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AzərbaycancaGlossary
Trading glossary: terms explained simply
120 trading terms explained in plain language, each with a concrete example and links to deeper lessons.
A
- ADX (Average Directional Index)An indicator from 0 to 100 that measures how strong a trend is, regardless of its direction; readings above about 25 suggest trending conditions.
- ATR (Average True Range)A volatility indicator showing the average size of recent price movement, based on each period's true range; it ignores direction.
B
- Base currencyThe first currency in a pair; the quoted price tells you how much of the second currency one unit of it costs.
- BearishExpecting or describing falling prices; a bearish market, candle or signal points downward.
- Blockchain networkThe specific chain a crypto transfer travels on, such as TRC-20 (Tron), BEP-20 (BNB Chain) or ERC-20 (Ethereum); sender and receiver must match.
- Bollinger BandsA volatility envelope: a 20-period moving average with bands two standard deviations above and below, widening and narrowing with volatility.
- Break-even win rateThe share of trades you must win just to avoid losing money at a given payout; above 50% whenever the payout is below 100%.
- BreakoutA move in which price pushes decisively through a support, resistance or pattern boundary and continues in that direction.
- BullishExpecting or describing rising prices; a bullish market, candle or signal points upward.
C
- CandlestickA chart element showing one period's open, high, low and close, with a body between open and close and wicks reaching the extremes.
- CCI (Commodity Channel Index)An oscillator measuring how far the typical price is from its average, in units of mean deviation; ±100 marks unusually strong deviations.
- Central bankThe institution that issues a currency and sets monetary policy, including interest rates — for example the Fed, the ECB or the Bank of Japan.
- ChannelTwo parallel lines enclosing price as it trends or ranges: one drawn through the lows and one through the highs.
- ConfluenceSeveral independent pieces of evidence pointing to the same price area or direction, used to filter trade ideas.
- Cross pairA currency pair that doesn't include the US dollar, such as EUR/GBP, EUR/JPY or AUD/NZD.
- CrossoverThe moment one line crosses another — such as a fast moving average crossing a slow one, or MACD crossing its signal line — used as a signal.
- Currency pairTwo currencies quoted against each other, such as EUR/USD, showing how much of the second currency buys one unit of the first.
D
- Dark cloud coverA two-candle bearish reversal pattern: a long bullish candle, then a bearish candle opening higher and closing below the first body's midpoint.
- Demo accountA practice account with virtual money that lets you trade on real charts without risking your own funds.
- Discipline (trading)The habit of following your own rules — setups, stakes, limits — consistently, including when your emotions push the other way.
- DivergenceA disagreement between price and an oscillator — such as a higher high in price with a lower high in RSI — hinting that momentum is fading.
- DojiA candle whose open and close are almost equal, leaving a very small body — a sign of balance or indecision during that period.
- Double top (and double bottom)A reversal pattern where price fails twice at about the same high, then breaks the low between the peaks; a double bottom is its mirror image.
- DrawdownThe decline of your balance from its highest point to a later low, usually expressed as a percentage of that peak.
E
- Economic calendarA schedule of upcoming economic releases and central-bank events, with forecasts and previous values, used to anticipate volatile moments.
- EMA (Exponential Moving Average)A moving average that gives more weight to recent prices, so it reacts faster to new moves than a simple moving average does.
- Engulfing patternA two-candle reversal pattern in which the second candle's body completely covers the first candle's body in the opposite direction.
- Entry priceThe price recorded at the moment your trade opens; the price at expiry is compared with it to decide whether the trade wins.
- Equity curveA chart of your account balance over time or trade by trade, showing not only the result but how bumpy the path to it was.
- Evening starA three-candle bearish reversal pattern: a long bullish candle, a small-bodied candle, then a strong bearish candle closing deep into the first.
- Expected value (EV)The average profit or loss per trade you would get if you repeated the same trade many times, given its win probability and payout.
- ExpiryThe moment a fixed-payout trade closes and its result is decided by comparing the price at that moment with the entry price.
F
- False breakout (fakeout)A move beyond a key level that quickly reverses back inside, trapping traders who entered on the break.
- Fibonacci retracementA drawing tool marking 23.6%, 38.2%, 50%, 61.8% and 78.6% of a price swing, used to anticipate where pullbacks may pause.
- FOMO (fear of missing out)The anxious urge to jump into a move because it seems to be happening without you, which often leads to late, unplanned entries.
G
H
- HammerA bullish reversal candle after a decline: a small body near the high and a long lower wick at least twice the body's length.
- Hanging manA bearish warning candle at the top of an uptrend, shaped like a hammer: a small body near the high and a long lower wick.
- HaramiA two-candle pattern in which a small body sits inside the previous candle's larger body, suggesting the prior move is losing force.
- Head and shouldersA reversal pattern of three peaks — a higher middle one between two lower ones — completed when price breaks the neckline joining the troughs.
- Higher high (HH)A swing high above the previous swing high; together with higher lows, it defines an uptrend.
- Histogram (indicator)A bar display of an indicator's value around a zero line; in MACD it shows the gap between the MACD line and its signal line.
I
- Ichimoku Kinko HyoA Japanese all-in-one indicator with five lines — Tenkan, Kijun, two Senkou spans forming the cloud, and Chikou — showing trend, momentum and levels.
- Indecision (candlestick)A market state in which neither buyers nor sellers gain control, shown by small-bodied candles such as dojis and spinning tops.
- InflationThe rate at which the general price level rises, reducing what money can buy; central banks watch it closely when setting interest rates.
- Inside barA candle whose whole range — high and low — lies within the previous candle's range, signalling a pause or consolidation.
- Interest rate (policy rate)The rate a central bank sets to steer borrowing costs; differences between countries' rates are a major driver of exchange rates.
- Inverted hammerA potential bullish reversal candle after a decline: a small body near the low and a long upper wick; it needs confirmation.
K
- Kumo (Ichimoku cloud)The shaded area between Senkou Span A and B in Ichimoku, shifted 26 periods ahead and used as a trend filter and support/resistance zone.
- KYC (Know Your Customer)Identity verification — ID documents, a selfie, sometimes proof of address — that financial services use to confirm who their customers are.
L
- Lagging indicatorAn indicator that confirms a price move after it has started, because it is built from past prices — moving averages and MACD, for example.
- Leading indicatorAn indicator designed to signal a possible move before it happens, usually by measuring momentum or extremes — RSI or Stochastic, for example.
- LiquidityHow easily an asset can be bought or sold without moving its price much; high liquidity means many participants and tight prices.
- Lower low (LL)A swing low below the previous swing low; together with lower highs, it defines a downtrend.
M
- MACD (Moving Average Convergence Divergence)A trend-momentum indicator built from the difference between two EMAs (usually 12 and 26), with a 9-period signal line and a histogram.
- Major pairOne of the most-traded currency pairs, each pairing the US dollar with another large currency, such as EUR/USD or USD/JPY.
- MartingaleA betting system that raises the stake after every loss to recover everything with one win; it multiplies risk without improving expected value.
- MarubozuA candle with a long body and no or almost no wicks: price opened at one extreme and closed at the other, showing one-sided control.
- Mean reversionThe tendency of a price to move back towards an average after stretching away from it — and the trading approach built on that idea.
- Memo / destination tagAn extra identifier that some coins, such as XRP and XLM, require alongside the address so the receiving service can assign the deposit to you.
- MomentumThe speed and persistence of a price move — how strongly price is pushing in one direction right now.
- Morning starA three-candle bullish reversal pattern: a long bearish candle, a small-bodied candle, then a strong bullish candle closing well into the first.
- Multi-timeframe analysisReading one instrument on two or three timeframes — a higher one for context, a lower one for timing — before making a decision.
N
O
- OHLC (open, high, low, close)The four prices that summarise a trading period — open, high, low and close — used to build candlestick and bar charts.
- OscillatorAn indicator that moves back and forth within a band or around a central line, used to gauge momentum and spot extremes.
- OTC (over-the-counter)Generally, trading outside an exchange; on Sky Trade, OTC instruments are priced by Sky Trade's server and do not follow any real market.
- Overbought and oversoldIndicator readings suggesting price has risen (overbought) or fallen (oversold) unusually far and fast relative to its recent history.
- OvertradingTaking far more trades than your plan justifies — out of boredom, excitement or the urge to recover — which multiplies the built-in cost of trading.
P
- P2P (peer-to-peer) tradingBuying or selling crypto directly with another person through an exchange's marketplace, often paying by local bank transfer.
- Parabolic SARA trend-following indicator that plots dots below price in uptrends and above it in downtrends, flipping sides when price touches them.
- PayoutThe profit a winning fixed-payout trade earns, as a percentage of the stake; on Sky Trade it is shown before opening and fixed for the trade.
- Piercing lineA two-candle bullish reversal pattern: a long bearish candle, then a bullish candle opening lower and closing above the first body's midpoint.
- PipThe standard unit of price change in forex: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen.
- Position sizingDeciding how much to stake on each trade, usually a small fixed percentage of your balance, so that a losing streak can't wipe you out.
- PullbackA temporary move against the prevailing trend before the trend resumes, such as a dip inside an uptrend.
Q
R
- Range (sideways market)A period when price moves back and forth between a roughly horizontal ceiling and floor without making progress in either direction.
- ResistanceA price area above the current price where rallies have repeatedly stalled and turned down, suggesting sellers tend to appear there.
- RetestA return of price to a level it has just broken, used to check whether old resistance now acts as support, or the other way round.
- Revenge tradingOpening impulsive, often larger trades right after a loss to win the money back quickly — a habit that usually deepens the loss.
- Reversal patternA chart or candlestick formation suggesting a trend may be ending and turning, such as a hammer, an engulfing or a double top.
- Risk managementThe set of rules that limits how much you can lose — per trade, per day and overall — so that mistakes and bad luck stay survivable.
- Risk of ruinThe probability of losing so much of your account that you can no longer trade, driven by stake size, win rate and payout.
- RSI (Relative Strength Index)A momentum oscillator from 0 to 100 that compares the size of recent gains with recent losses; readings above 70 and below 30 are widely watched.
S
- Shooting starA bearish reversal candle after a rise: a small body near the low and a long upper wick showing a rally that was rejected.
- SMA (Simple Moving Average)The average closing price over a set number of periods, each weighted equally, used to smooth price and show its direction.
- Spinning topA candle with a small body centred between upper and lower wicks of similar length, showing a tug-of-war that ended roughly even.
- SpreadThe difference between the buy (ask) and sell (bid) price of an instrument; in conventional trading it is a built-in cost of every position.
- Squeeze (Bollinger squeeze)A period of unusually low volatility when Bollinger Bands narrow sharply, often followed by a larger move in a direction it doesn't predict.
- StablecoinA cryptocurrency designed to hold a steady value, usually one US dollar — USDT and USDC are the best-known examples.
- StakeThe amount of money you commit to a single trade — and, in a fixed-payout trade, the most you can lose on it.
- Standard deviationA statistical measure of how widely values spread around their average; in trading, a common gauge of price volatility.
- Stochastic oscillatorA momentum oscillator (0–100) showing where the close sits within the recent high-low range, with a %K line and a smoothed %D line.
- SupportA price area below the current price where declines have repeatedly stopped and bounced, suggesting buyers tend to step in there.
T
- Three black crowsThree consecutive long bearish candles, each opening within the previous body and closing near its low — a picture of strong selling.
- Three white soldiersThree consecutive long bullish candles, each opening within the previous body and closing near its high — a picture of strong buying.
- Tick volumeThe number of price changes (ticks) in a period, used in forex as a rough proxy for activity because real traded volume isn't available.
- TiltAn emotional state in which frustration or excitement overrides your judgement, so you trade badly without fully noticing it.
- TimeframeThe period each candle or bar on a chart represents — for example M1 for one minute or H1 for one hour.
- Trading journalA record of every trade — setup, reason, result and state of mind — used to find out what really works and which mistakes you repeat.
- Trading planA written set of rules defining what you trade, when, how you enter, how much you risk and when you stop for the day.
- Trading sessionThe part of the 24-hour forex day when a major financial centre — Sydney, Tokyo, London or New York — is open and active.
- Trailing stopAn exit level that follows price as a trade moves in your favour, locking in part of the gain, and stays put if price turns.
- TrendA persistent direction of price over a chosen period — up, down or sideways — judged by the sequence of highs and lows.
- Trend lineA straight line drawn through successive lows in an uptrend, or highs in a downtrend, to show the trend's direction and slope.
- Trend strengthHow forceful and persistent a trend is, judged by indicators such as ADX, the slope of moving averages and the quality of price structure.
- TriangleA consolidation pattern in which highs and lows converge into a narrowing shape — ascending, descending or symmetrical — often before a breakout.
- True rangeThe largest of high−low, high−previous close and low−previous close, capturing a period's full movement including gaps.
- Tweezer tops and bottomsTwo or more candles with matching highs (tweezer top) or matching lows (tweezer bottom), showing a level rejected twice in a row.
U
V
W
- Wagering requirementThe trading volume you must complete before a bonus becomes withdrawable — usually the bonus amount times a multiplier, such as ×30.
- Wallet addressA string of characters identifying where crypto should be sent on a particular blockchain network — like an account number for that network.
- Weekend gapA jump between Friday's closing price and the first price of the new week, caused by news and orders building up while forex was shut.
- Wick (shadow)The thin line above or below a candle's body, marking the highest and lowest prices reached during the period.
- Win rateThe percentage of your trades that ended in profit; meaningful only next to your break-even win rate and over many trades.
Practise first, then decide
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