A practical glossary for traders learning the language of algo workflows.
This glossary explains the terms that show up repeatedly across strategy building, backtesting, broker APIs, options workflows, and risk management in Indian markets.
Definitions here are intentionally practical. The goal is to help you understand what each term means in real trading workflows, not in textbook isolation.
Core workflow terms
Algo trading
Rule-based trading where entries, exits, and risk actions are executed by a system instead of by manual clicking.
Backtest
A simulation that runs strategy rules on historical market data to estimate how the logic would have behaved in the past.
Paper trading
A live-market simulation mode where orders are tracked without risking real capital.
Live trading
Execution mode where real orders go to your broker account.
Broker API
The interface used by a trading system to authenticate, fetch market data, and place or monitor orders with a broker.
Risk terms
Drawdown
The decline from a strategy’s equity peak to its next trough. It measures pain, not just profit.
Stop-loss
A rule that exits or reduces a position when the trade moves against you beyond a defined threshold.
Trailing stop
A stop-loss that moves in your favor as profit grows, helping lock in gains while leaving room for the trade to move.
Kill switch
A hard safety control that stops fresh entries or trading activity when risk conditions become unacceptable.
Position sizing
The method used to decide how much capital or quantity to allocate to one trade.
Execution and data terms
Slippage
The difference between the price you expected and the price you actually got when the order executed.
Webhook
A way to receive an external signal, such as from TradingView, and convert it into an execution workflow.
Signal
A rule-triggered event that suggests a trade setup, not necessarily a final order.
Market regime
A broad reading of current conditions such as trending, choppy, high-volatility, or low-volatility behavior.
Audit trail
The event log, transcript, and order history that let you review what the system did and why.
Options terms
Option chain
A table of calls and puts across strikes and expiries used to inspect premium, open interest, and market structure.
PCR
Put-call ratio, a sentiment indicator built from put and call activity or open interest.
Greeks
Measures like delta, theta, and gamma that describe how option prices react to underlying price, time decay, and other factors.
Hedge basket
A multi-leg options structure built to manage exposure together instead of leg by leg.
Theta decay
The loss of option value over time as expiry gets closer, assuming other variables stay unchanged.