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· Glossary

Trading & AI Glossary

Key terms and definitions for trading, AI, and automation.

AI Trading Bot

Software that uses artificial intelligence to analyse market data and execute trades automatically.

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Algorithmic Trading

Trading using computer programs that follow predefined rules or ML models to execute trades.

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Backtesting

Testing a trading strategy against historical data to evaluate potential performance.

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Circuit Breaker

An automated mechanism that halts trading during extreme market conditions to prevent cascading losses.

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Drawdown

The peak-to-trough decline in portfolio value, often expressed as a percentage.

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Ensemble Model

A machine learning approach that combines predictions from multiple models to improve accuracy.

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Hyperliquid

A decentralised exchange (DEX) for crypto perpetual futures trading with high performance and low fees.

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MACD

Moving Average Convergence Divergence, a trend-following indicator.

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Market Regime

The current state of the market: trending, ranging, volatile, or calm.

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Non-Custodial

A platform architecture where user funds remain in the user's own exchange account.

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Paper Trading

Simulated trading using virtual funds to test strategies without financial risk.

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Position Sizing

The process of determining how large a trading position to take based on risk parameters.

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RSI

Relative Strength Index, a momentum indicator measuring overbought/oversold conditions.

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Sentiment Analysis

Using NLP and AI to analyse news and social media to gauge market mood.

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Sharpe Ratio

A measure of risk-adjusted return.

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Stop-Loss

An order that automatically closes a position at a predetermined price to limit losses.

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Walk-Forward Validation

A backtesting method that tests strategy performance on out-of-sample data.

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