Trader glossary
Understand the terms behind an order: prices, contracts, risk and strategy testing. Each entry includes a practical example.
Strategy testingBacktest
Simulation of explicit trading rules on historical data with stated assumptions for execution and costs.
Changing a signal from bar close to the next bar open can materially change a simulated result.
Prices & marketsBid and ask
Bid is the price a buyer quotes; ask is the price a seller quotes. These differ from the last traded price.
With bid 99 and ask 101, the quoted spread is 2. A displayed last price of 100 is a separate observation.
Risk & resultBreak-even win rate
The success rate at which expected profit is zero under a specified win/loss model. Costs and unequal stakes change it.
With profit 80 on a win and loss 100 on a loss, the rate is 100/(100+80), about 55.56%, before costs.
Chart analysisBreakout and false breakout
A move beyond support or resistance. A return into the prior range can make it a false breakout.
Price rises above resistance at 100, then returns to 98: a possible false breakout.
Orders & contractsDirectional option
A contract whose result depends on a price condition at expiry. The directional product described on Dexopt differs from a vanilla option with an exercise right.
For an upward condition, the opening reference, settlement reference and treatment of equality must be known before trading.
Chart analysisDivergence
A disagreement between the structure of price extremes and indicator extremes measured over corresponding points.
A new price high with a lower oscillator high is a divergence; it does not specify when or whether price will reverse.
Risk & resultDrawdown
A decline from a prior equity peak. Maximum drawdown is the largest such decline within the measured period.
Equity falling from 1,000 to 800 has a 20% drawdown. Returning from 800 to 1,000 requires a 25% gain.
Orders & contractsExpiry
The point when a time-limited contract ends and its result is determined under its settlement rules.
A five-minute chart bar and a five-minute contract expiry can start at different times.
Risk & resultFunding
Periodic charges or transfers associated with a perpetual contract. The rate, sign, interval and charged base must be read together.
At a hypothetical rate of 0.01%, a base of 1,000 implies 0.10 per interval; direction depends on the rules.
Chart analysisIndicator lag
The delay introduced by processing past observations, often as a trade-off for smoothing noise.
A longer average usually reacts more slowly to a sudden price jump than a shorter average.
Risk & resultIsolated and cross margin
Isolated margin allocates collateral to a position; cross margin shares eligible collateral. Cross losses can endanger other positions.
With cross margin, losses on position A can reduce collateral supporting position B.
Risk & resultLeverage
The ratio of position exposure to supporting capital. It amplifies the effect of a price move on that capital in both directions.
Exposure of 1,000 supported by 100 corresponds to 10×. A 1% exposure move is 10 before costs.
Orders & contractsLimit order
An instruction to buy at a specified price or lower, or sell at that price or higher. Execution is not guaranteed.
A buy limit at 100 may remain unfilled while available sellers quote 101.
Risk & resultLiquidation
Forced reduction or closure when the account or position no longer satisfies margin requirements under the product rules.
The trigger may use a reference price different from the latest trade shown on a chart.
Prices & marketsLiquidity
The ability to trade an amount without materially moving the execution price. Volume alone does not describe available depth.
A small order may fit at the best price while a larger order consumes several price levels.
Orders & contractsLong and short
A long benefits from rising prices; a short benefits from falling prices. Both can lose money.
From 100 to 110: a long gains 10 per unit before costs.
Strategy testingLook-ahead bias
A simulation error in which a decision uses information that was not yet available at that decision time.
Trading at a bar open using that same bar’s final high or close introduces future information.
Chart analysisLookback period
The amount of past data an indicator uses. Smoothing may retain influence from observations older than the nominal period.
SMA(20) averages 20 bars. EMA(20) recursively carries information from earlier bars.
Orders & contractsMaker and taker
A maker adds resting liquidity; a taker consumes it. An immediately filled limit order can be a taker.
A resting buy at 99 adds liquidity; buying at the available ask removes it.
Risk & resultMargin
Collateral required to open and maintain a leveraged position. Initial and maintenance requirements serve different purposes.
Enough collateral to open a position does not ensure enough remains after an adverse price move.
Prices & marketsMark price and index price
An index combines reference market prices; a mark is a calculated valuation price. Their use in liquidation depends on product rules.
Last trade 100, mark 99: a liquidation trigger may use 99, not 100.
Orders & contractsMarket order
An instruction to execute against available prices. It prioritizes execution rather than a fixed price; availability depends on the product.
If the best ask changes before execution, the fill may differ from the price visible when you clicked.
Chart analysisOHLC and candles
A candle groups the first, highest, lowest and last prices of a time interval. An unfinished candle changes as data arrives.
O=100, H=105, L=98, C=103 describes the interval, but not the exact order of movements within it.
Prices & marketsOrder book
Outstanding buy and sell orders grouped by price. Displayed orders can change or be cancelled.
Selling 3 units into bids of 2 at 100 and 1 at 99 yields 299.
Strategy testingOverfitting
Choosing rules so specifically for a historical sample that their apparent advantage may not generalize to new data.
Selecting the best of hundreds of parameter combinations on one period needs a separate, previously unused evaluation period.
Orders & contractsPayout rate
The quoted return for a successful directional contract. Distinguish profit from the total amount returned including the stake.
If the rate means 80% profit, a successful stake of 100 earns 80 and returns 180 in total. Check the product convention.
Orders & contractsPerpetual futures
A derivative position without a fixed expiry. Margin, liquidation rules and any funding mechanism still apply.
The absence of expiry does not mean a position can remain open without sufficient collateral.
Risk & resultPnL
The gain or loss of a position. Unrealized PnL values open exposure; realized PnL reflects closed exposure. Net results include applicable costs.
Buying 2 units at 100 and selling at 105 gives gross PnL of 10 before costs.
Risk & resultPosition sizing
The quantity traded. For a simple linear position, planned loss depends on quantity and stop distance; costs and gaps increase risk.
Risk budget 20, entry 100, stop 95: 20/(100−95) = 4 units before costs.
Chart analysisRepainting and confirmation
A displayed indicator value or marker can change as an open bar develops or as later bars confirm a turning point.
A fractal centered on an earlier bar is only known after its required right-hand bars appear.
Risk & resultRisk/reward ratio
Planned loss compared with potential profit. The ratio does not tell you the probability of success.
Entry 100, stop 95, target 110: risk 5, reward 10, ratio 1:2 before costs.
Prices & marketsSlippage
The difference between the expected price and the actual execution price. It can improve or worsen the result.
A buy expected at 100 but filled at 100.20 has adverse slippage of 0.20 per unit.
Prices & marketsSpread
The difference between ask and bid at the same moment. It is a trading cost separate from an explicit commission.
An ask of 101 and a bid of 100 give a spread of 1, or 1% of the bid.
Orders & contractsStop loss
An exit condition intended to limit loss. Trigger price and execution price are different concepts; a stop is not a guaranteed loss cap.
A stop at 95 may execute below 95 during a gap or a fast move.
Orders & contractsStop-limit order
A stop trigger activates a limit order. The limit controls price, but execution is not guaranteed.
Sell stop 95, limit 94: a gap to 90 may leave the order unfilled.
Chart analysisSupport and resistance
Price zones where declines or advances previously stalled. These zones can fail; they do not guarantee reversals.
Repeated bounces near 100 suggest support; a break below can invalidate it.
Orders & contractsTake profit
An exit condition associated with a target result. Check the trigger reference and the order used after it fires.
A target on a long position can close exposure at a higher price, subject to execution conditions.
Chart analysisTechnical indicator
A transformation of price, volume or related data into a series that emphasizes a particular property of that data.
A moving average smooths prices; an oscillator transforms their changes. Neither observes the future.
Prices & marketsTick size
The smallest permitted increment in a quoted or submitted price. It is different from the minimum order amount.
With a step of 0.05, 100.10 fits the grid; 100.12 does not.
Chart analysisTimeframe
The duration represented by one chart bar. Indicator periods usually count bars, not calendar days.
A 20-bar study spans about 20 hours on an hourly chart and 20 sessions on a daily chart.
Strategy testingTrade expectancy
Probability-weighted average outcome per trade, including costs. An estimate from historical results does not guarantee future returns.
40% wins of 30, 60% losses of 10, cost 2: 0.4×30−0.6×10−2 = 4 per trade.
Orders & contractsTrading fees
Charges on executed trades. Check the rate and charged amount; opening and closing can both incur fees.
A hypothetical 0.1% fee on 1,000 is 1 per execution, excluding other costs.
Prices & marketsTrading pair: base and quote
The base asset is priced in units of the quote asset. A contract may settle in a different currency.
BTC/USDT at 100,000 means 1 BTC is quoted at 100,000 USDT.
Prices & marketsTrading volume
The quantity traded within a period and a defined source. Base volume, quote volume and tick counts are different measures.
2 units traded at 100 correspond to 2 units of base volume and 200 units of quote volume.
Chart analysisTrend
The direction of price structure over a chosen period. Trends can differ between timeframes and can reverse.
Higher highs and higher lows suggest an uptrend on that timeframe.
Prices & marketsVolatility
The size or dispersion of price changes over a specified period. High volatility does not determine direction.
Two markets can finish unchanged while one travels through a much wider range during the day.
Strategy testingWin rate
Profitable closed trades divided by the measured total. Define flat trades consistently; win rate alone does not measure profitability.
6 profitable trades out of 10 = 60%; large losses can still make the total negative.