Glossary of terms

Bullish

Expecting the price to rise.

Bearish

Expecting the price to fall.

OHLC

Open, High, Low, Close – the four prices of a candle.

Body

The part between the open and the close.

Shadow / wick

The line between the body and the high/low.

Doji

A candle with open ≈ close.

Gap

An empty space between two candles.

Confirmation

A subsequent candle or signal that supports the pattern.

Reversal pattern

A pattern signaling a change of trend.

Continuation pattern

A pattern signaling a pause and continuation of the trend.

Support

A level below which price struggles to fall.

Resistance

A level above which price struggles to rise.

Liquidity

Accumulated orders (stops) above highs and below lows.

Sweep

A brief break of a level to collect liquidity, followed by a return.

R (unit of risk)

The distance between entry and stop; 2R = a profit twice the risk.

Stop-loss (SL)

An order that limits the loss.

Take-profit (TP)

An order that locks in the profit.

Timeframe

The period of one candle: M1, M15, H1, H4, D1, W1.

Divergence

A mismatch between the direction of price and the indicator.

Confluence

Several factors coinciding in one zone.

Inside bar

A candle entirely within the range of the previous one.

Lot

Position size; 1 lot of XAUUSD = 100 ounces.

“The market is like a wave. Don't try to stop it – learn to read it.”