TradeSmrt

Stock Basics · Lesson 7/7 · 4 min read

A Glossary of Terms You'll See in the Trading Strategies Course

Why Round Up Terms Before You Start

The Trading Strategies course explains each term as it comes up within a given strategy, but terms that show up repeatedly across several lessons are much easier to keep straight when they're gathered in one place. This lesson doesn't teach new concepts — it's a map of the vocabulary you're about to encounter. Each entry notes which lesson covers it in depth, so feel free to come back here any time something in the Trading Strategies course feels unclear.

Trend-Following Indicators

  • Moving Average (MA): A line connecting the average closing price over the last N days. Shorter periods react quickly to recent prices; longer periods show the bigger picture more smoothly. → Strategies Lesson 1
  • Golden Cross / Death Cross: The point where a short-term MA crosses above or below a long-term MA — read as a buy or sell signal, respectively. → Strategies Lesson 1
  • SMA / EMA: Two ways of calculating a moving average. SMA weights every day equally; EMA weights recent days more heavily. → Strategies Lesson 1

Indicators That Measure the Strength of a Move

  • RSI (Relative Strength Index): A 0–100 indicator comparing recent gains to recent losses. Commonly read as overbought above 70 and oversold below 30 — though some strategies interpret it the opposite way. → Strategies Lesson 2
  • Momentum: How strongly and how consistently price has been moving in one direction recently. → Strategies Lesson 2
  • Relative strength (vs. market): An individual stock's return compared to its sector or the broader market index. → Strategies Lesson 2

Indicators That Measure How Wildly Price Swings

  • Bollinger Bands: Bands drawn above and below a moving average at a distance based on standard deviation. Price touching a band is read as overbought or oversold. → Strategies Lesson 3
  • Z-score: A precise number for how many standard deviations away from the average the current price sits. → Strategies Lesson 3
  • Support / Resistance: A price level where a decline or rally has repeatedly stalled. A decisively broken resistance level can flip into support afterward. → Strategies Lesson 4
  • Breakout: A move that breaks out of a range price has been stuck in for a long time. → Strategies Lesson 4
  • Volume Profile: An indicator showing how much volume actually traded at each price level, rather than price over time. → Strategies Lesson 4

ICT / Smart Money Terms

  • Liquidity: The cluster of stop-loss and pending orders sitting near a recent high or low. → Strategies Lesson 5
  • Liquidity sweep: A move that briefly pokes through that high or low before quickly reversing. → Strategies Lesson 5
  • FVG (Fair Value Gap): A trading gap left across 3 candles by a fast price move. → Strategies Lesson 5
  • HTF / LTF: Higher Time Frame and Lower Time Frame. Direction is set on the HTF; precise entry timing is set on the LTF. → Strategies Lesson 5
  • PO3 (Power of Three): The market's recurring three-phase rhythm — Accumulation (consolidating) → Manipulation (a fakeout) → Distribution (the real move). → Strategies Lesson 7
  • DOL (Draw On Liquidity): The liquidity target price is expected to be drawn toward. → Strategies Lessons 5 and 7
  • Premium / Discount: Whether price is above (premium) or below (discount) the halfway point (equilibrium) of a recent swing range. → Strategies Lesson 7
  • Killzone: A specific time window believed to see concentrated institutional order flow — most commonly, right after the New York regular session opens. → Strategies Lesson 7

Trade Management Terms

  • Stop / Target: The price where you exit having decided you were wrong (stop), and the price where you take your desired profit (target). → Basics Lesson 3, Strategies Lesson 6
  • Risk/Reward Ratio (R:R): The ratio between the risk you're taking and the reward you expect. "1:3" means risking 1 to try to make 3. → Strategies Lesson 6
  • R-multiple: Actual P&L converted into a multiple of your initial risk — used to compare different trades on the same scale. → Strategies Lesson 6
  • Kelly Criterion: A formula that calculates a mathematically "optimal" position size from your win rate and risk/reward ratio. → Basics Lesson 6

How to Actually Use This Glossary

Don't try to memorize all of this at once. It's far more effective to work through the Trading Strategies course lesson by lesson and come back here whenever an unfamiliar term shows up. After running into these terms a few times, they'll start to feel natural.

Summary

  • This lesson isn't new material — it's a map of the vocabulary ahead.
  • Organized roughly as: trend (moving averages) → strength (RSI) → volatility (Bollinger Bands) → price levels (support/resistance) → ICT terms (liquidity, FVG) → trade management (risk/reward).
  • Whenever you get stuck in the Trading Strategies course, feel free to come back to this lesson.

You're ready. Let's move into the Trading Strategies course and learn some widely used strategies in practice.