One subject
Trading plan and journal
11 lessons and 20 glossary terms cover this across the academy. Each one links to its own page, and nothing is repeated here.
Trading involves risk. You could lose more than your deposit.
The curriculum
11 lessons cover this.
In curriculum order, which is the order you would meet them.
- What a demo account isModule 01What you are actually trading6 min
- Daily and weekly loss limitsModule 09Risk, plan and practice7 min
- What expectancy describesModule 09Risk, plan and practice7 min
- What the trading styles demandModule 09Risk, plan and practice9 min
- What goes in a trading planModule 09Risk, plan and practice10 min
- How a trading system is testedModule 09Risk, plan and practice9 min
- The limits of testing on historyModule 09Risk, plan and practice8 min
- How a trading journal is keptModule 09Risk, plan and practice8 min
- The behavioural failure modesModule 09Risk, plan and practice14 min
- Trading robots and automated systemsModule 10Staying safe and your rights7 min
- What going live responsibly meansModule 10Staying safe and your rights8 min
The glossary
20 terms belong here.
Alphabetical, each defined in one sentence on its own page.
- Algorithmic tradingTrading in which the decisions, the sizing or the routing are expressed as coded rules, so identical inputs produce an identical instruction every time without a person intervening.
- Audit trailAn audit trail is the chain of dated records that lets a figure on an account statement be traced back to the instruction that was sent and the fill that answered it.
- Automated tradingTrading in which software places the orders directly, so a rule that has been coded and switched on acts on the market without a person confirming each instruction.
- BacktestingRunning a fixed set of trading rules over stored historical prices to record what that rule would have produced, which measures the rule against one past sample and nothing else.
- Confirmation biasConfirmation bias is the tendency to notice evidence that supports a view already held and to discount evidence against it, which is why an open position changes how a chart looks.
- Day tradingOpening and closing positions within a single session so that none is carried overnight, which avoids financing adjustments and pays the spread more often.
- Demo accountAn account running the same platform and the same quote stream as a funded one, in which every fill is produced by a simulator rather than obtained from a market.
- DrawdownThe fall from a peak in an account's value to the lowest point reached before a new peak is set, usually stated as a percentage of that peak.
- ExpectancyExpectancy is the average result per trade a set of rules produced over a sample of closed trades, combining how often it won with how much it won and lost.
- Loss limitA loss limit is a threshold fixed in advance, stated as an amount or as a percentage of the account, at which a trading plan calls for dealing to stop for a defined period.
- Money managementMoney management is the set of conventions traders use to decide position size and how much of an account is exposed at once, separate from any view about direction.
- Out of sample testingOut of sample testing holds back part of a price record while a rule is being shaped, then runs the finished rule over the held back part, so the result is measured on data the rule never saw.
- Outcome biasOutcome bias is judging a decision by the result it happened to produce rather than by the information available when it was taken, which rates a lucky decision well and a sound one badly.
- OverfittingOverfitting is shaping a rule until it describes the particular record it was developed on, including the parts of that record produced by chance, which is why the result does not survive new data.
- Quantitative tradingQuantitative trading derives its entry, exit and sizing rules from statistical work on historical data, so the decision comes from a tested rule set rather than a discretionary reading.
- Reward-to-risk ratioA reward-to-risk ratio compares the distance from an entry price to a target with the distance from that entry to a protective level, stating the first as a multiple of the second.
- Swing tradingSwing trading holds positions for days to weeks to capture one move inside a larger trend, which brings overnight financing, weekend gaps and scheduled events into the arithmetic that intraday styles avoid.
- Systematic tradingSystematic trading follows rules fixed in advance for entry, size and exit, so the same market data produces the same decisions whoever is watching the screen and however they feel about it.
- Trading journalA trading journal is a contemporaneous record of positions and the reasoning behind them, written at the time rather than afterwards, so the record cannot be revised once the outcome is known.
- Trading planA trading plan sets out in advance, in writing, which markets a trader deals in, how positions are sized, what defines an entry and an exit, and how results are reviewed.
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01/ 04step 1 of 4
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02/ 04step 2 of 4
Verify
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03/ 04step 3 of 4
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04/ 04step 4 of 4
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MetaTrader 5
