Glossary
Trading & signals glossary
Every term with its definition, how to calculate it, a worked example and what we see in the signal channels we measure.
What is a pip in forex?
A pip is the unit traders use to measure how far a price moves in forex. On most currency pairs it’s the fourth decimal place (0.0001); on yen pairs it’s the second (0.01). Gold has no standard: depending on who’s counting, one pip is either $0.01 or $0.10.
What is an R-multiple in trading?
An R-multiple measures a trade’s result in units of its own risk: 1R is what you lose if the stop gets hit. A trade that makes twice what it risked is +2R; one that gets stopped out is −1R. That lets you compare trades and channels with different stops and position sizes.
What is drawdown in trading?
Drawdown is the drop from an account’s peak, or a channel’s running total, down to its lowest point before it makes a new high. Max drawdown is the biggest of those drops: how much losing you’d have had to sit through to keep following a strategy.
What is a stop loss?
A stop loss is an order that automatically closes a losing trade when price reaches a level you set in advance. It caps how much you can lose: the distance between your entry and your stop is the trade’s risk, what traders call 1R.
What is a take profit?
A take profit is an order that automatically closes a winning trade when price reaches a target you set in advance. Trading signals often come with several (TP1, TP2, TP3): each one further from entry, and each one less likely to get hit.
What is win rate in trading?
Win rate is the share of trades that end in profit: 60 winners out of 100 is a 60% win rate. On its own it doesn’t tell you whether a system makes money, because it ignores how much you make when you’re right and how much you lose when you’re wrong.
What is scalping in trading?
Scalping is a trading style that goes after small gains on very short trades, from seconds to a few minutes, with tight stops and targets. Because the trades are so short, the spread, commissions and any delay copying a signal weigh much more on the result than on longer trades.
What is XAUUSD?
XAUUSD is the ticker for gold priced in U.S. dollars: the price of one troy ounce of gold (XAU) in dollars (USD). It’s the most traded market in Telegram signal channels thanks to its volatility and nearly round-the-clock hours, from Sunday evening to Friday afternoon.
What is backtesting?
Backtesting means testing a strategy on historical data: applying its rules to what already happened to see what result it would have produced. With trading signals, it means taking every signal a channel posted and checking against real prices whether it hit the target or the stop first.
What is slippage in trading?
Slippage is the difference between the price you meant to get in or out at and the price your order actually fills at. It happens when price moves between the decision and the execution: on news, in thin markets, or when you copy a signal late.
What is expectancy in trading?
Expectancy is what a trading system makes or loses on average per trade. It combines win rate with the average win and the average loss; if it’s positive, the system makes money over time, even if it loses plenty of trades along the way.
What is copy trading?
Copy trading means automatically copying another trader’s trades in your own account: when they open or close a position, your account does the same, scaled to your capital. With Telegram signals, copying is usually manual or done by a bot, and it lands seconds or minutes late.
What is breakeven in trading?
Breakeven is the point where a trade neither makes nor loses money. In trading signals, “move to breakeven” means moving the stop up to the entry price after the first target is hit: if price comes back, the trade closes flat instead of at a loss.
What are pending orders in trading?
A pending order doesn’t fill at the current price. It waits until price reaches a level you set in advance. Buy limit and sell limit orders wait for a better price than the current one; buy stop and sell stop orders wait for price to break through a level. If price never gets there, the order never fills.
What are FOMC and NFP in trading?
The FOMC is the Federal Reserve committee that sets US interest rates, and NFP is the monthly US jobs report. They’re the releases that move the dollar and gold the most: in seconds, price can cover a normal day’s range and blow through nearby stops.
What is the risk-reward ratio?
The risk-reward ratio compares what you risk on a trade with what you stand to make: the distance to the target divided by the distance to the stop. A 1:2 ratio means you’re aiming for $2 for every $1 at risk. On its own it doesn’t tell you whether you’ll make money; that also depends on your win rate.
What is profit factor?
Profit factor is the ratio between what a system makes and what it loses: gross profit divided by gross loss. Above 1, the system makes money; below 1, it loses. A profit factor of 1.5 means that for every dollar lost, the system made $1.50.
What is Myfxbook?
Myfxbook is a platform that connects to a trading account (MetaTrader or cTrader) and publishes its results automatically: returns, drawdown and every trade. A Myfxbook-linked account shows the results of a real, connected account, not screenshots someone can cherry-pick or edit.
What is a funded trading account?
A funded account is a trading account backed by a prop firm’s capital, earned by passing an evaluation, often called a challenge: hit a profit target without breaking certain loss limits, typically 5% in a day and 10% overall. Pass it, and you trade the firm’s capital and keep a share of the profits.
What is account management in trading?
Account management is a service where a trader trades someone else’s account in exchange for a fee or a cut of the profits. In the US, managing other people’s money generally requires registration: as a commodity trading advisor with the CFTC and NFA for forex and futures, or as an investment adviser.
What are the forex trading sessions?
Trading sessions are the hours of the day when the major financial centers are open: Asia (Tokyo and Sydney), Europe (London) and the Americas (New York). Forex and gold trade nearly 24 hours a day, but activity and volatility concentrate in the London and New York sessions, especially when they overlap.
What is survivorship bias in trading?
Survivorship bias is drawing conclusions only from what survived and ignoring what disappeared. In signal channels it shows up when losing signals get deleted or edited: whatever’s left looks much better than what actually happened.
What is a VIP trading signals group?
A VIP group is a private Telegram channel or group you get into by paying a subscription, usually monthly. The free channel works as a storefront: it posts a few signals or just results, and the paid VIP group promises more signals, better entries or coaching.
What is day trading?
Day trading means opening and closing every position within the same day, with nothing held overnight. It aims to capture moves that last minutes or hours and avoids the risk of whatever happens while the market is closed, at the cost of paying more in spreads and commissions from trading often.
What is swing trading?
Swing trading means holding a trade for several days, sometimes weeks, to catch a bigger price move. It trades less often than day trading, with wider stops, and takes on the risk of price gaps and the cost of holding a position overnight (swap, also called rollover).
What is risk management in trading?
Risk management is the set of rules that decides, ahead of time, how much you can lose on each trade, in a day and overall. The most basic one: risk a small, fixed percentage of your account per trade, with a stop in place, so you survive losing streaks.
What is a trailing stop?
A trailing stop is a stop loss that automatically follows price at a fixed distance when the trade moves in your favor, and doesn’t move back when price turns around. It locks in open profit without setting a target in advance.
What is volatility in trading?
Volatility is how much, and how fast, an asset’s price moves over a given period. High volatility means wide, sharp moves; low volatility means small ones. It doesn’t tell you which way price is headed, only how much it moves, and it determines how far away your stops need to be.
What is compounding in trading?
Compounding is earning on what you’ve already earned: when each trade risks a percentage of your current balance, gains make your next trades bigger and losses make them smaller. Over time it multiplies a small edge, and a small negative edge just the same.