Plain-English glossary

Understand the words.
Question the claims.

ATR

An average of past true ranges, calculated using a declared length and smoothing method. It does not cap future movement.

Confirmation

A specific observation required by your rule before acting. It adds evidence, not certainty.

Invalidation

An observable event that means the trade premise no longer meets its declared conditions.

Liquidity

The ability to transact at available prices and sizes. Visible depth can change and does not guarantee a fill.

Look-ahead bias

Using information in a historical decision before it would have been available in real time.

OHLC

Open, high, low and close over one specified interval. They summarize traded prices, not participant intentions.

Point value

Cash change for a one-price-point move in one unit, expressed in a chosen currency.

R multiple

A result divided by initial declared risk. Use actual fills and costs when reporting net R.

Slippage

The difference between an assumed or requested execution price and the actual fill. An allowance is only an estimate.

Stop order

An order with activation and execution rules defined by the venue or broker. A stop price is not a guaranteed execution price.

VWAP

Volume-weighted average price over a declared interval. Identify the price and volume feed, computation and reset.