Glossary

Definitions of trading, strategy, and platform terminology used across plutarc.

Trading Mechanics

Perpetual Contract (Perp): A derivative contract that tracks the price of an underlying asset with no expiry date. Unlike futures, perps never settle — positions can be held indefinitely. plutarc exclusively trades perpetual contracts.
Leverage: A multiplier that increases your effective position size relative to the margin you put up. For example, 10x leverage means a $100 margin controls a $1,000 position. Higher leverage amplifies both gains and losses.
Margin: The collateral required to open and maintain a leveraged position. If losses approach your margin, the exchange may liquidate your position to prevent further loss.
Liquidation: Forced closure of a position by the exchange when losses erode the margin below the maintenance requirement. Proper risk management (stop losses, conservative leverage) helps avoid liquidation.
Funding Rate: A periodic payment exchanged between long and short holders on a perpetual contract. It keeps the perp price anchored to the spot price. A positive funding rate means longs pay shorts; negative means shorts pay longs.
Open Interest (OI): The total number of outstanding derivative contracts that have not been settled. Rising OI alongside a price move suggests conviction; declining OI suggests the move may be losing steam.
Slippage: The difference between the expected price of a trade and the price at which it actually executes. Slippage increases with low liquidity or large order sizes.
Order Book: A list of all open buy and sell orders for an instrument, organised by price level. It shows the available liquidity at each price point.

Contract Types

Linear Contract: A perpetual contract where margin and profit/loss are denominated in a stablecoin (USDT or USDC). PnL scales linearly with price movement. Most commonly traded contract type.
Inverse Contract: A perpetual contract where margin and profit/loss are denominated in the base cryptocurrency (e.g. BTC for BTCUSD). PnL has a non-linear relationship with price — gains in coin terms are larger when price falls, and smaller when price rises.
Settlement Currency: The currency in which a contract's margin and PnL are denominated. For linear contracts this is typically USDT or USDC; for inverse contracts it is the base asset (e.g. BTC, ETH).

Performance Metrics

Equity: The total value of your account including unrealised PnL from open positions. Equity = wallet balance + unrealised PnL.
Equity Curve: A chart plotting equity over time. An upward-sloping equity curve indicates consistent profitability; sharp drops indicate drawdowns.
Drawdown: The peak-to-trough decline in equity, expressed as a percentage. Maximum drawdown measures the largest loss from a high point before a new high is reached. It quantifies worst-case risk.
Win Rate: The percentage of trades that were profitable. A 60% win rate means 6 out of every 10 trades made money. Win rate alone does not determine overall profitability — it must be considered alongside risk-reward ratio.
Profit Factor: The ratio of gross profits to gross losses. A profit factor above 1.0 means the strategy is profitable overall. For example, a profit factor of 1.5 means the strategy earned £1.50 for every £1.00 lost.
Sharpe Ratio: A measure of risk-adjusted return. It divides the average return by the standard deviation of returns. Higher values indicate better risk-adjusted performance. Generally, a Sharpe ratio above 1.0 is considered acceptable; above 2.0 is strong.
MFE (Maximum Favourable Excursion): The largest unrealised gain a trade achieved before it was closed. MFE helps evaluate whether your exit rules are capturing enough of each trade's potential profit.
MAE (Maximum Adverse Excursion): The largest unrealised loss a trade experienced before it was closed. MAE helps evaluate whether your stop losses are appropriately placed — high MAE relative to final PnL suggests stops may be too wide.
Realised PnL: The actual profit or loss from a closed trade, after fees. This is the definitive measure of a trade's outcome.
Unrealised PnL: The paper profit or loss on an open position based on the current market price. It becomes realised PnL when the position is closed.

Strategy Concepts

Strategy Template: A complete trading strategy configuration consisting of components, their roles and parameters, combination rules, and trading sessions. System templates are read-only presets; user templates are fully editable.
Component: A self-contained technical indicator or rule (e.g. RSI, MACD, Trailing Stop) that produces an output used in trade decisions. Components are the building blocks of strategy templates.
Signal: A component role that produces a directional score: +1 (bullish), -1 (bearish), or 0 (neutral). Signal scores are combined according to the combination mode to determine trade entries.
Filter: A component role that evaluates market conditions and returns pass or fail. A failing filter blocks all trade entries regardless of signal scores.
Entry Guard: A component role that checks execution quality before opening a position. Entry guards block entries when conditions are unfavourable — for example, when price is too far from a moving average.
Risk Gate: A component role that blocks trade entries based on market risk conditions. Risk gates run after signals are evaluated but before a trade is opened, so you can see what the strategy would have done while still blocking risky entries. Components like Funding Rate, ATR, and Volatility Regime Classifier can serve as risk gates.
Exit Rule: A component role that determines when to close an open position. Multiple exit rules can be active simultaneously, and any triggered rule will close the position.
Combination Mode: The method used to merge multiple signal scores into a single trade decision. Options are Weighted Sum, All Agree, Any, and Majority. Each mode has a configurable threshold.
Anchor Component: An optional signal that must agree with the trade direction for entry to proceed, regardless of other signals. Used to enforce a mandatory condition (e.g. trend alignment) across all combination modes.
Confluence: When multiple independent signals or indicators agree on a trade direction. Higher confluence generally correlates with higher-probability trade setups.
Trading Session: A UTC time window during which the bot is allowed to open new positions. Outside active sessions, exit rules continue managing open positions but no new entries are taken.

Platform Terms

Bot: A dedicated compute instance that executes a strategy template 24/7. Each bot is assigned one API key and one strategy template. Bots can be paused, resumed, and stopped from the dashboard.
Fleet: The collection of all your active bots. The dashboard provides a fleet overview showing status, equity, and performance across all bots.
API Key: Credentials that connect a bot to your exchange account. Keys are encrypted at rest with AES-256-GCM and only decrypted in-memory at runtime. Each key is assigned to one bot at a time.
Kill Switch: An automatic safety mechanism that halts trading when a configurable daily loss threshold is reached. When triggered, the bot closes all open positions and stops entering new trades until the next trading day.
Backtest: A simulation of a strategy template against historical market data. Backtests produce performance metrics (win rate, PnL, drawdown, Sharpe ratio) to help evaluate a strategy before deploying real capital.