Glossary

Price moving beyond the most recent swing point in the direction of the existing trend: a new higher high in an uptrend or a new lower low in a downtrend. It suggests the trend is continuing.

How traders use it: Many structure traders wait for a BOS, then look for a pullback into a zone created by the move before planning an entry.

Common mistake: Counting a wick through the swing as a break when the candle closed back inside. Decide in advance whether a body close is required.

A failed order block. Price sweeps a prior high or low, then reverses hard enough to break structure through the zone that "should" have held. That broken zone is then watched from the opposite side.

How traders use it: Similar in logic to an S/R flip: the retest of the broken zone is the area of interest.

Common mistake: Labelling any broken zone a breaker; the classic definition needs the liquidity sweep first.

Resting buy orders above highs: stop-losses of short sellers and buy-stop breakout entries.

How traders use it: Old highs and equal highs are watched as targets, or as places where a sweep and reversal might occur.

Common mistake: Shorting directly beneath obvious highs without allowing for the sweep.

The first break of structure against the prevailing trend, such as an uptrend breaking below its most recent higher low. "MSS" is often used for the same idea, usually when the break comes with strong displacement.

How traders use it: Treated as an early warning that control may be changing, not proof of a reversal. Traders often wait for a new swing in the new direction to confirm.

Common mistake: Reversing on every CHoCH in a lower timeframe while the higher timeframe trend is intact. Many CHoCHs are just pullbacks.

Two roughly parallel trendlines containing price: one along the swing lows and one along the swing highs.

How traders use it: Traders note where in the channel price sits and watch for breaks of the channel as a change in pace or direction.

Common mistake: Assuming the opposite channel line is a guaranteed target.

Several independent reasons pointing at the same area, for example a higher-timeframe level, a fair value gap and a premium/discount location lining up.

How traders use it: Used to choose between many possible zones and to avoid one-reason trades.

Common mistake: Stacking related signals (three moving averages) and calling it confluence, or adding reasons until any trade qualifies.

A chosen swing low to swing high (or high to low) used as the frame for measuring premium, discount and equilibrium.

How traders use it: Usually the most recent leg that broke structure. Redraw it when a new external swing forms.

Common mistake: Anchoring to an arbitrary pair of points that makes the current price look "cheap".

A move outside a range (above the high or below the low) that is quickly rejected and closes back inside. It is the range version of a liquidity sweep.

How traders use it: Range traders sometimes treat a deviation below the range low and reclaim as an idea toward the opposite side of the range.

Common mistake: Ignoring acceptance: if price keeps closing outside the range, it is no longer a deviation.

A fast, strong move with large bodies and little overlap between candles, often leaving fair value gaps. It suggests one side is in clear control for the moment.

How traders use it: Used to judge whether a break of structure is meaningful, and to identify the zones (order blocks, FVGs) the move came from.

Common mistake: Chasing the displacement candle itself instead of waiting for structure to form after it.

Two or more swing highs (or lows) at nearly the same price. They look like strong resistance or support, which is why many stops cluster beyond them.

How traders use it: Often treated as a magnet for a sweep rather than a wall, especially when they are very clean.

Common mistake: Treating a "double top" as guaranteed resistance.

The midpoint of a range or leg. Price spent roughly equal time being "too high" and "too low" around it, so it often acts as a balance point.

How traders use it: Used as a reference for partial targets in ranges, and as a filter: entries near equilibrium have less room in either direction.

Common mistake: Treating the 50% line as a precise support or resistance level rather than a rough zone.

Shorthand for comparing each swing to the previous one. Higher highs and higher lows describe an uptrend; lower highs and lower lows describe a downtrend; a mix describes a range or a transition.

How traders use it: In an uptrend, the most recent higher low is often treated as the level that "should" hold; in a downtrend, the most recent lower high.

Common mistake: Counting wicks on one swing and closes on the next. Use the same rule every time.

A minor, obvious swing that forms just before price reaches a bigger zone. Early entries at that swing place stops that later become fuel when price runs them into the real zone.

How traders use it: Some traders wait for the inducement to be swept before trusting a zone.

Common mistake: Seeing inducement everywhere after the fact. Define it before the move.

External structure is the major swing high and low that define the current leg or range on your chosen timeframe. Internal structure is the smaller swings that form inside that leg.

How traders use it: A break of internal structure can signal a pullback ending; a break of external structure is the bigger statement about trend.

Common mistake: Mixing the two, for example calling a minor internal break a trend reversal.

A price that has mattered before: prior swing highs and lows, range edges, previous day/week/month highs and lows, opening prices, and round numbers.

How traders use it: Key levels are where traders plan, not where they guess: what happens on arrival (rejection or acceptance) is the information.

Common mistake: Drawing so many lines that every price is "near a key level".

Clusters of resting orders, mainly stop-losses and breakout entries, assumed to sit just beyond obvious highs and lows. Large participants need that liquidity to fill size.

How traders use it: Traders ask where the obvious stops are and whether price has already taken them before planning a trade.

Common mistake: Assuming you know exactly where orders are. It is an inference from chart structure, not visible data.

A quick move beyond an obvious high or low that triggers resting orders, often followed by a reversal. It can also simply continue; see the hypothetical examples on the strategies page.

How traders use it: Also called a stop run or stop hunt. Traders wait for price to sweep, then reclaim the level (close back inside) before considering a reversal idea.

Common mistake: Calling a sweep in real time before the candle closes. A "sweep" that keeps going is a breakout.

The sequence of swing highs and swing lows on a chart, read as a map of who has been in control: buyers making higher swings, sellers making lower swings, or neither (a range).

How traders use it: Traders label swings first, then decide whether they are looking for continuation with the structure or for evidence that it is changing.

Common mistake: Labelling every tiny wiggle. Pick a timeframe and a consistent swing definition, or the "structure" changes every few candles.

Like a breaker, but without the sweep: price fails to make a new high (or low), then breaks structure. The zone of that failed swing is watched on a return.

How traders use it: Used by traders who think participants trapped at the failed swing will try to exit near breakeven ("mitigate") when price returns.

Common mistake: Confusing it with a breaker, which changes the logic and the stop location.

Checking that a lower-timeframe idea agrees with, or at least does not fight, the structure on one or two higher timeframes.

How traders use it: A common routine is higher timeframe for bias and key levels, middle timeframe for structure, lower timeframe for the entry trigger.

Common mistake: Flipping between timeframes until one agrees with the trade you already wanted.

In "smart money concepts", the last opposite-direction candle (or small cluster) before a strong move that breaks structure: the last down candle before a bullish displacement, or the last up candle before a bearish one.

How traders use it: Watched as a possible area for price to return to before continuing. Traders often require that the move from it broke structure and left a fair value gap.

Common mistake: Calling every candle before any move an order block. Without displacement and a structure break, it is just a candle.

Within a dealing range, prices above the 50% midpoint are called "premium" and prices below it "discount". It is a relative location, not a valuation.

How traders use it: Some traders only look for longs in discount and shorts in premium of the current range, so they are not buying after most of a move has happened.

Common mistake: Believing discount means price must go up. Strong trends can stay in premium or discount for a long time.

A sideways period where price oscillates between a roughly horizontal high and low without making a lasting new swing in either direction.

How traders use it: Range edges become reference levels. Traders either fade the edges, wait for a breakout, or watch for a sweep of one edge that fails (a deviation).

Common mistake: Drawing a range after only one touch of each side, or trading the middle of the range where neither side has an advantage.

A return to a level or zone after price has broken away from it, to see whether it now holds from the other side.

How traders use it: Breakout-and-retest ideas enter on evidence the retest held, with the stop beyond the retested zone.

Common mistake: Entering the retest without waiting for any reaction, which turns it into catching a knife.

Resting sell orders below lows: stop-losses of long positions and sell-stop breakdown entries.

How traders use it: Old lows and equal lows are treated as potential targets or sweep areas.

Common mistake: Placing a long stop exactly at an obvious low where everyone else's stop sits.

Phase A events. A climax is a sharp, high-volume extreme that exhausts the trend; the automatic move is the reflex bounce or drop after it; the secondary test revisits the climax area, ideally on less activity.

How traders use it: The climax low/high and the AR together often mark the initial range boundaries.

Common mistake: Calling any large candle a climax without the follow-through that stops the trend.

A sign of strength is a strong rally toward or through range resistance; a sign of weakness is a strong drop toward or through support. The last point of support (LPS) or supply (LPSY) is the pullback after it that holds.

How traders use it: Phase D entries are often planned on the LPS or LPSY, where invalidation is clearer than inside the range.

Common mistake: Treating the SOS candle as the entry instead of waiting for the pullback.

In accumulation, a drop below the range support that quickly reverses back inside, shaking out late sellers and triggering stops. It is the Wyckoff name for a deviation below the range.

How traders use it: Traders often wait for a "test" of the spring (a higher low on lighter activity) rather than buying the spring itself.

Common mistake: Assuming the drop below support is a spring before price has reclaimed the range.

Areas where price left quickly, implying an imbalance between buyers and sellers. A demand zone sits at the base of a strong rally; a supply zone at the base of a strong drop.

How traders use it: Traders mark the base candles of the move and watch for a first return to the zone.

Common mistake: Treating zones as fresh after several tests, or drawing them so wide that a stop beyond them is unaffordable.

Support is an area where falling price has previously stopped or bounced; resistance is an area where rising price has previously stalled. They are zones, not exact prices.

How traders use it: Used for entries, stops just beyond the zone, and targets at the next opposing zone.

Common mistake: Expecting a level to hold forever. Each test can absorb resting orders, and levels eventually break.

When a broken resistance later acts as support (or broken support acts as resistance). The idea is that traders who missed the break, or were trapped by it, react at the old level.

How traders use it: A breakout followed by a retest that holds the old level is a classic structure-based entry concept. See the hypothetical example on the technical examples page.

Common mistake: Assuming every retest will hold. A retest that closes back through the level is evidence the break failed.

Price trades beyond a prior swing high or low but the candle closes back on the other side, failing to hold the new extreme.

How traders use it: Used as a reversal concept with invalidation beyond the wick of the failed candle.

Common mistake: Ignoring the timeframe: an SFP on a 1-minute chart says little against a daily trend.

A swing high is a peak with lower highs on both sides; a swing low is a trough with higher lows on both sides. A common definition uses one or more candles either side (a "fractal").

How traders use it: Swings are the anchor points for structure, stops, targets and liquidity. Many traders only count a swing once price has clearly moved away from it.

Common mistake: Treating a swing as confirmed while the candle that forms it is still open.

A persistent direction of travel: rising swings for an uptrend, falling swings for a downtrend. A trend is a description of the past, not a promise about the next candle.

How traders use it: Trend-following ideas look for entries in the direction of the trend after a pullback; counter-trend ideas need stronger evidence and usually smaller expectations.

Common mistake: Calling a trend from two candles, or assuming a trend on a 5-minute chart matters to the daily chart.

A diagonal line connecting two or more swing lows in an uptrend (or swing highs in a downtrend).

How traders use it: A visual guide for pullback areas and for spotting when a trend is losing its angle.

Common mistake: Redrawing the line every time it breaks, or drawing through candle bodies to make it fit.

In distribution, a push above range resistance that fails and returns inside. The UTAD is the late-range version in Phase C, the mirror of a spring.

How traders use it: Watched as a possible trap of late buyers before markdown, usually with a sign of weakness needed as confirmation.

Common mistake: Shorting a breakout before it has actually failed back into the range.

A range after a decline in which supply is absorbed. Typical events: preliminary support (PS), selling climax (SC), automatic rally (AR), secondary test (ST), spring, sign of strength (SOS) and last point of support (LPS), followed by markup.

How traders use it: A spring followed by a successful test and SOS is the classic structure people look for before expecting markup.

Common mistake: Calling every range after a drop "accumulation". It can resolve lower.

A range after an advance in which demand is absorbed. Typical events: preliminary supply (PSY), buying climax (BC), automatic reaction (AR), secondary test (ST), upthrust (UT), upthrust after distribution (UTAD), sign of weakness (SOW) and last point of supply (LPSY), followed by markdown.

How traders use it: A UTAD followed by a sign of weakness is the textbook sequence before markdown.

Common mistake: Shorting the first upthrust in a range that later turns out to be re-accumulation.

A framework from Richard D. Wyckoff (early 1900s) that describes ranges as accumulation (before a markup) or distribution (before a markdown), with named events and phases A to E.

How traders use it: Traders use the vocabulary to describe how a range is developing and where a breakout or failure might come from.

Common mistake: Labelling events with certainty while the range is still forming. Many ranges fit both schematics until late.

Phase A stops the prior trend (climax, automatic move, secondary test). Phase B builds the "cause" with tests of both sides. Phase C is the test: a spring in accumulation or a UTAD in distribution. Phase D is the move toward the range edge (SOS/LPS or SOW/LPSY). Phase E is the trend out of the range.

How traders use it: Phases help a trader say "where are we in this range?" rather than guess direction from one candle.

Common mistake: Forcing a phase label onto a chart that does not show the events clearly.

A volatility measure from J. Welles Wilder: the average of each period's "true range" (the largest of high minus low, or the gaps from the prior close).

How traders use it: Used to pad stops beyond levels, to compare volatility across markets, and to spot compression.

Common mistake: Using ATR alone to set a stop with no structural reason for that location.

Moving the stop to the entry price (plus costs) after price has moved a set distance in favor.

How traders use it: Reduces the planned loss to roughly zero after a defined condition, ideally a new structure point, not a feeling.

Common mistake: Moving to breakeven too early, then getting stopped on a normal retest before the move continues.

Price moving and closing beyond a defined level, range or pattern boundary.

How traders use it: Some trade the break directly; others wait for the retest. The candle close beyond the level is the usual minimum evidence.

Common mistake: Entering on a wick through the level, before the close.

The closing price of a candle is the final agreed price for that period. Where a candle closes relative to its range and to nearby levels is often more informative than its wicks.

How traders use it: Many structure rules are judged on closes ("a daily close below support"). Crypto trades 24/7, so traders choose a reference close, commonly 00:00 UTC for daily candles.

Common mistake: Making a decision on a candle that has not closed yet. Note: analysis can wait for a close, but a protective stop order does not.

Shrinking candle ranges and tighter swings, often forming a triangle or flag. Volatility is contracting.

How traders use it: Compression is watched for a later expansion; traders plan both directions and let the break choose.

Common mistake: Assuming you know which way it will break.

The specific, pre-defined event that turns an idea into an order, such as a candle closing back above a swept low or a break of an inside bar.

How traders use it: Written triggers make a plan testable and stop entries based on feel.

Common mistake: Changing the trigger after the fact, which makes any review meaningless.

A late, often outsized move at the end of a trend that fails to follow through, as the last buyers (or sellers) are used up.

How traders use it: Traders look for exhaustion into a higher-timeframe level, followed by a structure change, before considering a reversal.

Common mistake: Calling exhaustion just because a move "feels" extended.

A breakout that closes beyond the level but then falls back inside within a short time, trapping traders who bought (or sold) the break.

How traders use it: Trapped traders exiting can fuel a move the other way, which is why some traders treat a confirmed failure as an idea in itself.

Common mistake: Holding a breakout trade after it has clearly failed because "it should have worked".

A brief move beyond a level, often only by a wick, that does not hold. Fakeouts are usually faster and shallower than failed breakouts.

How traders use it: Traders reduce fakeout risk by requiring a close, a retest, or a higher-timeframe confirmation.

Common mistake: Moving the stop beyond each fakeout until the risk is far bigger than planned.

The trend, range and key levels on a timeframe above the one you are trading. It sets the backdrop for any lower-timeframe pattern.

How traders use it: A bullish pattern into higher-timeframe resistance deserves less trust than one bouncing from higher-timeframe support.

Common mistake: Taking every lower-timeframe setup without checking what is directly above or below it on a bigger chart.

An impulse is a strong leg in the trend direction with large bodies and little overlap; a correction is the slower, overlapping move against it.

How traders use it: Trend traders try to enter near the end of a correction and expect the next impulse, with the stop beyond the correction's extreme.

Common mistake: Mistaking a deep, fast "correction" for a pause when it is actually a new impulse the other way.

A candle whose high and low are both within the previous candle's high and low (the "mother bar"). It shows a pause or contraction.

How traders use it: Traders mark the mother bar's high and low and wait for a break of one side, often in the direction of the higher-timeframe trend.

Common mistake: Trading inside bars in the middle of a choppy range, where breaks often reverse.

The price at which a trade idea is proven wrong. The stop goes just beyond it.

How traders use it: Define invalidation from structure first (the swing or zone that must hold), then size the position so a stop-out costs the planned amount.

Common mistake: Placing the stop where the loss "feels" acceptable rather than where the idea is wrong.

The speed and strength of a move: candle size, how far closes progress, and how little price pulls back.

How traders use it: Rising momentum supports continuation ideas; fading momentum near a level (smaller bodies, longer wicks) warns that a move is tiring.

Common mistake: Buying because momentum is strong right after the largest candle, with the stop far away.

A candle whose high is above and low is below the previous candle's range. It shows expansion and a contested period.

How traders use it: Where it closes matters most: a close near the high after taking the prior low is read differently from a close in the middle.

Common mistake: Treating every outside bar as an engulfing reversal regardless of where it closed.

Closing part of a position at one target and leaving the rest for a further target or a trailing stop.

How traders use it: A trade plan states in advance what fraction closes where, for example a portion at the first opposing level.

Common mistake: Taking partials early out of fear and letting losers run whole, which quietly changes the plan's average win and loss.

Analysing the movement of price itself (candles, swings, levels and how price behaves at them) rather than relying on indicators.

How traders use it: Price action traders ask what the latest move says about buyers and sellers, at which level, and in what higher-timeframe context.

Common mistake: Reading every candle in isolation and ignoring where it formed.

A temporary move against the trend, ideally into a level, zone or moving average, before the trend resumes.

How traders use it: Pullback entries aim for a better location and a tighter, clearer invalidation than chasing.

Common mistake: Buying every pullback without asking whether structure has actually changed.

A result measured in units of the planned risk. If you planned to risk $100 and made $250, that is +2.5R.

How traders use it: Lets you compare trades of different sizes and plan targets as multiples of risk (for example a first target at 1R). Planned R is a plan, not a prediction.

Common mistake: Quoting reward-to-risk without accounting for fees and slippage, or comparing R across trades with moved stops.

Planning trades from the edges of an established range toward the middle or the opposite edge.

How traders use it: Long near the range low with invalidation below it, short near the range high with invalidation above it. Equilibrium is a common first target.

Common mistake: Continuing to fade the edges after the range has broken and been accepted outside.

Price pushing into a level and being driven back, usually leaving a long wick and a close away from the extreme.

How traders use it: A rejection at a planned level is one piece of evidence; traders often want a follow-through candle as confirmation.

Common mistake: Treating any wick as rejection, even in the middle of nowhere.

Choosing where the stop-loss goes: just beyond the level that invalidates the idea, with a buffer for normal noise and spread.

How traders use it: Common choices are beyond the swing, beyond the zone, or beyond the wick of the trigger candle, sometimes padded by a fraction of ATR.

Common mistake: Placing the stop exactly on an obvious high or low where liquidity sits, or tightening it to fit a bigger position.

An order or rule to exit a losing trade at a planned price. It limits the plan, not the outcome: fills can be worse.

How traders use it: Placed at entry, not later. Moving it further away turns a planned loss into an unplanned one.

Common mistake: Widening the stop as price approaches it.

A stop that is moved in the trade's favor as price progresses, for example below each new higher low.

How traders use it: Structure traders often trail behind confirmed swings rather than a fixed distance.

Common mistake: Trailing so tightly that normal pullbacks close the trade.

The part between open and close. An up (bullish) body closes above its open; a down (bearish) body closes below. Body size shows how far price travelled and held.

How traders use it: Large bodies suggest conviction in one direction; small bodies suggest balance or hesitation.

Common mistake: Reading body color alone. A small up candle after a large down move says little.

The moment a candle's period ends. In crypto, daily candles usually close at 00:00 UTC, but some charts use a local time zone, which changes the candles.

How traders use it: Agree on a reference so patterns and closes are consistent between charts and reviews.

Common mistake: Comparing patterns from charts that use different daily close times.

Follow-through after a pattern that supports it, such as the next candle closing beyond the pattern's high (for a bullish pattern) or low (for a bearish one).

How traders use it: Waiting for confirmation usually means a worse price but more evidence. Traders decide in advance which they prefer and test that choice.

Common mistake: Adding "confirmations" until the move is over.

Where a pattern forms: after what move, at which level, and in what higher-timeframe trend. The same shape means different things in different places.

How traders use it: A reversal pattern is generally given more weight at a planned key level after an extended move, and little weight in the middle of a range.

Common mistake: Hunting for shapes and only then looking for a reason the location matters.

The thin line above or below the body showing the high or low that price reached but did not hold into the close.

How traders use it: A long wick at a level shows prices that were tested and rejected during the period.

Common mistake: Treating wicks as noise to be ignored, or the opposite: assuming every long wick is a reversal.

How far an account has fallen from its highest value, usually as a percent. A 20% drawdown needs a 25% gain to recover.

How traders use it: Planning a maximum drawdown in advance sets when to pause and review.

Common mistake: Increasing size to "win it back" during a drawdown.

The average result per trade in R: (win rate × average win) − (loss rate × average loss). Positive expectancy over a large, honest sample is the goal; it is never guaranteed to continue.

How traders use it: Measured from a large, recorded sample with costs included, not from a handful of trades.

Common mistake: Estimating it from memory or from a few recent trades.

A jump in price from one level to another with no trading in between, for example after news. A gap can skip past a stop.

How traders use it: Gap risk is considered when sizing positions held through news or market closures.

Common mistake: Confusing a price gap with a fair value gap, which is a wick-to-wick imbalance with trading in between.

A calculation from price or volume (such as a moving average or RSI) drawn on a chart. Indicators describe what already happened; they are not entry signals on their own.

How traders use it: Often used as a filter or context alongside structure.

Common mistake: Stacking indicators built from the same data and treating them as independent evidence.

Holding a position larger than the cash posted as margin. It changes the margin needed and the liquidation price, not the loss at your stop. Losses can exceed the money deposited.

How traders use it: Size from the stop first; leverage only determines margin.

Common mistake: Choosing leverage first and letting it decide the position size.

When a venue force-closes a leveraged position because the margin left is too small. It can happen before your stop is reached.

How traders use it: Check that the liquidation price sits well beyond the stop.

Common mistake: Not checking it at all.

How many units to buy or sell. Calculated as dollar risk ÷ risk per unit, so a stop-out costs about the planned amount.

How traders use it: Calculated after the stop is placed from structure.

Common mistake: Picking a size first and placing the stop to fit it.

The distance from entry to stop for one unit, plus costs. The input to position sizing.

How traders use it: Wider structural stops mean smaller positions for the same dollar risk.

Common mistake: Leaving out fees and expected slippage.

The difference between the expected price and the actual fill. Stop orders become market orders when triggered and can fill worse than the stop, especially in fast markets.

How traders use it: Budget for it in risk per unit, especially around obvious levels where many stops trigger together.

Common mistake: Assuming the stop price is the exit price.