Trading glossary

Balanced Price Range

Where a bullish and a bearish fair value gap overlap — a band that was left untraded in both directions, treated as a higher-conviction zone.

Breaker Block

An order block that price closed through after mitigating it — the zone flips polarity, and former support is treated as resistance.

Fair Value Gap

A three-candle pattern where the middle candle moves so fast it leaves a price range untraded by the wicks either side — an imbalance price often revisits.

Liquidity Sweep

A push through an obvious high or low that reverses quickly — price reaching for the stop orders resting beyond the level rather than breaking out.

Order Block

The last opposing candle before a sharp impulsive move — the price zone where large orders were filled before the move began.

Candlestick Pattern Priority

Which formation is reported when several match the same candles — the specific pattern must be checked before the generic one it contains.

Doji

A candle whose open and close are nearly equal, leaving almost no body — buyers and sellers finished the period level.

Engulfing Pattern

A candle whose body completely covers the previous candle's body, reversing the prior period's result outright.

Harami

A small candle whose body sits entirely inside the previous candle's body — the mirror of engulfing, read as momentum stalling.

Morning Star and Evening Star

A three-candle reversal — a strong candle, a small-bodied star gapping away from it, then a strong candle the other way.

Three White Soldiers

Three consecutive strong candles in one direction, each opening within the previous body — steady accumulation rather than one spike.

Three-Line Strike

Three candles in one direction, then a fourth that engulfs all three — and its reliable resolution is the opposite of what its name suggests.

Volume Confirmation (candlestick)

Requiring a pattern to form on meaningfully above-average volume before it counts — participation, not just shape.

BOS vs CHoCH

A BOS breaks a swing point in the direction of the existing trend and confirms it. A CHoCH breaks one against the trend and warns the trend may be over.

Equal Highs and Equal Lows

Two swing points at almost the same price. The flat edge advertises where stops are resting, which makes it a liquidity target.

Wyckoff Accumulation

Wyckoff's model of how large positions are built inside a range before a markup — phases A to E, with the spring as the classic final shakeout.

ADX

A 0–100 measure of how strongly a trend is moving, without saying which way. High ADX means a strong trend; low ADX means a range.

EMA Crossover

A fast exponential moving average crossing a slow one, read as a trend change. EMAs weight recent prices more heavily than an SMA.

MACD

The difference between a fast and a slow EMA, with a signal line and histogram — a trend-following momentum indicator.

RSI (Relative Strength Index)

A 0–100 momentum oscillator comparing average gains to average losses over a lookback, by default 14 periods.

VWAP

The average price weighted by volume across a session — the benchmark level institutional execution is measured against.

Implied Volatility

The volatility figure that makes a pricing model return the option's traded premium — the market's expectation of future movement, backed out of price.

IV Rank

Where current implied volatility sits within its own recent range, as a percentile — context an absolute IV number cannot give.

Lot Size (F&O)

The fixed number of units in one F&O contract. NSE revises lot sizes by circular, and both old and new sizes trade simultaneously during a revision.

Max Pain

The strike at which the total value of expiring options is smallest — where option buyers collectively lose the most.

Open Interest

The number of derivative contracts currently outstanding. It rises when a new position is opened and falls when one is closed.

Option Chain

A table of every call and put across strikes for one expiry, with premium, open interest, volume and implied volatility per strike.

Option Greeks

Sensitivities of an option price to its inputs — delta to spot, gamma to delta, theta to time, vega to volatility.

Put-Call Ratio

Put open interest divided by call open interest. Often read as a sentiment gauge, and frequently read backwards.

Theta

The premium an option loses per day from the passage of time alone. Negative for buyers, and it accelerates into expiry.

Confluence

Independent methods agreeing on the same read. The word is only meaningful when the inputs are genuinely independent.

Market Regime

A classification of current conditions — trending, ranging, breakout or choppy — that determines which methods are applicable at all.

Multi-Timeframe Analysis

Reading the same instrument across several timeframes so a lower-timeframe entry is taken with the higher-timeframe context in view.

Expected Move

An estimate of how far price is likely to travel over a horizon, from either volatility or option pricing — a range, not a forecast.

Position Sizing

Deciding how much to trade from the distance to your stop and the amount you are willing to lose — not from conviction or available margin.

Risk of Ruin

The probability that a sequence of losses takes an account below the point where it can keep trading — driven by size per trade more than by win rate.