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.
R Multiple
A term used to express trading results in terms of the initial risk. All profits...
R value
A term used to express the initial risk taken in a given position, as defined...
R-Multiple Distribution
The set of trade results expressed in R-multiple terms generated by a trading system. The...
Random
An event determined by chance. In mathematics, a number that cannot be predicted.
Random Entry System
A trading system that enters positions randomly.
Reduced Total Equity
One of the three equity models. In this case, you subtract out any allocation that...
Relative Strength Index (RSI)
A futures market indicator described by J. Welles Wilder, Jr., that is used to ascertain...
Reliability
How accurate something is or how often it wins. Thus, “60 percent reliability” means that...
Resistance
An area on a chart up to which a stock can trade but cannot seem...
Retire
Determines the trading goal (i.e., the retire amount).
Retire-Less-Ruin
The probability of reaching our goal less the probability of having our worse case drawdown.
Retracement
A price movement in the opposite direction of the previous trend. A retracement is usually...
Reward-to-Risk Ratio
The average return on an account (on a yearly basis) divided by the maximum peak-to-trough...
Risk
The difference in price between the entry point in a position and the worst-case loss...
Rollovers
Moving a futures contract into the next most liquid trading month when the contract expires.
Round Trip/ Turn
A term that refers to the process of both getting into and exiting a futures...
Ruin
The amount of drawdown in your account at which you would stop trading.