Trading Glossary
Clear, practical definitions. No jargon for the sake of jargon — only terms you will actually use.
B
Bias
Your directional expectation for the session, based on higher-timeframe structural analysis. Bullish bias = look for longs only. Bearish bias = look for shorts only.
Why it matters: Defining bias before the session prevents you from taking trades in both directions simultaneously. One direction per session based on structure.
Break of Structure (BOS)
A confirmed move beyond a prior swing high (bullish) or swing low (bearish), signalling that the current trend is continuing. Confirmed by a candle body close beyond the level — not a wick.
Why it matters: BOS is the primary trend-continuation signal in structural analysis. It tells you the trend is intact and a pullback entry may be valid.
C
Change of Character (CHOCH)
The first swing that violates the current trend sequence. In a bullish trend, the first lower low is a CHOCH. In a bearish trend, the first higher high. It is an early warning — not a confirmed reversal.
Why it matters: CHOCH tells you the trend may be ending. It does not confirm a reversal — it signals caution. Stop adding positions in the prior direction.
Confirmation
A specific price event that validates your trade idea before entry. Examples: a rejection candle at a key level, a BOS on a lower timeframe, or a strong close beyond a trigger point.
Why it matters: Confirmation prevents premature entry. "Price is near the level" is not confirmation. A specific, observable event is.
Confluence
When two or more independent factors align at the same price zone — for example, a Fibonacci 61.8% level and a prior swing high at the same price. Confluence increases the probability of a reaction.
Why it matters: A single factor is weak. Two or more factors at the same level create order density that makes the zone more likely to hold.
D
Demand Zone
A price area where a significant bullish move originated. When price returns to this zone, unfilled buy orders may cause another rally.
Why it matters: Demand zones represent institutional buying interest. The first retest of a fresh demand zone is the highest-probability reaction.
Drawdown
The peak-to-trough decline in account equity. A 10% drawdown means the account dropped 10% from its highest point before recovering.
Why it matters: Drawdown recovery is asymmetric: a 10% loss needs 11.1% to recover, a 20% loss needs 25%, a 50% loss needs 100%. Keep drawdowns small.
E
Expectancy
The average R you gain per trade over a sample. Formula: E = (Win Rate x Avg Win R) - (Loss Rate x Avg Loss R). Positive expectancy = edge present.
Why it matters: Expectancy is the only number that predicts long-term performance. Track it after every 20 trades. If negative, fix the system — not your mindset.
H
Higher High (HH)
A swing high that is above the previous swing high. Part of the bullish structural sequence (HH/HL).
Why it matters: A series of higher highs confirms bullish structure. If the next swing high fails to exceed the prior one, the trend may be weakening.
Higher Low (HL)
A swing low that is above the previous swing low. Part of the bullish structural sequence. The most recent HL is the key invalidation level for bullish bias.
Why it matters: A break below the most recent HL is the structural definition of a trend change (CHOCH). Protect this level when long.
I
Invalidation
The specific price level or condition that, if reached, means your trade idea or structural read is no longer valid. Defined before entry, not after.
Why it matters: Every trade must have a clear invalidation level. Without it, you have no stop logic and no way to know when you are wrong.
K
Kill Zone
The 60-90 minute window around a major session open (London: 0700-0830 GMT, New York: 1230-1400 GMT) when institutional order flow is highest and liquidity sweeps are most likely.
Why it matters: Kill zones produce the sharpest moves and the most reliable reversal setups on gold and forex. Trading outside kill zones has lower follow-through.
L
Liquidity
Clusters of pending orders (stop losses, limit orders) sitting at key price levels. Institutional players often drive price toward these clusters to fill large positions.
Why it matters: Understanding where liquidity sits explains why price sweeps obvious levels before reversing. Equal highs, equal lows, and round numbers are common liquidity targets.
Lower High (LH)
A swing high that is below the previous swing high. Part of the bearish structural sequence (LH/LL).
Why it matters: In a bearish trend, each lower high is a potential entry zone for short positions. A break above the most recent LH invalidates bearish structure.
Lower Low (LL)
A swing low that is below the previous swing low. Confirms bearish continuation when paired with lower highs.
Why it matters: Each new lower low extends the bearish trend. The LL is the bearish equivalent of the bullish HH — a continuation signal.
P
Position Size
The number of lots or units you trade, calculated from your account size, risk percentage, and stop distance. Formula: Lot Size = Risk Amount / (Stop Pips x Pip Value).
Why it matters: Correct position sizing is the single most important risk management action. It ensures that every trade risks the same percentage regardless of stop distance.
R
Retracement
A temporary pullback within a trend. After an impulse move, price often retraces a portion of the move before continuing. Fibonacci levels (38.2%, 50%, 61.8%) mark common retracement depths.
Why it matters: Retracements are where pullback entries occur. The depth of the retracement helps you identify the entry zone and stop level.
Risk-to-Reward (R:R)
The ratio of potential loss (stop distance) to potential gain (target distance). A 1:2 R:R means you risk 1 unit to gain 2. Minimum recommended: 1.5:1.
Why it matters: R:R determines the minimum win rate needed to be profitable. A 1:2 R:R only needs a 33% win rate to break even. A 1:1 R:R needs 50%.
S
Session Open
The start of a major trading session: London (0700 GMT), New York (1300 GMT). Session opens bring fresh volume and often establish the session direction within the first 60-90 minutes.
Why it matters: Most reliable entries occur during session opens. Asian session consolidation → London expansion is the most consistent daily pattern.
Supply Zone
A price area where a significant bearish move originated. When price returns to this zone, unfilled sell orders may cause another decline.
Why it matters: Supply zones are where institutional sellers placed orders. Fresh (untested) zones are stronger than retested ones.
These terms are used throughout the academy courses and strategy frameworks.