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.
Scaling-In
A form of position sizing in which you keep adding to the position size based...
Scaling-Out
A form of position sizing in which you reduce your size when the open risk...
Scalping
A term that refers to the actions, usually of floor traders, who buy and sell...
Seasonal Trading
Trading based on consistent, predictable changes in price during the year due to production cycles...
Secular (bull or bear) Market
A term that refers to long-term tendencies in the market to increase valuations (bull) or...
Setup
A term that refers to a part of your trading system in which certain criteria...
Sharpe Ratio
A ratio developed by Nobel Laureate William F. Sharpe to measure risk-adjusted performance. It is...
Short
Not actually owning an item that you are selling. If you were using this strategy,...
Sideways Market
A market that moves neither up nor down.
Sideways-Quiet
One of the six types of markets in which the price moves very little over...
Sideways-Volatile
One of the six types of markets in which the price moves very little over...
Signal to Noise Ratio
A measure of signal strength compared with the background noise used commonly in engineering and...
Slippage
The difference in price between what you expect to pay when you enter the market...
Specialist
A floor trader assigned to fill orders in a specific stock when the order has...
Speculating
Investing in markets that are considered to be very volatile and thus quite “risky” in...
Spreading
The process of trading two related markets to exploit a new relationship. Thus, you might...
Stalking
A term that refers to the process of getting ready to get into a position....
Standard deviation
The positive square root of the expected value of the square of the difference between...
Statistical Significance
A set of results has a cause and therefore is not random. The term is...
Step up/Step Down Function
A mathematical function that has a fixed way to move up or move down in...
Stochastic
An overbought-oversold indicator, popularized by George Lane, that is based on the observation that prices...
Stop (Stop Loss, Stop Order)
An order you put with your broker that turns into a market order if the...
Support
The price level that historically a stock has had difficulty falling below. It is the...
Swing Trading
A term that refers to short-term trading designed to capture quick moves in the market.
System
A set of rules for trading. A complete system will typically have (1) some setup...
System Quality Number (SQN)
A method used in this book to determine the quality of a system. It is...
System Quality Number 100 Score (SQN 100)
The SQN score normalized to 100 trades. For systems with few trades, assuming 100 trades...