60+ essential terms every funded-account trader should know. ICT & Smart Money concepts, risk management, prop firm rules, trading psychology — concise definitions, no fluff. If you want to journal your trades properly, start here.
A volatility indicator measuring the average size of recent price moves (usually 14-period). Used for stop-loss placement: a stop at 1.5× ATR adapts to current market volatility instead of fixed-pip stops that get hit in choppy conditions.
Applying a trading strategy to historical price data to estimate its win rate and expectancy before risking real money. Not predictive — past performance does not guarantee future results.
A trader's directional expectation for the session — long, short or neutral. Set before the market opens to avoid emotion-driven decisions. In GridTrade, daily bias is logged separately from trades.
Price breaks above the most recent swing high (bullish BOS) or below the most recent swing low (bearish BOS), confirming a trend continuation. Cornerstone of ICT / Smart Money concepts. Full BOS & CHoCH guide →
A failed order block — the candle structure that originally caused a move, then got swept by price returning through it. After the sweep, it often flips polarity (former support becomes resistance) and acts as the new significant zone. Full order-block guide →
The cluster of stop-loss and breakout-buy orders sitting above a previous swing high. Smart Money targets BSL because that's where retail stops live — sweeping it triggers a wave of buy orders before the real (often downward) move starts. Full liquidity-sweep guide →
First lower-low in an uptrend (or higher-high in a downtrend), signaling a potential trend reversal. Earlier signal than BOS — used to anticipate the new direction. Full BOS & CHoCH guide →
Multiple independent signals pointing to the same trade idea — e.g. order block + Fibonacci level + session high. Higher confluence = higher-probability setup.
Used by most prop firms (Apex, Topstep, FTMO) — your single best day's profit cannot exceed a defined percentage of your total profit (often 30–50%). Designed to prevent traders from passing on one lucky outlier. Even consistency = sustainable funded account.
The maximum loss allowed in a single trading day on a prop firm account before the account is closed. FTMO uses 5% of starting balance, Topstep approximately 4%, Apex uses a trailing model. Breaching this rule = challenge or funded account failed.
In a measured range, the lower half is "discount" (good for longs), the upper half is "premium" (good for shorts). Buying premium / selling discount = poor risk-reward.
The percentage drop from peak to trough in an equity curve. Daily drawdown limits in FTMO/Apex are usually 5%, max drawdown 10%. Exceeding either = challenge failed. See also the dedicated FTMO journal page.
Any repeatable advantage that gives you positive expectancy over enough trades. Edge can come from setup selection, timing, psychology, or execution — but it's only real if you can quantify it in your journal. "Feeling like" you have edge ≠ having edge.
A line chart of your account balance over time. A clean upward-sloping equity curve with shallow drawdowns is the signature of a sustainable trader. Steep drawdowns followed by sharp recoveries usually mean blown risk management — not edge.
Average $ won per trade over a series — calculated as (WinRate × AvgWin) − (LossRate × AvgLoss). Positive expectancy = profitable system over enough trades. Reported per-setup in GridTrade's playbook. How R-multiple expectancy works →
A 3-candle pattern where the wicks of candle 1 and candle 3 don't overlap — leaving an imbalanced "gap" on candle 2. Price often returns to fill this gap, making it a popular entry zone in ICT-style setups. Full FVG guide →
Entering a trade after the move has already started, driven by the fear of missing the rest. Stop-loss is usually placed too wide → poor risk-reward → predictable losses. Pre-tagged as a mistake in GridTrade.
An account provided by a prop firm (FTMO, Apex, MyForexFunds, etc.) after passing an evaluation. The trader keeps a profit split (usually 70–90%) without risking own capital. Strict drawdown rules apply. See the funded-account journal page.
A price discontinuity where the open of one candle is significantly different from the previous close — most common at the Sunday futures open or after earnings. Traders often "fade the gap" (trade toward the prior close) or "trade with the gap" depending on volume confirmation.
A timeframe larger than the one you trade on — e.g. if you trade the 5-min, HTF is 1h or 4h. HTF context filters your trades: only take longs in a bullish HTF, only shorts in a bearish HTF.
The framework popularized by Michael J. Huddleston, focused on Smart Money concepts: order blocks, FVGs, liquidity sweeps, killzones, and the idea that retail traders systematically place stops where institutions hunt them. Polarizing but influential — most modern day-trader vocabulary comes from ICT. Full ICT guide → · SMC explained →
Same as FVG (Fair Value Gap) — a price area where the market moved aggressively in one direction without filling. Often revisited by price to rebalance.
A liquidity pool the market deliberately runs before reversing into the real move. Traders see "obvious" levels, place stops, get swept, then the real trade starts. Full liquidity-sweep guide →
A structured record of every trade you take — entry, stop, exit, setup, emotion, outcome, notes. The single highest-ROI activity for any serious trader past the first 100 trades. See best trading journals 2026 for tool options.
A formula for optimal position size given a known win rate and reward-to-risk ratio: f = W − (1−W)/R where W = win rate, R = reward/risk. Theoretically maximizes long-term compounding, but most professionals use a fraction (often 1/4 Kelly) because real-world expectancy estimates are noisy.
ICT-defined time windows of highest volatility where institutional moves typically begin: London Killzone (07:00–10:00 GMT), New York Killzone (12:00–15:00 GMT). Many ICT-style day traders only take setups during these windows — and ignore the rest of the day. Full ICT guide →
Trading position size larger than your account balance, enabled by margin. Common ratios: 1:30 retail FX (EU), 1:50–1:500 offshore brokers, ~1:20 for futures via margin. Higher leverage doesn't increase edge — it amplifies both wins and losses. Used poorly, it's the #1 reason traders blow accounts.
An order to buy or sell at a specific price or better — only fills if the market reaches your level. Opposite of a market order (which fills immediately at the current price, paying spread). Limit orders give you better fills but risk missing the move if price doesn't return.
Price wicks above a recent high (or below a recent low) to trigger pending stops and orders, then immediately reverses. Classic "stop-hunt" pattern in ICT terminology — often the start of the real move. Full liquidity-sweep guide →
The cash deposit required to open a leveraged position. Initial margin opens the trade; maintenance margin is the minimum required to keep it open. If your equity falls below maintenance, you get a margin call — and the broker may auto-liquidate.
The total loss allowed across the lifetime of a prop firm account before it's closed — typically 10% of starting balance (FTMO), or trailing-drawdown-based (Apex). Different from daily loss limit. Breaching max loss is final; the account is gone.
An order block formed after a CHoCH, where unfilled orders from the previous trend get "mitigated" (filled) when price returns to the zone. Often a high-probability reversal entry, especially when paired with HTF bias confirmation.
The last opposing candle before a strong directional move — assumed to be the area where institutions placed orders. Often acts as support (bullish OB) or resistance (bearish OB) when price returns. Full order-block guide →
The high and low of the first 5–30 minutes of the trading session — used as a reference zone for the rest of the day. Opening Range Breakout (ORB) is one of the most-tested day-trading setups: enter long on a break above the opening range high, short on a break below. Full ORB strategy guide →
The three possible results of a trade. Win = closed at target, Loss = closed at stop, BE (Break-Even) = closed at entry. Tracked per-trade in any serious journal.
Taking far more trades than your edge supports — usually after a winning trade ("hot hand") or a losing one ("revenge"). Most overtrading sessions feature emotion ≥ 4 in the journal. Pre-tagged as a mistake in GridTrade's catalog.
The smallest standard price move in forex — typically the 4th decimal place (or 2nd for JPY pairs). 1 pip on EUR/USD = $10 per standard lot, $1 per mini-lot, $0.10 per micro-lot. Pip values are constant within a pair but vary across pairs.
The $ result of a trade (or a period). Tracked daily in the calendar, weekly in the rückblick chart. Net PnL includes commissions and fees.
A pre-marked price zone where the trader expects a reaction — usually an order block, FVG or liquidity pool. The trade plan is built around what happens when price reaches the POI.
Calculating contract or lot count so that the stop-loss equals a fixed % of equity (usually 0.5–2%). Most important risk-management lever — bigger than entry timing for most traders. Use our free position size calculator.
Total gross profit divided by total gross loss across a trade sample. PF > 1.0 = profitable system. PF > 2.0 = strong system. PF < 1.0 = losing system regardless of win rate. The single number most prop firms quietly evaluate.
A "proprietary trading firm" that funds traders after they pass an evaluation challenge. Major firms in 2026: FTMO, Apex Trader Funding, Topstep, MyForexFunds, FundedNext, The5%ers, E8 Funding. Profit splits typically 70–90% to the trader. See our funded-account journal page.
The trade result expressed in multiples of the initial risk. Risk $100, win $250 = +2.5R. Lets you compare trades across instruments and account sizes — the universal trading currency.
A period where price oscillates between a defined high and low without trending. Range trading: buy near support, sell near resistance. Most failed breakout trades happen when traders try to trend-trade in what's actually a range.
Re-entering a trade immediately after a loss to "win it back" — overriding the playbook. Almost always destructive. GridTrade flags this via emotion-5 trades in the mistakes catalog.
The fixed % of equity you're willing to lose on any single trade. Industry standard: 0.5–2%. On prop firm accounts with tight drawdown, most professionals stay at 0.25–0.5% per trade to survive losing streaks of 8–10 in a row (statistically certain over time).
Potential reward divided by risked amount, before taking the trade. 1:3 RR means you're risking $100 to make $300. Combined with win rate, determines expectancy.
A trading style focused on dozens of fast trades per session, holding seconds to minutes, targeting small per-trade gains. High volume, high stress, high commission drag. Works only with razor-thin spreads and tight execution — usually futures or major FX.
The three main trading sessions of the day. London (08:00–11:00 GMT) and NY (13:30–16:00 GMT) overlap on the highest volume. Many traders only take trades during a specific session — filtering by session is essential.
A named, repeatable trade idea with defined entry, stop, target. E.g. "Opening Range Breakout" or "FVG Reclaim". Listed in your playbook, tracked across trades. The unit of "edge".
Return divided by volatility (standard deviation of returns), minus the risk-free rate. Higher = better risk-adjusted returns. Sharpe > 1.0 is good, > 2.0 is excellent. Used heavily in quantitative trading; less common but increasingly relevant in retail day-trading analysis.
The difference between your intended fill price and the actual execution price. Worst during news events, volatile opens, and thin liquidity. Slippage on stop-losses can blow past your planned risk — one reason news traders use wider stops or skip the news.
The difference between bid and ask. Major FX pairs run 0.1–1 pip; minor pairs 2–5 pips; exotic pairs 10+. Spread eats into your edge — a 1-pip spread on a 5-pip scalp is a 20% tax. Pick liquid instruments and tight-spread sessions.
The cluster of stop-loss and breakout-sell orders sitting below a previous swing low. Smart Money targets SSL to trigger retail stops before reversing upward. Mirror image of BSL. Full liquidity-sweep guide →
A pre-set order that closes the trade automatically if price moves against you by a fixed amount. Non-negotiable for prop-firm traders — drawdown rules make stop-hits cheap, hand-managed losses expensive.
A pre-set order that closes a winning trade at a defined price. Removes the emotional "should I let it run?" decision. Most professionals set the take-profit at the same time as the stop-loss — both based on the setup's structure, not on dollar targets.
The $ value of the smallest price increment for an instrument. NQ = $5/tick, ES = $12.50/tick, MNQ = $0.50/tick, MES = $1.25/tick, BTC futures = $5/tick. Built into GridTrade's risk calculator and trade form so PnL and R are auto-computed.
The emotional state where rational decision-making collapses — usually after 2–3 losses in a row, or one large unexpected loss. Most blown prop accounts trace back to a tilt session. Flagging trades at emotion 4–5 in the journal is how you catch tilt patterns before they're catastrophic.
A stop-loss that moves with the price in your favor, locking in profit as the trade progresses. Trailing by ATR, by swing high/low, or by % from peak. Trade-off: gives you bigger winners on trending moves, but stops you out earlier on choppy ones.
The size and speed of price moves. Measured by ATR, standard deviation of returns, or implied volatility (options). High volatility = bigger moves, bigger opportunity, bigger risk. Position size should adjust to volatility — same R-multiple across different vol regimes requires different contract counts.
A histogram of traded volume at each price level over a period. Shows where the market actually transacted — high-volume nodes act as magnets, low-volume nodes act as fast-traversal zones. Point of Control (POC) = the price level with the most volume.
Percentage of winning trades over a sample. High win rate alone doesn't mean profitable — a 70%-win rate with 1:0.3 RR is worse than a 35%-win rate with 1:3 RR. Always pair with expectancy.
Knowing the terms is step 1. Logging your trades against them — that's where the edge comes from. GridTrade does that, with a calendar, 9 filters and per-trade emotion tracking.
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