Trading terms, defined precisely.
The metrics shown on every WaiTrade algorithm — Sharpe ratio, drawdown, profit factor, and more — explained with formulas and real examples.
Algorithmic Trading
Using computer programs to execute trades automatically based on a defined set of rules, rather than manual decision-making.
Backtesting
Testing a trading strategy against historical price data to estimate how it would have performed in the past.
Expert Advisor (EA)
An automated trading program that runs on MetaTrader 5, executing trades based on pre-programmed rules.
Maximum Drawdown
The largest peak-to-trough decline in an account's equity before it reaches a new high.
Profit Factor
The ratio of gross profit to gross loss — how many dollars a strategy makes for every dollar it loses.
Recovery Factor
A measure of how efficiently a strategy recovers from its drawdowns, relative to net profit.
Sharpe Ratio
A measure of risk-adjusted return that shows how much excess return a strategy generates per unit of volatility.
Slippage
The difference between the price a trade was expected to execute at and the price it actually executed at.
Sortino Ratio
A variation of the Sharpe ratio that only penalizes downside volatility, not upside swings.
Win Rate
The percentage of a strategy's trades that closed profitably.