session since has traded through. Some traders mark it as a reference level; it is not a price the market has to revisit. Learn more: Reference Levels from Prior Sessions.

NBBO. The national best bid and offer: the highest eligible displayed bid and lowest eligible displayed ask for a US stock across all exchanges at a moment, not every order or hidden liquidity. Brokers check fills against it. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Neckline. A line through the swing lows (or highs) between the peaks of a double top or a head and shoulders shape. Learn more: Chart Patterns Explained.

Net asset value (NAV). The value of a fund’s holdings minus its liabilities, divided by the number of shares outstanding, usually calculated once a day. Learn more: How ETFs Work: Creation, Redemption, NAV and Costs.

Net income. A company’s profit after all costs, interest and taxes for a period. Also called net earnings or the bottom line. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Net position. Long contracts minus short contracts for a trader or group. Learn more: The Commitments of Traders Report.

Neutral day. A session that extends beyond both the initial balance high and the initial balance low. Learn more: Opening Types and Day Types.

NFA BASIC. The National Futures Association’s free online database of CFTC registration and NFA membership information for firms and individuals in the US futures industry, including regulatory actions by NFA, the CFTC and US futures exchanges. It does not include everything, such as criminal cases or actions by state or other regulators, so it is one check among several. Learn more: How to Spot Trading Gurus and Guaranteed-Return Claims.

Noncommercial trader. In the legacy COT report, a reportable trader not classified as commercial, such as many funds and speculators. Learn more: The Commitments of Traders Report.

Nonfarm payrolls. The monthly change in the number of US jobs outside farming and a few other categories, from the establishment survey in the jobs report. Learn more: The Jobs Report: Payrolls, Unemployment and Wages.

Non-GAAP (adjusted) measures. Company-defined figures, such as adjusted EPS, that exclude items the company considers unusual. Companies must reconcile them with GAAP figures. Learn more: Earnings Reports and Guidance.

Nonreportable positions. Positions held by traders below the reporting threshold, shown as a group in the COT report. Learn more: The Commitments of Traders Report.

Notional value. The full value of the underlying a derivative position represents. For a futures contract, price times the contract multiplier or unit. Learn more: Futures Contract Specifications.

Novation. The step in which a clearinghouse becomes the buyer to every seller and the seller to every buyer once a trade is matched. Learn more: Exchanges, Brokers and Clearing: Who Does What in a Trade.

OHLC. Open, high, low and close: the four prices summarized by one bar. Learn more: Candlestick Anatomy.

OHLC bar. A bar showing a period’s high and low as a vertical line, with a left tick at the open and a right tick at the close. Learn more: Chart Types: Candles, Bars, Lines and Their Settings.

On-balance volume (OBV). A running total that adds a bar’s volume on up closes and subtracts it on down closes. Learn more: Trading Volume Explained: Volume vs Open Interest.

Open. The first traded price of a bar or session. Learn more: Candlestick Anatomy.

Open auction. An opening that rotates around the open price without a clear direction. Learn more: Opening Types and Day Types.

Open drive. An opening that moves away from the open in one direction and does not return during the opening period. Learn more: Opening Types and Day Types.

Open interest. The number of futures or options contracts still outstanding at a point in time. Learn more: Trading Volume Explained.

Open rejection reverse. An opening that moves one way, meets opposing activity, and reverses back through the open. Learn more: Opening Types and Day Types.

Open test drive. An opening that tests a nearby reference in one direction, then moves firmly the other way. Learn more: Opening Types and Day Types.

Opening auction. A single-price auction that sets a stock’s first price of the regular session by matching orders collected before the open. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Operating leverage. How much profit changes for a change in revenue when a large part of costs are fixed. High operating leverage magnifies both gains and losses. Learn more: Revenue, Margins and Earnings Quality: Reading Beyond EPS.

Opportunity cost. What is given up by choosing one use of money over another, such as the interest forgone by holding an asset that pays none. Learn more: The Dollar, Oil and Gold: How Macro Markets Connect.

Option chain. A table of the calls and puts listed for one underlying and expiration, arranged by strike, with quotes and statistics for each contract. Learn more: Options Basics: Calls, Puts, Strikes and Expiration.

Option on futures. An option whose exercise usually delivers a position in a futures contract. Learn more: Index Options, ETF Options and Options on Futures Compared.

Options. Contracts giving the right, but not the obligation, to buy or sell an asset at a set price before or at expiration. Learn more: What You Can Trade.

Order. An instruction to a broker to buy or sell a set quantity under stated conditions. Learn more: Order Types Explained.

Order book. The full list of resting limit orders at each price. Learn more: How Markets Work.

Order flow. The study of how orders arrive and trade, using data such as the order book, time and sales, and bid/ask volume. Learn more: Order Flow Basics.

Organic growth. Revenue growth that excludes acquisitions, divestitures and currency effects. Learn more: Revenue, Margins and Earnings Quality: Reading Beyond EPS.

Out-of-sample. Data not used when building or tuning an idea, set aside to test it. Learn more: Trading Plans, Journaling and Honest Backtesting.

Outright position. A position in a single futures contract month, as opposed to a spread between months or products. Learn more: Calendar Spreads and the Forward Curve in Futures.

Overbought and oversold. Labels for oscillator readings above or below set lines, such as 70 and 30 on RSI. They describe recent strength or weakness, not a coming reversal. Learn more: RSI and Stochastic Oscillators: What Overbought Really Means.

Overconfidence. Believing one’s knowledge or skill is greater than it is, often after a run of good results. Learn more: Trading Psychology.

Overfitting. Tuning an idea so closely to past data that it describes noise rather than anything repeatable. Learn more: Trading Plans, Journaling and Honest Backtesting.

Overlapping value. Two sessions whose value areas share much of the same price range, often read as a sign of balance. Learn more: Composite Profiles and Value Migration.

Overlay (chart). An indicator drawn on the price pane because it shares price’s scale, such as a moving average or VWAP. Learn more: Adding Indicators and Reading Their Settings.

Overnight high and low (ONH, ONL). The top and bottom prices traded in the overnight session, between one regular-hours close and the next regular-hours open, in markets that trade outside regular hours. Learn more: Reference Levels from Prior Sessions.

Overnight inventory. A description of where most overnight trade sat compared with a labeled prior reference: above-reference, below-reference or even by the declared proxy; NOT measured net positions. Learn more: Overnight Inventory and the Overnight High and Low.

Overnight session. For futures, trading between the end of one regular daytime session and the start of the next. Learn more: Trading Sessions and Costs.

Parameter sensitivity. How much test results change when a setting is moved slightly. Sharp changes are a common sign of overfitting. Learn more: Overfitting and Repainting.

Pattern day trader (PDT), legacy US securities-margin term: A classification under FINRA’s former day-trading margin framework, including the applicable counting/classification provisions and $25,000 equity requirement. FINRA adopted a replacement effective June 4, 2026, with broker phase-in through October 20, 2027. A transitioned firm uses the new intraday-margin framework, without the legacy count-based PDT designation or FINRA $25,000 PDT minimum. Identify the broker’s current regime; other margin, house and cash-settlement rules remain separate. Checked November 6, 2026. Learn more: Account Types and the Pattern Day Trader Rule.

Payment for order flow. Payment a broker receives from a market maker or wholesaler for routing customer orders to it. Brokers must disclose these arrangements. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Payoff diagram. A chart of an option position’s result at expiration across possible underlying prices, including the premium paid or received. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

PCE price index. A monthly measure of prices for personal consumption spending, published by the Bureau of Economic Analysis. The Federal Reserve states its inflation goal in terms of PCE. Learn more: Inflation Reports: CPI, PCE and PPI Explained.

PEG ratio. The P/E ratio divided by expected earnings growth, which adds a forecast to the calculation. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

Per-contract risk. The loss on one futures contract if a stop fills at its price: ticks to the stop times tick value, plus fees. Slippage can make the real loss larger. Learn more: Sizing Futures Positions in Contracts.

Performance bond. The futures meaning of margin: a good-faith deposit held against possible losses. Nothing is borrowed. Learn more: Leverage and Margin Across Stocks, Futures and Options.

Physical delivery. Settling a futures contract by delivering the underlying itself, such as barrels of oil or ounces of gold, under the exchange’s delivery rules. Learn more: Futures Contract Specifications.

Pin risk. Uncertainty for an option seller about whether an option will be exercised when the underlying finishes very near the strike at expiration. Learn more: Exercise, Assignment and Settlement.

Pip. The standard small unit of price change in a currency pair: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen. Learn more: Forex and Crypto Basics: Pairs, Pips and 24-Hour Markets.

Pivot points. Reference levels calculated from the prior period’s high, low and close, with support and resistance levels above and below a central pivot. Learn more: Reference Levels from Prior Sessions.

PM settlement. Settlement based on closing prices on the last trading day. Learn more: Index Options, ETF Options and Options on Futures Compared.

Premium and discount (ETF). How far an ETF’s market price sits above (premium) or below (discount) its net asset value. Learn more: How ETFs Work: Creation, Redemption, NAV and Costs.

Pre-trade checklist. A short list of yes or no questions read before placing an order to catch avoidable errors. Learn more: A Pre-Trade Checklist: Slowing Down Before Acting.

Price alert. A notification a charting platform sends when a condition you set is met, such as price crossing a level. It usually does not place an order. Learn more: Alerts as Reminders of Your Own Levels.

Price limit. An exchange rule that pauses trading or restricts prices after a move of a set size from a reference price. Limits slow trading; they do not cap losses. Learn more: Futures Trading Hours, Settlement Prices and Price Limits.

Price-to-book ratio (P/B). Market capitalization divided by shareholders’ equity, used more often for banks and insurers. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

Price-to-earnings ratio (P/E). A stock’s price divided by its earnings per share. Trailing P/E uses past earnings; forward P/E uses estimates. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

Price-to-sales ratio (P/S). Market capitalization divided by revenue. It can be used for companies without profits but ignores costs. Learn more: Valuation Ratios Explained: P/E, EV/EBITDA, P/S and Yield.

Price-weighted index. An index in which each stock counts in proportion to its share price, whatever the company’s size. Learn more: Sectors, Indexes and Market Breadth.

Primary source. The original document behind a claim, such as a company filing, an agency release, a central bank statement or an exchange notice. Learn more: Reading Primary Sources.

Process versus outcome. Judging decisions by whether they followed a sound plan with the information available, separately from whether they gained or lost. Learn more: The Weekly Review: Process Before Outcome.

Producer Price Index (PPI). A monthly measure of prices received by domestic producers for their goods and services, published by the Bureau of Labor Statistics. Learn more: Inflation Reports: CPI, PCE and PPI Explained.

Producer/merchant. A COT category of firms that produce, process, handle or use a physical commodity and use futures to manage price risk. Learn more: The Commitments of Traders Report.

Profit margin. A profit measure divided by revenue. Gross, operating and net margins use gross profit, operating income and net income. Learn more: Revenue, Margins and Earnings Quality: Reading Beyond EPS.

Protective put. A position that owns shares and buys a put option on them, which sets a floor on losses below the strike for the cost of the premium. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

P-shaped profile. A profile with heavy volume near the top and a thin tail below. Learn more: Volume Profile Explained.

Partial fill. An order that is only partly executed, leaving the rest working or canceled. Learn more: Order Types Explained.

Passive order. A resting limit order waiting to be filled; it supplies liquidity. Learn more: Order Flow Basics.

Pennant. A small symmetrical-looking consolidation after a sharp move, similar to a flag but converging. Learn more: Chart Patterns Explained.

Point (futures). A one-unit move in a futures price; its dollar value depends on the contract multiplier. Learn more: What You Can Trade.

Point of control (POC). The price with the most volume (or TPO block letters) in a profile. Learn more: Volume Profile Explained.

Poor high. A session high with no tail, where two or more periods reached the same top price, or nearly the same, and none went higher. Some traders believe markets return to poor highs; that is a hypothesis to test, not an established fact. Learn more: Excess, Poor Highs and Lows, and Single Prints Explained.

Poor low. A session low with no tail, where two or more periods reached the same bottom price, or nearly the same, and none went lower. Some traders believe markets return to poor lows; that is a hypothesis to test, not an established fact. Learn more: Excess, Poor Highs and Lows, and Single Prints Explained.

Position. The quantity of an asset or contracts a trader currently holds, long or short. Learn more: How Markets Work.

Position size. How many shares or contracts are in a position. One common piece of arithmetic is position size = dollars at risk ÷ risk per unit. Illustrative arithmetic only, not a recommendation: $200 ÷ $2 of risk per share = 100 shares. The actual loss can be larger than planned if price gaps or the exit fills at a worse price. Learn more: Risk Management Arithmetic.

Premium (options). The price paid for an option. Learn more: What You Can Trade.

Price action. The study of price movement itself, through bars, swings and levels, with little reliance on indicators. Learn more: Reading Candlesticks as Behavior.

Price-time priority (FIFO). A matching rule under which, at the same price, the order that arrived first fills first. Many markets use it; some products use pro-rata or mixed allocation instead. Exchanges publish the rule for each product. Learn more: Reading the DOM Honestly.

Prior close. The last traded price of the previous session. For futures, traders often also mark the settlement price, which the exchange sets by its own procedure and which can differ from the last trade. Learn more: Reference Levels from Prior Sessions.

Prior day high (PDH). The highest price of the previous session. Its value depends on the session window used, for example regular hours or the full electronic session. Learn more: Reference Levels from Prior Sessions.

Prior day low (PDL). The lowest price of the previous session. Its value depends on the session window used, for example regular hours or the full electronic session. Learn more: Reference Levels from Prior Sessions.

Prior value area. The previous session’s value area high and value area low, used as reference levels for describing where the next session opens and trades. Depends on profile settings and data source. Learn more: Reference Levels from Prior Sessions.

Pullback. A move against the recent direction that does not, so far, change the swing sequence. Learn more: Market Structure Explained.

Pulling and stacking. Informal DOM terms: pulling is displayed size disappearing as price approaches, and stacking is size being added. They describe changes in the visible book, not the reasons for them. Learn more: Reading the DOM Honestly.

Pump and dump. A fraud in which promoters buy a thinly traded asset, hype it to attract buyers, then sell into the rise. Learn more: Common Trading Scams: Beyond Gurus.

Purchasing managers’ index (PMI). A monthly survey index of business conditions in which a reading above 50 means more respondents reported improvement than deterioration. Learn more: GDP, PMI and Retail Sales: Measuring Economic Growth.

Put option. An option giving the holder the right, but not the obligation, to sell the underlying at the strike price. Learn more: What You Can Trade.

Put skew. A pattern in which lower-strike options, especially puts, show higher implied volatility than higher strikes. Learn more: Volatility Skew and Term Structure.

Put-call parity. A pricing relationship linking calls, puts, the underlying and interest rates for options with the same strike and expiration. Learn more: Covered Calls and Cash-Secured Puts.

Put-call ratio. The volume or open interest of puts divided by that of calls over a period. It describes activity, not direction. Learn more: Implied Volatility and the Expected Move Explained.

Quantitative easing and tightening (QE and QT). QE is large-scale buying of bonds by a central bank to add reserves and lower longer-term yields. QT is shrinking those holdings, usually by not reinvesting maturing bonds. Learn more: Central Banks and Interest Rates: How Policy Reaches Markets.

Queue position. Under price-time priority, an order’s place in line among resting orders at the same price. An order at the back of a long queue may not fill even when price trades at its level. Learn more: Reading the DOM Honestly.

Range. The distance between a high and a low; also a sideways market moving between them. Learn more: Candlestick Anatomy.

Range bar. A bar that closes once its high-to-low range reaches a set size, so every bar has the same range and busy periods produce more bars. Learn more: Heikin-Ashi, Renko and Range Bars.

Range extension. Price trading beyond the initial balance high or low later in the session. Learn more: Opening Types and Day Types.

Rate strip. A series of consecutive interest rate futures months read together as a market-implied path of short-term rates. Learn more: Interest Rate Futures: Treasury and SOFR Contracts Explained.

Real yield. A yield after allowing for expected inflation, roughly the nominal yield minus expected inflation. In the United States, TIPS yields are a common measure. Learn more: The Dollar, Oil and Gold: How Macro Markets Connect.

Realized gain or loss. The gain or loss locked in when a position is closed, as opposed to an unrealized change on an open position. Learn more: Tax Concepts for Traders.

Recession. A significant, broad decline in economic activity lasting more than a few months. In the United States, recessions are dated by a committee of the National Bureau of Economic Research. Learn more: GDP, PMI and Retail Sales: Measuring Economic Growth.

Record date. The date on which a company checks its records to see which shareholders receive a dividend or other distribution. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Recovery scam. A fraud targeting people who already lost money, promising to recover it for an upfront fee. Learn more: Common Trading Scams: Beyond Gurus.

Reference level. A price from an earlier period, such as a prior high, low, close, point of control or value area boundary, marked before a session so the session can be described relative to it. A place to observe, not a place where something has to happen. Learn more: Reference Levels from Prior Sessions.

Regular divergence. Price makes a higher high while an indicator makes a lower high, or price makes a lower low while the indicator makes a higher low. Learn more: Divergence in Depth: Regular, Hidden and Why Most Go Nowhere.

Regular trading hours (RTH). The main daytime session, aligned for index futures with the underlying stock market hours. Learn more: Trading Sessions and Costs.

Regulation T. A US Federal Reserve rule that sets initial borrowing limits for buying many securities on margin. Learn more: Leverage and Margin Across Stocks, Futures and Options.

Rejection. In auction terms, price touching a level briefly and leaving quickly on little volume. Learn more: Auction Market Theory Basics.

Relationship investment scam. A fraud that builds a friendly or romantic online relationship before introducing a fake investment. Learn more: Common Trading Scams: Beyond Gurus.

Relative strength (comparison). A comparison of one stock’s or sector’s return with a benchmark’s return over the same period. It is a different idea from the RSI indicator. Learn more: Sectors, Indexes and Market Breadth.

Relative volume. Current volume compared with a typical level, often for the same time of day. Learn more: Trading Volume Explained.

Renko chart. A chart that draws a fixed-size brick only when price moves a set amount beyond the last brick. Elapsed clock time does not determine when a new brick forms; timestamps still exist. Learn more: Heikin-Ashi, Renko and Range Bars.

Repainting. When an indicator’s past values change after new data arrives, so the chart shows readings that were not visible at the time. Learn more: Technical Indicators Explained.

Resistance. A price area where rising prices have previously slowed or turned down. Learn more: Support and Resistance Zones.

Responsive activity. Buying below value or selling above value; trading that tends to push price back toward accepted prices. Learn more: Auction Market Theory Basics.

Resting liquidity. Limit orders waiting in the order book at each price, available to be filled by incoming market orders. Learn more: Liquidity, Sweeps and Stop Runs: A Descriptive Look.

Retail sales. A monthly measure of sales at retailers and food service businesses, in dollars and not adjusted for inflation. In the United States it is published by the Census Bureau. Learn more: GDP, PMI and Retail Sales: Measuring Economic Growth.

Retest. A return of price to a level after breaking it. Learn more: Support and Resistance Zones.

Revenge trading. Trading to win back a recent loss, usually outside one’s written plan. Learn more: Trading Psychology.

Revenue. The money a company earns from selling its goods and services over a period, before costs. Also called sales or the top line. Learn more: Reading Company Financial Statements: A Plain-Language Guide.

Reverse split. A stock split that reduces the number of shares and raises the price by the same factor, such as 1-for-10. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Rho. An option Greek: the estimated change in an option’s price for a one-percentage-point change in interest rates. Learn more: The Option Greeks in Plain Language.

Risk. The possibility of losing money. In planning, the amount a trader estimates could be lost on a trade, which can be exceeded when fills are worse than expected. Learn more: Risk Management Arithmetic.

Risk of ruin. The chance that losses reduce an account to a level at which trading can no longer continue. It depends on position size, the distribution of results and other assumptions. Learn more: Risk Management Arithmetic.

Risk-reward ratio. A comparison of a planned trade’s potential gain with its potential loss. It is usually expressed as planned potential gain relative to planned potential loss (or the reverse, depending on the source). In illustrative arithmetic only, not a recommendation: a planned gain of 6 points against a planned loss of 2 points is 3 to 1 written as gain ÷ loss. The ratio says nothing about the odds of winning or losing. Learn more: Risk Management Arithmetic.

Roll. Moving a futures position from an expiring contract month to a later one. Learn more: What You Can Trade.

Roll gap. The price jump on an unadjusted continuous futures chart where one contract month is replaced by the next. It is not a traded move. Learn more: Futures Expiration, Rollover and Continuous Charts.

Roll yield. A return contribution associated with replacing an expiring futures contract with a later one, not a guaranteed payment received on the roll. It is negative in steady contango and positive in steady backwardation. Learn more: Calendar Spreads and the Forward Curve in Futures.

Rotation. A swing from one side of a range toward the other. Learn more: Auction Market Theory Basics.

Round lot and odd lot. A round lot is the standard trading unit for a stock, traditionally 100 shares; an odd lot is an order for fewer shares. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Round number. A price ending in whole figures such as 00 or 50. Learn more: Support and Resistance Zones.

RSI (relative strength index). An oscillator comparing the size of recent up moves with recent down moves on a 0 to 100 scale. Learn more: Technical Indicators Explained.

Ruin threshold. The account level defined as “ruin” in a risk-of-ruin calculation, such as zero, a set drawdown or a broker minimum. Learn more: Risk of Ruin: How Losing Streaks and Bet Size Interact.

Runaway gap. A gap in the middle of an established move. Also called a continuation or measuring gap. Learn more: Price Gaps Explained: Opening, Breakaway and Exhaustion Gaps.

Sample size. The number of trades or observations in a record or test. Small samples swing widely by chance. Learn more: Reviewing Your Own Trade Statistics: Expectancy, MAE and MFE.

Seasonal adjustment. A statistical method that removes regular calendar patterns, such as holiday hiring, from economic data so months can be compared. Learn more: Inflation Reports: CPI, PCE and PPI Explained.

Seasonal chart. A chart that averages past years by a declared recurring calendar position, such as calendar dates, business-day offsets or crop-year stages. The average can hide wide differences between years. Learn more: Seasonality in Futures: Patterns, Causes and Limits.

Seasonality. A tendency for prices, supply or demand to follow a calendar pattern, often tied to physical cycles such as harvests or weather. Learn more: Seasonality in Futures: Patterns, Causes and Limits.

Sector. A group of companies in similar lines of business, such as energy or health care, used to compare parts of the stock market. Learn more: Sectors, Indexes and Market Breadth.

Segregated funds. Customer money in futures accounts that a firm must keep separate from its own funds. Learn more: Choosing a Broker: Questions to Ask, Not Answers to Copy.

Selling tail. In a TPO profile, a short run of rows near the session high, each holding only one or two letters. The profile alone does not establish a quick departure or brief dwell. A description of how the high formed, not evidence that the high holds. Learn more: Excess, Poor Highs and Lows, and Single Prints Explained.

Session. A defined trading period, such as the regular daytime session or the full electronic session. Learn more: Trading Sessions and Costs.

Session delta. Cumulative delta that resets to zero at the start of each session, so the running total covers that session only. Learn more: Cumulative Delta and Its Limits.

Session profile. A volume or TPO profile covering one trading session. Learn more: Volume Profile Explained.

Session replay. A step-by-step description of a finished session using a fixed checklist, from the overnight range to the close. It describes what happened and does not show what anyone should have done. Learn more: Three Fictional Session Replays.

Session VWAP. VWAP that starts at the beginning of each session and resets at the next. Learn more: What Is VWAP? Session vs Anchored VWAP Explained.

Settled funds. Cash in an account whose related trades have completed settlement and can be used without restriction. Learn more: Account Types and the Pattern Day Trader Rule.

Settlement cycle (T+1). The time between a trade and the exchange of cash and securities. Most US stock trades settle one business day after the trade date. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Settlement price. The official daily price set by a futures exchange, used for margin and daily gains and losses. Learn more: What You Can Trade.

Settlement style. How an option or future settles at expiration: by cash or by delivering the underlying. Learn more: Index Options, ETF Options and Options on Futures Compared.

Share buyback. A company buying back its own shares, which reduces the number of shares outstanding. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Shooting star. A candlestick with a small body near the bottom of its range and a long upper wick. Learn more: Reading Candlesticks as Behavior.

Short. Holding a position that gains if price falls. Learn more: How Markets Work.

Short interest. The number of a company’s shares sold short and not yet bought back, often shown as a share of the float or in days of average volume. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Short sale price test. The US rule (Rule 201) that, after a stock falls 10% from the prior close, allows short sales only above the national best bid for the rest of that day and the next. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Short selling. Selling borrowed shares with the aim of buying them back later at a lower price. If the price rises instead, the loss has no fixed limit. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Short squeeze. A rapid price rise driven partly by short sellers buying back shares to close positions, which adds to buying pressure. Learn more: Short Selling Explained: Borrowing, Fees and Short Squeezes.

Short volatility. A position that tends to gain when price moves stay small or implied volatility falls, and can lose heavily on large moves. Learn more: Straddles and Strangles: Payoffs Built From Volatility.

Signal line (MACD). The technical name for a moving average of the MACD line. Despite the name, it is a calculation, not a trading instruction. Learn more: Technical Indicators Explained.

Simple moving average (SMA). The plain average of closing prices over a set number of bars. Learn more: Technical Indicators Explained.

Single prints. In a TPO profile, a row present in only one selected time block. Learn more: Volume Profile Explained.

SIPC. The Securities Investor Protection Corporation, which protects customers of failed member broker-dealers up to set limits. It does not cover market losses. Learn more: Choosing a Broker: Questions to Ask, Not Answers to Copy.

Skew (volatility skew). The pattern of implied volatility across strikes for the same expiration. Term structure is the pattern across expirations. Learn more: Implied Volatility and the Expected Move Explained.

Slippage. The difference between the price you expected and the price you were filled at. Learn more: Order Types Explained.

SOFR. The Secured Overnight Financing Rate, a benchmark US overnight interest rate based on repurchase agreement trades backed by Treasury securities. Learn more: Central Banks and Interest Rates: How Policy Reaches Markets.

SOFR futures. Futures based on the Secured Overnight Financing Rate, quoted as 100 minus the rate for the contract period. Learn more: Interest Rate Futures: Treasury and SOFR Contracts Explained.

Spin-off. A company separating part of its business into a new company and giving the new shares to its existing shareholders. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Split profile. A view of a TPO profile in which each period’s letters sit in their own column in time order, so the sequence of the session is visible. The collapsed view stacks the same letters into rows. Learn more: TPO Profile Basics.

Spoofing. Placing a bid or offer with the intent, when it is placed, to cancel it before it executes, typically to mislead others about supply or demand. Prohibited in US futures markets under the Commodity Exchange Act. Changing or canceling an order is not spoofing by itself: legitimate, good-faith changes and cancellations are allowed, and what matters is whether the trader intended, when the order was placed, to cancel it before it executed. Learn more: Order Flow Basics.

Spot forex. Currency trading for near-immediate settlement, conducted over the counter between banks, dealers and brokers rather than on a single exchange. Learn more: Forex and Crypto Basics: Pairs, Pips and 24-Hour Markets.

Spread. See Bid-ask spread. (Traders also use “spread” for a position combining two related contracts, which is a different meaning.) Learn more: How Markets Work.

Spread margin. A reduced margin requirement for positions that hold related contracts in opposite directions, such as two months of the same future. Learn more: Futures Margin and Daily Mark-to-Market Explained.

Spread width. The distance between the two strikes of an option spread, which sets the spread’s maximum value at expiration. Learn more: Vertical Spreads: Defined-Risk Payoffs With Two Strikes.

Stablecoin. A crypto token designed to keep a steady value against a currency such as the US dollar. It depends on its issuer’s reserves and practices, and some have lost their peg. Learn more: Forex and Crypto Basics: Pairs, Pips and 24-Hour Markets.

Stacked imbalance. On a bid/ask volume chart, several consecutive price rows with imbalances on the same side. The ratio, minimum volume and number of rows needed are user settings. Learn more: Reading Delta and Imbalance on a Bid/Ask Volume Chart.

Standard contract. The full-size version of a futures contract, as opposed to a smaller mini or micro version on the same underlying. Learn more: Micro vs Standard Futures Contracts.

Standard deviation. A statistical measure of how spread out values are around their average. Learn more: Technical Indicators Explained.

Standard lot. 100,000 units of the base currency in forex. Mini and micro lots are 10,000 and 1,000 units. Learn more: Forex and Crypto Basics: Pairs, Pips and 24-Hour Markets.

Steepening and flattening. A yield curve steepens when the gap between long and short yields widens and flattens when it narrows. Bull and bear describe whether yields are falling or rising. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Stochastic oscillator. An indicator that shows where the close sits within the high-low range of a lookback period, on a 0 to 100 scale, usually with a smoothed signal line. Learn more: RSI and Stochastic Oscillators: What Overbought Really Means.

Stock split. A change in the number of a company’s shares, with the price adjusted so the total value is unchanged. A 2-for-1 split doubles the shares and halves the price. Learn more: Stock Splits, Dividends and Corporate Actions Explained.

Stop order. An order that becomes a market order once price trades at or through a set level, the stop price. The fill can be worse than the stop price, for example in a fast market or a gap, so a stop order does not cap a loss at a set amount. Learn more: Order Types Explained.

Stop run. A sweep in which the orders triggered beyond a level are thought to be stop orders. Where stops rest cannot be seen before they trigger. Learn more: Liquidity, Sweeps and Stop Runs: A Descriptive Look.

Stop-limit order. A stop order that becomes a limit order, not a market order, once the stop price is reached. It will not fill beyond its limit price, so it may not fill at all. Learn more: Order Types Explained.

Straddle. A position combining a call and a put with the same strike and expiration. The at-the-money straddle price is often used as a rough expected-move estimate. A model one-standard-deviation scale and an ATM-straddle premium are not the same quantity. Learn more: Implied Volatility and the Expected Move Explained.

Strangle. A position combining an out-of-the-money call and an out-of-the-money put with the same expiration but different strikes. Learn more: Straddles and Strangles: Payoffs Built From Volatility.

Strike price. The price at which an option holder can buy (call) or sell (put) the underlying. Learn more: What You Can Trade.

Support. A price area where falling prices have previously slowed or turned up. Learn more: Support and Resistance Zones.

Survivorship bias. Looking only at examples that still exist or that worked, while the failures have dropped out of view. Learn more: Trading Plans, Journaling and Honest Backtesting.

Swap dealer. A COT category of firms that deal in swaps and use futures to manage the risk from those deals. Learn more: The Commitments of Traders Report.

Swing high. A bar whose high is above the highs of the bars on either side of it. Learn more: Market Structure Explained.

Swing low. A bar whose low is below the lows of the bars on either side of it. Learn more: Market Structure Explained.

Swing rule. A written rule for what counts as a swing high or low, such as a set number of bars on each side. Learn more: Market Structure Explained.

Term premium. The extra yield investors are thought to require for holding a longer-term bond instead of rolling shorter ones. It is estimated by models, not observed. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Term structure (volatility). The pattern of implied volatility across expiration dates for the same underlying. Learn more: Implied Volatility and the Expected Move Explained.

Test. A return of price to a level that was marked earlier. See also retest. Learn more: Support and Resistance Zones.

Theta. An option Greek: the estimated change in an option’s price from one day passing, other inputs unchanged. Often called time decay. Learn more: The Option Greeks in Plain Language.

Tick. The smallest allowed price change for a contract or security. Learn more: What You Can Trade.

Tick size. The minimum price increment for a contract or security. See tick. Learn more: What You Can Trade.

Tick value. The money value of a one-tick move for one contract. Learn more: What You Can Trade.

Ticker symbol. A short code that identifies an instrument on a platform, often paired with an exchange or data source. Learn more: Symbols, Timeframes and Sessions on a Chart.

Time and sales (tape). A running list of completed trades with time, price and size. Learn more: Order Flow Basics.

Time in force. The instruction for how long an order stays working, such as for the day or until canceled. Learn more: Order Types Explained.

Time value. The part of an option’s premium above its intrinsic value. It falls to zero at expiration. Learn more: Option Premium: Intrinsic Value, Time Value and Moneyness.

Timeframe. The period each bar on a chart represents, such as 1 minute or 1 day. Learn more: Timeframes and Multi-Timeframe Analysis Explained.

TIPS. Treasury Inflation-Protected Securities: US government bonds whose principal is adjusted for inflation. Their yields are a common measure of real yields. Learn more: The Dollar, Oil and Gold: How Macro Markets Connect.

Top of book. The best bid and best offer in an order book, with the displayed quantity at each. Learn more: Reading the DOM Honestly.

TPO (time price opportunity). In a TPO profile, a mark showing that a price traded during a given time period (often 30 minutes). Learn more: Volume Profile Explained.

TPO count. A tally of the TPO letters above and below the point of control in a TPO profile, shown by some platforms. It counts block coverage, not actual dwell time or buying/selling intent. Learn more: TPO Profile Basics.

TPO period. One of the equal time windows, commonly 30 minutes, into which a TPO profile divides a session. Each period gets its own letter or color. Changing the period length changes the profile. Learn more: TPO Profile Basics.

TPO profile. A chart that stacks a mark for each time period in which a price traded, showing visited time blocks, not exact dwell minutes. The Chicago Board of Trade introduced this kind of chart in the 1980s under the name Market Profile; see the trademark note below. Learn more: Auction Market Theory Basics.

Tracking difference. The gap between a fund’s return and its index’s return over a period. Tracking error is how much that gap varies. Learn more: How ETFs Work: Creation, Redemption, NAV and Costs.

Trade classification rule. A method software uses to label a trade as buyer-initiated or seller-initiated when the data feed does not say, for example by comparing the trade price with the prevailing bid and ask. Different rules can label the same trade differently. Learn more: Reading Delta and Imbalance on a Bid/Ask Volume Chart.

Trading halt. A pause in trading in a stock, set by an exchange or regulator, for reasons such as pending news, a large price move or a market-wide circuit breaker. Learn more: How a Stock Trades: Exchanges, Market Makers and Auctions.

Trading plan. A written document setting out what a person will trade, when, with what risk limits and under which conditions, used for later review. Learn more: Building a Trading Plan Document.

Treasury futures. Futures based on US government notes or bonds within set maturity ranges. Their prices generally move opposite to Treasury yields. Learn more: Interest Rate Futures: Treasury and SOFR Contracts Explained.

Trend (uptrend, downtrend). A sustained sequence of swings in one direction: higher highs and higher lows in an uptrend, lower highs and lower lows in a downtrend. Learn more: Market Structure Explained.

Trend day. A session that moves mostly in one direction and closes near its extreme. Learn more: Opening Types and Day Types.

Trendline. A straight line drawn through two or more swing lows in an uptrend, or swing highs in a downtrend, to describe the slope of a trend. Where it is drawn is a judgment. Learn more: Trends, Trendlines and Channels: How Traders Draw Direction.

Triangle. A consolidation in which the highs and lows converge; it may be symmetrical, ascending or descending. Learn more: Chart Patterns Explained.

True range. The largest of: the current high minus low, the distance from the prior close to the current high, and the distance from the prior close to the current low. Learn more: Technical Indicators Explained.

Typical price. The average of a bar’s high, low and close; used by many platforms to approximate VWAP. Learn more: What Is VWAP? Session vs Anchored VWAP Explained.

Unemployment rate. The share of the labor force that is without work, available and actively looking for work. In the United States it comes from the household survey. Learn more: The Jobs Report: Payrolls, Unemployment and Wages.

Unfinished auction. A label some traders give to a poor high or poor low, meaning the extreme stopped without a clear response from the other side. A description and an interpretation, not a forecast. Learn more: Excess, Poor Highs and Lows, and Single Prints Explained.

US dollar index. An index of the US dollar against a basket of six major currencies, with the euro the largest weight. Learn more: The Dollar, Oil and Gold: How Macro Markets Connect.

Value. In auction terms, the price area where most trading took place over a period. Learn more: Auction Market Theory Basics.

Value area (VA). The contiguous price band selected around the point of control using a declared percentage and algorithm, applied to volume or TPO block letters, not exact dwell time. 70% is a setting, and discrete algorithms need not include exactly 70%. It resembles one standard deviation around the average only if the distribution were normal, which real ones need not be. Learn more: Volume Profile Explained.

Value area high (VAH). The upper boundary of the value area. Learn more: Volume Profile Explained.

Value area low (VAL). The lower boundary of the value area. Learn more: Volume Profile Explained.

Value migration. The movement of the value area from one session to the next: higher, lower or overlapping. Learn more: Volume Profile Explained.

Variation margin. The daily cash payment that moves gains and losses between futures accounts after each settlement. Learn more: Futures Margin and Daily Mark-to-Market Explained.

Vega. An option Greek: the estimated change in an option’s price for a one-percentage-point change in implied volatility. Learn more: The Option Greeks in Plain Language.

Vertical spread. A position that buys one option and sells another of the same type and expiration at a different strike, which limits both the maximum gain and the maximum loss of the intact matched expiry payoff, not account-level loss after unequal exercise, assignment or resulting stock. Learn more: Option Payoff Diagrams: Long and Short Calls and Puts.

Volatility. How much and how quickly price moves. Learn more: How Markets Work.

Volatility decay. The loss of value that daily-reset leveraged and inverse funds can suffer when an index moves up and down, even if the index ends where it started. Learn more: Leveraged and Inverse ETFs: Daily Reset and Volatility Decay.

Volatility smile. A pattern in which implied volatility is higher for strikes far from the current price on both sides than for strikes near it. Learn more: Volatility Skew and Term Structure.

Volume. The number of shares or contracts traded in a period, each unit counted once (not once for the buyer and again for the seller). Learn more: Trading Volume Explained.

Volume profile. A sideways histogram showing how much volume traded at each price over a period. Learn more: Volume Profile Explained.

VWAP bands. Lines drawn at a set number of volume-weighted standard deviations, or a set percentage, around VWAP to describe how spread out trade has been. Learn more: Anchored VWAP: Averaging From a Chosen Starting Point.

VWAP (volume-weighted average price). The average traded price since a starting point, weighted by volume at each price. Learn more: What Is VWAP? Session vs Anchored VWAP Explained.

VWAP algorithm. A broker execution method that spreads a large order through the day in line with expected volume, aiming to finish near VWAP. Learn more: What Is VWAP? Session vs Anchored VWAP Explained.

Walk-forward test. A test that tunes rules on one window of data, checks them on the next unseen window, then moves both forward and repeats. Learn more: Overfitting and Repainting.

Watchlist. A list of instruments a person follows, often showing the last price and change. Learn more: Saving Layouts, Templates and Watchlists.

Wedge. A chart pattern in which two converging trendlines slope in the same direction. Learn more: Chart Patterns Explained: Flags, Triangles, Double Tops.

Weekly review. A scheduled look back at a week’s trades, plan, checklist and journal, focused on process rather than results. Learn more: The Weekly Review: Process Before Outcome.

Weighted moving average. A moving average that gives more weight to recent prices on a straight-line scale. Learn more: Moving Averages in Depth: SMA, EMA, Lag and Crossovers.

Wick (shadow). The thin line on a candlestick from the body to the high or low. Learn more: Candlestick Anatomy.

Win rate. The share of trades in a record that closed with a gain. On its own, it says nothing about profitability. Learn more: Reviewing Your Own Trade Statistics: Expectancy, MAE and MFE.

Yield curve. A line plotting yields on bonds of the same credit quality against their maturities, usually for government bonds. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Yield curve inversion. A yield curve shape in which shorter maturities yield more than longer ones, such as a negative 2s10s spread. Learn more: The Yield Curve: Shape, Inversion and What It Reflects.

Zigzag indicator. A tool that connects swing highs and lows above a set size. It redraws its last line until a swing is confirmed, so it repaints by design. Learn more: Overfitting and Repainting.

Zone. A price area, not a single price, marked where price paused or turned before. Support and resistance are usually drawn as zones. Learn more: Support and Resistance Zones.

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Trademark notes

Market Profile is a name associated with the Chicago Board of Trade (CBOT), now part of CME Group. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. Socratic Trading Academy is not affiliated with, sponsored by or endorsed by CME Group or CBOT. Footprint is a registered trademark of its owner. Bollinger Bands is a registered trademark of John A. Bollinger. ‘Bid/ask volume chart’ is used here as a generic description.

Terms from the new lessons

Partial exit. Closing part of a position at one price and keeping the rest open under the plan's rules. Learn more: Trade Management.

Scaling in (adding to a position). Increasing an open position's size after the first entry. This raises the position's total risk. Learn more: Trade Management.

Time stop (time limit). A plan rule that closes whatever is left of a position at a set time, whatever the price. Learn more: Trade Management.