Trading and testing terms, in plain English.

A run of an EA’s rules over past prices, to see how it would have traded. Only as good as its data, its costs and the period it covers.

Tuning settings until they match past prices so closely that they describe history rather than a real edge. Also called overfitting.

The fall from an equity peak to the lowest point before a new peak, usually shown as a percentage. Maximum drawdown is the largest one on record.

Your balance plus or minus the result of open trades. Drawdown is most honest on equity, because it counts the losses a trade is still carrying.

The average result per trade: the win rate times the average win, minus the loss rate times the average loss. A positive expectancy is the edge.

A system that opens more trades at fixed price steps as price moves against it. Without a hard limit, its worst case is the whole account.

Controlling a position larger than your balance, using margin from the broker. It magnifies losses exactly as much as gains.

The unit of trade size. In forex, 1.00 lot is 100,000 units of the base currency and 0.01 is the smallest common size.

Raising the lot size after a loss so that one win recovers everything. It turns many small wins into rare, account-sized losses.

Data the EA’s settings were not tuned on. Results there are the closest a backtest gets to the future.

Gross profit divided by gross loss. Above 1 makes money. Between 1.1 and 1.3 is a thin edge that costs and bad luck can erase.

A trade’s result divided by the amount it risked. A trade that risks $50 and makes $100 is +2R.

The chance that a run of losses takes the account below the point where you can, or will, keep trading. It rises fast with risk per trade.

The share of the account you lose if a trade hits its stop-loss. It sets the size of every drawdown.

The gap between the price you asked for and the price you got. It is usually larger around news and session opens.

The gap between the bid and the ask, paid on every trade. Raw-spread accounts show a smaller spread plus a commission.

An order that closes a trade at a set loss. A hard stop-loss sits with the broker, so it works even when your terminal is off.

Every price change the broker recorded. Testing on real ticks shows fills, spreads and stops far more accurately than one-minute bars.

How much of a backtest ran on real ticks rather than generated ones. MT5 reports it as history quality, a percentage.

A stop-loss that follows price as a trade moves into profit, locking some of that profit in.

Tuning on one period, testing on the next, then rolling both forward and repeating. A stricter kind of out-of-sample testing.

The share of trades that close in profit. It means little without the size of the average win and the average loss.