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.