Glossary

A straight line drawn through successive highs or successive lows. A rising trendline connects higher lows, and a falling trendline connects lower highs. While the direction holds, pullbacks tend to stop on a similar slope, so a single line can show whether a trend is still intact. Two points do not yet make a line; it counts as valid only when a third touch draws a reaction. The more touches a line collects, the more it suggests the market remembers that slope. This material is not a recommendation to buy or sell.

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A price zone where a falling price has repeatedly stopped and turned back. The people willing to sell at that price have already sold while buyers remain, so selling pressure weakens. Areas with heavy past trading, the previous low, and round numbers often act as support. It is confirmed not by a single wick but by how many times candles came back without closing below it.

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A price zone where a rising price has repeatedly stopped and turned back. Holders who were trapped at that price want to exit at breakeven, so supply appears and buying pressure runs out. The previous high, the point where an earlier decline began, and zones with accumulated supply act as resistance. It is confirmed by whether a candle closes above it and holds.

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Locking in gains by closing only part of a position rather than all of it. The remaining quantity is left open to leave room for the trend to continue. Closing everything secures profit but misses the rest of the move, while holding everything gives realized gains back in a pullback. Partial profit-taking splits the position between a locked-in part and a remaining part.

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A predetermined price at which profit is locked in. Short for Take Profit; when the price reaches it, a set quantity is closed. If the decision is left to the moment, hope that price will rise further and fear that it is time to get out alternate, and the standard changes each time. That is why the key is to write the number down before entering.

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A predetermined price at which a loss is cut. Short for Stop Loss; when the price reaches it, the idea is treated as wrong and the position is closed. Left alone, a loss grows at an accelerating rather than linear pace, and the smaller the remaining capital, the steeper the return needed to recover. The essence of a stop loss is deciding before entry where the idea counts as wrong.

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Profit or loss expressed as a multiple of the distance to the stop loss, which is defined as 1R. Because the gap between the entry price and the stop price is 1R, 2R means the trade earned twice that gap. Price units and volatility differ from one instrument to another, so monetary profit and loss cannot be compared directly, but converting to R puts them on the same scale. Keeping records in R makes it possible to add up cumulative results on one scale.

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Moving the stop to the entry price so that the trade can no longer lose money. Short for Break Even. Applied after some profit has built up, it turns the worst case from a loss into no loss. Moving it too early, however, can get the trade stopped out by a normal pullback and miss the move, so it helps to set a rule in advance for when the move will be made.

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The range over which price has fluctuated during a period. It is unrelated to direction: if price moves a lot, up or down, volatility is high. Even with the same stop distance, a high-volatility phase can reach the stop through normal swings alone, so position size and stop distance have to be adjusted together. It is checked by whether the high-low range of recent candles has grown compared with normal.

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The quantity actually traded during a period. Price can be moved by a small number of orders, but volume is the amount that really changed hands, so it shows the substance of participation. Rallies or breakouts without volume are often reversed. It is checked not as an absolute number but as a multiple of the instrument's usual volume.

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The largest drop in cumulative performance from a peak to a trough. Short for Max Drawdown. Even with the same final profit, how deep the dip was along the way determines whether the method could actually be followed. People tend to quit at the maximum drawdown, not at the final result, so whether the drawdown is bearable is the practical test of sustainability.

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Return divided by the volatility experienced while earning it. The less the results swung to produce the same return, the higher the value. Looking at return alone lets one lucky large win distort the whole picture; dividing by volatility reduces that distortion. With few observations the value itself is unstable, so check first that there are enough records.

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A measure with the same purpose as the Sharpe ratio, but only downside volatility goes into the denominator. It addresses the Sharpe ratio's weakness of penalizing large gains as volatility. The view is that upward jumps are not a problem and downward drops are. Read together with the Sharpe ratio, it shows which direction the swings came from.

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The share of all records that ended in profit. Win rate alone does not tell the result. If profits are cut short and losses are allowed to run, the total can be negative even with a high win rate. Win rate has to be read together with the average size of wins and losses, and the expected value, which multiplies the two, determines the actual result.

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The average profit divided by the average loss. A value of 2 means a winning trade earns twice what a losing trade loses. With a high ratio the total can be positive even when the win rate is below half, and with a ratio below 1 the total can be negative even when the win rate is high. It is checked by averaging winning and losing trades separately.

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A change from a structure in which highs and lows are both rising to one in which both are falling, or the opposite. A one-day spike or drop is often a pullback rather than a reversal, so it is judged by whether the structure has actually changed after candles close. It appears first on smaller timeframes and is confirmed later on larger ones.

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A state in which volume has increased sharply compared with normal. A spike by itself does not indicate direction; it only shows that attention has gathered. It therefore carries meaning only when read together with the direction of the candle it occurred on. It is checked as a multiple of the average of the past several days, and the multiple used as a threshold differs by instrument.

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A point where trend lines of different lengths meet and swap positions. A short-period line reflects recent prices and a long-period line reflects accumulated movement, so a crossover means the recent flow has overtaken the accumulated flow. A crossover is lagging information that appears after the move has already happened, so it is too late to serve as a standalone basis.

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When a short-period trendline crosses above a long-period trendline from below. It means the recent average price has moved above the older average, which suggests the flow may have turned upward. In sideways ranges the two lines stay close together and cross repeatedly, so reliability drops. It is a general term widely used in the market.

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When a short-period trendline crosses below a long-period trendline from above. It means the recent average price has fallen below the older average. Like the golden cross it is lagging information, and in sideways ranges crossovers are frequent and lose meaning. It is a general term widely used in the market.

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A holding that profits when the price rises. Both spot purchases and futures longs belong here. The loss is capped at the price falling to zero, but with leverage, liquidation occurs well before the capital is gone.

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A holding that profits when the price falls. It exists in structures such as futures or securities lending, where one borrows and sells first. Unlike a long, there is no upper limit on price, so the loss is theoretically unlimited, and a rush of demand to buy back can make a rise abrupt.

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A way of trading an amount larger than one's own capital. Not only gains but also losses are multiplied by the same ratio, and above all, the price range that can be endured before liquidation narrows in inverse proportion to the multiple. A higher multiple can reach forced liquidation even within normal fluctuations, so leverage should be understood not as a way to control profit but as something that narrows the margin for survival.

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Ending a held position and fixing the profit or loss. It counts as a close whether the result is a gain or a loss. Until it is fixed, profit and loss are only a valuation that can disappear if the market moves; it becomes a record only after it is fixed.

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When margin falls below the maintenance requirement and the exchange closes the position on its own. It is carried out regardless of one's own judgment, and depending on liquidity at that moment it may fill at a worse price than expected. The higher the leverage, the narrower the price room before liquidation, so it is safer to manage size and leverage together so that the liquidation price lies outside a realistic range.

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The amount held in the account as collateral to keep a position open. The initial margin needed to open and the maintenance margin needed to keep it open are different. When unrealized losses grow and the account falls below the maintenance level, an additional deposit or forced liquidation follows.

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A cost paid to the exchange each time an order is filled. A single fee may look small, but fees accumulate in proportion to the number of trades, and because they are charged on trading value rather than profit, they are also paid on losing trades. The more frequently one trades over short horizons, the larger their share of performance, so when testing a method, look at the numbers after fees.

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The difference between the price at which an order was placed and the price at which it was actually filled. When the order is larger than the quantity quoted, or when the market moves fast, the fill is pushed to the next price level. It becomes especially large in thinly traded instruments and sharp moves, and it is the main reason why calculated results and real results diverge.

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A list of buy and sell orders stacked by price level. It shows how much quantity is waiting at each price. However, orders that have not been filled can be cancelled at any time, so there is no guarantee that a thick wall will be defended as it stands.

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An order that does not specify a price and is filled immediately against the quotes currently posted. Execution is nearly guaranteed, but the price is not. When the book is thin, the order eats through several levels and slippage grows. It is used when one must exit during a sharp move; used out of habit for ordinary entries, cost keeps leaking away.

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An order that specifies the fill price. It fills only at the desired price or better, so the price is guaranteed but execution is not. If price only touches the level briefly, the order stays unfilled and the opportunity can be missed.

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A conditional order that is triggered when the price reaches a specified level. It is used both for stop losses and for breakout entries. After triggering, the nature of the fill depends on whether it goes out as a market order or a limit order, so it matters to distinguish the two.

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The five values contained in one candle: open, high, low, close, and volume. Every indicator on a chart is ultimately calculated from these five values. The close in particular is the price the period agreed on, so it is often used as the reference for judgment.

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A chart that draws the open, high, low, and close of a period as a body and wicks. The body spans from the open to the close, and the wicks show the range that was reached during the period and then pushed back. A long wick is read as a trace of force in the opposite direction at that price level.

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A candle whose close ended above its open. It means buyers had the upper hand during that period. However, color alone should not be the basis for judgment. If the body is short and the upper wick is long, price rose and was pushed back, which is closer to a record of supply appearing above than of a rise.

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A candle whose close ended below its open. It means sellers had the upper hand during that period. If the lower wick is long, price fell and was pushed back, so it cannot be read simply as sellers winning. Looking at the ratio of body to wicks shows what happened during that period.

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The unit of time that one candle represents. Short for Timeframe; examples include minute, hourly, daily, and weekly candles. The same instrument can look like it is rising or falling depending on the unit used. Unless the unit used for judgment is decided first, the conclusion changes every time one looks.

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A larger time unit than the one currently being viewed. The larger the unit, the more participants it involves and the longer a single candle takes to form, so its direction changes less easily. The usual order is therefore to set the direction on the larger unit and find the timing on the smaller one.

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A smaller time unit than the one currently being viewed. It reacts quickly but contains much noise, so its direction flips often. Looking only at small units makes it easy to judge against the larger flow, so the direction of the larger unit is checked first.

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Lines that mark, as ratios, how far a price pulls back relative to the preceding rise or fall. The 38.2 percent, 50 percent, and 61.8 percent levels are commonly used. It is less that the ratios themselves have force than that many participants watch the same places, so reactions occur there. It is checked by whether the line overlaps with existing support and resistance or with zones where trading was heavy.

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When assets that used to move together separate and head in different directions. When a relationship that normally kept them moving the same way breaks, it means a factor specific to that instrument has appeared. A mismatch of one or two candles is noise, so it carries meaning only when it occurs across several timeframes at once. Relationships are not permanent; they may return or may stay broken.

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Setting the size in advance so that one failure cannot end the whole account. How much is put at stake affects the result more than what is bought. Even with good judgment, if the size is excessive the account can vanish in normal fluctuations first. In practice it starts with fixing numbers for the loss limit per trade, the daily loss limit, and the number of positions held at once.

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A method that first decides the amount one can afford to lose, then divides that amount by the distance to the stop to get the quantity. If the stop is far the quantity shrinks, and if the stop is near the quantity grows, so the amount lost on failure is the same for any instrument. If the quantity is decided first and the stop attached afterwards, risk varies from instrument to instrument and the cumulative result cannot be managed.

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A test that applies rules to past data and calculates the result. It is possible only when the rules are fixed as numbers; if vague judgment is mixed in, it becomes recollection rather than testing. That a rule worked in the past does not guarantee the future, but it can filter out rules that did not even work in the past.

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A way of testing by using new data from after the point at which the rules were fixed. If rules are refined on a period whose outcome is already known, the results are bound to look good; a forward test has no such contamination. If backtest and forward results diverge greatly, the rule was probably fitted only to the past.

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An approach that turns judgment into numbers and rules so that it can be tested. The point is not automation but reproducibility: the same input gives the same conclusion. A method that cannot be reproduced cannot be reused, because even when results were good there is no way to confirm why.

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A way of having a program carry out rules set by a person exactly as written. It reduces emotional interference and execution delay, but errors in the rules themselves and system failures are repeated just as faithfully. For that reason, validation before running and stop conditions have to be designed together.

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Statistics such as interest rates, inflation, and employment that affect the market as a whole. Regardless of conditions at any individual instrument, they change the discount rate and risk appetite of every asset at once. The reaction comes from the gap between the release and the value that was expected beforehand; a large number that matches expectations often passes quietly.

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The meeting that decides the US policy interest rate. Because the statement and press conference also signal the future direction, the wording about the next path often drives the market reaction more than whether rates were raised or cut. Right after the release, it is common to see large swings in both directions before a direction settles.

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The Consumer Price Index, a statistic that shows how much prices have risen. If inflation stays high it becomes harder to lower interest rates, which affects the discount rate across risk assets. The core figure, which excludes volatile food and energy, is read alongside it because it gives a more stable view of the trend.

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The policy rate applied to overnight lending between US banks. It is the starting point for the discount rate and funding cost of almost every asset, so when it moves, stocks, bonds, commodities, and crypto all react together. The market prices in the expected future path ahead of the current level.

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The difference between the highest bid and the lowest ask. Buying and immediately selling starts with a loss of that difference, so it is effectively an instant trading cost. It is narrow when liquidity is good and widens in quiet hours or in thinly traded instruments.

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How easily the desired quantity can be bought or sold near the desired price. With good liquidity even a large order does not move the price much, while with thin liquidity the same order moves the price several levels. It tends to dry up suddenly during sharp declines after being fine in normal times, which shows up as the risk of being unable to sell when selling is needed.

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A cost exchanged periodically between longs and shorts to keep the price of a perpetual futures contract anchored to spot. When the futures price is above spot, longs pay shorts; when it is below, shorts pay longs. A value heavily skewed to one side means positions are crowded in that direction, so liquidations can cascade when a reversal comes.

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Moving a position from an expiring contract to the next contract to keep it open. A cost or gain arises equal to the price difference between the two contracts. The longer a position is held, the more this difference accumulates, so the rollover cost has to be calculated separately for long holding periods.

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A range between the close of one candle and the open of the next in which no trading took place. It arises when information that arrived while the market was closed is priced in all at once. Because there were no actual fills in that range, no support or resistance has formed there. Gaps are relatively rare in markets that trade around the clock.

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A move in which price later returns to fill the range left empty by a gap. Unfilled orders often remain in that range, so fills tend to cluster when price comes back. Not every gap gets filled, however, and there is no rule for when it will happen.

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A reference price calculated from the previous day's high, low, and close, together with the levels above and below it. Because the formula is public, many participants watch the same values and reactions occur there. Rather than being used alone, it is used to check where it overlaps with existing support and resistance.

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A distribution showing how much trading took place at each price level. Prices with heavy trading have many holders who bought there, so breakeven selling appears when price returns. Conversely, ranges with little trading have thin resistance and price passes through them quickly. It is read from the thickness along the volume axis, not the price axis.

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The average traded price weighted by volume. It is close to the average purchase price of that day's participants, and institutions use it as a benchmark for execution quality. When price is above this line, it is read as meaning that most people who bought that day are in profit.

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The average price calculated by dividing time evenly. It is also the name of a technique that executes an order by slicing it into small pieces in the same way. A large order placed all at once pushes the price, so spreading it over time reduces the impact.

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A ratio showing whether buy fills or sell fills dominated over a given period. Unlike resting quantity on the order book, it counts only what was actually filled, so it does not disappear through cancellations. When price rises but trade intensity does not follow, the rise is treated as one with thin participation.

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The total quantity of contracts that remain open and have not been closed. If volume is the activity during a period, open interest is the inventory of positions currently built up in the market. It is read in two ways: if it grows along with a rising price, new money has come in, and if the price rises while it shrinks, existing shorts were closed and pushed the price up.

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A trade in which shares you do not own are borrowed and sold first, then bought back and returned later. It profits only if the price falls. As the outstanding short balance grows, so does potential buying demand, because the shares must eventually be bought back. If the price rises, that buying can arrive all at once and enlarge the move.

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A demand for additional funds that arises when unrealized losses push margin below the required level. If it is not met, the position moves on to forced liquidation. It usually happens when the market is at its worst, so the position tends to be closed at the most unfavorable price.

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A contract in which two parties exchange cash flows under agreed terms. Interest rate swaps and currency swaps are typical. In crypto markets, a futures contract with no expiry is itself called a perpetual swap. The cost exchanged periodically while holding that contract is the funding rate, not a swap, so the product name and the cost name should not be confused.

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Offsetting an existing risk with a position in the opposite direction to reduce fluctuation. The purpose is not to increase profit but to reduce the spread of outcomes. A hedge therefore softens the worst case at the price of also trimming the best case. It should be understood as a choice to pay a cost in exchange for lower volatility.

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Spreading holdings across assets with different characteristics so that the failure of one does not shake the whole portfolio. Simply adding more instruments is not diversification; holding several assets that react to the same factor means they fall together in a crisis. It is judged not by count but by looking at weights, volatility, and correlations between assets together.

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Returning asset weights that have drifted over time to the originally planned weights. By trimming what has risen a lot and topping up what has risen less, it ends up reducing what has become expensive and adding to what is cheaper. Doing it too often accumulates costs, so a schedule or a deviation threshold is set in advance.

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A method of buying the same amount at set intervals. More units are bought when the price is low and fewer when it is high, which reduces the variation in the average cost. Entry timing does not need to be judged, but a limitation is that losses also build up in an asset that keeps falling.

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A problem in which the sample does not represent the whole, tilting the conclusion in one direction. Testing only on a rising market, or only on instruments that still exist today, makes results look better than they really were. It is checked by whether the test period includes both declining and sideways phases.

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A state in which rules are fitted so closely to past data that they have memorized even the noise. Test results look strikingly good but collapse sharply on new data. If performance improves a little with every added condition, it is worth doubting whether the condition is a principle or a coincidence. If results swing greatly when a parameter is changed slightly, that is treated as a sign of overfitting.

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A method that splits data into several segments and repeatedly rolls forward, setting rules on an earlier segment and testing them on the next. Each test segment is new data that was not used in setting the rules, which filters out overfitting. If performance varies widely from segment to segment, the rule works only in particular phases.

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A test that shuffles the order of the records at random and recalculates the result many times. It shows that even with the same records, the maximum drawdown can differ greatly depending on whether losses arrive in a cluster. It is used to gauge how bad the worst path one could actually face might be.

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The average amount left over per attempt. It is calculated as win rate times average win minus loss rate times average loss. A method with negative expected value turns into a certain loss as the number of trials grows, while one with positive expected value converges as trials accumulate even if there are swings along the way. That is why the sign of the expected value matters more than the result of any one trade.

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An approach that uses the range of a set period as a reference and treats a move beyond it as a change in the flow. The reference is tied to recent volatility, so it is narrow in quiet markets and wide in turbulent ones. Its weakness is that when sideways movement continues, false breakouts that cross the reference and then return keep recurring.

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An approach that follows the direction after it has been established. It does not try to call bottoms and tops; it makes profit by cutting wrong entries quickly and letting correct ones run long. Its win rate tends to be low and results come from the reward-to-risk ratio. A structural weakness is that losses accumulate in sideways markets.

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An approach that looks for a pullback after price has been pushed too far. The win rate tends to come out high, but a single failure can cancel all earlier gains, so it cannot be sustained without stop discipline. In strongly trending phases it repeatedly leaves one on the wrong side.

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A style of taking small moves many times within a short period. Because the target per trade is small, fees and spreads take up a very large share of the results. Execution speed and cost structure decide the outcome, so the execution environment matters more than judgment.

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A style in which entry and exit are both completed within the same day. It avoids exposure to the next day's opening gap, but requires a fresh judgment every day, and the larger number of trades adds up in costs. Watching the screen throughout market hours makes it easy for fatigue to affect judgment.

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A style aiming at moves lasting from several days to a few weeks. Intraday noise can be ignored, so observation can be less frequent, but overnight gaps and event risk during the holding period must be accepted as they are. The stop distance is wider, so the position size has to be smaller to keep risk constant.

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A style that looks only at the big picture over months to years. With few trades, the effect of costs is small and noise does not shake it, but when the judgment is wrong it takes a long time to find out. It is therefore necessary to state at the outset what would show that the view was wrong.

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A chart on which one candle forms over a span of a few minutes. It reacts quickly but has a high share of noise, so its direction flips often. Mistaking the direction seen here for the larger flow produces a different conclusion each time. It is used to narrow down the entry timing within a direction set on a larger timeframe.

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A chart on which one candle forms over one hour or several hours. It suits viewing the structure of a day's movement and is often used as a bridge between the direction set on the daily chart and timing on minute charts. It is also used to gauge how deep an intraday pullback goes.

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A chart on which one candle forms per day. Because it records the close, the price the day agreed on, it is the most widely used reference for judging direction. What matters is that however much price swings during the day, nothing is confirmed until the close.

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A chart on which one candle forms per week. Daily noise is removed and only the larger direction remains. A single candle takes a week to complete, so confirmation comes late, but for the same reason it is not easily reversed and suits use as a directional reference.

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A chart on which one candle forms per month. It is used to see phase changes spanning several years. Because it takes so long for a judgment to be confirmed, it is treated not as a tool for timing entries but as a tool for knowing roughly where one stands in the larger flow.

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A state in which price moves up and down within a set range, capped above and below. Neither side has the advantage, so trend-following approaches are repeatedly cut at the top and bottom of the range. If the range narrows and volume keeps shrinking, it is treated as a sign that a breakout is being prepared, but the direction cannot be known until it breaks.

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A move above resistance or the top of a range. What matters is less the fact of crossing than whether a candle closes beyond it and holds. Breakouts without volume are often reversed, and another thing to check is whether the former resistance turns into support after price comes back.

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A move that briefly crosses above resistance and then falls back below. Orders placed for a breakout fill and are immediately pushed back, so stops cluster and the move in the opposite direction can become large. The way to tell is to go by the candle close and not count a mere wick above as a breakout.

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A pattern of three peaks in which the middle peak is the highest and the two on either side are lower. It pictures price beginning to fail to make new highs. The checkpoint is whether the line connecting the lows, called the neckline, breaks; if it does not break, the pattern is not complete.

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A pattern in which two highs of similar height form and the low between them breaks. Being pushed back twice at the same price means supply appeared there repeatedly. As long as the low between the two highs holds, it is not yet a pattern.

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A pattern in which two lows of similar depth form and the high between them is exceeded. It means the price was supported twice at the same level. Until the high between the two lows is exceeded, it cannot be told apart from a rebound within a decline.

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A pattern in which highs get lower and lows get higher, narrowing the range of movement. It is seen as a zone where the forces on both sides approach balance and energy builds up. The direction cannot be known from the narrowing itself and is settled only after the break.

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A move out of one boundary of a narrowing range. The narrower the range became, the larger the move after the break tends to be. However, false breaks are frequent near the end of the narrowing, so whether the candle closes outside and whether volume came with it are checked together.

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A pattern in which price pauses briefly in a narrow range after a steep move. It forms as profit-taking appears right after a strong move, and volume typically dries up during the pause. If the pause lengthens and the range widens, the character of the pattern changes.

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A pattern in which two boundary lines slope in the same direction while converging. Unlike a triangle, the pattern as a whole slopes in one direction, showing that the ongoing move is weakening. A check is whether volume also shrank during the narrowing.

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A method of reading the contest between buyers and sellers from the shape of one or a few candles. The pattern itself does not determine direction; where it appears is what gives it meaning. A reversal shape near support and the same shape in open space are completely different pieces of information.

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A candle whose open and close are nearly equal, leaving almost no body. It means the two sides were evenly matched during that period. It does not signal a change of direction but marks a decision being put off, so what matters is which way the next candle resolves it.

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A candle with a small body at the top and a long lower wick. It is a trace of price being pushed down and then pulled back. It carries meaning when it appears near support after a decline; the same shape appearing in open space during a rise is interpreted differently.

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A candle with a small body at the bottom and a long upper wick. It is a trace of price being pushed up and then pushed back. It carries more meaning when it appears near resistance after a rise; the same shape appearing in open space during a decline is interpreted differently. Position, more than shape, is what makes it informative.

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A formation in which the body of the next candle completely covers the body of the previous one. It means the advantage flipped within a single period. The checkpoint is whether volume came with the covering candle; an engulfing candle without trading activity behind it often lacks substance.

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A formation in which a bullish candle completely covers the body of the preceding bearish candle. When it appears after a continued decline, especially near support, it is read as a shift in strength. Looking at the shape without the location leads to a wrong reading, and the volume of the covering candle should be checked as well.

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A formation in which a bearish candle completely covers the body of the preceding bullish candle. It means the buyers' advantage turned into the sellers' within a single period. It carries more meaning when it appears after a continued rise, especially near resistance, and the checkpoint is whether volume came with the covering candle.

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Deliberately making the size of profits and losses differ. If losses are cut at a fixed width and profits are left open, the total can be positive even when the win rate is below half. Asymmetry does not arise by chance; it comes from two rules: fixed stops and letting profits run.

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A division of judgments by time horizon. The same instrument can lead to opposite conclusions depending on the horizon. Problems arise when horizons get mixed. If a trade entered on a short-term judgment is relabeled as a long-term hold after a loss, the stop standard disappears and risk slips out of management.

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The overall composition of all assets held. What matters is not the performance of individual instruments but the total and how much it fluctuates. Even a collection of instruments that each look good will move like a single block in a crisis if they react to the same factor.

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Buying in several parts instead of all at once. It softens the impact if the entry timing turns out to be wrong. However, buying more each time the price falls without a plan is not scaling in but averaging down; the difference is whether the number of parts and the stopping point were decided in advance.

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Closing a holding in several parts. Even without calling the top, it lets the average exit price come out reasonable. The aim is to lock in gains while leaving the remaining quantity room to follow the move.

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The average purchase price across several buys. The market does not know this number, and price does not move with reference to it. Even so, when decisions are based on the average entry price, the goal of getting back to breakeven replaces the original reason for the entry.

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Buying more of a losing position to lower the average entry price. The average price falls, but the total amount at risk grows and the fact that the judgment was wrong remains. The difference from planned scaling in lies in the order of events: if it was decided before entry it is scaling in, and if it was decided after seeing the loss it is averaging down.

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Closing a position that is in profit to lock in the gain. Profit before it is locked in is only a valuation that disappears if the market reverses. Conversely, a habit of locking in too early leaves losses large and profits small, and the overall result deteriorates. The remedy is to decide before entry where profit will be taken.

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Closing a position when the loss reaches a set level, which fixes the loss. The purpose is not to be right but to set the size of the loss in case one is wrong. Holding on without a stop means one error in judgment can erase all earlier results.

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The increase relative to the amount invested, expressed as a ratio. Without the period, returns cannot be compared, and without the risk taken to earn them, they cannot be evaluated. A return therefore has meaning only when stated together with its period and maximum drawdown.

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A structure in which earned results are added back to the principal and become the base for the next calculation. The longer the period, the more sharply the difference widens. Losses work the same way in reverse: after a large drop, the remaining capital is smaller and the return needed to recover rises steeply. For that reason, in compounding, drawdown management comes before the pursuit of profit.

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A structure in which interest is calculated only on the principal and earned results are not reinvested. The same amount is added each period. Compared with compounding, the difference is small at first but the gap widens greatly as the period lengthens. Whether or not results are reinvested decides the long-term outcome.

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A value that converts results over different periods to a one-year basis so that they can be compared. A good result over a short period, stretched to an annual figure, looks exaggerated compared with reality, so the original period and the number of observations should be checked together.

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A value showing how widely numbers are scattered around their average. Applied to returns, it is a measure of volatility. Even with the same average, a large value means the path actually experienced is much rougher. This is why choosing a method by its average alone leads people to quit midway.

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A coefficient showing how much an asset moves when the market as a whole moves. Above 1, it moves more than the market; below 1, it moves less. It is used to separate how much of an individual instrument's risk is due to the market.

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The excess performance that market movement does not explain. It asks whether anything remains after removing the part earned simply because the market rose. With few observations it cannot be told apart from chance, so it must be checked together with statistical significance.

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A value showing how unlikely it is that an observed difference is due to chance. It is calculated by dividing average performance by the variability of that performance and the number of observations. An absolute value above roughly 2 is where chance becomes hard to accept as an explanation. With few observations the value does not grow no matter how good the average is, so the number of records comes first.

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The probability that the observed result would arise from chance alone. The smaller the value, the harder it is to explain by chance. A small value does not, however, mean the effect is large; with a very large sample, even trivial differences produce a small value. Size and significance have to be looked at separately.

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A method of estimating, with a line or curve, how one value changes when another changes. It is used to check by the slope whether cumulative performance is actually rising over time. A relationship is not the same as causation, so interpretation requires care.

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A value between 0 and 1 showing how much of the scatter in actual values the fitted line explains. The closer to 1, the more tightly the values cluster around the line. Even with a positive slope, a low value means the path is too disordered to call a steady rise.

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A value between -1 and 1 showing how much two values move together. Near 1 means the same direction and near -1 the opposite direction. A large value does not imply causation, and the relationship can flip depending on the market phase. In particular, the phenomenon in which the correlations of many assets approach 1 at the same time during a crisis undermines diversification.

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The degree to which two values deviate from their averages in the same direction. It is an ingredient of the correlation coefficient, and because it carries units, its size is hard to compare directly. Dividing by each standard deviation to remove the units gives the correlation coefficient.

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A distribution that forms a symmetric bell shape around its mean. Many statistical tools are built on the assumption of this shape. Market returns, however, have fatter tails than this shape implies, so abrupt moves that should in theory almost never happen occur far more often in practice.

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A value showing which way a distribution leans. A long right tail means rare large gains are mixed in, and a long left tail means rare large losses are mixed in. Looking at the average alone does not reveal this asymmetry.

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A value showing how thick the tails of a distribution are. A large value describes a distribution that is usually quiet but occasionally produces extreme values. Market returns generally have high kurtosis, so the mean and standard deviation alone underestimate risk.

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Return divided by the maximum drawdown. Because the denominator is the deepest loss actually experienced rather than volatility, it is closer to a measure of performance relative to the pain an investor can bear. Over short periods with shallow drawdowns, the value can look unrealistically high.

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Excess return divided by beta. It evaluates performance using only market risk, leaving out individual risk that can be removed by diversification. It is meaningful when comparing well-diversified portfolios, and its interpretation is distorted when holdings are concentrated in a few instruments.

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Excess performance relative to a benchmark divided by the volatility of that excess. It shows how consistently the benchmark was outperformed. Because it distinguishes one large outperformance from steady small outperformance, it reveals a repeatability that total return alone does not show.

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Gross profit divided by gross loss. A value of 1 is breakeven, and above 1 means profits exceeded losses. Even a large value is less repeatable if most of the profit came from a single trade, so it should be read together with the distribution of trades.

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A real advantage that makes the expected value positive over the long run. It counts as a true advantage only if one can explain whether it comes from information, execution, or discipline. Results that cannot be explained may not be an edge but a coincidence that has yet to reveal itself.

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The ratio of the targeted profit to the loss being risked. It differs from the reward-to-risk ratio in that it is a plan figure calculated before entry, while the latter is an after-the-fact tally. However good the planned ratio, it remains only a number on paper if one does not check whether the target is realistically reachable.

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A formula for the bet size that maximizes long-run growth when the expected value is positive. It requires knowing the win rate and reward-to-risk ratio, and in practice those are estimates, so using the computed value as is leads to overbetting. A common approach is therefore to use only a fraction of the computed value.

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The broad cycle in which interest rates, the economy, and liquidity alternate between expansion and contraction. The kind of assets that do well changes with the phase, so the same method works in some periods and not in others. A phase is often not identifiable in real time and is recognized only after it has passed.

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A policy in which a central bank buys assets to supply money to the market. It is used when there is no further room to cut interest rates. As funding becomes easier, it tends to create an environment in which risk assets rise together.

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A policy in which a central bank reduces its holdings of assets to withdraw money from the market. It creates a phase of shrinking liquidity, the opposite of quantitative easing. It often acts as a burden on risk assets, and the reaction depends on whether the pace and scale proceed as announced.

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A policy decision to raise the policy interest rate. Funding costs rise and the present value of future earnings falls, so assets that depend on growth are affected more. The market prices in expectations of the hiking path before the actual hike.

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A policy decision to lower the policy interest rate. Funding becomes easier, which generally acts favorably for risk assets. When rates are cut because the economy is worsening, however, the cut itself may be read as a bad sign.

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An index showing how strong the dollar is against a basket of major currencies. A stronger dollar tends to weigh on assets priced in dollars. The market reaction depends more on the direction and speed of the move than on the absolute level.

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An index showing expected future volatility in the US stock market. It is called the fear index, and a sharp rise means participants are preparing for large moves. The key point is that it measures the size of swings, not the direction.

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A phase in which the value of the dollar rises against other currencies. It weighs on the relative price of assets priced in dollars and can put capital outflow pressure on emerging markets with large dollar debts. If other factors are stronger, however, this relationship does not hold.

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A phase in which the value of the dollar falls against other currencies. It tends to support dollar-denominated asset prices. This relationship is not a law that always holds but a tendency that is often observed, so periods when it fails are normal.

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Assets that tend to rise more when the economy and risk appetite are strong and to fall sharply when they are weak. Stocks and crypto are typical examples. Expected return is high, but in bad phases different instruments tend to fall together as a single block.

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Assets that money flows into when anxiety grows. Government bonds, gold, and some currencies belong here. Safe does not mean free of losses; it refers to a tendency to move differently from other assets in a crisis. The price paid for that is lower returns in ordinary times.

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A phase in which risk appetite rises and money moves into risk assets. The whole market tends to rise together regardless of conditions at individual instruments. Whether good results in this period reflect skill or just the phase can be judged only after the opposite phase has passed.

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A phase in which anxiety grows and money moves into safe-haven assets. Risk assets that normally move differently fall at the same time, so the benefit of diversification is weakest at exactly the moment it is needed most. Liquidity thins as well, making it hard to close at the desired price.

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The share of Bitcoin in the total market capitalization of cryptocurrencies. A rising share is read as a phase in which money gathers in Bitcoin, and a falling share as one in which it spreads to the rest. The share can also rise when the whole market falls together, so it should be read alongside the trend in total market value.

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A phase in which coins other than Bitcoin rise relatively more. It is read as a state in which risk appetite has grown even stronger. Volatility grows with it, so not only the rises but also the declines get larger.

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A coin designed to limit price fluctuation by pegging its value to a fiat currency or similar. It is used like cash inside the market, as a place to park funds while waiting and as a channel for moving them. Risk differs greatly depending on what backs the peg and how, and if the peg breaks, the assumption of safety collapses.

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Financial services that handle deposits, loans, and exchanges through smart contract code without an intermediary. Open access and publicly visible records are its strengths. In exchange, it carries risks of its own, such as code flaws and cascading liquidations when collateral drops sharply, and when something goes wrong there is no party to make users whole.

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Locking assets in a network or service in return for rewards. The key is to check where the rewards come from. Sustainability differs greatly depending on whether they pay for network operation, come from new issuance, or come from other participants' funds. Being unable to sell while locked is also a risk.

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A pool of funds in which two assets are deposited together so that trades can take place. Depositors share in the fees. If the price ratio of the two assets changes, however, the outcome can be worse than simply holding them.

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A phenomenon in which the value of two assets deposited in a liquidity pool falls below what simply holding them would have been worth, because their price ratio has changed. It is called impermanent because it disappears if the ratio returns to the original, but if funds are withdrawn in that state, the loss becomes final.

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A token that proves ownership of a unique item and cannot be swapped for an identical one. Liquidity is thin, so a single quote can move the price sharply, and it is common to find no buyer when you want to sell. It is an asset class with a large gap between the displayed price and the amount actually recoverable.

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A product that bundles several assets so that they can be bought and sold on an exchange like a single stock. Its strengths are small-amount diversification and ease of trading. Management fees are deducted every year, and a gap can arise between the underlying asset value and the market price, which is worth checking.

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The main index of the Korean securities market. Large-cap stocks have a big influence, so situations where the index rises while one's own holdings fall are common. It is notably affected by foreign and institutional flows and by the exchange rate.

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The index of the Korean market centered on small and mid-sized growth companies. It is more volatile than the KOSPI and has a higher share of individual investors. Reactions tend to be larger under the same market conditions, so holding the same weight carries greater real risk.

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An index made up of 500 leading US companies. It is widely used as the benchmark for the US stock market as a whole and as a yardstick for comparing the performance of other strategies. Because it is market-cap weighted, there are periods when a handful of top companies drive the whole index.

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An index of a US stock market with a high share of technology stocks. Many of its companies depend on expectations of future earnings, so it reacts sensitively to interest rate changes. Both rises and falls tend to be large, and because a few large companies carry heavy weight, there are periods when the whole index depends on the results of a few stocks.

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An index made up of 30 large, established US companies. It uses an old method of weighting by share price rather than market capitalization, so stocks with high share prices have an outsized influence. As a result, it has limits as a gauge of the whole US market.

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A company's market valuation, calculated as the share price multiplied by the number of shares outstanding. The share price alone does not show a company's size, and a share that looks cheap may belong to a large company. Comparisons should always be made by market cap, not by share price.

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The share price divided by earnings per share, indicating how many years of current earnings are being paid for. The normal range differs by industry, so comparing across different industries leads to wrong conclusions. Its limitations are that the value jumps when earnings dip temporarily and that it cannot be calculated when the company has a loss.

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The share price divided by net asset value per share. A value below 1 means the stock trades for less than its book value. However, book value and actual liquidation value can differ, and in business models with few assets the value itself carries little meaning. A low value alone cannot be taken as undervaluation.

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A ratio showing how much profit was earned on shareholders' equity. It is higher for companies that earn more with the same capital. Because the value also rises when debt is increased and equity shrinks, it should be read together with the debt level.

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Earnings per share: total earnings divided by the number of shares issued. Even if earnings stay the same, it falls when the share count rises. Changes in share count, such as capital increases and share cancellations, must therefore be checked; an earnings increase and a share count decrease differ in character even if EPS ends up the same.

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A company paying part of its profit to shareholders in cash or other forms. After the record date the share price adjusts by that amount, so receiving a dividend does not increase assets by that much. A stock with a high dividend yield may simply have seen its yield rise because the price fell, so sustainability should be checked as well.

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A company issuing new shares to raise funds. The share count increases, diluting existing shareholders' stake and per-share value. Reactions differ, however, depending on how the money is used; whether it goes to repaying debt or to expanding the business is what to check.

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Converting surplus into capital and distributing shares to shareholders free of charge. The share count rises and the price adjusts by the same proportion, so the company's value itself does not change. It can make trading more active as more shares are in circulation.

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Dividing one share into several. The price falls and the share count rises, but market cap and company value stay the same. The lower price per share makes the stock more accessible, but it does not make the stock cheaper. A changed price tag should not be read as a discount.

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Registration of a company's shares so that they trade on an exchange. Funding becomes easier, but disclosure obligations and outside scrutiny follow. In crypto, it can also mean a new instrument being registered on an exchange, in which case liquidity changes greatly.

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Removal of an instrument from an exchange so that it can no longer be traded. It occurs when requirements are not met or because of serious problems. Since the means of trading itself disappears, liquidity dries up sharply and it becomes impossible to close at the desired price.

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The procedure by which an unlisted company offers its shares to the public for the first time and lists them. Early volatility is very large and depends on the offering price and the number of shares in circulation at the start. The absence of past data to compare against right after listing also makes judgment harder.

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The volume of short sales not yet repaid. It is also potential buying demand, since the shares must be bought back at some point. When a stock with large short interest rises, buy-backs can rush in and make the rise abrupt. Note that it is disclosed with a delay of a few days.

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A method of reading recurring structures from records of price and volume. It is not a tool for predicting the future but a tool for organizing where things stand now and what would show the judgment to be wrong. For that reason, whether an invalidation level can be set matters more to its usefulness than prediction accuracy does.

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A method of assessing the value of the company itself through earnings, financials, and industry structure. It is better suited to deciding what to hold than when. The difficulty in practice is that it can take a long time for value to be reflected in price.

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An approach that looks at how participants' expectations and fear are reflected in price. Extreme sentiment often sets the stage for a pullback, but there is no way to know how long the extreme will last. It is therefore used as a tool for gauging where the market stands, not for timing.

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An indicator that combines several market measures and summarizes participant sentiment as a single number from 0 to 100. Extreme values only show that sentiment has tilted to one side, not when it will reverse. In strong trends, an extreme state can persist for a long time.

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Fear, uncertainty, and doubt: a term for the spread of negative stories that have weak support. Separating confirmed facts from unconfirmed stories is where a response begins. Dismissing every piece of bad news with this word, however, also dismisses real warning signs.

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The fear of missing out, which leads people to jump in without a plan. It is strongest after a big rise, so the worst combination results: a poor entry level and a wide stop. The response is not to suppress the emotion but to write the entry conditions down in advance and pass when the conditions are not met.

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An expression for the attitude of holding long term without reacting to price swings. Holding because of a reasoned view and being unable to sell because there is no exit rule are entirely different. The latter is not a strategy but the absence of an exit rule.

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A participant holding a quantity large enough to affect market prices. Large movements draw attention, but there is no guarantee that a transfer to an exchange means a sale. The limit of interpretation is that intent cannot be inferred from wallet movements alone.

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The procedure of moving assets between an exchange account and an outside wallet. A wrong network or a single wrong character in the address cannot be undone. Sending a small test amount first and confirming it before sending a large amount is the basic practice.

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A unique identifier that assets can be sent to. It is fine for it to be public, but the private key must never be exposed. Address formats differ by chain, so sending a coin of the same name to an address on a different chain makes recovery difficult.

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A way of keeping the private key offline, disconnected from the internet. It is safe from online breaches, but the trade-off is that not losing the device and managing the recovery phrase carefully become the whole job of protecting the assets. It is inconvenient for immediate trading and is used for long-term storage; keeping the recovery phrase in a photo or in the cloud removes its safety.

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A wallet used while connected to the internet. It is convenient to use but constantly exposed to the risk of a breach. The usual practice is to keep only a small amount for frequent use and store the rest separately; dividing convenience and risk by amount is the practical approach.

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A security method that adds a second means of authentication beyond the password. Even if the password leaks, one more layer remains. Text-message codes are vulnerable to attacks that take over the phone number itself, so authenticator apps or security keys are safer, and recovery codes should be stored separately.

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Credentials that connect an exchange account with an outside program. The basic practice is to grant only the permissions needed and never grant withdrawal permission. Restrict which addresses are allowed to connect, and if a leak is suspected, revoke the key immediately and issue a new one.

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The upper limit on the number of requests that can be sent within a set time. Requests over the limit are rejected, and repeated violations can restrict access altogether. Automated queries should therefore limit their own call volume and wait longer between retries after failures.

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A communication method in which, once connected, the server pushes changes as they happen. Delay is shorter and load is lighter than with constant asking. In exchange, a dropped connection leaves a gap in the data, so reconnection and filling the gap are essential.

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A method in which a request is made each time and a response is received. Its strengths are a simple structure and ease of use. In exchange, learning of changes means asking continuously, and because of call limits it is not suited to data that must be real time.

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A format that represents data as pairs of keys and values. It is readable by people and directly usable by programs, so most price responses arrive in this format. If the structure changes, the reading side can fail silently, so the format needs to be validated.

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A method in which the server sends a notification first when an event occurs. There is no need to keep asking, so it is efficient. However, delivery can fail or the same notification can arrive twice, so the handling logic has to be written to allow for duplicate and missed notifications.

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Temporarily storing a result that has been fetched and reusing it. Responses get faster and call volume falls, but there is a risk of mistaking an old value for the latest. How old a value may be must therefore be decided alongside it.

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A function registered in advance to run automatically when a particular situation occurs. It lets the action be linked beforehand so that other work can go on. Since the time of execution is not fixed, the state at that moment may have changed, which has to be taken into account.

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A collective name for errors that make past test results look better than they really are. Typical ones are using future information, using only surviving instruments, omitting costs, and repeatedly refining conditions. When results look too good, these four are the first things to check.

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An error in which a conclusion is drawn by looking only at what has survived to the present, making results look better. Instruments that disappeared and failed cases drop out of the sample. A test that excludes delisted instruments is typical, and advice that collects only success stories has the same structure.

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An error in which information that could not yet have been known at the time of the test gets mixed into the calculation. Typical cases are using a close before it is confirmed or using data that was later revised as it now stands. It is the most common cause of unrealistically good results, so check whether only values actually knowable at each point in time were used.

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Data that was held back and not used when the rules were built. The results on that segment serve as the real test. If that segment is examined repeatedly while the rules are refined, it is no longer held-back data, so the principle is to check it only once, at the end.

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A method of splitting data into earlier and later segments, setting rules on the earlier one and testing on the later one, and repeating this in time order. Every test happens on new data, which filters out overfitting. If performance varies widely from segment to segment, the rule works only in particular phases.

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A notification that a set condition has been met. Meeting the condition means the odds have improved slightly, not that the outcome is guaranteed. Only when the condition is fixed as numbers can hits be scored afterwards, and a notification that is not scored cannot be improved.

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A state in which the direction of the highs or lows made by price differs from the direction made by a supporting indicator. If price makes a new high but an indicator that measures strength does not, it is read as the strength of the rise weakening. In strong trends the mismatch can last for a long time, so it is too weak to serve as a basis on its own.

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A concept that describes not the direction but how forcefully that direction is being maintained. Even in the same rise, when strength is low the pullbacks are often deeper. In phases of weak strength, an approach that assumes a range often fits better than one that follows the direction.

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The speed of price movement and its persistence. It rests on the tendency that once a direction is established, it continues for a while. However, the point at which speed peaks and turns can only be known afterwards, so entering late means running straight into the pullback.

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A method of raising the exit level as profit grows, to protect what has already been secured. The aim is to capture a large part of a big move without having to call the top. There is a trade-off: if the level is placed too tight, a normal pullback ends the trade early, and if too far, a lot of profit is given back.

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Closing a position in several stages rather than all at once. It locks in gains while leaving the remaining quantity free to continue with the move. The key is that no single judgment decides everything.

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Closing the entire remaining position at once. It is used when the premise behind the view has failed or when risk must be removed immediately. The cost is that one does not take part if the move continues afterwards, and putting off the exit because of that regret discards the original standard.

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Entering an instrument again after it has been closed, when the conditions are met once more. The risk lies in re-entering right after a loss. Entering repeatedly at the same place for the same reason turns one wrong judgment into several losses. For that reason, re-entry is commonly given its own conditions and a waiting interval.

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A waiting period imposed after a loss before entering the same instrument again. It builds into the rule a pause over the stretch in which the urge to win it back is strongest. It is not a matter of judgment ability; it rests on the premise that anyone's judgment wavers right after a loss.

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A position taken in the opposite direction alongside an existing one to reduce its risk. The purpose is not to increase profit but to soften the worst case. Costs accrue on both positions at the same time, so the burden builds up the longer the hedge is kept.

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A mode of operation in which both a long and a short can be held on the same instrument. It is used to keep separate judgments alive when a larger and a smaller timeframe point in different directions. The two positions offset each other and make profit and loss easy to confuse, so the exit standards for each should be kept separate.

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A mode of operation that allows only one direction per instrument. An order in the opposite direction is handled as reducing or reversing the existing position. The structure is simple and profit and loss are easy to calculate, but judgments on different timeframes cannot be held at the same time.

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An account setting that decides whether an instrument holds only one direction or both long and short. Depending on the mode, an opposite-direction order is treated either as a close or as a new entry. If the setting is not checked, the result may differ from what was intended, so it should be set before trading.

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The side that fills against quotes already on the book. Because it takes liquidity, the fee is generally higher. Fills are fast, but cost and slippage come with them, so the more trades there are, the larger the share of results they take up.

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The side that posts a quote and waits for someone else to fill it. Because it supplies liquidity, the fee is lower or partly rebated. In exchange, the order does not fill if price does not come, so trying to save on cost can mean missing the opportunity.

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A method of linking two orders so that when one fills, the other is cancelled automatically. It is used to place a take-profit order and a stop-loss order together. It prevents the mishap in which one side fills while the other stays open and creates an unintended opposite position.

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An order whose exit level follows price as it moves favorably and stays put when price moves the other way. It is used to protect profit while following the move. A narrow trailing distance is easily triggered by noise and gets stopped out often, while a wide one gives back more profit.

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A method in which a limit order at a predetermined price is placed automatically when price reaches a specified level. Its strength is control over the fill price. In a sharp move, however, price can pass through the limit without the order filling, which makes it risky for cutting losses.

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A method in which a market order is sent immediately when price reaches a specified level. Because a fill is likely, it is mainly used for cutting losses. In exchange, in a sharp move it may fill at a worse price than expected, so the calculated loss and the actual loss can differ.

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A zone where support and resistance from different timeframes overlap in the same price area, making a reaction more likely. Many participants are watching the same place, so speed often slows or direction turns near it. It does not say which way it will turn, however, so it serves not as an entry or exit standard but only as a place to watch for a reaction. What to check is whether candles stalled and turned back in that price area.

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The price at which the view based on that level is considered to have failed. A brief touch of the price is not invalidation. It counts only when a confirmed candle closes beyond that level by a set margin, with the trend having turned in the opposite direction. If wicks and intraday breaks are counted too, the view gets abandoned at every normal pullback, and with no standard at all, a level that has already broken keeps being relied on.

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A reference price for which the things to check are written down in advance, for when price reaches it. Reaching that price does not in itself mean action; it is a marker prompting a check of what needs to be checked. It is written down beforehand because, at the moment price is actually moving, there is no time to build a judgment from scratch.

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A price set in advance, beyond which the original view no longer holds. Together with the target price, it forms a single range. A view without an invalidation level has no way to confirm that it was wrong, so it stays in place even after its basis is gone. A judgment with a target but no invalidation is not a judgment but a hope.

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The end of a set period, when the close of a candle is confirmed. The intraday price keeps changing, but the closing price remains as the price the period agreed on. For that reason, breakouts, breakdowns, and trend reversals are generally judged on the close. Judging by a candle still in progress means being repeatedly fooled by moves that reverse just before the close.

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A phase in which, after moving in the direction of the trend, price gives back part of the move in the opposite direction. It is not the end of the trend but a rest within it. The distinction between a pullback and a reversal is made by structure, not by size. If the previous low or high is holding, it is a pullback; if that structure breaks, a reversal becomes possible.

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A phenomenon in which positions crowded on one side rush to close in response to a move in the opposite direction, which then amplifies the move. When many shorts have piled up and price rises, buying back comes all at once and the rise becomes abrupt, and the reverse happens when longs are crowded. What to check is not only price but also which side positions were crowded on.

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Large quantities being quietly bought up or sold off during a sideways stretch in which price does not move much. It is regarded as accumulation when it appears in a bottoming zone after a decline, and as distribution when it appears in a topping zone after a rise. Both look like the same sideways movement, so they are hard to tell apart while in progress and are confirmed by which way the range is left. Sideways movement on small timeframes is mostly just noise.

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Levels obtained from different timeframes or by different methods gathering in the same price area. It means many participants are watching the same place, so a reaction near it becomes more likely. The fact that they overlap does not guarantee the direction, however. What to check is how many timeframes overlap and how narrow the zone is.

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The degree to which prices on Korean exchanges are higher than prices on overseas exchanges, expressed as a ratio. It arises because money cannot cross borders instantly, so prices in the two markets do not become equal right away. A wide gap is read as a sign of overheated domestic demand, and a negative value is called a reverse premium.

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When an asset designed to hold its value fixed to a particular reference moves away from that reference. Stablecoins are the typical case. Because such assets are widely used as collateral and a means of payment on the premise of being safe, once the departure begins it easily spreads into falling collateral value and cascading liquidations. What backs the value matters more than the size of the departure.

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A term for the flow of funds from participants with an advantage in information and capital. Who actually moved cannot be identified; it is only inferred from the traces large funds leave. It therefore has to be treated as circumstantial evidence and not as established fact, and a trace having appeared is not the same as the direction having been right.

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The number of records on which a judgment was based. With a small sample, the average swings greatly on one or two chance cases, so neither good nor bad results can be trusted. That is why the denominator should be looked at before the ratio. Even a 70 percent hit rate gives no basis for predicting the next result if the denominator is ten.

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The ratio obtained by scoring, afterwards and under a set standard, whether published judgments turned out right. Because it counts direction or whether a level was reached rather than profit and loss, it is a different number from account performance. It cannot be interpreted unless the standard for what counts as a hit and the sample size are presented together.

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The range in which an estimated value is likely to lie. The smaller the sample, the wider the range becomes, until it effectively says nothing. Looking at the range together with the single ratio shows how far that number can be trusted. If the range straddles the reference line, a difference has not yet been confirmed.