Plain-language definitions of the terms that matter.
R is what you risk on a trade. An R-multiple expresses profit or loss as a multiple of that risk, so a small and a large trade can be compared on the same scale.
Expectancy is the average R-multiple a system earns per trade over many trades. A positive number means it makes money over time — even with a low win rate.
Position sizing decides how many shares or lots to trade so that a stop-out costs a fixed, pre-chosen amount. It is the single biggest lever over survival and consistency.
Win rate is the percentage of trades that close in profit. On its own it says nothing about whether a system makes money — it only matters next to your average win and loss.
Profit factor is gross profit divided by gross loss. Above 1.0 means a system makes money; the higher it climbs, the more cushion every losing trade has.
SQN rates the quality of a trading system by combining its average R, the consistency of its results, and how many trades you have. It rewards steady edges, not lucky streaks.
Drawdown is how far your account has fallen from its highest point. Max drawdown is the worst such fall — the single best gauge of how much heat a system makes you take.
MAE is the furthest a trade moved against you before it closed. Studying it tells you whether your stop-losses are too tight, too wide, or about right.
MFE is the furthest a trade moved in your favour before it closed. Comparing it to where you actually exited reveals how much profit you routinely leave on the table.
Risk of ruin is the probability that a run of losses draws your account down to a point you can't recover from. Your risk per trade is the lever that controls it.
Standard deviation measures how much your per-trade results scatter around their average. It is the raw 'volatility' that risk-adjusted ratios like Sharpe and Sortino are built on.
The Sharpe ratio divides your return by how much it bounces around. It rewards smooth, consistent gains over the same return earned through wild swings.
The Sortino ratio is a refinement of Sharpe that measures return against downside volatility only. It stops rewarding you less just for having big winners.
The Calmar ratio divides your return by your worst drawdown. It answers whether the reward a system delivered was worth the deepest hole it dug along the way.
Downside deviation measures how much your results scatter below a target — only the harmful swings. It is the engine behind the Sortino ratio.
The discipline tax is the gap between what your trades actually made and what they would have made if you had followed your own plan every time. It puts a number on indiscipline.
Overtrading is taking more trades than your edge calls for — often out of boredom, revenge, or impatience. Tracktions flags days where your trade count spikes and shows the damage.
Conviction calibration compares how confident you felt before a trade with how those trades actually turned out. It reveals whether your gut read of a setup is worth trusting.
Revenge trading is jumping straight back into the market to win back a loss, abandoning your plan in the process. It is one of the fastest ways to turn a small loss into a large one.
A structured trade follows a defined playbook; an impulse trade is taken on a whim with no setup. Separating the two shows how much your discipline is actually worth.
A streak is a run of consecutive wins or losses. Most streaks are ordinary variance, not a change in skill — and treating them as signals is a common, costly mistake.