Glossary · Risk & money management
Profit factor
Gross profit divided by gross loss. Above 1 a strategy is profitable, and many traders look for 1.5 or more.
Related terms
Expectancy
The average amount a strategy makes or loses per trade: (win rate…
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…
Correlation
A measure from −1 to +1 of how closely two pairs move together.…
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…