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The Trading Glossary

Every term that matters, defined the LA Traders way — no textbook filler, just what each concept means at 6:30 AM when the New York open prints.

50 terms8 categoriesUpdated 2026-07-21

RRR Framework

RRR Framework
The three-question filter every LA Traders setup must pass: Reveal, Retrace, Run.
Reveal
The first RRR question: what did the market just show you?
Retrace
The second RRR question: where should price pull back to?
Run
The third RRR question: where is price likely to travel?
A+ Setup
A trade that answers all three RRR questions with confluence at a marked level.
The 6:00 AM Protocol
The five-stage pre-market routine: mark overnight range, 4H structure, 1H structure, midpoint, and the NY opening candle.

Market Structure

Market Structure
The skeleton of price movement — the sequence of swing highs and swing lows that defines trend.
Break of Structure (BOS)
When price closes beyond a significant swing point, confirming trend continuation or reversal.
Change of Character (CHoCH)
The first break of structure against the prevailing trend — the earliest reversal signal.
Swing High
A local peak in price — a high with lower highs on both sides.
Swing Low
A local trough in price — a low with higher lows on both sides.
Trend
The directional bias of price, defined by the sequence of higher highs/lows or lower highs/lows.

Liquidity

Liquidity
The pool of resting orders (stops and pending entries) clustered at obvious price levels.
Liquidity Sweep
A fast run through a level that triggers resting stops, then reverses — the signature Reveal.
Buy-Side Liquidity
The pool of buy orders resting above resistance — shorts' stops and breakout longs.
Sell-Side Liquidity
The pool of sell orders resting below support — longs' stops and breakout shorts.
Stop Hunt
Deliberate price movement through a level to trigger clustered stop-loss orders before reversing.
Turtle Soup
Fading the false breakout — entering against the move after a level is swept and reclaimed.

Price Action

Order Block
The last opposing candle before a strong directional move — a zone where institutions likely entered.
Fair Value Gap (FVG)
A three-candle imbalance where the middle candle's range doesn't overlap — price often returns to fill it.
Imbalance
Any inefficient price move where one side overwhelmed the other — the parent concept of the FVG.
Breaker Block
A failed order block that flips polarity — old support becomes new resistance (or vice versa).
Mitigation
Price returning to a zone so trapped traders can exit at breakeven — the engine behind retests.
Premium and Discount
The upper and lower halves of a range — you sell premium and buy discount, never the reverse.
Equilibrium
The 50% midpoint of any range — the fairest price, and the line between premium and discount.
Optimal Trade Entry (OTE)
The 62%–79% retracement zone of a leg — the statistically sweet spot for entries.
Fibonacci Retracement
Horizontal levels at 23.6%, 38.2%, 50%, 61.8%, and 78.6% of a measured leg, used to frame retrace entries.

Sessions & Time

Overnight Range
The high and low formed during the overnight session — the first levels marked every morning.
Overnight Midpoint
The 50% level of the overnight range — the session's equilibrium, marked in White at 6:25 AM.
The Opening Candle
The first candle of the New York session (6:30 AM PT) — marked in Gold as the day's reference range.
Opening Range
The high/low band established in the first minutes of the session — the day's first battleground.
The New York Session
The 6:30–11:00 AM PT window where US equity volume concentrates — the only session LA Traders trades.
Killzone
A specific time window where high-probability setups concentrate — e.g., the New York open 60–90 minutes.
Silver Bullet
A time-based setup targeting specific one-hour windows where FVG entries have statistical edge.

Risk & Execution

Risk-to-Reward (R:R)
The ratio between your stop distance and target distance — the math that decides if a trade is worth taking.
Position Sizing
How many contracts or shares to trade, derived from your stop distance and fixed dollar risk.
Expectancy
The average R you earn per trade over a large sample — the true scoreboard of your edge.
Drawdown
The peak-to-trough decline in account equity — the cost of doing business, and the metric that kills careers.
Revenge Trading
Re-entering immediately after a loss to 'win it back' — the fastest account killer in trading.
Trade Journaling
Recording every trade with screenshots, reasoning, and outcome — the feedback loop that builds edge.
Discipline
Executing the process exactly — especially when you don't feel like it. The meta-skill that contains all others.

Instruments

ES (E-mini S&P 500 Futures)
The most liquid equity index futures contract in the world — the primary LA Traders instrument.
NQ (E-mini Nasdaq-100 Futures)
The tech-heavy sibling of ES — faster, wilder, and less forgiving.
Tick Value
The dollar amount gained or lost per minimum price increment — the unit your P&L is built from.
Margin (Futures)
The good-faith deposit required to hold a futures position — leverage's entry fee.
Prop Firm (Evaluation)
A firm that funds traders with its capital after they pass a rules-based evaluation — the modern funded-trader path.

Options

Options Contract
The right — not the obligation — to buy (call) or sell (put) an underlying at a set price before expiration.
Delta
How much an option's price moves per $1 move in the underlying — the directional sensitivity.
Theta
The daily time decay of an option's value — the silent tax on every long option.
Implied Volatility (IV)
The market's forecast of future movement embedded in option prices — high IV = expensive options.

Learn the full system

The RRR Daily Trading Checklist — the exact morning routine LA Traders runs before every New York session. Free.

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