Short definitions of risk, statistics, returns, prop trading, MetaTrader and crypto terms — with links to detailed guides and calculators.
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Risk and position size
Risk per trade
The percentage of the account you lose if the stop is hit. Usually 0.5–2%. Learn more →
R (R-multiple)
A trade result in units of risk: a 2 R profit is twice the risk to the stop, a stopped-out loss is −1 R. Without a stop, R cannot be calculated. Learn more →
Stop loss
An order that closes a position at a loss at a set price. Risk, position size and R are calculated from it.
Take profit
An order that closes a position at a profit at a set price.
Reward-to-risk ratio (RR)
The distance to the target divided by the distance to the stop. RR 2 means the target is twice as far as the stop. Learn more →
Lot
The unit of volume in MetaTrader. In forex a standard lot is usually 100,000 units of the base currency; size is calculated from risk and stop distance. Learn more →
Pip
The standard price step: 0.0001 for most currency pairs and 0.01 for yen pairs. Learn more →
Pip value
How much money a one-pip price move makes at a given volume. Learn more →
Leverage
How many times a position can exceed your own funds. Leverage changes the required margin, not the trade risk at the same size and stop.
Margin
The collateral a broker locks for an open position.
Margin level
Equity divided by margin, in percent. When it falls to the broker's thresholds, a margin call and stop out follow.
Stop out
Forced closing of positions by the broker when the margin level falls to a set threshold.
Swap
A charge or credit for holding a position overnight.
Trading statistics
Win rate
The share of winning trades. Without the ratio of average win to average loss it says nothing about the result. Learn more →
Payoff
Average win divided by average loss.
Profit factor
Gross profit divided by gross loss in absolute terms. Above 1 the strategy makes money. Learn more →
Expectancy
The average result per trade in money or R: win rate × average win − (1 − win rate) × average loss. Learn more →
Drawdown
The fall of an account from a peak to a subsequent low, in percent or money. Learn more →
Maximum drawdown
The largest drawdown over a period — the main measure of what had to be endured for the return. Learn more →
Equity drawdown
Drawdown including the floating result of open positions. It is deeper than balance drawdown, which sees only closed trades.
Drawdown recovery
The gain needed to return to the peak: +25% after −20%, +100% after −50%. Learn more →
Losing streak
Several losing trades in a row. At a 50% win rate, a streak of 5 losses happens at least once in 100 trades with a probability of about 81%.
Sharpe ratio
Average return divided by its variability (standard deviation). The higher, the smoother the result. Learn more →
Sortino ratio
Like the Sharpe ratio, but the denominator is the variability of losing periods only.
Z-score
A runs test: shows whether winning and losing trades alternate randomly or cluster. Learn more →
AHPR and GHPR
The arithmetic and geometric average return per trade relative to the balance before it. Learn more →
Risk of ruin
The probability that drawdown reaches a set threshold within a chosen number of trades. Learn more →
Returns and portfolio
TWR
Time-weighted return: the returns of the periods between deposits and withdrawals are chained, so the result does not depend on when money was added. Learn more →
XIRR (MWR)
Money-weighted return: the annual rate at which all contributions add up to the final portfolio value. Learn more →
Benchmark
An index or asset the portfolio return is compared with.
Rebalancing
Bringing portfolio shares back to target: selling what grew above its share and buying what lags. Learn more →
Cost basis: average cost and FIFO
The price at which bought assets are booked: the average of all purchases, or in purchase order — first bought is sold first. Learn more →
Realized and floating P/L
Realized — from closed trades and sales; floating — from open positions at the current price.
Prop trading
Prop firm
A company that, after an evaluation, lets a trader trade its capital and shares the profit. Learn more →
Challenge
An evaluation phase: reach a profit target without breaking the loss limits. There can be one, two or three phases. Learn more →
Funded account
The account after passing the evaluation; its profit is split between the trader and the firm.
Daily loss limit
The maximum loss per day. Firms calculate it differently: from balance or equity, by server time. Learn more →
Static drawdown
A loss limit measured from the starting balance; it does not move. Learn more →
Trailing drawdown
A loss limit that moves up with the account peak — at some firms only up to a certain level. Learn more →
Profit target
The profit needed to pass an evaluation phase.
MetaTrader and connection
MetaTrader 5
The MetaQuotes trading terminal brokers use to offer forex, CFDs, stocks and futures.
Expert Advisor (EA)
An MQL5 program that runs in the terminal on a chart: it trades, manages positions or sends data. Learn more →
Investor password
A password for view-only access to an account, without the right to trade. Learn more →
Master password
The password with full trading access to the account; never share it. Learn more →
WebRequest
The list of addresses in the terminal settings that EAs are allowed to reach over the network. Learn more →
AutoTrading (Algo Trading)
The terminal-wide switch for trading by EAs. When off, it blocks trading operations, not the EA itself. Learn more →
Magic number
A number an EA tags its orders with to tell them apart from other EAs' and manual ones.
VPS
A remote server where the terminal runs around the clock while your computer is off.
Crypto
Spot
Buying and selling the coin itself, credited to your balance.
Perpetual futures
A contract on the coin price with no expiry; funding keeps it close to the spot price.
USDT-M and COIN-M
Futures margined and settled in USDT and in the coin itself, respectively.
Funding rate
A periodic payment between holders of long and short perpetual futures positions. Learn more →
Liquidation
Forced closing of a position by the exchange when the margin is not enough to maintain it.
Read-only API key
A key that lets a service read trades and balances without the right to trade or withdraw. Learn more →
Closed P&L
The result of a closed position on an exchange net of fees and funding. Learn more →
Plan and discipline
Trading plan
Written rules: what you trade, entry and exit conditions, risk and when you do not trade. Learn more →
Checklist
A list of conditions checked before the trading day and before every trade. Learn more →
Setup
A recurring market situation with defined entry, stop and target conditions.
Trading journal
A record of every trade with the entry reason, result and mistake review. Learn more →
Tilt
A state where, after losses, emotion makes the decisions instead of the system. Learn more →
Overtrading
Taking more trades than your strategy gives. Learn more →
Revenge trading
Trying to win a loss back right away, usually with a bigger size. Learn more →
FOMO
Fear of missing out: entering without a signal because the price is «getting away».
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