Glossary

Authoritative definitions and concise explanations of terms referenced across strategy and framework articles.

• Altman Z Score A composite financial health metric estimating bankruptcy risk.
• Backtesting Historical simulation of a defined strategy against past market data.
• Delta (Options) Sensitivity of an option’s price to a $1 move in the underlying asset.
• Delta Neutral A position constructed so net delta is approximately zero.
• Emotional Discipline The practiced ability to execute predefined trading rules under stress.
• Expectancy Average result per trade after enough samples, combining wins, losses, and their sizes.
• Margin of Safety A probabilistic and fundamental buffer acknowledging the trader can be wrong.
• Paper Trading Live market simulation using virtual or tracked trades without risking capital.
• Position Sizing The method for determining trade capital allocation relative to risk budget.
• Risk Management Framework Structured set of rules limiting loss paths and stabilizing equity curve variance.
• Systematic Trading A rules-driven approach where predefined conditions govern entries, sizing, and exits.
• Validation Ladder Staged process: backtest then paper trade then micro live then scale.
• Volatility Regime A sustained market state characterized by typical variance and range behavior.