Glossary Of Trading

Resistance

The price level that traders believe represents the highest value an asset will reach before reversing its trend. Consequently, traders begin selling the asset in hopes of maximizing their profit, and the price begins to fall due to oversupply.

Return

The benefit one receives on an investment.

Risk

The level of deviation of past returns and/or losses on an asset from the mean. Usually, the higher the risk, the higher the potential profits and losses.

Risk Management

Maximizing one’s profits by assessing and countermanding risk.

Rollover

(also overnight swap) – the price of rolling a forex position over from one day to the next or a futures contract from one period to the next.

RSI (Relative Strength Index)

The velocity and magnitude of a trend, an indicator of traders’ sentiment, is derived by computing the movement’s velocity and magnitude. The RSI is an oscillator (ranging from 0 to 100) often used to predict a trend reversal, with 30 denoting an oversold asset and 70, one that is overbought.