Glossary
Plain-words meanings of the terms used across the site.
- Backtest
- A replay of a rule on past prices, to see how it would have traded. It is a hypothetical, not a prediction. Backtesting explained
- Basket
- A few stocks held together, each at a set share of the total.
- Benchmark
- Something results are set beside for comparison, such as the Nifty 50 index.
- CAGR
- Compound annual growth rate. The average yearly growth that would take the starting amount to the ending amount.
- Charges
- The broker fee, taxes and exchange fees taken from each trade. Here they are estimated, not exact. Trading charges explained
- Delayed daily close
- A closing price from the end of an earlier trading day. It is not a live price.
- Deploy
- Make a saved strategy available to the weekday scan. Paper only, no real orders are placed.
- Drawdown
- The largest fall in account value from a peak to the lowest point after it. How to read a backtest
- EMA
- Exponential moving average. The average closing price over the last N days, with recent days counting for more. Moving averages explained
- Equity curve
- A line showing how the account value changed over time.
- Expectancy
- The average result per trade across the trades in a test. It describes past trades only.
- GTT
- An order that waits for a price you set, then is placed. Here it is paper only, so no real order is sent.
- Hypothetical
- Based on past prices. It did not really happen to you, and it says nothing about what comes next.
- India VIX
- A measure of expected market volatility.
- Kill switch
- Stops new practice trades from opening. Open ones stay.
- Loss at the stop (estimate)
- Estimated loss if every open stop fills at its price (simulated).
- MACD
- A line built from two moving averages of different speeds. Rules often use where it crosses its own signal line. MACD explained
- Monte Carlo
- Shuffling the order of past trades many times, to see how much the results vary.
- Nifty 50
- An index of 50 of the largest listed Indian companies, tracked as one number.
- Out-of-sample
- Prices a rule was not built on, used to check it.
- Overfitting
- Tuning a rule until it fits past prices closely, so it may not hold on prices it has not seen.
- P&L
- Profit and loss. The money made or lost on trades.
- Paper trading
- Practising with pretend money. No real orders are placed. Paper trading for beginners
- Position sizing
- How much money goes into a single trade. Position sizing explained
- Profit factor
- Total money won on trades divided by total money lost on trades.
- RSI
- A 0 to 100 gauge of how fast price moved up or down over the last N days. It describes recent movement only. RSI explained
- Sample size
- How many trades a result rests on. A result built on few trades is less reliable.
- Scanner
- Finds stocks that match your rules on delayed daily data. A match is not a recommendation.
- SIP
- Systematic investment plan. The same amount invested on a fixed schedule.
- Slippage
- The gap between the price you expect and the price a trade really gets. Backtests here do not include it.
- SMA
- Simple moving average. The plain average closing price over the last N days, drawn as a line. Moving averages explained
- Stop loss
- A price at which a trade is set to close, aiming to limit a loss. Real fills can be worse. Stop loss and trailing stop
- Strategy
- A set of rules for when to enter and when to exit a trade.
- STT
- Securities Transaction Tax. A government tax charged on trades in India.
- Target
- A price at which a trade is set to close in profit. It is an exit rule you set, not a forecast.
- Universe
- The group of stocks a test or scan looks at, such as the Nifty 50.
- Volatility
- How much a price moves up and down over a period.
- Walk-forward
- A test that tunes a rule on one period, checks it on the next, and repeats.
- Win rate
- The share of closed trades that made money after charges. A trade that ends exactly flat counts as closed, not as a win.