Glossary

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The vocabulary of automated trading, defined in plain language. Every entry follows the same rules as the lessons: no hype, no predictions, no promises — just what the term means and why it matters.

• Backtest — Running a strategy against historical price data to see how its rules would have behaved in the past.
• Broker server time — The clock your broker's platform runs on — the timezone that defines what "session hours" mean to a robot.
• Commission — A fixed per-trade fee some brokers charge instead of (or on top of) a wider spread.
• Demo account — A broker account with simulated money — the standard proving ground before any strategy touches real funds.
• Drawdown — The decline from an account's peak value to its subsequent low — the number that measures how painful a strategy is to hold.
• Equity curve — The plot of account value over time — including open positions — that shows a strategy's character at a glance.
• Expectancy — The average amount a strategy makes or loses per trade, combining win rate and win/loss size into one number.
• Expert Advisor (EA) — A program that runs inside MetaTrader and places, manages, and closes trades automatically according to fixed rules.
• Forward test — Running a strategy on live or demo markets going forward, after development, to see if backtest behavior holds up.
• Leverage — Borrowed buying power from the broker that lets a small deposit control a much larger position.
• Liquidity — How much volume the market can absorb at current prices — the depth that determines spreads and slippage.
• Lot size — The unit that measures position size in forex and metals — one standard lot is 100,000 units of the base asset.
• Margin — The deposit a broker locks as collateral while a leveraged position is open.
• Margin call / stop-out — The broker's forced closing of positions when account equity can no longer support the open margin requirement.
• Martingale — A recovery scheme that increases position size after losses so one win repays the streak — with drawdowns that grow geometrically.
• MetaTrader 5 (MT5) — The trading platform most retail algorithmic trading runs on, connecting charts, robots, and your broker account.
• Modelling quality / tick data — How faithfully a backtest reconstructs historical price movement — the difference between testing on real ticks and on interpolated guesses.
• MQL5 — The programming language used to write Expert Advisors and indicators for MetaTrader 5.
• Overfitting (curve fitting) — Tuning a strategy so tightly to historical data that it captures noise instead of a repeatable edge.
• Pending order — An instruction that rests at the broker until price reaches a chosen level — buy/sell stops and limits.
• Pip / point — The smallest conventional unit of price movement in a currency pair; its cash value depends on the pair and the lot size.
• Position sizing — Deciding how much to risk on each trade — the discipline that determines whether losing streaks are survivable.
• Range breakout — A strategy family that marks a price range during quiet hours and trades the move when price escapes it.
• Risk per trade — The fraction of account equity a single trade can lose if its stop loss is hit.
• Slippage — The difference between the price an order requested and the price it actually filled at.
• Spread — The difference between the buy (ask) and sell (bid) price — the built-in cost of every round-trip trade.
• Stop loss — An order that closes a position automatically at a predefined worse price, capping the loss on a trade.
• Take profit — An order that closes a position automatically at a predefined better price, locking in a gain.
• Trading session — The hours when a major financial center is active — Asian, London, and New York sessions shape the day's liquidity rhythm.
• VPS (Virtual Private Server) — A rented, always-on computer that keeps your trading terminal running when your own machine is off.
• Win rate — The percentage of trades that close in profit — meaningless on its own, informative next to the reward-to-risk ratio.

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