The trader's glossary.

Price areas where a market has repeatedly stopped falling (support) or rising (resistance). They matter because real decisions were made there before — positions opened, stops placed, losses realised — so the crowd watches the same spots again.

How easily a market absorbs orders without moving. Practically, 'liquidity' also refers to clusters of resting orders — especially stop-losses — that large players may target, because executing size requires someone on the other side.

A quick push through an obvious level that triggers the stops resting behind it, then reverses. Not a conspiracy — simply the mechanics of size needing liquidity. The obvious level is rarely the safe place to hide a stop.

A period when price oscillates between accepted boundaries and neither side wins. Markets spend most of their time here. Breakouts from long balances tend to travel, because positions accumulated inside must be resolved.

Price pierces a boundary, triggers breakout entries and stops, then returns into the range. One of the most traded patterns in futures precisely because the crowd's reaction to it is predictable.

Trends move in alternating phases: impulses (fast, directional, high participation) and corrections (slow, overlapping, against the trend). Distinguishing them tells you whether you are trading with the pressure or against it.

A jump between one session's close and the next open with no trading between. Gaps mark urgency; they often act as reference zones later, and 'filling the gap' is a common magnet narrative.

Futures contracts expire; open positions migrate to the next contract in the days before. Volume and open interest shift, and price behaviour around rollover can be distorted — worth knowing before reading too much into a move.

A tick is the minimum price increment of a futures contract; a point is a full unit of price. Each tick has a fixed dollar value per contract — the basis of all position-size math.

Instruments that tend to move together (EUR and GBP futures) or inversely (dollar index vs. gold). Correlation lets you confirm a read on one market with another — or hide a stop behind a level on the correlated asset.

The 24-hour futures day divides into Asia, London, and New York sessions, each with its own liquidity profile and typical behaviour. Many setups only make sense inside the right session.

The full market value a futures contract controls, not the money you post to hold it. One ES contract at 5,000 index points is 5,000 × $50 = $250,000 of exposure. Position size is measured here, not at the margin.

Notional exposure divided by account equity. A $250,000 ES contract on a $10,000 account is 25:1 before any decision has been made. Leverage does not change your edge; it multiplies both the result and the speed at which a bad run becomes terminal.

The shape of the futures curve. In contango, later contracts trade above nearer ones — the normal state for storable commodities and for volatility. In backwardation, later contracts trade below. Rolling itself costs nothing — closing the near contract and opening the far one produces no cash flow. What the curve shape explains is why a rolled futures position’s return over time differs from the change in the spot price over the same period.

Exchange-set maximum daily price moves. When a contract is limit-locked, trading may only occur at or inside the limit — which means a position cannot always be exited at the price on your screen. During the 1980 silver collapse the futures were limit-locked while the spot month swung by five and ten dollars a day, so “the price of silver” meant two different things depending on which contract you held.

A rules-based pause in trading after a defined move. Halts protect the market as a whole and remove your ability to act at the same time. A stop-loss can only work during the hours and conditions in which the market is accepting orders.

The stream of actual executed trades — who bought, who sold, how aggressively, at what price. Order-flow analysis reads this stream instead of (or alongside) the price chart, asking not 'where did price go?' but 'who pushed it there?'

A chart that splits every candle into price levels and shows the volume traded at each — often separated into buys and sells. It reveals where inside the bar the real business happened.

The difference between market-buy volume and market-sell volume over a bar or level. Positive delta = aggressive buyers dominated. Divergences between delta and price (price rises, delta falls) hint at absorption.

Delta summed over time. It tracks which side has been the aggressor across a whole move, and its divergence from price is a classic clue that a trend is running on fumes.

A price level where aggressive volume on one side heavily outweighs the other (commonly 200–400%, compared diagonally on a footprint: the ask at one price against the bid one tick below). Stacked imbalances mark urgency — and often the levels a market returns to test.

A histogram of volume by price over a chosen period. Its shape shows where the market did business (acceptance) and where it moved fast (rejection).

The single price with the most traded volume in a profile — the market's 'fairest' price for that period. Price tends to react to old POCs, making them natural reference levels.

The price band containing ~70% of a period's volume. Trading above or below value, and re-entries into it, are core concepts in profile-based trading.

A profile built from time at price rather than volume: each half-hour period stamps letters at the prices it touched. Reveals balance, excess, and untested 'single prints' the market may revisit.

The volume-weighted average price — the average price actually paid over a period. Institutions benchmark executions against it. An 'anchored' VWAP starts the calculation at a chosen event (a high, a report) to track the positioning built since.

A chart of fixed-size price bricks that ignores time. It filters noise and makes structure and momentum shifts easier to see — at the cost of hiding the clock.

Aggressive orders hitting a level and being fully met by passive size — price barely moves despite heavy volume. Someone big is taking the other side. Levels that absorb are levels being defended.

A large passive order that shows only a small visible slice at a time, reloading as it fills. Icebergs are how size hides in the book — and repeated reloads at one price are a footprint of institutional interest.

A participant quoting both sides of the book, earning the spread and managing inventory risk. An options market maker does that by trading the underlying futures, not the other way round. Understanding what the market maker must do (not wants to do) at certain prices is a powerful lens on price behaviour.

The gap between the best price a buyer will pay and the best a seller will accept. It is the cost of demanding immediacy, it widens exactly when you most want out, and over hundreds of trades it is a larger share of most retail edges than commission is.

The ladder of resting limit orders on each side of the book. It shows intent to trade at a price, not commitment: resting size can be pulled instantly, and often is. Read it alongside what actually traded rather than instead of it.

A market order guarantees execution and not price; a limit order guarantees price and not execution. A stop-loss is usually a market order in disguise, which is why stop fills are systematically worse than entry fills and why cost assumptions built on entries understate reality.

The difference between the price you expected and the price you got. It is not random noise around zero — it is biased against you, because you are most often demanding liquidity at moments when others are too.

A fast push through a level that fills the resting orders parked behind it — typically stops — followed by a return. Size needs a counterparty, and the obvious level is where counterparties are concentrated. It is mechanics, not malice.

A contract giving the right, not the obligation, to buy (call) or sell (put) the underlying at a set strike price — on the expiration date only (European style) or at any time up to it (American style). On CME equity index futures the quarterly options are American-style while the weekly and end-of-month options are European, so most listed expirations in a month are European. On futures exchanges, options open interest is public — a map of where positions actually sit.

The price at which an option can be exercised. Strikes with heavy open interest become reference levels for the underlying, because someone has real money committed there.

The date an option ceases to exist. As expiration approaches, hedging flows around big strikes intensify. The documented pinning effect is narrow — clustering at the at-the-money strike on expiration days, small in size, and in index futures it can repel as easily as attract depending on which way dealers are positioned.

The number of contracts currently open. Unlike volume, it shows positions that still exist. Where open interest builds, commitments exist that must eventually be defended, hedged, or unwound.

The price at which the total value of expiring options is lowest — where option buyers collectively lose the most. Price drifting toward max pain into expiration is a popular (and debated) observation about hedging pressure.

A call and a put bought (or sold) at the same strike and expiration. A bought straddle is a bet on movement in either direction; its breakeven prices frame the move the buyer expects.

Like a straddle, but the call and put strikes are apart. Cheaper, needs a bigger move. Large strangles in the data outline the range a serious participant is playing for.

A three-strike structure with capped risk. A long butterfly profits most if price expires near the middle strike; a sold butterfly is the opposite bet. A large print marks the middle strike as a price someone has an opinion about — but the tape does not show which side initiated, so it does not tell you which opinion.

Selling one expiration and buying another at the same strike, trading how volatility and time decay differ between dates. Institutional calendars flag which dates the smart money thinks matter.

An options combination replicating another instrument (long call + short put = synthetic long future). Size going through synthetics is positioning that never shows up in the futures tape directly.

The underlying price at which an options position starts to profit at expiration — strike plus (or minus) the premium paid. Large participants' breakevens act like magnets and defence lines on the chart.

Dealers and market makers offset the directional exposure of their option book by trading the underlying, whether the book is net long or net short. As price moves those hedges must be adjusted — mechanical flows that push and pull futures around big strikes, independent of anyone's opinion. Which direction they push depends on the sign of the book: a short-gamma dealer buys strength and sells weakness, amplifying the move; a long-gamma dealer does the opposite and dampens it.

How fast an option's delta changes as price moves. High gamma near big strikes means hedging flows accelerate — small moves force big adjustments, which can pin price or slingshot it.

The volatility priced into an option's premium. Not an unbiased forecast: implied volatility sits above subsequently realised volatility on average, so it is a price that carries a risk premium. Rising IV into an event is the options market bracing; collapsing IV after is the exhale.

The weekly Commitments of Traders report from the CFTC, breaking down futures positioning by participant type. Which categories you see depends on which report: Legacy uses commercial / non-commercial / non-reportable; Disaggregated covers physical commodities; and Traders in Financial Futures — the relevant one for index, rate and FX futures — splits dealers, asset managers, leveraged funds and other reportables. Free, public, and one of the few direct windows into who holds what.

The exchange’s minimum performance bond for holding one futures contract. Your broker may require more, intraday requirements are often far lower, and the figure changes with volatility — so use today’s number from your own account. It converts directly into a price distance — how far a market must move before a position has lost its full margin — which makes margin math a structural tool, not just a broker formality.

Futures accounts are marked to market daily. The call is issued when account equity falls below the maintenance requirement — a level below initial margin — and must then be restored back up to initial. So forced behaviour begins earlier than a full initial-margin loss, not at it. Zones where many positions reach that point are zones of forced, price-insensitive decisions.

A position taken to offset the risk of another. Much of the 'mysterious' flow in futures is hedging — mechanical, obligatory, and readable if you know whose book it protects.

The rate at which an option loses value simply because time has passed, all else equal. It is the seller’s income and the buyer’s rent. For an at-the-money option theta accelerates as expiration approaches, which is why a directionally correct trade can still lose money by being early. Well in or out of the money it does the opposite and decays more slowly into expiry.

Sensitivity of an option’s price to a change in implied volatility. Buying options is buying volatility as well as direction; a move in your favour with a collapse in implied volatility can produce a loss on a correct call.

Intrinsic value is what the option would be worth if exercised right now; extrinsic value is everything else — time and implied volatility. Only extrinsic value decays. Understanding the split explains most of the surprise in option P&L.

Where the strike sits relative to price. In-the-money options carry intrinsic value and behave more like the underlying; at-the-money options carry the most extrinsic value and the highest gamma; out-of-the-money options are pure extrinsic value and expire worthless unless price arrives.

Two ways of asking whether current implied volatility is high or low for this instrument. IV rank places today between the past year’s extremes; IV percentile counts how many days were lower. An absolute IV number means little without one of these.

The pattern of implied volatility across strikes. In equity indices, downside puts almost always carry higher implied volatility than equidistant calls — the market charges more to insure a crash than a rally. Changes in skew are positioning information.

Put volume or open interest divided by call. A crude sentiment gauge, and easy to over-read: high put volume can be hedging by holders rather than bearish speculation. Useful as one input among several, never as a signal.

A pre-set order that closes a losing position at a price chosen in advance — the exact spot where the trade idea is proven wrong. The defining habit of surviving traders is that the stop exists before the entry does.

Capping the loss on any single trade at a small fixed fraction of the account (commonly 0.5–2%). It makes ruin mathematically slow and keeps any one trade emotionally survivable.

Calculating how many contracts to trade from the stop distance and the risk cap: size = (account × risk%) ÷ (stop distance × tick value). Size is an output of risk — never a feeling.

Potential profit divided by potential loss, both defined in advance. A 2:1 trade can lose more often than it wins and still make money — which is why win rate alone tells you almost nothing.

Moving the stop to the entry price after a trade moves favourably, making the worst case zero. Useful, but done too early it converts winners into scratches — a common hidden leak.

Closing part of a position at a nearer target and letting the rest run. Trades certainty against potential; the right balance depends on the setup, not on mood.

The decline from an account's peak to its trough. Every method has one; the question is whether yours is planned for. Risk rules exist to keep the inevitable drawdown recoverable.

The average result per trade over many trades: (win% × avg win) − (loss% × avg loss). The only number that says whether a method makes money. One good month proves nothing; expectancy needs a sample.

The share of trades that profit. Seductive and overrated: a 90% win rate with occasional huge losses is a losing system. Always read it together with the risk–reward ratio.

A trade’s result expressed in units of the risk taken. If your stop was $200 and you made $500, that is +2.5R. Recording results in R rather than dollars makes trades comparable across account sizes and instruments, which is what expectancy needs in order to mean anything across a mixed history.

The probability of hitting a level from which you stop — a margin call, a prop-firm limit, or the personal point at which you quit. It rises sharply with risk per trade and is the reason more leverage can lower the expected result rather than merely widening it.

Total risk across all open positions, measured as what the account loses if every stop is hit. Most traders have a per-trade limit and no book limit, which is how a “1% risk” discipline turns into a 4% day.

The risk that positions you believe are separate move together. Three US index futures at 1% each are closer to one 3% trade than to three 1% trades — and correlations rise toward 1 in precisely the sessions that hurt.

The arithmetic penalty compounding pays for volatility: a 10% loss needs an 11.1% gain to undo, and a 50% loss needs 100%. Two accounts with identical average returns and different swing sizes do not finish in the same place, and the wilder one finishes lower.

The fact that the order of your trades, not just their contents, decides your experience. The same set of results in a different order produces a completely different drawdown — and drawdown is what determines whether you are still trading.

Maximum adverse excursion is the worst unrealised loss a trade reached before closing; maximum favourable excursion is the best unrealised gain. Logging both turns vague exit questions into evidence: whether stops sit inside the noise, and how much of the average winner you are leaving behind.

A stop and a target submitted together, where filling one cancels the other. Placing the bracket at entry moves both exit decisions into a moment when you are calm, which is the entire point.

Fear of missing out — entering late because a move is leaving without you. The market re-offers opportunity daily; the account you chase it with does not regenerate as easily. Missing a trade costs zero.

Trying to win a loss back immediately, usually bigger and angrier. The loss has become personal, the plan is gone. The only reliable fix is mechanical: a hard stop to the session after a defined losing streak.

Taking trades because you are at the screen, not because the setup exists. Death by a thousand fees and small losses. The cure is a checklist that must be satisfied before any entry.

An emotionally compromised state — after a big loss or a big win — in which decisions stop following rules. Recognising your own tilt signature (bigger size, faster clicks, 'just one more') matters more than never tilting.

So many indicators and opinions that no decision survives. Usually a symptom of redundant inputs: nine tools drawing one opinion nine ways. Fewer, independent reads decide faster.

Seeking evidence for the trade you already want. The chart obliges — it offers something for every thesis. Independent evidence sources, defined before the trade, are the structural antidote.

Yesterday's chart looks obvious; live charts never are. Judging your method by replay perfection breeds false confidence. Judge it by the journal instead — what you actually saw and did in real time.

Holding a bad position because you have 'already lost so much'. The market does not know your entry price. The only question that matters is: would I open this position now, at this price?

A written definition of what you trade, when, with what risk, and what disqualifies a trade. Discipline is not a personality trait — it is how faithfully your actions match this document.

Recording every trade — setup, reasoning, emotion, outcome — and reviewing weekly. The journal is where expectancy, leaks, and tilt patterns become visible. The unexamined account repeats itself.

The documented tendency to realise gains readily and losses reluctantly. In the canonical study of 10,000 retail brokerage accounts, investors closed winners about one and a half times as readily as losers — and the winners they sold went on to beat the losers they kept.

Losses weigh more heavily than equivalent gains — by roughly a factor of two on current meta-analytic estimates. It is the reason a scratch feels like a victory, a stop-out feels like a verdict, and breakeven feels like a legitimate objective.

Judging a price by reference to an arbitrary number — usually your own entry. The market does not know your entry and has no opinion about it. Every decision measured against it is being made with an input that contains no information.

Grading a decision by its result rather than by the process that produced it. In a business where any short window is dominated by randomness, judging trades by profit will teach the wrong lesson often enough to be corrosive — and how often depends entirely on your win rate and payoff shape.

Weighting the last few trades far above the sample they came from. It is what makes a statistically ordinary losing streak feel like a broken method, and a lucky run feel like a new level of skill.