Glossary
The words, in plain English.
Every term that appears on this site, explained in a sentence or two. No prior knowledge assumed.
- Paper trading
- Practising trades with pretend money. The desk records what it would have bought or sold and how that would have turned out, but no real money ever moves.
- RSI (Relative Strength Index)
- A 0–100 score of how hard a price has been pushed up or down lately. Under 30 is usually called oversold (it may have fallen too far, too fast); over 70 is overbought.
- Momentum
- How strongly and steadily a price has been moving in one direction. Paper Desk describes it in words first, with the RSI number beside it.
- ETF (Exchange-Traded Fund)
- A basket of many stocks you can buy as one share. SPY, for example, holds the 500 large US companies in the S&P 500.
- Ticker
- The short code a stock or fund trades under, like QQQ or SPY.
- Trading activity (volume ratio)
- How many shares changed hands compared with a normal day. 1.8× usual means almost twice the normal amount of trading, which often means news or a big move.
- TWS (Trader Workstation)
- Interactive Brokers' desktop trading app. The Mac desk reads prices from a practice TWS account; this website never connects to it.
- P&L (profit and loss)
- How much a trade, or all trades together, would have made or lost. In Paper Desk it is always pretend money.
- Win rate
- The share of finished trades that made money. 60% means 6 out of 10 would have been profitable. On its own it says nothing about how big the wins and losses were.
- Expectancy
- The average amount each trade would make or lose over time, counting both wins and losses. Positive means the rules have been making money on paper.
- Profit factor
- Total money from winning trades divided by total money lost on losing ones. Above 1 means the wins outweigh the losses; under 1 means the opposite.
- Drawdown
- How far the paper account fell from its highest point before recovering. Max drawdown is the worst such dip, a measure of how painful the bumpy stretches get.
- Backtest
- Running the trading rules over old market data to see how they would have done. The backtest gate lists what the rules must prove before going any further.
- Risk limit
- A hard cap the desk must respect, such as the most money allowed in one trade. Limits keep any single mistake small.
- Confidence
- How strongly the desk's rules agree with a would-be trade: Low, Medium or High. It describes the rules' signal, not a guarantee.
- Safety lock
- A setting that stops the desk from sending any real order. While it is on, everything is practice only.