Desk terms

The language of the desk in plain words. Across the site these terms are finely underlined; a click brings you here.

Acceptance: Price trades beyond a level, stays there and builds volume. The opposite of a sweep: the market agrees with the new price.
ADR (average daily range): The average distance between the high and the low of a day over the last days. It tells you how much of a normal day is already used up.
ATR (average true range): The average size of a candle on the chart you are looking at, gaps included. A yardstick for what counts as a large or a small move.
Backtest: A rule set applied to past prices to see what it would have done. It is a calculation, not a trading result: nobody was filled, and the rules were written knowing the past.
Break-even: Moving the stop to the entry price once a trade is far enough in profit. From then on the trade can no longer lose, apart from costs.
CFD: Contract for difference: a contract with a broker that follows the price of an index, gold or a currency. Common on MetaTrader. It is not traded on an exchange; the broker is the counterparty.
DOM (depth of market): The order book: the buy and sell orders waiting at each price, shown as a ladder. Also the window from which many futures traders place their orders.
Drawdown, maximum drawdown: The fall from a high point of the account to the next low point. The maximum drawdown is the largest such fall in a period: what you would have had to sit through.
E-mini Nasdaq-100 future (NQ): The futures contract on the Nasdaq-100 index, traded at the CME in Chicago almost around the clock. The reference market for US technology stocks.
Expert advisor (EA): A program in MetaTrader that places and manages orders by fixed rules. What other platforms call a strategy, a bot or a robot.
Fair value gap (imbalance): Three candles where the first and the third do not overlap: price moved so fast that almost nothing traded in between. A desk would say imbalance. Price often returns to it.
Hypothetical results: Results calculated on past prices, not earned on an account. They leave out what a real account meets: slippage, rejected orders, and the trader who breaks the rules.
Line in the sand: The one price that decides whether the plan for the day is still valid. Above it you think one way, below it the other.
Liquidity sweep, stop run, raid: Price trades through an obvious high or low, triggers the orders resting there, finds no follow-through and comes back. Three names for the same event.
Liquidity, resting orders: Orders that wait at a price: stops of traders positioned the other way and orders of those waiting for a breakout. They cluster beyond obvious highs and lows, and the market tends to go where the orders are.
Micro contract (MNQ): The Micro E-mini Nasdaq-100 future: one tenth of the NQ contract. One index point is worth 2 US dollars. The size most private traders start with.
Opening range: The high and the low of the first minutes after a session opens, for example the first 15 or 30 minutes from 09:30 New York time. A first reference for the day.
Order flow: Reading the trades and orders themselves instead of the candle: who is buying at the offer, who is selling at the bid, and how much. Tools: footprint chart, delta, volume profile, DOM.
Previous-day high and low: The highest and the lowest price of the previous trading day. Two of the most watched levels of any morning.
Profit factor: All winning trades added up, divided by all losing trades added up. Above 1 the rule set made money in the test; 1.5 means 1.50 won for every 1.00 lost.
Prop firm, evaluation account: A firm that lets traders trade its capital. To get an account you pass an evaluation with fixed rules: a daily loss limit, a maximum drawdown, a profit target.
R (risk unit): The amount risked on one trade, from entry to stop. A trade that makes twice that amount made +2R. It lets you compare trades of any size.
Risk-on, risk-off: Risk-on: investors buy risk; equities are bid, the dollar and volatility are offered. Risk-off is the reverse. When the markets disagree, the picture is mixed.
RTH (regular trading hours): The cash session of the US stock market, 09:30 to 16:00 New York time. Futures trade outside these hours as well, but most of the volume is here.
Session: A part of the trading day named after the centre that is open: Asia, London, New York. The high and low of each session are levels the next session works with.
Slippage: The difference between the price you wanted and the price you got. Small in calm markets, larger at the open and around news.
Spread: The difference between the best buying price and the best selling price. You pay it on every trade.
Tick data: Every single trade or quote, not summarised into candles. Tests on tick data show what happened inside a candle and are stricter than tests on candles.
Time exit: Closing a trade because time has passed, not because a price was reached. It removes trades that are going nowhere.
VWAP: Volume-weighted average price: the average price of the day, weighted by how much traded at each price. Many institutions measure their executions against it.