180 terms · English and Spanish

Trading glossary: 180 terms explained

The concepts we use in the course, from A to Z, with their Spanish names: candlesticks, patterns, indicators, orders, options, futures, risk management and trader psychology.

Most-read terms

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1-2-3 trend change ruleRegla 1-2-3: Victor Sperandeo’s criterion: trendline break, failed high and a break of the last low.

A

AccumulationAcumulación: The first phase of an uptrend: the best-informed participants buy while the public is pessimistic.
AskAsk / offer: The lowest price at which a seller is willing to sell at that moment. It’s what you pay if you buy at market. Read the full guide
AssignmentAsignación: The option seller’s obligation to fulfill the contract when the buyer exercises.
ATRAverage True Range: The average of the true range; it measures a candle’s typical size, including gaps. Read the full guide

B

Base: A consolidation of several weeks after an advance, from which breakouts emerge in CAN SLIM.
Bid: The highest price a buyer is willing to pay at that moment. It’s what you receive if you sell at market. Read the full guide
Bollinger BandsBandas de Bollinger: A 20 SMA with bands at ±2 standard deviations; they measure volatility. Read the full guide
Bracket orderOrden bracket: An entry order with a linked profit target and stop.
Breakeven win rateTasa de aciertos de equilibrio: The win rate needed to break even given a risk/reward ratio: 1 ÷ (1 + reward/risk). Read the full guide

C

Call: An option that gives the right to buy the underlying at the strike.
CAN SLIM: William O’Neil’s system combining earnings growth, leadership, institutional demand, technical buy points and market direction.
CandlestickVela japonesa: A representation of a period with a body between open and close and shadows out to the high and low. Read the full guide
Cash accountCuenta de efectivo: An account that only trades with your own settled money. It doesn’t allow shorts or loans.
Cash-secured putPut asegurado con efectivo: Selling a put while keeping the cash to buy the shares if assigned.
ChannelCanal: A trend line with a parallel on the other side of price.
ClimaxClímax: A session of extreme volume at the end of an extended trend; it usually marks exhaustion.
ConfluenceConfluencia: Several independent pieces of evidence coinciding at the same place and time.
Contract multiplierMultiplicador: How many dollars each point of a future’s price is worth.
Covered callCall cubierto: Selling a call on 100 shares you already own.
Cup with handleTaza con asa: A U-shaped continuation pattern followed by a small pullback; popularized by William O’Neil.

D

Daily loss limitPérdida máxima diaria: The loss threshold at which you stop trading for the day. Read the full guide
DAYDay order: An order valid only during the day’s session.
Day trading: A style that opens and closes all positions within the same session. Read the full guide
Death crossCruce de la muerte: The 50 SMA crosses below the 200 SMA. Read the full guide
Delta: The approximate change in an option’s price for every $1 move in the underlying.
Disposition effectEfecto disposición: The tendency to sell winners too early and hold losers too long.
DistributionDistribución: The final phase of an uptrend: those who bought early sell to a euphoric public.
Distribution dayDía de distribución: A meaningful decline in an index on higher volume than the previous day; a sign of institutional selling.
DivergenceDivergencia: When two indicators or indexes that should move together don’t; a sign of caution.
Documented consistencyConsistencia documentada: Positive expectancy, high adherence and controlled drawdown, verified in the journal over a sufficient period. Read the full guide
Doji: A candle with almost equal open and close; it indicates indecision. Read the full guide
Double top / double bottomDoble techo / doble suelo: Reversal patterns with two failed tests of a level; confirmed on a break of the intermediate trough or peak. Read the full guide
Dow TheoryTeoría de Dow: A set of principles derived from Charles Dow’s writings; the foundation of modern technical analysis. Read the full guide
Drawdown: The account’s decline from its highest peak. Read the full guide

E

EdgeVentaja estadística: A feature of a strategy that, repeated many times, makes more than it loses after costs.
EMAMedia móvil exponencial: Exponential moving average: weights recent data more heavily. Read the full guide
EngulfingEnvolvente: A two-candle pattern in which the second candle’s body completely covers the first one’s. Read the full guide
Equity curveCurva de capital: A chart of the balance or the cumulative result, trade by trade. Read the full guide
Error tagEtiqueta de error: A fixed classification of execution failures for counting them and measuring their cost.
ETFExchange-traded fund: A fund that trades like a stock and tracks an index, sector, commodity or other basket of assets. Read the full guide
Evaluation / challengeChallenge: A funding program’s paid evaluation, with a profit target and risk rules. Read the full guide
Evening starEstrella de la tarde: A three-candle bearish pattern: long bullish, small body and long bearish.
ExpectancyExpectativa: The average gain or loss per trade, in dollars or in R.
Extrinsic / time valueValor extrínseco: The part of the premium above intrinsic value; it disappears at expiration.

F

False breakoutRuptura falsa: A crossing of a level that soon reverses and traps those who entered.
Five fundamental truthsLas cinco verdades: Mark Douglas’s ideas: anything can happen, you don’t need to know the future, results are randomly distributed, an edge is a probability and every moment is unique.
Fixed fractional riskRiesgo fijo fraccional: Always risking the same percentage of the account per trade.
FlagBandera: A continuation pattern: a strong move (the pole) followed by a small channel against it.
Follow-through dayDía de seguimiento: A strong gain in an index on more volume than the previous day, from the fourth day of a rally attempt onward.
FOMOMiedo a perderse la oportunidad: Fear of missing out on an opportunity, which leads to entering late and without a setup. Read the full guide
Fundamental analysisAnálisis fundamental: Estimating an asset’s value from its financial statements, its industry and the economy. Read the full guide
Funded account / prop firmCuenta fondeada: A program in which a firm lets you trade its capital or a simulated account in exchange for a share of the profits, after passing an evaluation. Read the full guide
Futures contractFuturo: A standardized contract to buy or sell an asset on a future date at a price agreed today.

G

Gambler’s fallacyFalacia del jugador: Believing an outcome is more likely because it hasn’t happened recently.
Gamma: The change in delta for every $1 move in the underlying.
GapHueco: An area with no trading between two consecutive candles.
Golden crossCruce dorado: The 50 SMA crosses above the 200 SMA. Read the full guide
Good faith violation: In a cash account, buying with unsettled funds and selling that position before the funds settle.
GTCGood ’til canceled: An order that stays active until it executes or is canceled (with a time limit set by the broker).

H

HammerMartillo: A candle with a small body on top and a long lower shadow after a decline; possible bullish reversal. Read the full guide
Hanging manHombre colgado: The same shape as the hammer after a rally; a bearish warning. Read the full guide
Harami: A two-candle pattern in which the second candle’s body fits inside the first one’s.
Head and shouldersHombro-cabeza-hombro: A reversal pattern with three highs, the middle one highest; confirmed below the neckline. Read the full guide
Heikin-Ashi: A candlestick variant calculated with averages; it smooths the trend but doesn’t show real prices.

I

Implementation intentionIntención de implementación: A concrete plan of the form “if X happens, I do Y.”
Implied volatility (IV)Volatilidad implícita: The future volatility the market expects, reflected in premiums.
IndexÍndice: A benchmark basket that measures the performance of a group of assets, such as the S&P 500. It can’t be bought directly. Read the full guide
Initial / maintenance marginMargen inicial y de mantenimiento: The performance bond to open a futures position and the minimum that must be kept. Read the full guide
Intrinsic valueValor intrínseco: What an option would be worth if exercised now.
Island reversalIsla de reversión: A group of candles isolated by two gaps in opposite directions.
ITM / ATM / OTMDentro / en / fuera del dinero: In, at or out of the money, depending on the relationship between the underlying and the strike.
IV crush: A sharp drop in implied volatility after an event, which makes premiums cheaper.
IV rankIV rank / IV percentile: A measure of current implied volatility compared with its range over the past year.

L

Level 2Nivel 2: A view of the order book showing the depth of bids and asks. Read the full guide
LeverageApalancamiento: Controlling a position larger than your own capital. It multiplies gains and losses, not the probability of being right. Read the full guide
Limit orderOrden limitada: Buys or sells at a specific price or better. It guarantees price, not execution. Read the full guide
LiquidityLiquidez: How easily you can buy or sell without moving the price much. It shows up as high volume, a tight spread and depth.
Log scaleEscala logarítmica: A chart scale in which equal distances represent equal percentage changes.
Long positionPosición larga: Buying in the expectation that price will rise.
Loss aversionAversión a la pérdida: The tendency to feel losses more intensely than gains of the same size.

M

MACDMoving Average Convergence Divergence: Gerald Appel’s oscillator: 12 EMA − 26 EMA, with a signal line (9 EMA) and a histogram. Read the full guide
MAEExcursión máxima adversa: Maximum adverse excursion: how far a trade went against you before it closed.
MarginMargen: A loan from the broker to trade, or the equity you must keep as collateral. Read the full guide
Margin callLlamada de margen: A notice that your equity fell below the required minimum; you must deposit funds or reduce positions. Read the full guide
Mark-to-market: The daily settlement of gains and losses on a futures position.
Market makerCreador de mercado: A firm that constantly posts bids and asks and provides liquidity.
Market orderOrden de mercado: Buys or sells immediately at the best available price. It guarantees execution, not price.
Maximum drawdownDrawdown máximo: The account’s largest decline from a peak to the following low. Read the full guide
Measured moveMovimiento medido: A rule that projects a pattern’s height from its breakout to estimate a target. Read the full guide
MFEExcursión máxima favorable: Maximum favorable excursion: how far a trade went in your favor before it closed.
Micro contractMicro contrato: A future one tenth the size of the standard contract.
Momentum: The speed and strength of price movement.
Morning starEstrella de la mañana: A three-candle bullish pattern: long bearish, small body and long bullish.

N

NecklineLínea de cuello: The line connecting the lows between the shoulders and the head. Read the full guide
Net liquidation valueValor de liquidación neto: What the account would be worth if all positions were closed at the current price.
Notional valueValor nocional: The total value of the asset a contract controls: price × multiplier.

O

OBVOn-Balance Volume: Cumulative volume that adds on up-close days and subtracts on down-close days.
OCOOne cancels the other: Two linked orders: when one executes, the other is canceled.
OHLCApertura, máximo, mínimo, cierre: The four prices of each period: open, high, low and close. Read the full guide
Open interestInterés abierto: The number of outstanding contracts of an option or future.
Opening rangeRango de apertura: The high and low of the first minutes of the session. Read the full guide
OptionOpción: A contract that gives the right, not the obligation, to buy (call) or sell (put) an asset at a fixed price until a certain date.
Order bookLibro de órdenes: The list of pending buy and sell orders at each price level.
OscillatorOscilador: An indicator that oscillates around a central value, such as the RSI or the MACD.
Out-of-sample / forward testPrueba fuera de muestra: Verifying an improvement with new data, different from the data that suggested it.
Overbought / oversoldSobrecompra / sobreventa: Extreme oscillator readings (RSI above 70 or below 30); they indicate recent strength or weakness, not a mandatory reversal. Read the full guide
OverconfidenceExceso de confianza: Overestimating your own skill, common after winning streaks.
Overfitting / curve fittingSobreajuste: Adapting the rules to the noise of the past; historical results don’t repeat.

P

Paper trading: Trading with play money on the broker’s real platform.
Pattern day traderPDT rule: A FINRA rule that required $25,000 for frequent day trading in margin accounts. Eliminated effective June 2026 and replaced by intraday margin requirements.
Payoff ratio: Average gain divided by average loss.
PennantBanderín: A continuation pattern: a pole followed by a small symmetrical triangle.
Pivot pointPunto pivote: A base’s buy point, typically its high or the handle’s high.
Plan adherenceAdherencia al plan: The percentage of trades in which every rule of the plan was followed.
Polarity changeCambio de polaridad: Broken resistance tends to act as support, and vice versa. Read the full guide
Portfolio heatRiesgo total abierto: The sum of what you’d lose if all stops were hit at once.
Position trading: A style that follows trends lasting weeks or months. Read the full guide
Pre-market and after-hoursHorario extendido: Sessions before and after regular hours, with lower liquidity and wider spreads.
Pre-trade checklistLista de verificación: Questions answered before each trade; a single “no” cancels it. Read the full guide
PremiumPrima: An option’s price; the buyer pays it and the seller collects it.
Probabilistic mindsetMentalidad probabilística: A way of thinking in which each trade is one event in a series and the individual result doesn’t matter too much.
Profit factor: Gross gains divided by gross losses; below 1 the strategy loses.
Put: An option that gives the right to sell the underlying at the strike.
PyramidingPiramidación: Adding to a winning position at later buy points, without exceeding total risk.

R

R-multipleR (múltiplo de riesgo): A trade’s initial risk. Making 2R means making twice what was risked. Read the full guide
Realized P&LGanancia realizada: The profit or loss on trades already closed.
Recency biasSesgo de lo reciente: Giving too much weight to the latest events.
Relative strengthFuerza relativa: A stock’s performance compared with the market or with other stocks.
Relative volumeVolumen relativo: The day’s volume compared with the asset’s own average.
ResistanceResistencia: A zone where supply has stopped rallies. Read the full guide
Retest: Price returning to a level it just broke.
Revenge tradingTrading de revancha: Trading to immediately win back a recent loss. Read the full guide
Risk/reward ratioRelación riesgo/beneficio: A trade’s potential reward divided by its risk. Read the full guide
RobustnessRobustez: An improvement is robust if it also works with nearby parameters.
Rollover: Moving a position from the expiring contract to the next one.
RSIRelative Strength Index: Welles Wilder’s 0-to-100 oscillator comparing recent gains and losses. Read the full guide

S

Scalping: A style of trades lasting seconds to minutes that seeks very small moves at high frequency. Read the full guide
SegmentationSegmentación: Splitting trades into groups (setup, context, behavior) to find where the edge is.
Shooting starEstrella fugaz: A candle with a small body at the bottom and a long upper shadow after a rally; possible bearish reversal.
Short positionPosición corta: Selling a borrowed asset in the hope of buying it back cheaper. Theoretically unlimited loss. Read the full guide
SIPCSecurities Investor Protection Corporation: A U.S. entity that protects customer securities and cash if a member broker fails, up to $500,000 (with $250,000 for cash). It doesn’t cover market losses.
Slippage: The difference between an order’s expected price and the price at which it actually filled. Read the full guide
SMAMedia móvil simple: Simple moving average: the average of the last n closes. Read the full guide
SpreadBid-ask spread: The difference between the best ask and the best bid. It’s a cost on every market entry and exit. Read the full guide
SqueezeCompresión: A narrowing of the Bollinger Bands that usually precedes an increase in volatility. Read the full guide
Static drawdownDrawdown estático: An elimination level fixed relative to the starting balance. Read the full guide
StockAcción: A fraction of ownership in a publicly traded company.
Stop orderOrden stop: Triggers when a price is touched and becomes a market order. Used to cut losses or enter breakouts. Read the full guide
Stop-limit: When triggered it becomes a limit order; it may not fill in sharp moves. Read the full guide
StrikeStrike / precio de ejercicio: An option’s exercise price.
Sunk costCosto hundido: Sticking with a decision because of what you’ve already invested in it.
SupportSoporte: A zone where demand has stopped declines. Read the full guide
Survivorship biasSesgo de supervivencia: The error of drawing conclusions by looking only at the cases that succeeded.
Swing trading: A style that seeks to capture moves of roughly 2 to 10 days within a trend. Read the full guide

T

T+1 settlementLiquidación T+1: For U.S. stocks, the money and securities from a trade settle one business day later.
Technical analysisAnálisis técnico: The study of price and volume to assess the probability of future moves. Read the full guide
Theta: The value an option loses from the passage of one day.
Tick: A contract’s minimum price movement.
Tilt: A state in which emotions take control of decisions.
Time and sales: A real-time record of every executed trade: price, size and time. Read the full guide
Time stopStop por tiempo: Exiting a trade that hasn’t made progress after a certain number of days.
TimeframeMarco temporal: The period each candle or bar represents: one minute, one hour, one day, one week.
Top-down analysisTop-down: Analysis that starts from the overall market, then sectors and finally individual stocks.
Trading journal: A detailed record of each trade with technical, execution and emotional data.
Trading planPlan de trading: A document with goal, markets, setups, entry and exit rules, risk, conduct, routine and review. Read the full guide
Trailing drawdownDrawdown dinámico: An elimination level that rises as the account reaches new highs. Read the full guide
Trailing stop: A stop that follows price in your favor at a fixed distance and never moves back. Read the full guide
TrendTendencia: The general direction of price, defined by the sequence of highs and lows. Read the full guide
TrendlineLínea de tendencia: A sloping support or resistance connecting rising lows or falling highs.
TriangleTriángulo: A pattern in which the range narrows between two converging lines: symmetrical, ascending or descending.
True rangeRango verdadero: The largest of high − low and the distances from the high and the low to the previous close.

U

Unrealized P&LGanancia no realizada: The open profit or loss on a position that’s still open.

V

Vega: The sensitivity of an option’s price to implied volatility.
Vertical spreadSpread vertical: Simultaneously buying and selling options of the same type and expiration with different strikes; defined risk.
VolatilityVolatilidad: The typical size of price movements. Read the full guide
Volume profilePerfil de volumen: A tool that shows the volume traded at each price level.
VWAPPrecio promedio ponderado por volumen: The session’s volume-weighted average price; an intraday institutional benchmark. Read the full guide

W

WedgeCuña: A pattern with two lines sloping in the same direction and converging; the rising one is bearish and the falling one bullish.
Whipsaw: A series of false signals when price crosses an average or level repeatedly in a range.

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