The reference · a wing of the CANDLEWORK network
Every term, in one plain sentence
No jargon left undefined. Search the language of price action and risk — each entry written to be the clearest, most quotable answer online.
Auction
A market as a continuous negotiation: price moves to wherever the next buyer and seller can agree on a trade.
Ask (offer)
The lowest price a seller will currently accept. Buy at the ask.
Bid
The highest price a buyer will currently pay. Sell at the bid.
Body
The thick part of a candle, from open to close. A long body means one side won decisively; a short one means a near-draw.
Breakout
Price clearing a level it had been stuck under or over — often watched for continuation, but prone to false starts.
Candlestick
One bar showing four prices for a period — open, high, low, close. Green closed up, red closed down.
See also: Body, Wick, Doji
Confluence
When several independent factors point the same way at one price. A pattern at a level with volume is confluence.
Close
The final price of a period — often treated as the most important of the four, since it's where conviction settled.
Doji
A candle whose open and close are almost equal — a standoff, nearly all wick. Meaningful only in context.
Drawdown
The fall from a peak in account value to a later low. Down 50% needs +100% just to recover — which is why size matters.
Engulfing
A two-candle pattern where one body fully covers the previous one — a visible shift in who's in control.
Expectancy
The average result you'd expect per trade over many trades, blending win rate and average win vs loss. Positive expectancy is the whole point.
Indicator
A value calculated from price (moving average, RSI, MACD). Useful, but always one step behind what price already did.
Invalidation
A fact decided in advance that would prove your trade wrong — telling you exactly when to exit, before emotion can argue.
Leverage
Borrowing to control a larger position than your cash allows. It multiplies gains and losses alike.
Liquidity
How easily an asset can be traded without moving its price. Thin liquidity means bigger, faster swings.
Margin
Money borrowed from a broker to trade a larger position. Powerful and dangerous — it's how ordinary declines become wipeouts.
Marubozu
A candle that is all body and no wick — one side controlled the whole period without giving an inch.
Open
The first agreed price of a period — where the session's negotiation began.
Order book
The live list of buy and sell orders waiting at each price. Price action is its footprint on the chart.
Price action
Reading a chart from price itself — the candles — rather than from indicators layered on top.
Position size
How much of an asset you hold. Set it from your risk and stop distance — not from how confident you feel.
R-multiple
A result measured in units of risk, where 1R is entry-to-stop distance. A +2R win, a −1R loss — the same language on any market.
Resistance
A price where sellers have repeatedly appeared, capping advances — until they don't.
Stop-loss
A pre-set exit that caps a trade's loss. Deciding it in advance is what keeps a bad trade from becoming a bad month.
Supply & demand
More eager buyers than sellers lifts price; the reverse sinks it. Every candle is that balance, resolved.
Support
A price where buyers have repeatedly stepped in, holding declines up — until they don't.
Tilt
Trading from emotion rather than plan — chasing losses, oversizing, revenge trading. The main way accounts die.
Timeframe
The period each candle represents — a minute, an hour, a day. The same pattern means different things on different clocks.
Trend
A persistent direction — higher highs and higher lows (up) or the reverse (down). Patterns read best with it.
Volume
How much traded in a period. A pattern on strong volume carries more weight than the same shape on thin trade.
Wick (shadow)
The thin line above or below a body, marking the extreme price reached before the close pulled back — a rejection.
Market maker
A firm that continuously quotes both a bid and an ask, earning the spread and providing the liquidity that lets you trade instantly.
Order book
The live ladder of resting buy and sell orders at each price. Price moves as those orders are filled and refilled.
Slippage
The gap between the price you expected and the price you actually got — worse in thin, fast markets.
Market impact
How much your own order moves price by consuming available liquidity. Large orders pay for it.
Payment for order flow
When a broker is paid by a wholesaler to route your order to them instead of a public exchange — how many "commission-free" trades are funded.
Dark pool
A private off-exchange venue where large orders trade without showing on the public book — less market impact, but less transparency.
Iceberg order
A large order that displays only a small piece at a time, hiding its true size while the rest fills quietly.
Adverse selection
The risk a market maker takes trading against someone with better information — a key reason spreads widen when uncertainty rises.
High-frequency trading
Automated trading that competes on speed — often providing liquidity, while raising fairness debates about latency advantages.
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