Catalogue
Glossary
Rigorous one-paragraph definitions for the terms used across this catalogue. Cross-linked from EA, broker, strategy, pair, and guide pages.
A
- Average Directional Index
- A technical indicator measuring trend strength on a 0–100 scale without saying which way the trend runs. EAs use it as a regime filter — trend strategies wait for a high reading, mean-reversion strategies for a low one.
- Average True Range
- A volatility indicator measuring the average size of recent price movement, in price units. EAs use it to set stop distances and position sizes that adapt to current conditions instead of assuming yesterday's.
B
- Backtest
- A simulation of an EA's trading rules applied to historical price data to estimate how the strategy would have performed in the past.
C
- Compound annual growth rate
- The annualised rate of return over a multi-year period that accounts for compounding, normalising returns across different backtest lengths so two strategies tested over different spans can be compared.
E
- ECN broker
- A broker that routes orders to a pool of liquidity providers instead of taking the other side of them, quoting a raw spread and charging a separate commission per lot.
- Execution model
- How a broker processes an order — by taking the other side of it as counterparty, or by routing it outward to external liquidity providers.
- Expectancy
- The average amount expected to win or lose per trade, calculated as win rate times average win minus loss rate times average loss. Positive expectancy is required for a profitable strategy.
- Expert Advisor
- An automated trading program written in MQL5 that runs inside MetaTrader 5 and places, modifies and closes orders according to programmed rules without manual intervention.
- Exponential Moving Average
- A moving average that weights recent prices more heavily than older ones, so it turns sooner than a simple average. EA trend filters and crossover entries are built on it more often than on any other indicator.
G
- Grid trading
- A strategy that places orders at fixed price intervals above and below a reference price, profiting from oscillation rather than from predicting direction.
I
- Introducing Broker programme
- An Introducing Broker programme pays a person or site out of a broker's own revenue for each client it refers — as a one-off per funded account, a recurring share of every lot they trade, or both.
L
M
- Magic number
- An integer an Expert Advisor stamps on every order it sends, so it can recognise its own positions and leave everything else on the account alone.
- Margin call
- A broker warning issued when the margin level of an account falls to a stated percentage, followed by automatic closure of positions at a lower percentage called the stop-out.
- Martingale
- A sizing rule that increases the lot after a loss, usually by doubling, so that one eventual win recovers the whole losing sequence and the original target profit.
- Maximum drawdown
- The largest peak-to-trough decline in account equity over a measurement period, as a percentage of the previous peak.
- Modelling quality
- A percentage the MT5 strategy tester prints for how completely the price history covered the tested window — reported on generated-tick runs too, not only on real ticks.
N
- Negative balance protection
- A broker policy that writes off any account balance below zero, so the most a client can lose is the amount deposited even when a gap moves through the stop-out.
O
- Overfitting
- Tuning EA parameters too precisely to historical data, producing a strategy that backtests well but performs poorly on unseen data because it exploits noise rather than real market patterns.
P
- Position sizing
- The rule that turns a trading signal into a lot size — most usefully by fixing the loss a single trade may cost and letting the stop distance decide the volume.
- Profit factor
- Total gross profit divided by total gross loss over a given period. A profit factor above 1.5 indicates a profitable strategy; above 2.0 is strong.
R
- Recovery factor
- Total net profit divided by maximum drawdown, indicating how many times the strategy has earned back its worst loss. Higher is better.
- Restricted jurisdiction
- A country or territory in which a broker will not offer or market its services, because doing so would require a local licence or breach a regulator's rules.
- Risk/reward ratio
- The ratio of potential profit to potential loss on a single trade, calculated as take-profit distance divided by stop-loss distance. It fixes the win rate a strategy needs in order to break even.
S
- Sharpe ratio
- A risk-adjusted return metric: excess return divided by the standard deviation of returns. It rewards a smooth equity curve, which is why it can flatter a martingale EA right up until it blows up.
- Slippage
- The difference between the price an order asked for and the price it was filled at. It can fall either way, but for a strategy that trades on speed it is a cost that backtests rarely model.
- Sortino ratio
- A risk-adjusted return metric built like the Sharpe ratio but dividing by downside deviation only, so a strategy is not penalised for the volatility of its winning periods.
- Spread
- The gap between the bid and the ask on a symbol. It is paid on entry, it is the cost every trade starts behind by, and it is the one MT5 shows least clearly.
- Stop-loss
- A stop-loss is a price level attached to a position at which the broker closes it automatically, capping the loss on that trade. It lives on the broker's server, so it works even when the terminal does not.
- Swap
- The financing charge or credit applied to a position held past the broker's daily rollover, derived from the interest rate differential between the two currencies plus the broker's own markup.
T
- Take-profit
- A price level attached to a position at which the broker closes it automatically to realise a gain. Like the stop-loss it lives on the broker's server, and like the stop-loss it is decided before the trade is open.
- Tick data
- Tick data is the record of every individual price change on a symbol — each one timestamped, with its own bid and ask — and it is what MT5 replays in its 'Every tick based on real ticks' model instead of inventing a path between bars.
- Trailing stop
- A trailing stop is a stop-loss that moves in the direction of a profitable trade and never moves back. It turns an open gain into a floor under the position, so a retracement decides the exit instead of a target chosen in advance.
V
- Value at risk
- Value at risk (VaR) is a modelled estimate of the worst loss over a set horizon at a stated confidence level. A 95% one-day VaR of 2% means the account should lose more than 2% on about one trading day in twenty — and it says nothing about how much more.
- Virtual Private Server
- A rented remote computer that keeps MetaTrader open around the clock — so an EA keeps trading when your own machine sleeps or drops its connection, and sits nearer the broker's servers.
- Volatility
- Volatility is the degree of price variation over time — how far price moves, not which way. Statistically it is the standard deviation of returns; inside an MT5 EA it is read as Average True Range, and it decides whether last month's stop distance is still right today.
W
- Walk-forward analysis
- A validation method that re-optimises a strategy on one window of history, trades those settings untouched on the window that follows, then slides both windows forward and repeats — quoting only the untouched segments.
- Win rate
- The percentage of trades that close at a profit, calculated as winning trades divided by total closed trades. Must be evaluated alongside risk/reward ratio to be meaningful.
- Worst losing streak
- The longest consecutive series of losing trades or the largest cumulative loss within a contiguous run of losing trades in a backtest or live record.