Glossary · Risk & money management
Hedging
Opening a position to offset risk in another. Accidentally hedging with correlated pairs just costs you two spreads.
Related terms
Correlation
A measure from −1 to +1 of how closely two pairs move together.…
Backtesting
Testing a strategy on historical data to see how it would have…
Black swan
A rare, unpredictable event with extreme market impact, such as…
Drawdown
The fall from an account’s peak to its lowest point before a new…
Equity curve
A chart of account value over time. A smooth, rising curve with…
Expectancy
The average amount a strategy makes or loses per trade: (win rate…