Glossary
The words behind the charts.
Plain definitions of the terms used across Analess, each with a link to the page that goes further. Definitions describe what a term measures, not what to do with it.
B
- Backtest
- A simulation of how a rule would have behaved on historical data. It is hypothetical: it is built with hindsight and does not establish future results. What a backtest can prove.
- Breakout
- A bar that closes beyond a defined level or trend line. The word names a calculation over closed bars, not a forecast of what price does next. Auto-annotation.
C
- Correlation
- How closely two series move together, from −1 (they move in opposite directions) through 0 (no linear relationship) to 1 (they move in step). Diversification lab.
D
- Drawdown
- The fall from a peak in an account’s or a strategy’s value to a later low, usually stated as a percentage of the peak. Drawdown simulator.
F
- Fibonacci retracement
- Horizontal levels drawn at fixed ratios of a price swing, such as 38.2%, 50% and 61.8% of the distance between its high and its low. Auto-annotation.
H
- Heikin-Ashi
- Candles built from averaged prices, which smooth the series. Their open and close are not traded prices. Chart types compared.
L
- Look-ahead bias
- A testing error in which a rule uses information it could not have had at the time, such as a bar’s close before that bar has finished. How a backtest is computed.
M
- Match score
- How closely a detected pattern fits its published definition, from 0 to 100. It is not a probability that price will move. A match score is not a probability.
- Monte Carlo simulation
- Rerunning a result many times with randomised inputs, such as a reshuffled trade order, to see the range of outcomes chance alone can produce. Backtesting and robustness.
- Moving average
- The average of the last N values, recalculated as each new bar arrives. Smoothing a series this way also delays it. Indicator lag lab.
O
- Overfitting
- Tuning a rule so closely to past data that it fits noise rather than a repeatable pattern. Testing many settings on the same history makes it more likely. Overfitting lab.
R
- Relative Strength Index (RSI)
- A momentum oscillator from 0 to 100 that compares the size of recent up closes with recent down closes. RSI in the indicator reference.
S
- Slippage
- The difference between the price a trade was expected to fill at and the price it actually filled at. Trading cost calculator.
- Spread
- The gap between the best price buyers are bidding and the best price sellers are asking at the same moment. Trading cost calculator.
- Support and resistance
- Price levels a market has repeatedly turned at: support below the current price, resistance above it. They describe where price has been, not where it will go. Auto-annotation.
T
- Trend line
- A line drawn through two or more swing highs, or two or more swing lows, to show the slope of a move. Drawing tools.
V
- Volatility contraction pattern (VCP)
- A chart pattern defined by successively smaller pullbacks. Chart assistance.
- Volatility
- How widely a price varies over a period, often measured as the standard deviation of its returns. Average True Range in the indicator reference.
W
- Walk-forward analysis
- Fitting a rule’s settings on one stretch of history, testing them on the next stretch, then moving forward and repeating. Backtesting and robustness.
X
- XABCD pattern
- A five-point harmonic pattern defined by ratios between its swings. Chart assistance.