Van Tharp Institute Glossary
The Van Tharp Institute Glossary is a comprehensive resource designed to help traders and investors understand the essential terminology and concepts related to trading psychology, systems development, and market analysis. Whether you’re a beginner or an experienced trader, this glossary offers clear definitions and insights into the principles that Dr. Van Tharp championed. By providing a deeper understanding of key terms, the glossary aims to enhance your knowledge and support your journey toward consistent and profitable trading. Explore the glossary to unlock the language of trading success.
Parabolic
An indicator that has a U-shaped function, based on the function y = ax2+ bx...
Paradigm Shift
A change from one way of thinking to another. It's a revolution, a transformation, a...
Passive Income
Income that occurs because your money is working for you.
Peak-to-Trough Drawdown
A term that is used to describe one’s maximum drawdown from the highest equity peak...
Percent Margin Model
A position sizing strategy that is based upon the margin set by the exchange in...
Percent Risk Model
A position-sizing model in which position sizing is determined by limiting the risk on the...
Percent Volatility Model
A position-sizing model in which position sizing is determined by limiting the amount of volatility...
Portfolio Heat
The total open risk in your portfolio at any given time. This generally should not...
Position Sizing Strategy
The most important of the six key elements of successful trading. This term, invented in...
Positive Expectancy
A system (or game) that will make money over the long term if played at...
Postdictive Error
An error that is made when you take into account future data that you should...
Prediction
A guess about the future. Most people want to make money through guessing future outcomes,...
Price Shock
A sudden and very large price movement.
Price-to-Sales Ratio
The ratio of the price of a stock to its sale. For example, if a...
Price/Earnings (P/E) Ratio
The ratio of the price of a stock to its earnings. For example, if a...
Proprietary Methodology
A methodology that a trader keeps to himself because (1) he doesn’t want to share...
Psychological Loss
A loss as a result of your natural biases and psychology (usually larger than 1R).
Put Option
An option that gives someone the right to sell the underlying instrument at a predetermined...