WickCheck / Trading school / Dictionary
Trading dictionary
Every ICT, smart money, risk and backtesting term in plain English, A to Z. 135 terms, each with a plain definition, how to spot it, the common mistake and a level so you know where it fits.
A
A+ setupIntermediateThe cleanest version of your strategy, where every condition lines up.Asian rangeIntermediateThe high and low made during the quieter Asian session, often swept in the London or New York morning.Asian sessionBeginnerThe Tokyo and Sydney part of the trading day, roughly 19:00 to 04:00 New York time (00:00 to 09:00 London time). Usually the quietest session.ATR (Average True Range)IntermediateThe average size of recent candles, including gaps. A volatility measure.
B
BacktestBeginnerRunning a strategy's exact rules over historical data to see how it would have performed.Balanced price range (BPR)AdvancedThe overlap between a bullish and a bearish fair value gap that formed close together.Bid and askBeginnerThe bid is the price you can sell at, the ask the price you can buy at. The gap between them is the spread.BISI and SIBIAdvancedICT names for bullish (BISI) and bearish (SIBI) fair value gaps.Bollinger bandsBeginnerA moving average with bands two standard deviations above and below it.Break of structure (BOS)IntermediateA candle closing beyond the last swing high (bullish) or swing low (bearish) in the direction of the trend.Breaker blockAdvancedAn order block that failed: price broke through it after a liquidity sweep, and it is now expected to act from the other side.Breakeven stop (BE)BeginnerMoving the stop to the entry price once a trade is in profit, so it can no longer lose.Broker server time (chart time)BeginnerThe clock your broker's platform uses for candles. Many forex brokers use New York close + 7 (UTC+2 in winter, UTC+3 in summer) so that each week has exactly five daily candles.Buyside and sellside liquidity (BSL / SSL)IntermediateBuyside liquidity rests above highs (buy stops); sellside liquidity rests below lows (sell stops).
C
CandlestickBeginnerOne bar of price: open, high, low and close for a period of time.Central bank dealers range (CBDR)AdvancedThe price range from 14:00 to 20:00 New York time, used by ICT to project the next day's highs and lows.Change in state of delivery (CISD)AdvancedPrice closing back through the opening level of the candles that started the last move, showing delivery has flipped direction.Change of character (CHoCH)IntermediateThe first break of structure against the current trend, an early sign the trend may be turning.ConfluenceIntermediateSeveral independent reasons pointing to the same trade.Consequent encroachment (CE)AdvancedThe 50% midpoint of a fair value gap or a long wick.Consistency ruleIntermediateA prop rule that limits how much of your profit can come from one day.CorrelationIntermediateHow closely two markets move together, from +1 (same way) to −1 (opposite).CPI (Consumer Price Index)BeginnerThe main inflation number. Higher than expected usually means higher rates for longer.
D
Daily loss limit (Daily drawdown)BeginnerThe most you can lose in one day before the account fails, often 4–5%.Daily openIntermediateThe opening price of the trading day, used as a bias reference.Daylight saving time (DST) (DST)IntermediateThe clock change in spring and autumn. The UK and the US change on different dates, so for a few weeks a year London is only 4 hours ahead of New York.Dealing rangeIntermediateThe range between a clear swing high and swing low that price is currently trading inside.DisplacementAdvancedA fast, strong move made of large candles, often leaving fair value gaps behind.DivergenceIntermediatePrice makes a new high or low but an oscillator does not.DojiBeginnerA candle that opens and closes at almost the same price, showing indecision.Dollar index (DXY)IntermediateA measure of the US dollar against six major currencies, mostly the euro.Draw on liquidity (DOL)AdvancedThe pool of liquidity price is most likely heading toward next, such as old highs, equal lows or an unfilled gap.Drawdown (DD)BeginnerThe fall from an account's peak to its lowest point before a new peak. Max drawdown is the worst one.
E
Economic calendarBeginnerThe schedule of data releases and central bank decisions that move markets.Engulfing candleBeginnerA candle whose body fully covers the previous candle's body, in the opposite colour.Equal highs and equal lows (EQH / EQL)IntermediateTwo or more highs (or lows) at nearly the same price, seen as an obvious pool of stops.Equilibrium (EQ)IntermediateThe 50% level of a dealing range, the line between premium and discount.Equity curveBeginnerYour account balance plotted trade by trade.ExpectancyIntermediateThe average result per trade, usually in R. Positive expectancy means the strategy makes money on average.
F
Fair value gap (FVG)IntermediateA three-candle pattern where the wicks of the first and third candle do not overlap, leaving a gap the middle candle moved through quickly.Fibonacci retracement (Fib)BeginnerLines at 23.6, 38.2, 50, 61.8 and 78.6% of a swing, used to plan pullback entries.FOMC rate decision (FOMC)BeginnerThe US Federal Reserve's interest rate decision, eight times a year at 14:00 New York time.FOMO (Fear of missing out)BeginnerJumping into a move late because it is running without you.Forward testIntermediateTrading the strategy on new data, in real time, usually on demo or small size, after the backtest.Funded accountBeginnerThe account you trade after passing a challenge, sharing profits with the firm.
H
High-impact news (Red folder news)BeginnerReleases that historically cause large, fast moves.Higher-timeframe bias (HTF bias)IntermediateThe expected direction from a bigger timeframe (4h, daily, weekly), used to decide whether to look for longs or shorts on the entry timeframe.
I
ICT macrosAdvancedShort 20 to 30 minute windows around the hour (for example 09:50 to 10:10 New York time) when ICT says the algorithm seeks liquidity.Inducement (IDM)AdvancedA small, obvious level near a zone that tempts traders in early, so their stops become the liquidity that is taken before the real move.Inside barIntermediateA candle whose high and low sit inside the previous candle's range.Inversion fair value gap (IFVG)AdvancedA fair value gap that price closes straight through, after which traders expect it to act as support or resistance from the other side.IPDA (Interbank Price Delivery Algorithm)AdvancedICT's name for the idea that price is delivered between ranges of the last 20, 40 and 60 trading days.
J
K
L
LeverageBeginnerBorrowed buying power: 1:30 leverage lets $1,000 control a $30,000 position.Limit orderBeginnerAn order to buy below or sell above the current price, filled only at your price or better.LiquidityBeginnerIn ICT and SMC, the resting orders (mostly stop losses and breakout entries) that sit beyond obvious highs and lows.Liquidity run (Stop hunt)IntermediateA move that clears the stops beyond a level and keeps going, unlike a sweep that reverses.Liquidity sweepIntermediatePrice trades beyond a high or low, triggers the stops there, and closes back inside.Liquidity voidAdvancedA long, one-directional run of candles with little trading on the way, often a cluster of fair value gaps.London close killzoneIntermediate10:00 to 12:00 New York time (15:00 to 17:00 London time), when European traders close positions and the day's move often retraces.London sessionBeginnerThe European trading session, 08:00 to 16:30 London time (03:00 to 11:30 New York time), the most liquid session for forex.Long and shortBeginnerLong means buying to profit from a rise; short means selling to profit from a fall.Lot sizeBeginnerHow big a position is. One standard lot in forex is 100,000 units of the base currency.
M
MACD (Moving Average Convergence Divergence)IntermediateThe gap between a fast and a slow EMA, with a signal line and histogram.MarginBeginnerThe money a broker sets aside from your account to keep a leveraged position open.Market maker model (MMXM)AdvancedICT's map of a full move: consolidation, a run to one side, a smart money reversal, then delivery to the other side.Market orderBeginnerAn order filled straight away at the best available price.Market structureBeginnerThe pattern of swing highs and swing lows that shows whether price is trending up, trending down or ranging.Market structure shift (MSS)AdvancedA break of the opposite swing, usually with a strong, fast move, that signals price may now head the other way.MarubozuIntermediateA big candle with little or no wick: one side was in control the whole period.Maximum loss limit (Max drawdown)BeginnerThe total loss allowed from the starting balance, often 8–10%.Mean thresholdAdvancedThe 50% level of an order block's body.Midnight openAdvancedThe price at 00:00 New York time, used by ICT as the daily reference for premium and discount.Mitigation blockAdvancedLike a breaker, but without the sweep: a failed swing whose last opposite candle is later used as a zone.Monte Carlo testAdvancedReshuffling your backtest trades many times to see the range of possible equity curves and drawdowns.Moving average (SMA / EMA)BeginnerThe average closing price over the last N candles, drawn as a line.
N
New week and new day opening gap (NWOG / NDOG)AdvancedThe gap between Friday's close and Sunday's open (NWOG), or between one day's close and the next open (NDOG).New York PM sessionBeginner13:30 to 16:00 New York time (18:30 to 21:00 London time), the afternoon window for US indices into the stock market close.New York sessionBeginnerThe US session, roughly 08:00 to 17:00 New York time, with the biggest moves around the 09:30 stock market open and US data releases.Non-farm payrolls (NFP)BeginnerThe US jobs report, usually the first Friday of the month at 08:30 New York time.
O
Opening range breakout (ORB)IntermediateThe high and low of the first minutes of a session, traded on a break.Optimal trade entry (OTE)AdvancedAn entry zone at the 62% to 79% retracement of a swing, with 70.5% as the commonly used midpoint.Order block (OB)IntermediateThe last opposite-colour candle before a strong move, seen as the zone where large orders entered.Order flow (ICT)AdvancedIn ICT usage, the direction in which price keeps respecting bullish or bearish zones, not exchange order-book data.Out-of-sample dataIntermediateData your strategy was not built or tuned on, kept aside for an honest check.OverfittingIntermediateTuning a strategy so closely to past data that it captures noise instead of a real edge.
P
Partial profitsBeginnerClosing part of a position at a first target and letting the rest run.Pin bar (Hammer / shooting star)BeginnerA candle with a small body and one long wick, showing a sharp rejection.PipBeginnerThe standard unit of price change in forex: 0.0001 on most pairs, 0.01 on yen pairs.Point of control (POC)IntermediateThe price with the most volume (or time) in a volume profile.Position sizingBeginnerChoosing the trade size so a stop-out costs a fixed amount, usually a small % of the account.Power of 3 (AMD) (PO3 / AMD)AdvancedThe idea that a daily or session candle forms in three phases: accumulation, manipulation, distribution.Premium and discountIntermediateThe upper half of a price range is premium (expensive), the lower half is discount (cheap).Previous day high and low (PDH / PDL)BeginnerYesterday's high and low, two of the most watched liquidity levels of the trading day.Profit factor (PF)IntermediateGross profit divided by gross loss. Above 1 made money, below 1 lost money.Prop challenge (Evaluation)BeginnerThe test you pass to get a funded account, usually a profit target with loss limits.Prop firm (Proprietary trading firm)BeginnerA company that lets you trade its capital after you pass an evaluation, in return for a share of profits.Propulsion blockAdvancedA candle that trades into an order block and then pushes price on: a second-step order block.
R
R and R-multiple (R)BeginnerR is the amount you risk on a trade. A result of +2R means you made twice what you risked; -1R means you lost what you risked.RangeBeginnerSideways price between a clear high and low, with no trend.Rejection blockAdvancedThe wicks at a swing high or low, used as a level when price returns.Revenge tradingBeginnerTaking quick, bigger trades to win back a loss.Risk of ruinAdvancedThe chance a run of losses wipes out an account or breaks a loss limit.Risk on and risk offIntermediateMarket mood: risk on favours stocks and commodity currencies, risk off favours the dollar, yen, franc and often gold.Risk to reward (RR)BeginnerHow far the target is compared with the stop. A 1:2 trade risks 1 to make 2.RSI (Relative Strength Index)BeginnerA 0–100 oscillator that compares recent gains with recent losses.
S
Sample sizeIntermediateHow many trades a result is based on. Small samples can look great or terrible by pure chance.Sharpe ratioAdvancedAverage return divided by the variability of returns: return per unit of risk.Silver BulletAdvancedAn ICT setup traded in a single hour, most often 10:00 to 11:00 New York time: liquidity sweep, then a fair value gap entry.SMT divergence (SMT)AdvancedWhen two related markets disagree: one makes a new high (or low) and the other does not.Spread, commission and slippageBeginnerThe costs paid on every trade: the bid–ask spread, broker commission, and the difference between the price you wanted and the price you got.Stop loss (SL)BeginnerThe price where a losing trade is closed to cap the loss at a planned amount.Stop orderBeginnerAn order to buy above or sell below the current price, used to enter breakouts or to exit with a stop loss.Supply and demand zonesIntermediateAreas where price left quickly, showing unfilled orders: demand below price, supply above.Support and resistanceBeginnerPrices where buying (support) or selling (resistance) showed up before.Swing failure pattern (SFP)IntermediatePrice trades beyond a swing high or low but closes back inside it.Swing high and swing lowBeginnerA swing high is a candle high with lower highs on both sides; a swing low is a candle low with higher lows on both sides.
T
TiltIntermediateAn emotional state where you stop following your rules.Time zones for traders (UTC, GMT, New York, London) (UTC)BeginnerEvery session, killzone and news release is tied to a clock. Pick one time zone for your chart and your rules, and convert everything else to it.TimeframeBeginnerHow much time one candle covers: 1 minute, 15 minutes, 1 hour, 1 day and so on.Top-down analysisIntermediateReading the market from the higher timeframes down to the entry timeframe.Trade journalBeginnerA record of every trade with the reason, screenshots, result in R and how you felt.Trading planBeginnerYour written rules: what you trade, when, how you enter, exit and size, and when you stop for the day.Trailing drawdownIntermediateA loss limit that moves up with your highest balance or equity.Trailing stopBeginnerA stop that follows price as the trade moves in your favour, locking in more profit.TrendBeginnerA market making higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend).Turtle soupIntermediateA reversal trade against a breakout of an old high or low, named after the Turtle traders whose breakout rules it fades.
V
Value area (VAH / VAL)IntermediateThe price range holding about 70% of a session's volume, with a high (VAH) and low (VAL).Volume profileIntermediateA sideways histogram showing how much traded at each price.VWAP (Volume-weighted average price)IntermediateThe average price of the session weighted by volume, reset each day.
W
Walk-forward testAdvancedOptimising on one period, then testing the result on the next unseen period, repeated across history.Weekend gapIntermediateThe jump between Friday's last price and the first price after the weekend.Wick (Shadow)BeginnerThe thin part of a candle above or below the body, showing prices that were reached but rejected.Win rateBeginnerThe share of trades that make money.
Education only, not financial advice. Definitions vary between teachers; these are ours, written for clarity.