Trading discipline glossary
Short definitions of the terms used in trading journals and in DisciplineTrade, from averaging down to the tiltmeter. Each entry links to a guide or calculator where there is one.
- Averaging down
- Adding to a position that is already losing, at a worse price, which lowers the average entry but increases the amount at risk.
- Blind review
- Reviewing a trade with its result hidden, judging only whether it followed your rules, then revealing the outcome.
- Read more about Blind review
- Charges
- Everything paid on a trade besides the price: brokerage plus taxes and exchange fees shown on the contract note.
- Cooldown rule
- A rule to wait a fixed time after a loss before the next trade, written to prevent revenge trading.
- Read more about Cooldown rule
- Discipline score
- A daily 0-100 score for process: routine done on time, rules followed, trades planned, no behaviour flags. Profit never raises it.
- Drawdown
- The fall in account value from its highest point to a later low, usually shown as a percentage.
- Read more about Drawdown
- Expectancy
- The average result per trade over many trades: win rate times average win, minus loss rate times average loss.
- Read more about Expectancy
- If-then rule
- A rule that links a situation to an action, such as "If I have taken 3 trades today, then I stop trading".
- Read more about If-then rule
- Lucky win
- A profitable trade that broke your rules or had a weak setup. Labelling it stops it from teaching a bad habit.
- Read more about Lucky win
- Net P&L
- Profit or loss after all charges. It is what actually reaches or leaves your account.
- Overtrading
- Taking more trades than your plan and setups justify, often from boredom or to recover a loss.
- Read more about Overtrading
- Position size
- The quantity traded, chosen so that hitting the stop loses only a fixed share of capital.
- Read more about Position size
- Pre-trade verified
- A trade whose plan was saved with a server timestamp before the broker's entry time, so the reason was written before the outcome.
- R multiple
- A trade's net result divided by the amount planned to risk on it. +2R means the trade made twice its planned risk.
- Revenge trading
- Entering a new trade soon after a loss, mainly to win the money back.
- Read more about Revenge trading
- Risk of ruin
- The probability of losing a given share of capital before reaching a goal, based on win rate, payoff and risk per trade.
- Read more about Risk of ruin
- Risk reward ratio
- The planned profit to the target divided by the planned loss to the stop.
- Read more about Risk reward ratio
- Setup
- A named, repeatable trade pattern with an entry checklist. Grading each trade against the checklist shows which setups work for you.
- Tiltmeter
- A view of daily discipline scores next to the equity curve, to see whether poor process lines up with drawdowns.