Trading glossary
Plain-English definitions of the metrics and terms that actually move your P&L. Every one is something TraderLog tracks for you automatically.
Backtesting
Backtesting is the process of testing a trading strategy against historical market data to evaluate its performance before deploying it with real capital. It allows traders to simulate past trades and measure profitability, drawdowns, and consistency without financial risk.
Benefits of Using a Stock Journal
A stock journal is a systematic record of all trades that helps traders identify patterns, measure performance, and improve decision-making over time. It transforms emotional trading into data-driven strategy.
Best Journal Trading Platform
The best journal trading platform combines automated trade logging, performance analytics, and actionable insights to help traders track, analyze, and improve their strategies systematically.
Day Trading
Day trading is the practice of buying and selling financial securities within the same trading day, typically closing all positions before market close. Day traders aim to profit from intraday price movements rather than long-term trends.
Drawdown in Trading
Drawdown is the decline from your account's highest peak to its lowest point during a losing period. It measures the maximum loss you experience between equity highs.
Emotional Trading
Emotional trading is making buy or sell decisions driven by fear, greed, or frustration rather than following your predetermined trading plan. It leads to impulsive trades that typically reduce profitability.
Expectancy in Trading
Expectancy is the average amount of profit or loss you expect per trade based on historical performance. It combines your win rate, average winning trade size, and average losing trade size.
Features of Trading Journal
A trading journal's features are the tools and functions that help traders record, analyze, and improve their trading decisions. These include trade logging, performance metrics, pattern identification, and risk management capabilities.
Overtrading
Overtrading is executing excessive trades beyond your strategy rules, typically driven by emotion, boredom, or the urge to recover losses quickly. It's one of the most common ways traders sabotage profitable systems.
Paper Trading
Paper trading is simulated trading where you practice buying and selling securities without risking real money. It uses virtual cash to test strategies in real market conditions.
Position Sizing
Position sizing is the process of determining how much capital to allocate to each individual trade. It balances profit potential against the risk of losing your trading account.
Profit Factor
Profit factor is the ratio of gross profit to gross loss in trading. A ratio above 1.0 means wins exceed losses. Most traders aim for 2.0 or higher.
Risk Reward Ratio
The risk reward ratio compares your potential loss to your potential profit on a single trade. It shows whether a trade's profit target justifies the capital you're risking.
Risk Reward Ratio
The risk reward ratio measures the potential profit relative to potential loss on a trade. It compares how much you risk to how much you stand to gain.
Risk to Reward Ratio
The risk to reward ratio compares the amount of capital you risk per trade against the potential profit. A 1:2 ratio means risking $100 to make $200.
Stop Loss Order
A stop loss order is an instruction to automatically sell a security when its price falls to a specified level. It protects traders from excessive losses by triggering an exit at a predetermined price.
Swing Trading
Swing trading is a strategy where traders hold positions for days to weeks, capturing intermediate price movements between support and resistance levels. It bridges day trading and position trading.
The 3 5 7 Rule in Trading
The 3 5 7 rule is a risk management framework where traders risk 3% of capital per trade, target 5% profits on conservative trades, and aim for 7% on aggressive ones. It balances consistent wins with measured risk exposure.
The 3 5 7 Rule of Trading
A position sizing and risk management framework that allocates capital across three different trade types based on conviction levels. It guides traders to risk different percentages on short-term, medium-term, and long-term positions.
The 3 6 9 Rule in Trading
The 3 6 9 rule is a risk management framework that limits losses to 3% per trade, 6% per day, and 9% per week. It prevents catastrophic drawdowns by enforcing strict position sizing and daily stop-loss discipline.
The 90% Rule in Trading
The 90% rule is a widely cited statistic claiming that approximately 90% of retail traders lose their trading capital within 90 days of starting. It highlights the harsh reality of trading difficulty and the importance of proper preparation.
TraderVue Free Features
TraderVue's free tier provides basic trade logging and journal capabilities without payment. It includes essential tools for documenting trades and basic performance tracking.
Trading Edge
A trading edge is a repeatable advantage that produces profitable outcomes over time. It's the statistical probability that your trading method generates returns exceeding costs and risk.
Trading Journal
A trading journal is a systematic record of every trade you execute, documenting entry and exit prices, position size, strategy used, and emotional state. It serves as your personal trading database for analyzing performance and identifying patterns.
Trading Plan
A trading plan is a written set of rules and strategies that guides your trading decisions. It specifies entry signals, exit rules, position sizing, and risk management protocols before you place any trade.
What Is Trading and How Does It Work?
Trading is the act of buying and selling financial instruments like stocks, forex, or cryptocurrencies to profit from price movements. Traders execute trades based on market analysis and strategy.
Win Rate in Trading
Win rate is the percentage of your profitable trades compared to your total number of trades. A 60% win rate means six out of every ten trades are profitable.