One subject
Chart basics
26 lessons, 115 glossary terms and 2 market guides cover this across the academy. Each one links to its own page, and nothing is repeated here.
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The curriculum
26 lessons cover this.
In curriculum order, which is the order you would meet them.
- What a financial market isModule 01What you are actually trading6 min
- What a currency pair isModule 01What you are actually trading7 min
- What an index CFD isModule 01What you are actually trading6 min
- What commodities and metals areModule 01What you are actually trading7 min
- What a shares CFD isModule 01What you are actually trading7 min
- What an ETF CFD isModule 01What you are actually trading7 min
- What a pip isModule 02The trade ticket7 min
- What depth of market showsModule 05The venue and your counterparty7 min
- How to read a price chartModule 07Reading the chart9 min
- What a timeframe changesModule 07Reading the chart9 min
- Anatomy of a candlestickModule 07Reading the chart8 min
- Trends and rangesModule 07Reading the chart9 min
- Swing highs and swing lowsModule 07Reading the chart7 min
- What support and resistance areModule 07Reading the chart10 min
- Trend lines and channelsModule 07Reading the chart7 min
- Candlestick patterns and what they describeModule 07Reading the chart9 min
- Chart patterns and what they describeModule 07Reading the chart9 min
- What a moving average isModule 07Reading the chart8 min
- Leading and lagging indicatorsModule 07Reading the chart7 min
- What RSI isModule 07Reading the chart8 min
- What MACD isModule 07Reading the chart8 min
- What the stochastic oscillator isModule 07Reading the chart7 min
- What Bollinger Bands areModule 07Reading the chart8 min
- What ADX isModule 07Reading the chart7 min
- What the Ichimoku cloud isModule 07Reading the chart8 min
- Multiple timeframe analysisModule 07Reading the chart8 min
The glossary
115 terms belong here.
Alphabetical, each defined in one sentence on its own page.
- All-time highThe highest price an instrument has ever traded at, measured across its whole recorded history rather than a window, and superseded the moment it is exceeded.
- Aroon indicatorA pair of lines measuring how recently a price series set its highest high and its lowest low within a lookback window, each scaled between nought and one hundred.
- Average directional index (ADX)An indicator scoring how strongly a market is trending without saying in which direction, built from two directional movement lines and smoothed across a lookback period.
- Awesome oscillatorA momentum histogram plotting the difference between a short and a long simple moving average of each bar's midpoint, so it compares recent momentum against a longer baseline.
- Bar chartA price chart drawing each period as one vertical line spanning its high and low, with a short tick to the left for the opening price and a tick to the right for the close.
- Base currencyThe first currency named in a pair, always one single unit of it, against which the rate states how many units of the second currency that one unit costs.
- Bear marketA sustained decline in prices, conventionally marked once a market has fallen about twenty percent below a recent peak, though that threshold is a reporting convention rather than a defined term.
- Bearish engulfingA two candle formation in which a falling candle's body completely covers the body of the rising candle before it, read by chart traditions as a possible turn after an advance.
- Big figureThe leading digits of a currency quote that dealers leave unspoken because they rarely change during a session, also called the handle.
- Bollinger BandsA moving average drawn with two bands a chosen number of standard deviations above and below it, so the bands widen when recent closes have been dispersed and narrow when they have been tightly grouped.
- Bull marketA sustained rise in prices, conventionally dated from a recovery of about twenty percent above a recent low, though the threshold is journalistic shorthand rather than a defined term.
- Bullish engulfingA two candle formation in which a rising candle's body completely covers the body of the falling candle before it, read by chart traditions as a possible turn after a decline.
- CableCable is the dealing room name for the sterling to US dollar exchange rate, GBP/USD, after the nineteenth century telegraph cable that first carried the quote across the Atlantic.
- CandlestickA candlestick draws one period of trading as a single mark: a body spanning the opening and closing prices, with thin wicks reaching to the extremes traded inside that period.
- Chart patternA chart pattern is a shape read from the arrangement of highs and lows on a price chart, such as a triangle, a flag or a head and shoulders.
- Choppy marketA choppy market moves sideways with frequent reversals and little follow through, so a direction established in one bar is commonly given back over the next few.
- Close priceThe close price is the last price traded before a period ended, whether that period is a one minute bar, a daily session or an exchange's official closing auction.
- CommodityA commodity is a physical good traded in standardised units where one unit is interchangeable with another of the same grade, so its price prices a quantity of the material rather than a claim on a company.
- ConsolidationConsolidation is a phase in which price moves sideways inside a defined band after a directional move, with successive highs and lows contained rather than extending.
- Corporate actionA corporate action is an event initiated by a listed company that changes the terms or the price of its shares, such as a dividend, a split, a rights issue, a merger or a delisting.
- CorrectionA correction is a fall that interrupts a rising market without ending it, conventionally cited once the decline from a recent high reaches about a tenth of its value.
- Cross rateA cross rate is an exchange rate between two currencies with no US dollar on either side, historically assembled by combining each currency's separate dollar rate.
- Cup and handleA cup and handle is a chart pattern in which a rounded recovery back towards a prior high is followed by a shallow drift lower before that high is tested again.
- Currency pairA currency pair prices one currency in terms of another, base first and counter second, the rate stating how many units of the counter one unit of the base costs.
- Dead cat bounceA short recovery inside a decline that then continues, named from the observation that a falling object can bounce without having stopped falling.
- Descending triangleA chart formation whose successive highs fall toward a level where lows keep stopping, drawn as a downward sloping upper line converging on a flat lower one.
- DivergenceDivergence is the case where price makes a further extreme and an indicator computed from that price does not, which technical traditions read as a weakening of the move rather than as a signal to act.
- DojiA candle whose open and close finish at or very near the same price, drawn as a cross, describing a period that ended where it began.
- Donchian channelTwo lines plotting the highest high and the lowest low of a chosen number of past periods, with a midline between them, mapping the range price has occupied.
- Dow theoryA set of principles drawn from Charles Dow's editorials, holding that market movement runs in trends of three different lengths and that the averages must confirm one another.
- Elliott wave theoryElliott wave theory describes price as repeating sequences of five waves in the direction of the larger trend followed by three against it, nested at every scale of chart.
- Exponential moving average (EMA)An exponential moving average smooths a price series while weighting recent observations more heavily than older ones, so it turns faster than a simple average of the same length.
- FakeoutA move that breaks a watched price level convincingly enough to look like a breakout, then reverses back through it, leaving the level intact and the break unconfirmed.
- Fibonacci extensionA drawing tool that projects levels beyond the end of a completed price swing, at distances set by ratios above one drawn from the Fibonacci sequence.
- Fibonacci retracementA grid of horizontal lines drawn across a completed price swing at fixed proportions of its height, used to measure how far a pullback against that swing has travelled.
- Flag patternA short consolidation drifting against a sharp preceding move, bounded by two roughly parallel lines, which chartists read as a pause inside that move rather than the end of it.
- GapA gap is the blank space on a chart left when a session opens away from the previous session's close, meaning no trading took place at the prices in between.
- Golden crossA golden cross is recorded when a shorter moving average crosses above a longer one on the same chart, a crossing chart readers conventionally treat as a change of trend.
- HammerA single candle with a small body near the top of its range and a lower wick at least twice the body's length, forming after a decline.
- Hanging manA candle with a small body near the top of its range and a long lower wick that appears after an advance, sharing its geometry exactly with the hammer.
- Harmonic patternA price structure of four connected swings whose turning points sit at specified Fibonacci ratios of one another, named by shape: Gartley, bat, butterfly, crab and their variants.
- Heikin AshiA candle chart built from averaged prices rather than traded ones, which smooths a series into longer unbroken runs of one colour and hides the actual open and close.
- Ichimoku Kinko HyoIchimoku Kinko Hyo plots five calculated lines and a shaded cloud on one chart, so that trend, support and resistance and momentum are read from a single picture rather than from several separate indicators.
- In the moneyAn option is in the money when exercising it immediately would produce a positive amount: a call whose strike sits below the current price of the underlying, or a put whose strike sits above it.
- IndexAn index is the output of a published rule that measures a defined list of companies as one number, republished continuously in points against a base date, and it is a calculation rather than an asset anyone can hold.
- Index weightingIndex weighting is the rule deciding how much each constituent counts toward an index level, and it changes the behaviour of the same list of companies more than the membership of the list does.
- Initial public offering (IPO)An initial public offering is the first sale of a company's shares to outside investors, after which those shares are admitted to an exchange and priced continuously by whoever is willing to deal in them.
- Inside barAn inside bar is a price bar whose entire high to low range sits within the range of the bar before it, marking a period that did not extend beyond the previous one in either direction.
- Interbank marketThe interbank market is the network of bilateral dealing between large banks that produces the reference prices for foreign exchange, with no exchange, no central order book and no official closing price.
- Intrinsic valueIntrinsic value is the part of an option's premium that would survive if all remaining time to expiry vanished, equal to the amount by which the option is in the money and never less than zero.
- Inverse head and shouldersAn inverse head and shoulders is a chart shape of three troughs, the middle one the deepest, joined by a neckline drawn across the two peaks that separate them.
- Japanese candlestickJapanese candlestick charting draws each interval as a body spanning the open and the close, with thin shadows reaching to the high and the low of the same interval.
- Keltner channelA Keltner channel is a pair of bands drawn a chosen multiple of the average true range above and below a moving average, so the channel widens and narrows with volatility.
- Key levelA key level is a price a market has turned at more than once, marked on a chart from earlier highs, lows, closes or round numbers rather than calculated.
- Key reversalA key reversal is a single bar that extends past the previous bar's extreme and then closes back through it, read by chart readers as a turn compressed into one bar.
- Kijun-senKijun-sen is the slower of the two base lines in the Ichimoku system, plotted as the midpoint between the highest high and the lowest low of a longer lookback window.
- Lagging indicatorA lagging indicator reports a change only after it has already occurred, because every value it prints is computed from data that has already been published or prices that have already traded.
- Line chartA line chart plots a single price for each interval, conventionally the close, and joins those points, so it shows the shape of a move without the highs and lows traded inside it.
- LoonieLoonie is the dealing room name for the Canadian dollar, taken from the bird on its one dollar coin, and by extension for the US dollar against Canadian dollar rate.
- MACDMACD tracks the distance between two exponential moving averages of the same price series, plotting that distance, a smoothed version of it, and the gap between the two.
- Mean reversionMean reversion is the proposition that a series tends to return towards a central value after moving away from it, a property some series show and others do not.
- MomentumMomentum measures how fast a price has moved over a chosen lookback, and every momentum indicator is a restatement of prices that have already printed.
- Money flow index (MFI)The money flow index is an oscillator that weights price movement by volume, scoring the balance of buying and selling pressure on a scale from zero to one hundred.
- Moving averageA moving average is the average of a fixed number of recent prices, recalculated on every new bar, which smooths a price series by lagging it.
- Multi-timeframe analysisMulti-timeframe analysis reads one instrument on more than one chart interval at the same time, using the longer interval for context and the shorter one for detail.
- Opening priceThe opening price is the first price of an interval, whether that interval is a bar on a chart or an exchange session whose open is struck in an auction.
- OscillatorAn oscillator is an indicator that moves within fixed limits or around a centre line, describing how fast and how far price has moved recently rather than which way the trend runs.
- Out of the moneyAn option is out of the money when exercising it at the current price would be worth nothing, which leaves its intrinsic value at zero and its whole premium as time value.
- OverboughtOverbought describes a market that has risen far and fast enough for a bounded oscillator to sit above a conventional threshold, which is a statement about speed rather than about value.
- OversoldOversold describes a market that has fallen far and fast enough for a bounded oscillator to sit below a conventional threshold, which is a statement about speed rather than about value.
- Parabolic SARParabolic SAR prints a trail of dots that follows a directional move and tightens towards price each period, jumping to the other side of the chart once price crosses it.
- PennantA pennant is a short converging pause that forms after a sharp directional move, its highs stepping down and its lows stepping up over a handful of periods before the market resolves.
- PipA pip is the conventional increment a currency pair is quoted in, the fourth decimal place for most pairs and the second for pairs quoted against the yen.
- Pivot pointA pivot point is a reference level calculated from the previous period's high, low and close, published with a ladder of support and resistance levels derived from the same three numbers.
- PointPoint names the smallest unit a price is quoted in, so its size differs by instrument: a tenth of a pip on a currency quote, one unit on a stock index.
- Precious metalA precious metal is a naturally occurring metal held largely for its scarcity and durability rather than consumed by industry, the traded set being gold, silver, platinum and palladium.
- Price actionPrice action is the practice of reading a market from the movement of price itself, working from bars, candles and levels rather than from indicators calculated out of them.
- PullbackA pullback is a move against the prevailing direction that pauses a trend without ending it, usually shallow and brief before the earlier direction resumes.
- RallyA rally is a sustained rise in price over a stretch of time, whether it recovers ground given up earlier or extends a market that was already climbing.
- RangeRange means two things on a chart: the distance between the high and the low of a period, and the condition in which price keeps turning back inside a band instead of travelling in one direction.
- Range tradingRange trading is an approach that treats the edges of a sideways band as its reference points, working on the expectation that price returns towards the middle rather than leaving the band.
- RejectionRejection describes price reaching a level and being pushed back inside the same interval, leaving a long wick and a close some distance from the extreme it touched.
- Relative strength index (RSI)The relative strength index compares the average size of a market's recent gains with the average size of its recent losses and reports the comparison on a bounded scale from zero to one hundred.
- Renko chartA Renko chart adds a new brick only once price has travelled a fixed distance, so the horizontal axis measures movement rather than elapsed time and quiet periods produce nothing at all.
- ResistanceResistance is a price area where selling has appeared often enough to halt advances, so a market rising into it has previously stalled, turned back, or needed a second attempt to pass.
- RetracementA retracement is a move against the prevailing direction that gives back part of a prior advance or decline, measured as a proportion of the swing it is retracing.
- ReversalA reversal is a change in a market's prevailing direction, where a sequence of rising highs and lows gives way to a falling one or the other way round, as distinct from a pause inside the existing move.
- SectorA sector is a grouping of listed companies whose principal business is the same, such as energy or financials, used to compare like with like and to describe where an index move came from.
- Simple moving average (SMA)A simple moving average is the mean of a fixed number of recent closing prices, recalculated as each new period ends, which smooths a series by giving every price in the window equal weight.
- Stochastic oscillatorThe stochastic oscillator plots where the latest close sits inside the high to low range of a chosen lookback, on a scale from zero to one hundred, with a smoothed signal line drawn across it.
- Stock splitA stock split multiplies the number of a company's shares and divides the price by the same factor, so the value of a holding is unchanged while the price of one share falls.
- SupportSupport is a price area where buying has repeatedly been sufficient to halt a decline, read from prior lows rather than calculated, and treated as a band rather than as a single line.
- Swing highA swing high is a peak on a chart, a bar whose high stands above the highs of a stated number of bars on either side of it, which means it can only be identified once those later bars exist.
- Swing lowA swing low is a trough on a chart, a bar whose low sits beneath the lows of a stated number of bars on both sides of it, so it is confirmed only after the bars to its right have printed.
- Technical analysisTechnical analysis studies the record of past prices and volume for recurring structure, on the working premise that everything known about a market is already expressed in what it has traded at.
- Tenkan-senTenkan-sen is the faster of the two base lines in the Ichimoku system, plotted as the midpoint between the highest high and the lowest low of a short lookback window.
- TickA tick is one update to an instrument's price: the smallest event in a market's record, carrying a new bid, a new ask or both, with the moment it arrived.
- Time frameA time frame is the interval each bar or candle on a chart summarises, so an hourly chart draws one mark per hour of trading and a daily chart one per session.
- Tracking differenceTracking difference is the gap between the return a fund delivered and the return its index reported over the same period, and it arises from structural causes rather than from error.
- TrendA trend is a market's sustained bias in one direction, conventionally identified by successive highs and lows that both progress the same way rather than by any single move.
- Trend channelA trend channel is a pair of parallel lines drawn to contain a directional move, one along the swing points the move has bounced from and one along the extremes on the opposite side.
- Trend lineA trend line is a straight line drawn through a series of rising lows or falling highs, used to describe the slope of a move and the level at which it has repeatedly turned.
- True rangeTrue range is the largest of three distances measured on a single bar, the bar's own high to low, and each of its extremes to the previous close, so a gap between bars is counted rather than lost.
- UptickAn uptick is a price printed higher than the one immediately before it, the smallest recordable step upward in a market's sequence of prices.
- UptrendAn uptrend is a stretch of chart in which each significant high and each significant low sits above the one before it, so peaks and troughs are both progressing upward.
- VolatilityVolatility measures how widely a price has moved around its own average over a period, counting moves in both directions equally and saying nothing about which way the next one goes.
- VolumeVolume counts how much changed hands in a period, measured in contracts or shares on an exchange and, where no central record of size exists, in price updates instead.
- Wedge patternA wedge pattern is a chart shape drawn where two converging lines both slope the same way, so a market's swings narrow while the whole range still drifts up or down together.
- Weighted indexA weighted index gives each member an influence set by a stated measure, usually its free float market value, so the same percentage move in a large member shifts the index far more.
- WhipsawA whipsaw is a sharp move that reverses almost immediately, so an entry taken on the first leg is undone by the second and stops can be triggered on both sides in quick succession.
- WickA wick is the thin line reaching above or below a candlestick's body, marking the highest and lowest prices traded in that period beyond the levels where it opened and closed.
- Williams %RWilliams %R reports where a period's close sits inside the high to low range of a chosen lookback, on an inverted scale reading zero at the top and minus one hundred at the bottom.
- YardYard is dealing room shorthand for one thousand million units of a currency, borrowed from the French milliard so that a spoken amount cannot be heard as the wrong size.
- Zig zag indicatorThe zig zag indicator connects successive swing highs and lows with straight lines, ignoring every move smaller than a stated threshold, so only the larger turns remain on the chart.
- Zone (supply and demand)A supply or demand zone is a band on a chart, not a single line, marking an area price left rapidly and which chartists read as holding unfilled orders.
The market guides
2 guides answer a question about it.
Standalone reference answers, entered laterally rather than worked through.
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