Glossary

The gap between a futures or perpetual price and the underlying spot price, expressed in points or as a percentage.

Compound annual growth rate: a single annualized return figure that smooths out multi-year equity curve results.

A margin mode where your entire account balance backs all open positions, pushing liquidation farther away but putting the full balance at risk.

Investing a fixed dollar amount on a fixed schedule regardless of price, reducing the impact of entry timing on average cost.

The average profit or loss you can expect per trade, combining win rate, average win, and average loss into one number.

The periodic payment exchanged between long and short perpetual-futures holders that keeps the contract price near spot.

The collateral required to open a leveraged position, calculated as notional value divided by the chosen leverage.

A margin mode where only the collateral assigned to a specific position backs it, capping your maximum loss at that amount.

A formula that calculates the optimal fraction of capital to risk per trade to maximize long-run portfolio growth.

A multiplier that scales your market exposure beyond the collateral you deposit, amplifying both gains and losses equally.

The price at which a leveraged position's margin is exhausted and the exchange force-closes it.

The minimum equity level a leveraged position must hold to stay open; breaching it triggers automatic liquidation by the exchange.

The fair-value price used for unrealized PnL and liquidation calculations, derived from the spot index rather than the last traded price.

The largest peak-to-trough decline in an equity curve, expressed as a percentage of the peak value.

The total number of outstanding derivative contracts that have not been settled or closed, used as a gauge of market participation.

When a strategy is tuned so tightly to historical noise that it looks excellent in-sample but fails on new data.

A crypto derivative contract that never expires, tracking spot price through periodic funding payments instead of settlement or rollover.

The process of calculating how many units to trade based on portfolio risk, not conviction or gut feel.

A risk-adjusted return measure: excess return per unit of volatility, annualized.

The difference between the expected fill price and the actual fill price, driven by liquidity, order size, and market speed.

A risk-adjusted return metric like Sharpe, but penalizes only downside deviation instead of total volatility.

A pre-set exit order that closes a trade at a defined loss level, capping downside and defining the risk input for position sizing.

A pre-set exit order that closes a trade at a target price, locking in gains and defining the reward leg of the reward-to-risk ratio.

The standard deviation of an asset's returns over a period, annualized to allow comparison across timeframes.

An out-of-sample testing method that fits strategy parameters on a training window and validates on the next unseen window, then rolls forward.

The percentage of trades that close at a profit: wins divided by total trades closed.