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.
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 & 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.
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.
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.
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.
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.
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.
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 & 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.
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.
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.