Glossary
Technical terms explained in plain English for Robinhood-level users.
CAGR
Average annual return, compounded. If your $100K grew to $130K in 2 years, the CAGR tells you the equivalent yearly growth rate.
VIX
The "fear index" - measures how much volatility traders expect. Below 20 is calm; above 30 is stressed.
Market Regime
The current market state. Bull Run (strong uptrend), Bull (moderate uptrend), Neutral (sideways), Bear (downtrend), Recovery (bouncing back).
Golden Cross
When a short-term moving average crosses above a long-term average. Traditionally a bullish signal.
Death Cross
The opposite - short-term average crosses below long-term. Traditionally a bearish signal.
McClellan Oscillator
A market momentum indicator based on the difference between advancing and declining stocks. Positive means bullish breadth.
A/D Ratio (Advance/Decline)
How many stocks went up vs down. A high ratio means broad market participation in the rally.
HYG/LQD
ETFs that track high-yield (junk) bonds vs investment-grade bonds. The spread between them measures credit stress.
Alpha
How much a portfolio beats (or lags) its benchmark. +5% alpha means you earned 5% more than the market.
Sharpe Ratio
A score measuring return per unit of risk. Higher is better; above 1.0 is good, above 2.0 is excellent.
Calmar Ratio
Return divided by worst drawdown. Measures how much you earn relative to the worst pain you endure.
Sortino Ratio
Like Sharpe but only penalizes downside volatility. Better for strategies that have occasional big wins.
Tracking Error
How much your returns differ from the benchmark day-to-day. Low tracking error means you closely follow the market.
Drawdown
The drop from a portfolio's peak to its lowest point. A 20% drawdown means you lost 20% from your high.
Risk Tier
The system uses 4 tiers: Portfolio Risk (your holdings), Market Risk (broad market), Systemic Risk (economy-wide), Execution Risk (trading costs).
Stress Mode
When the system detects elevated risk and switches to conservative positioning automatically.
Geo Trigger
An override that forces a defensive position when geopolitical risk exceeds a threshold, bypassing normal model signals.
RSI (Relative Strength Index)
Momentum oscillator from 0-100. Below 30 is oversold (potentially cheap), above 70 is overbought (potentially expensive).
HHI (Herfindahl Index)
A concentration score. Lower means more diversified across stocks; higher means concentrated in fewer names.
Variant
One of 15 different strategy configurations. Each uses different parameters to pick stocks. Running many variants diversifies the approach.
Paper Trading
Testing a strategy with fake money before risking real capital. All 15 variants run with $100K each.
Profit Factor
Gross wins divided by gross losses. Above 1.0 means the strategy makes more than it loses. Above 2.0 is strong.
Win Rate
Percentage of trades that were profitable. 60% win rate means 6 out of 10 trades made money.
Overlay
An additional rule layer applied on top of base strategy signals (e.g., VIX-based position sizing, regime-based filtering).
Conviction
How confident the model is in its recommendation, expressed as a percentage. Higher conviction = stronger signal.
IFT (Interfund Transfer)
Moving money between TSP funds. Federal employees get 2 transfers per month.
G Fund
The safest TSP fund - government securities with no risk of loss but modest returns.
Lifecycle Fund (L Fund)
TSP target-date fund that automatically adjusts risk as you approach retirement.
AUC (Area Under Curve)
A model quality score from 0 to 1. 0.5 means random guessing; 0.8+ means the model is good at separating positive from negative cases.
Monte Carlo Simulation
Running thousands of random scenarios to stress-test a strategy. Shows what could happen in best and worst cases.
Block Bootstrap
A simulation method that preserves realistic market patterns by sampling chunks of historical data.
pp (percentage points)
The absolute difference between two percentages. If returns go from 10% to 15%, that's 5pp.
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