Reference
Trader's Glossary — Every Term You Need to Know
A reference companion to the Bharath Shiksha curriculum. Every concept below is defined in plain language and linked to the stage where it is taught in depth. Use this page to look up unfamiliar terms as you progress through the six-stage programme, or to preview what each stage covers before you enroll.
Market Structure & Price Action
8 termsMarket Structure
The foundational framework describing how price moves through trends, ranges, and breakouts. Market structure defines the current state of price — whether it is making higher highs, lower lows, or moving sideways in consolidation. Reading market structure correctly is the prerequisite for every other analytical skill in trading.
Taught in Stage 1 — Foundation Track
Price Action
The discipline of reading raw price movement on a chart without relying on lagging indicators. Price action traders analyse candlestick formations, support and resistance zones, and structural shifts to identify trade opportunities. On Indian markets such as NSE and BSE, price action is particularly effective on liquid instruments like Nifty 50 and Bank Nifty futures.
Taught in Stage 1 — Foundation Track
Support and Resistance
Horizontal price zones where buying demand (support) or selling supply (resistance) has historically concentrated. These levels act as decision points where price is likely to pause, reverse, or accelerate. Identifying clean support and resistance zones is the basis for all structured trade setups.
Taught in Stage 1 — Foundation Track
Higher Highs and Higher Lows
The defining characteristic of an uptrend in market structure. When each successive price peak is higher than the previous peak (higher high) and each successive trough is higher than the previous trough (higher low), the market is in a confirmed uptrend. The inverse pattern — lower highs and lower lows — defines a downtrend.
Taught in Stage 1 — Foundation Track
Breakout
A price event where the instrument moves decisively beyond a defined support or resistance level, or exits a consolidation range. Breakouts often signal the start of a new trend leg. False breakouts — where price briefly breaches a level before reversing — are a common trap that structured traders learn to identify and avoid.
Taught in Stage 1 — Foundation Track
Consolidation
A phase where price trades sideways within a defined range, indicating temporary equilibrium between buyers and sellers. Consolidation often follows a strong trending move and precedes the next breakout. Recognising consolidation prevents traders from forcing entries in low-probability, choppy environments.
Taught in Stage 1 — Foundation Track
Pullback / Retracement
A temporary move against the prevailing trend direction before price resumes its primary trajectory. Pullbacks offer lower-risk entry points within established trends. Distinguishing a healthy pullback from a full trend reversal is a core skill developed across Stages 1 and 2.
Taught in Stage 1 — Foundation Track
Gap
A price gap occurs when a security opens significantly above or below its previous closing price, creating a visible void on the chart. Gaps are common on Indian equity markets around earnings announcements, global overnight events, or after extended market holidays. Gap-fill and gap continuation are two distinct trade setups studied in Stage 2.
Taught in Stage 2 — Technical Core
Candlestick & Chart Patterns
6 termsCandlestick
A visual representation of price movement over a defined time period, showing four data points: open, high, low, and close. The body of the candle shows the range between open and close, while the wicks (shadows) show the high and low extremes. Candlestick charts are the default chart type used across the entire Bharath Shiksha curriculum.
Taught in Stage 1 — Foundation Track
Doji
A candlestick pattern where the opening and closing prices are nearly identical, producing a very small or nonexistent body with visible wicks. The doji signals indecision in the market — neither buyers nor sellers have gained control during that period. Context matters: a doji after a strong trend leg carries more weight than one during sideways chop.
Taught in Stage 1 — Foundation Track
Engulfing Pattern
A two-candle reversal pattern where the second candle's body completely engulfs the body of the previous candle. A bullish engulfing at support suggests a potential reversal upward; a bearish engulfing at resistance suggests a potential reversal downward. Engulfing patterns are most reliable when they form at key structural levels with above-average volume.
Taught in Stage 2 — Technical Core
Hammer / Inverted Hammer
Single-candle reversal patterns that form at support zones. A hammer has a small body at the top and a long lower wick, indicating that sellers pushed price down but buyers reclaimed control by the close. The inverted hammer is the mirror image, appearing at the bottom of a downtrend with a long upper wick. Both require confirmation from the next candle.
Taught in Stage 2 — Technical Core
Head and Shoulders
A three-peak chart pattern that signals a potential trend reversal. The pattern consists of a left shoulder, a higher head, and a right shoulder, connected by a neckline. A break below the neckline confirms the reversal from bullish to bearish. The inverse head and shoulders signals a reversal from bearish to bullish.
Taught in Stage 2 — Technical Core
Double Top / Double Bottom
Reversal patterns where price tests the same level twice and fails to break through. A double top forms at resistance after two failed attempts to move higher, signalling a potential bearish reversal. A double bottom forms at support after two failed attempts to move lower, signalling a potential bullish reversal. Both patterns are confirmed when price breaks the intervening swing level.
Taught in Stage 2 — Technical Core
Indicators & Frameworks
8 termsRSI — Relative Strength Index
A momentum oscillator that measures the speed and magnitude of recent price changes on a scale of 0 to 100. Readings above 70 are conventionally considered overbought; readings below 30 are considered oversold. RSI is most useful when combined with market structure analysis rather than used as a standalone buy or sell signal.
Taught in Stage 2 — Technical Core
MACD — Moving Average Convergence Divergence
A trend-following momentum indicator that shows the relationship between two exponential moving averages of price. The MACD line, signal line, and histogram together help identify trend direction, momentum shifts, and potential reversals. MACD divergence — when price makes a new high but MACD does not — is a key warning signal taught in Stage 2.
Taught in Stage 2 — Technical Core
VWAP — Volume Weighted Average Price
The average price of a security over a trading session, weighted by volume at each price level. VWAP serves as an institutional benchmark for intraday fair value. On Nifty and Bank Nifty, institutional desks frequently use VWAP as a reference for execution quality, making it a critical level for intraday traders to track.
Taught in Stage 3 — Structured Trader
Ichimoku Cloud / Ichimoku Kinko Hyo
A comprehensive multi-component indicator system that provides information about trend direction, momentum, support, and resistance in a single view. The cloud (kumo), tenkan-sen, kijun-sen, and chikou span work together to give a complete picture of market conditions. Ichimoku is particularly effective for swing trading on daily and weekly timeframes.
Taught in Stage 3 — Structured Trader
Bollinger Bands
A volatility-based indicator consisting of a simple moving average and two standard deviation bands above and below it. The bands expand during periods of high volatility and contract during periods of low volatility. Bollinger Band squeezes — where the bands narrow significantly — often precede explosive breakout moves.
Taught in Stage 2 — Technical Core
Fibonacci Retracement
A technical tool that identifies potential pullback levels based on Fibonacci ratios — 38.2%, 50%, and 61.8% are the most commonly watched. These levels are drawn between a swing high and a swing low to estimate where price may find support or resistance during a retracement. Fibonacci levels are used as confluence zones, not as standalone trade signals.
Taught in Stage 2 — Technical Core
Moving Average (SMA / EMA)
A trend-smoothing indicator that calculates the average closing price over a specified number of periods. The Simple Moving Average (SMA) weights all periods equally, while the Exponential Moving Average (EMA) gives more weight to recent prices. Common configurations include the 20 EMA for short-term trend, 50 SMA for intermediate trend, and 200 SMA for long-term trend direction.
Taught in Stage 2 — Technical Core
ATR — Average True Range
A volatility measurement indicator that calculates the average range of price movement over a specified number of periods, accounting for gaps. ATR is used for setting stop-loss distances, determining position sizes, and filtering out low-volatility conditions where trade setups are less reliable. A 14-period ATR is the standard default across most charting platforms.
Taught in Stage 2 — Technical Core
Advanced Methodologies
7 termsWyckoff Method
A market analysis methodology developed by Richard Wyckoff, based on the principles of accumulation, distribution, and the concept of the composite man — a theoretical entity representing the collective actions of institutional operators. The Wyckoff method uses price and volume to identify four distinct market phases: accumulation, markup, distribution, and markdown. Spring and upthrust events are key entry signals within this framework.
Taught in Stage 4 — Professional Edge
Elliott Wave Theory
A technical analysis framework proposing that market prices unfold in predictable wave structures driven by investor psychology. The basic pattern consists of five impulse waves in the direction of the primary trend and three corrective waves against it. Elliott Wave analysis requires disciplined rule application and is used for forecasting probable price targets and reversal zones.
Taught in Stage 4 — Professional Edge
Supply and Demand Zones
Price areas where institutional order flow has created a significant imbalance between buyers and sellers. Unlike conventional support and resistance lines, supply and demand zones are drawn as price ranges where large orders were historically placed. When price returns to these zones, the unfilled orders from the original move can trigger a strong reaction.
Taught in Stage 4 — Professional Edge
Harmonic Patterns
Advanced chart patterns — including the Gartley, Bat, Butterfly, and Crab — defined by precise Fibonacci ratio relationships between their legs. Harmonic patterns identify potential reversal zones (PRZs) with high accuracy when the geometric structure aligns with the required ratios. These patterns are best used as confluence tools alongside structural analysis.
Taught in Stage 4 — Professional Edge
Multi-Timeframe Analysis
The practice of analysing the same instrument across multiple timeframes to align higher-timeframe directional bias with lower-timeframe entry precision. A common approach is to determine trend direction on a daily chart, identify trade zones on a 4-hour chart, and time entries on a 15-minute chart. Multi-timeframe alignment dramatically improves trade quality and reduces false signals.
Taught in Stage 3 — Structured Trader
Confluence
The condition where multiple independent technical signals align at the same price level or zone. For example, a Fibonacci 61.8% retracement level coinciding with a prior support zone and a rising 50-period moving average creates a three-factor confluence. Higher confluence increases the probability of a trade setup working as anticipated.
Taught in Stage 3 — Structured Trader
Regime Detection
The analytical process of classifying the current market environment as trending, ranging, or volatile. Different strategies perform differently under different regimes — a trend-following system that works well in a strong Nifty rally will underperform in a choppy, range-bound market. Regime detection is a prerequisite for system-level strategy selection and portfolio construction.
Taught in Stage 5 — System Architect
Risk Management & Execution
7 termsR-Multiple
A standardised way to express trade outcomes as a multiple of the initial risk taken. If you risk 1,000 rupees on a trade and make 2,500 rupees, that trade is a +2.5R outcome. R-multiples allow consistent performance comparison across different instruments and position sizes, and form the basis of expectancy calculations.
Taught in Stage 1 — Foundation Track
Position Sizing
The process of calculating how many shares, lots, or contracts to trade based on a predefined percentage of account capital risked per trade. Correct position sizing ensures that no single trade — even a maximum adverse outcome — can cause disproportionate damage to the trading account. The standard rule taught in Stage 1 is to risk no more than 1-2% of account equity per trade.
Taught in Stage 1 — Foundation Track
Stop Loss
A predefined exit order placed at a specific price level to limit downside risk on a trade. The stop loss represents the maximum amount a trader is willing to lose if the trade moves against them. Placing stop losses at structurally significant levels — rather than arbitrary fixed-point distances — is a core discipline taught from Stage 1 onward.
Taught in Stage 1 — Foundation Track
Risk-Reward Ratio
The comparison of the potential profit target to the potential loss on a trade, expressed as a ratio. A trade risking 500 rupees with a target profit of 1,500 rupees has a 1:3 risk-reward ratio. Consistently taking trades with favourable risk-reward ratios is mathematically necessary for long-term profitability, even with a win rate below 50%.
Taught in Stage 1 — Foundation Track
Drawdown
The peak-to-trough decline in a trading account's equity before a new high is reached. Drawdown is expressed as a percentage of the peak value and measures the worst-case capital erosion during a losing streak. Understanding and managing drawdown is critical — a 50% drawdown requires a 100% gain just to break even, which is why capital preservation is the foundation of professional risk management.
Taught in Stage 4 — Professional Edge
Expectancy
The average profit or loss per trade over a statistically significant sample, calculated as (win rate multiplied by average win) minus (loss rate multiplied by average loss). Positive expectancy means the trading system is profitable over time; negative expectancy means it is not. Expectancy is the single most important number in evaluating whether a trading strategy has a genuine edge.
Taught in Stage 5 — System Architect
Trade Journal
A structured document where every trade decision is recorded — entry rationale, setup type, timeframe, risk parameters, execution notes, outcome, and post-trade review. The trade journal is the primary feedback mechanism for developing trading skill. At Bharath Shiksha, journaling is a required discipline from Stage 1 onward, not an optional exercise.
Taught in Stage 1 — Foundation Track
Quantitative & Automation
8 termsPine Script
TradingView's proprietary scripting language used to create custom indicators, strategies, and automated alert conditions. Pine Script enables traders to codify their discretionary rules into testable, repeatable systems. It is the primary scripting tool used in Stage 5 for building scanners and running backtests on Indian equity and derivatives data.
Taught in Stage 5 — System Architect
Backtesting
The process of testing a trading strategy against historical price data to evaluate its performance before committing real capital. A properly conducted backtest measures win rate, expectancy, maximum drawdown, Sharpe ratio, and profit factor across hundreds or thousands of simulated trades. Backtesting is essential but insufficient on its own — results must be validated with walk-forward analysis.
Taught in Stage 5 — System Architect
Walk-Forward Analysis
An out-of-sample validation technique used to test whether a backtested strategy performs consistently on data it has never seen. The historical dataset is divided into in-sample (optimisation) and out-of-sample (validation) windows that are rolled forward through time. Walk-forward analysis guards against curve-fitting — the most common reason backtested strategies fail in live trading.
Taught in Stage 5 — System Architect
Sharpe Ratio
A risk-adjusted return metric calculated as the ratio of a strategy's excess return (over the risk-free rate) to the standard deviation of those returns. A Sharpe ratio of 1.0 means the strategy earns one unit of return per unit of risk; above 2.0 is considered excellent. The Sharpe ratio is the standard institutional benchmark for comparing strategy quality.
Taught in Stage 5 — System Architect
Kelly Criterion
A mathematical formula for calculating the optimal fraction of capital to risk on each trade, based on the strategy's win rate and average win-to-loss ratio. Full Kelly sizing is aggressive and rarely used in practice — most professional traders use fractional Kelly (typically half Kelly or quarter Kelly) to reduce the volatility of equity curve growth while still compounding efficiently.
Taught in Stage 6 — Institutional Elite
Broker API
A programmatic interface provided by a stockbroker that allows traders to place, modify, and cancel orders through code rather than a manual trading terminal. In India, the major broker APIs include Zerodha Kite Connect, Upstox API, and AngelOne SmartAPI. Broker API integration is covered in Stage 6 for students building fully automated execution systems.
Taught in Stage 6 — Institutional Elite
Scanner
An automated tool that filters a universe of stocks or derivatives based on predefined technical criteria — such as RSI below 30, price above 200 SMA, or a bullish engulfing pattern on the daily chart. Scanners eliminate the need to manually review hundreds of charts each day. Bharath Shiksha teaches scanner construction in Pine Script and Python across Stages 5 and 6.
Taught in Stage 5 — System Architect
Algorithmic Trading
The use of computer programmes to execute trading orders automatically based on a coded set of rules. Algorithmic trading removes emotional decision-making from execution and allows strategies to operate at speeds and scales impossible for manual traders. In India, algorithmic trading on NSE requires compliance with exchange-level approvals for direct market access.
Taught in Stage 6 — Institutional Elite
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