Glossary

Trading terms, in plain English

No jargon walls. Search the words you keep running into and get a clear, one-paragraph answer.

API: Application Programming Interface — a defined way for programs to talk to each other, e.g. how your code requests prices or places orders with a broker.
Backtest: Running a strategy against historical data to estimate how it would have performed. Only as trustworthy as the data and assumptions behind it.
Drawdown: The drop from a peak in account equity to a subsequent low, usually shown as a percentage. The key measure of a strategy’s pain.
Expert Advisor (EA): A program that runs inside MetaTrader and trades a strategy automatically — reading the market, placing orders, and managing positions without manual input.
Forward test: Running a strategy on live or unseen data (often on a demo account) to check whether backtested results hold up in real conditions.
Latency: The delay between a signal or order and its execution. Low latency matters most for fast, short-term automated strategies.
Leverage: Borrowed capital that lets you control a position larger than your account balance. It magnifies both gains and losses.
Liquidity: How easily an asset can be bought or sold without moving its price. Deep liquidity means large orders barely shift the market.
Lookahead bias: A backtesting error where the strategy uses information that would not have been available at that moment, producing unrealistically good results.
MQL: MetaQuotes Language — the C-like programming language used to write Expert Advisors, indicators, and scripts for MetaTrader 4 and 5.
Order book: The live list of all resting buy and sell limit orders at each price level for an asset.
Overfitting: Tuning a strategy so tightly to past data that it memorizes noise instead of a real edge, and then fails on new data.
Pip: The smallest standard price move in a currency pair — usually the fourth decimal (0.0001). Used to measure gains, losses, and stop distances.
Slippage: The difference between the price you expected and the price you actually got, caused by the market moving or thin liquidity between order and fill.
Spread: The difference between the bid (sell) and ask (buy) price. It is a cost you pay on every trade and the broker’s main source of revenue.
Stop loss: A resting order that closes a position once price reaches a set level, capping the loss on a trade.
Take profit: A resting order that closes a position once price reaches a target level, locking in a gain.
Tick: A single update to an asset’s price. In MQL, the OnTick() function runs once per tick, driving an EA’s decision loop.
Time series: Data points ordered in time, such as a sequence of price candles. Most market data and indicators are time series.
Volatility: How much and how quickly a price moves. Higher volatility means bigger swings — more opportunity and more risk.