Bid
The highest price a buyer is currently willing to pay. Beginners often treat bid as the last traded price, but it is only one side of available liquidity.
Trading glossary
Plain-English definitions for the terms traders keep hearing.
Use this glossary before lessons, during chart review, and after quizzes. Each term includes what it means, why it matters, and the beginner mistake to avoid.
Ask
The lowest price a seller is currently willing to accept. The ask shows where immediate buying would likely execute.
Spread
The distance between bid and ask. Wider spreads usually mean higher execution cost, lower liquidity, or stressed conditions.
Liquidity
The ability to enter or exit without heavily moving price. Liquidity is not the same as volume; it is about available orders and execution depth.
Volatility
The size and speed of price movement. Volatility creates opportunity and risk because stops, entries, and position sizing must adapt.
Market Order
An order to execute immediately at available prices. It prioritizes speed over price certainty.
Limit Order
An order to trade only at a specified price or better. It controls price but may not fill.
Stop Order
An order that activates after price reaches a trigger. It is commonly used for risk control or breakout entry logic.
Higher High
A swing high above the prior swing high. It can suggest upward structure, but only matters inside context.
Higher Low
A pullback low above the prior swing low. It often shows buyers defending higher prices.
Break Of Structure
A move through a meaningful prior swing level. Beginners often mark every tiny break as BOS instead of checking significance and follow-through.
CHoCH
Change of character. A shift in behavior that may suggest transition, but it requires confirmation and context.
POC
Point of control: the price area with the most traded volume or TPOs in a profile. It often marks accepted value.
VAH / VAL
Value area high and value area low. These define the upper and lower edge of the area where most activity occurred.
Delta
The difference between aggressive buying and aggressive selling. Delta helps show participation, not guaranteed direction.
Absorption
When aggressive orders hit a level but price struggles to continue because passive liquidity is absorbing the flow.
Liquidity Sweep
A move through obvious highs or lows that triggers orders before price reverses or rebalances.
Fair Value Gap
An imbalance area created by fast movement where price traded inefficiently. It is a context tool, not an automatic entry.
Drawdown
The decline from an equity peak to a trough. Drawdown shows risk experience, not just account loss.
Expectancy
The average expected result per trade after accounting for win rate, average win, and average loss.
Revenge Trading
Entering impulsively after a loss to recover emotionally. It usually breaks risk rules and worsens drawdowns.