Glossary
The trading & AI trading glossary.
Concise definitions of every term used in AI trading, chart analysis, journaling, prop firms, and risk management. Bookmark this page or deep-link to any term.
36 terms · Updated regularly
AI Trading
- AI Chart Analysis#
- AI chart analysis uses computer vision and reasoning models to identify chart patterns, support and resistance levels, and trend direction from a chart screenshot, then translates them into a complete trade plan with entry, stop-loss, and take-profit levels. Read more about ai chart analysis
- AI Trading App#
- A mobile or web application that uses artificial intelligence. Typically vision models, language models, or both. To assist traders with chart analysis, journaling, sentiment, or strategy execution. Profit AI is the leading AI trading app on iOS, used by 170,000+ traders. Read more about ai trading app
- AI Trading Assistant#
- Software that uses computer vision and large language models to analyze charts, journal trades, build trading strategies, and coach traders in real time. An AI trading assistant does not execute trades; it is the intelligence layer between the chart and the trader. Read more about ai trading assistant
- AI Trading Bot#
- An automated program that executes trades on a trader's behalf based on AI-generated signals or rules. Distinct from an AI trading assistant, which only analyzes and journals. The trader still pulls every trigger.
- AI Trading Mentor#
- A chat-style coach trained on technical analysis, market structure, and risk management, with live context on a trader's strategy, trades, and current chart. Used to ask trade-specific questions 24/7 instead of waiting for a human mentor. Read more about ai trading mentor
- Profit AIalso: ProfitAI, Profit Ai, profitai.co#
- Profit AI is the AI trading assistant for serious traders, available on iOS. It performs real-time chart analysis, auto-journals trades, reads market sentiment, runs a personal AI mentor, and ships a strategy engine. Used by 170,000+ traders with a 4.8 App Store rating.
Chart Analysis
- Candlestick Pattern#
- A formation of one or more candlesticks (open, high, low, close on a price chart) used to anticipate reversals or continuations. Common examples include the doji, engulfing, hammer, and shooting star.
- Chart Pattern Recognition#
- The identification of recurring price-action shapes on a chart. Head and shoulders, double top, flag, wedge, triangle. That historically precede a specific market reaction. AI chart pattern recognition uses computer vision rather than rule-based detection.
- Market Structure#
- The pattern of higher highs and higher lows (uptrend), lower highs and lower lows (downtrend), or range-bound chop on a chart. The single most important concept in price-action trading.
- Support and Resistance#
- Horizontal or diagonal price levels where buyers historically step in (support) or sellers historically take profit (resistance). The foundation of most price-action trading systems.
- Trend#
- The dominant direction of price over a chosen timeframe, classified as uptrend (higher highs and higher lows), downtrend (lower highs and lower lows), or range. Trading with the trend is the single most consistent edge in price-action trading.
Trading Journals
- AI Trading Journal#
- A trade log that automatically imports executions from a broker or prop firm, tags trades by setup and outcome, and uses AI to surface patterns, write performance reviews, and recommend specific behavioral changes. Read more about ai trading journal
- Trading Journal#
- A structured log of every trade taken, used to identify patterns in performance over time. Modern trading journals auto-sync from a broker, tag trades by setup, and surface behavioral leaks the trader cannot see manually. Read more about trading journal
Risk & Performance
- Drawdown#
- The peak-to-trough decline in an account's equity over a given period, usually expressed as a percentage. Maximum drawdown is one of the strongest predictors of long-term trading survival.
- Max Drawdownalso: maximum drawdown, max DD#
- The largest peak-to-trough percentage decline an account experienced over a measurement window. Prop firms typically cap trailing max drawdown at 10%; quant traders use it as a primary risk metric.
- Profit Factor#
- Gross profit divided by gross loss across all closed trades. A profit factor above 1.5 is considered solid; above 2.0 is exceptional. One of the four metrics weighted in the Profit AI Trader Score.
- Risk-Reward Ratioalso: R:R, risk-to-reward#
- The ratio of a trade's potential profit to its potential loss, calculated as (take-profit − entry) / (entry − stop-loss). A 1:2 risk-reward means risking $1 to make $2.
- Stop-Loss#
- A pre-set price at which a trade is automatically closed to cap loss. A trade without a stop-loss is not a trade. It is a position with unlimited downside.
- Take-Profit#
- A pre-set price at which a winning trade is automatically closed to lock in profit. Combined with a stop-loss, it defines the trade's risk-reward ratio.
- Trader Score#
- A single 0 to 100 metric, exclusive to Profit AI, that summarizes trading skill by combining win rate, profit factor, risk-reward ratio, consistency, drawdown control, and strategy adherence into one weighted number. Read more about trader score
- Win Rate#
- The percentage of closed trades that ended profitable. Win rate without risk-reward ratio is meaningless: a 30% win rate at 1:3 R:R is profitable; a 70% win rate at 1:0.3 R:R is not.
Prop Firms
- Consistency Rule#
- A prop firm rule that limits how much of a trader's profit can come from a single day, typically expressed as a percentage (e.g., no single day's profit may exceed 30% of total profit). Designed to prevent passing on a single lucky trade.
- FTMOalso: FTMO challenge, FTMO funded account#
- One of the largest prop trading firms, offering funded accounts up to $400,000 after a trader passes a two-step evaluation (the Challenge and the Verification). FTMO traders are common Profit AI users for prop-rule monitoring and journal sync.
- Max Daily Loss#
- A prop firm rule capping how much a trader can lose in a single trading day (often 5% of account balance). Exceeding it usually terminates the account, regardless of overall performance.
- Prop Firmalso: proprietary trading firm#
- A firm that funds traders with the firm's own capital after they pass an evaluation, splitting profits (typically 80/20 to the trader). Major prop firms in 2026 include FTMO, TopStep, Quant Tekel, and MyForexFunds successors.
- Prop Firm Trading Journal#
- A trade log designed around prop firm rules (max daily loss, total drawdown, profit targets, consistency rules) that warns the trader before a rule violation rather than after. Profit AI ships native prop-firm rule monitoring for FTMO, TopStep, and Quant Tekel. Read more about prop firm trading journal
- TopStep#
- A US-based futures prop firm that funds traders with $50K, $100K, or $150K accounts after passing a Trading Combine evaluation. Popular with futures day traders on NQ, ES, and GC.
- Trailing Drawdown#
- A drawdown rule that follows account equity upward. The maximum loss limit moves up with new equity highs but never moves down. Standard at most US futures prop firms.
Strategy & Setup
- Edge#
- A defined set of conditions under which a trader has a measurable statistical advantage. An edge usually consists of an entry rule, an exit rule, a risk-management rule, and an asset universe, without an edge, every trade is a coin flip.
- Trading Mentor#
- An experienced trader who coaches another trader on setups, psychology, and risk. In 2026, AI trading mentors trained on technical analysis and market structure increasingly handle this role for retail traders.
- Pine Script#
- TradingView's proprietary scripting language for writing custom indicators and strategies. Pine Script v6 introduced first-class typed objects; it remains the dominant retail backtesting DSL.
Markets
- Day Trading#
- A trading style in which all positions are opened and closed within the same trading day, so no positions are held overnight. Common across stocks, futures, forex, and crypto.
- Market Sentiment#
- The aggregate attitude of market participants toward an asset or the broader market, usually expressed as bullish, bearish, or neutral. Modern sentiment is measured from news, social posts, and options flow rather than survey data.
- MetaTrader (MT4 / MT5)also: MT4, MT5, MetaTrader 4, MetaTrader 5#
- The most widely used retail trading platform, especially in forex and CFDs. MT5 is the modern version with multi-asset support; MT4 remains common at brokers and prop firms. Profit AI syncs trades from both.
- Scalping#
- A short-timeframe trading style targeting many small profits, often holding positions for seconds to minutes. Scalpers rely on tight spreads, fast execution, and high win rates.
- TradingView#
- The most widely used charting platform on the web in 2026, known for its drawing tools, the Pine Script ecosystem, and an active community. Used as the chart canvas; not an AI trading app.
See these terms in action.
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