Reference
Every term the Academy defines, in one place — with a link to the lesson that teaches it properly. 55 terms.
Body
The thick rectangular part of a candlestick, spanning the distance between the open and the close.
Wick
The thin line above or below a candle body, marking the high and low that price reached but did not close at.
Bullish candle
A candle that closes above where it opened — buyers finished the period in control.
Bearish candle
A candle that closes below where it opened — sellers finished the period in control.
OHLC
Open, high, low and close — the four prices every candlestick encodes for its period.
Expansion candle
A candle noticeably larger than those before it, usually marking new momentum entering the market.
Momentum
Whether each successive candle is winning by a larger or smaller margin than the last — read from body size, not distance travelled.
Doji
A candle whose open and close are almost identical, leaving little or no body — a period that ended in a draw.
Hammer
A candle with a small body near the top and a long lower wick, appearing after a decline — buyers rejected lower prices.
Shooting star
A candle with a small body near the bottom and a long upper wick, appearing after an advance — sellers rejected higher prices.
Engulfing candle
A candle whose body completely covers the previous candle's body in the opposite direction, showing one side taking control.
Spinning top
A candle with a small body and long wicks on both sides — a period of genuine two-way fighting with no resolution.
Morning star
A three-candle bullish reversal: a large bearish candle, a small indecisive one, then a large bullish candle closing well into the first.
Evening star
The bearish mirror of the morning star — a large bullish candle, a small indecisive one, then a large bearish candle, at the top of an advance.
Fair value gap
A three-candle pattern left by a fast move, where the first candle's high and the third candle's low (in a rally) do not overlap. The empty range between them is the gap.
Absorption
A bar with much more volume than the bars around it but a small body or range: heavy selling (or buying) met by a large opposite order that soaked it up, so price barely moved.
Swing high
A candle whose high is higher than the candles either side of it — a local peak where an advance stalled.
Swing low
A candle whose low is lower than the candles either side of it — a local trough where a decline stalled.
Uptrend
A sequence of higher swing highs and higher swing lows. Both conditions are required — rising highs alone are not an uptrend.
Downtrend
A sequence of lower swing highs and lower swing lows.
Break of structure (BOS)
Price closing beyond a prior swing point in the same direction as the existing trend — continuation, confirmed.
Change of character (CHOCH)
The first time price closes beyond a swing point against the prevailing trend — the earliest structural sign that control may be shifting.
Range
A market turning at roughly the same highs and lows repeatedly, with no clear sequence of higher or lower swing points.
Liquidity
On a chart, the pool of stop losses and pending orders resting just beyond obvious swing highs and lows — the orders price is often drawn to.
Liquidity sweep
Price trading just beyond an obvious high or low to trigger the stops there, then closing back inside — a wick through the level, not a close.
Inducement
A minor high or low inside a pullback that tempts traders in early and is usually taken out on the way to the main liquidity pool.
Previous day high and low
The highest and lowest prices of the previous daily candle (PDH and PDL). Intraday traders watch them closely, so stops and orders cluster just beyond them.
Risk per trade
The fixed percentage of an account risked on any single position — commonly 1% or less, and the same on every trade.
Position size
How large a position to take, calculated as (account × risk %) ÷ (stop distance × value per point).
Value per point
What a position gains or loses for each point the instrument moves. It differs by broker and product, so it must be confirmed rather than assumed.
Invalidation level
The price that, if reached, proves the trade idea wrong — decided before entering, and where the stop belongs.
Stop loss
A resting order that closes a position at a predetermined price, placed just beyond the level that would invalidate the idea.
Drawdown
The decline from an account peak to its subsequent low, usually expressed as a percentage.
Daily bias
A one-sentence view of which way an instrument leans for the session, together with the condition that voids it — decided before the open.
Top-down analysis
Reading higher timeframes first and working downward — daily for direction, 1H for levels, 5M for confirmation.
Zone
An area, rather than an exact price, where the market has previously reacted — marked with width because price rarely turns at a single number.
Confluence
Two or more independent reasons pointing at the same area — for example a 1H zone landing on the prior session low.
Trigger
The lower-timeframe candle confirming a level is holding — rejection at the zone with a close in the direction of the bias.
Volume profile
A histogram of how much volume traded at each price over a period, drawn sideways on the chart — where business was done, rather than when.
Point of control (POC)
The single price in a volume profile where the most volume traded.
Value area
The price range around the point of control that holds 70% of a period's volume. Its edges are the value area high (VAH) and value area low (VAL).
Rejection block
The zone covered by a long lower wick at a swing low (upper wick at a swing high) — from the wick's extreme to the candle's body — after the move away from it breaks structure.
Fibonacci retracement
A tool drawn from the swing low to the swing high of a move (or high to low) that marks how far a pullback has gone back, as a fraction of the move — 0.382, 0.5, 0.618, 0.786 and so on.
Golden zone
The band between the 0.618 and 0.79 Fibonacci retracement levels, where a pullback inside a trend commonly pauses. A zone covering about 17% of the move, not an exact turning point.
New York open
The start of the US cash stock market session at 9:30 New York time. US index CFDs like US30 trade around the clock, but volume and volatility usually jump at the New York open.
Tick volume
The number of price changes during a bar on a broker's feed. CFDs like US30 show tick volume because they have no exchange count of contracts traded.
Profit factor
Gross profit divided by gross loss. Above 1.0 means the method made money; 1.5 means £1.50 returned for every £1.00 lost.
Expectancy
The average result per trade: (win rate × average win) − (loss rate × average loss). Usually expressed in R.
R-multiple
A result expressed as a multiple of the amount risked. Risking 1% and making 2% is +2R, whatever the account size.
Win rate
The percentage of trades that are profitable. On its own it says nothing about whether a method makes money.
Breakeven win rate
The win rate needed to break even at a given reward-to-risk ratio — 50% at 1:1, 33% at 1:2, 25% at 1:3.
Sample size
How many trades a performance figure is based on. Below roughly fifty, results mostly measure variance rather than method.
Base rate
How often an outcome happens with no rule or signal at all — for example, how often any two-year window of the S&P 500 ended higher. A rule only shows an edge if it beats its base rate.
Out-of-sample test
Testing a strategy on data that was never used to design or adjust it — the only kind of backtest result that says anything about the future.
Curve fitting
Adjusting a strategy's rules until its backtest looks good — which describes the past data rather than finding anything that will repeat.