Glossary

Comprehensive reference for trading and platform terminology used in Lona.

Platform Terms

Agent

AI systems within Lona that handle specific tasks. Examples: Interview Agent (gathers requirements), Code Generation Agent (creates strategy code), Validation Agent (checks code).

Backtest / Backtesting

Testing a trading strategy against historical market data to see how it would have performed in the past. Lona runs backtests when you click “Execute.”

Canvas

The right-side panel in Lona that displays requirements, generated code, or execution results. Can be shown/hidden and switched between Code mode and Report mode.

Canvas Mode

Toggle between viewing generated code (Code Mode) or viewing requirements/results (Report Mode) in the Canvas panel.

Chat History

List of your recent conversations with Lona, accessible from the expanded left sidebar.

Code Generation

The process where Lona’s AI creates executable Python strategy code from your requirements. Use the model selector to choose between basic (fast) or powerful (sophisticated) AI models.

Execution

Running a backtest of your strategy against historical data to see performance metrics and results.

Export

Converting a Lona strategy to platform-specific code (MT5 or TradingView) for deployment on external trading platforms. See Exporting Strategies.

AI Model

The artificial intelligence system used to generate trading strategy code. Lona supports multiple AI models from providers like OpenAI (GPT series) and Anthropic (Claude series). Users can select which model to use based on speed vs. capability needs.

Basic Models

AI models optimized for speed and cost-effectiveness. Examples: GPT-4.1 Mini, GPT-4o. Best for simple strategies and quick iterations. Takes 10-30 seconds.

Powerful Models

More sophisticated AI models with advanced reasoning capabilities. Examples: GPT-4.1, GPT-5, Claude 4 Sonnet, Claude 4.5 Sonnet. Best for complex strategies. Takes 30-90 seconds.

Model Selector

Dropdown interface in the chat area that lets you choose which AI model processes your requests. Located next to the stage controls (Ask/Plan/Code).

Framework

The underlying trading system that executes your strategy. Lona automatically selects the appropriate framework. You don’t need to understand framework details.

Interview

The conversation phase where you describe your trading strategy to Lona’s Interview Agent using natural language.

Requirements

Structured list of what your strategy needs to do, extracted from your interview conversation. Displayed in the Canvas after clicking “Extract Requirements.”

Report

The results document created after executing a strategy backtest, containing metrics, charts, and performance data.

Strategy

A set of rules for entering and exiting trades. In Lona, this is the Python code that implements your trading logic.

Trading Strategy Terms

Entry Signal / Entry Condition

The specific circumstances or rules that trigger opening a new position. Example: “Buy when fast MA crosses above slow MA.”

Exit Signal / Exit Condition

The rules that trigger closing an open position. Example: “Sell when RSI reaches 70.”

Long Position / Going Long

Buying an asset with the expectation that its price will rise. Profit from upward price movement.

Short Position / Going Short

Selling an asset (that you don’t own) with the expectation that its price will fall. Profit from downward price movement. (Note: Not all strategies support shorting.)

Position

An open trade (either long or short) that you currently hold.

Signal

An indication from your strategy that it’s time to take action (enter or exit a trade).

Trading Logic

The rules and conditions that define how your strategy makes decisions about when to buy and sell.

Technical Indicators

Moving Average (MA)

Average price over a specified number of periods. Smooths out price data to identify trends.

Simple Moving Average (SMA)

Arithmetic average of prices over N periods. Each period weighted equally.

Exponential Moving Average (EMA)

Weighted average giving more importance to recent prices. More responsive than SMA.

Relative Strength Index (RSI)

Momentum oscillator measuring speed and magnitude of price changes. Range: 0-100.

Below 30: Oversold (potentially undervalued)
Above 70: Overbought (potentially overvalued)

Moving Average Convergence Divergence (MACD)

Trend-following momentum indicator showing relationship between two moving averages.

MACD Line: Difference between 12 and 26 EMAs (default)
Signal Line: 9-period EMA of MACD line
Histogram: Difference between MACD and signal lines

Bollinger Bands

Volatility bands placed above and below a moving average. Price touching bands indicates potential overbought/oversold conditions.

Stochastic Oscillator

Momentum indicator comparing closing price to price range over time. Range: 0-100.

Average True Range (ATR)

Volatility indicator measuring price movement range. Higher values = more volatility.

Volume

Number of shares/contracts/coins traded during a given period. Confirms strength of price moves.

Strategy Types

Trend-Following

Strategy that attempts to profit from persistent market direction (uptrend or downtrend). Example: Moving average crossover.

Mean Reversion

Strategy based on the idea that prices will return to their average over time. Buys oversold, sells overbought. Example: RSI bounce.

Momentum

Strategy that follows the speed and strength of price movements. Buys strong moves, sells weak moves.

Breakout

Strategy that enters when price breaks above resistance or below support levels.

Arbitrage

Exploiting price differences between markets or instruments (advanced).

Market-Agnostic

Strategy that works across different markets (stocks, forex, crypto) without modification. Lona creates market-agnostic strategies.

Market Data Terms

OHLCV

Standard market data format:

Open: Opening price for the period
High: Highest price during the period
Low: Lowest price during the period
Close: Closing price for the period
Volume: Trading volume during the period

Bar / Candlestick

A single period of time on a price chart (e.g., one day, one hour). Shows OHLC data.

Timeframe / Period

The duration each bar represents:

Daily: One bar per day
Hourly: One bar per hour
5-minute: One bar per 5 minutes

Symbol / Ticker

Identifier for a tradable asset. Examples: SPY (S&P 500 ETF), BTCUSDT (Bitcoin/Tether pair).

Historical Data

Past market prices used for backtesting strategies.

Custom Data

Non-price time-series data (sentiment, news, economic indicators) used in strategies.

Performance Metrics

Return / Total Return

Overall profit or loss as a percentage of initial capital. Formula: (Final Value - Initial Capital) / Initial Capital × 100

Sharpe Ratio

Measure of risk-adjusted return. Higher is better. Accounts for volatility. >

>2.0: Excellent
1.0-2.0: Good
<1.0: Marginal

Maximum Drawdown (Max DD)

Largest peak-to-trough decline in portfolio value. Always negative or zero.

Example: -15% means portfolio fell 15% from its highest point.

Win Rate

Percentage of trades that were profitable. Formula: Winning Trades / Total Trades × 100

Profit Factor

Ratio of gross profits to gross losses. Formula: Total $ Wins / Total $ Losses >

>2.0: Excellent
1.0-2.0: Good
<1.0: Unprofitable

Total Trades

Number of complete trade cycles (entry + exit) executed during backtest.

Average Trade

Mean profit/loss per trade.

Equity Curve

Chart showing portfolio value over time. Visual representation of strategy performance.

Underwater Curve / Drawdown Chart

Chart showing how far portfolio is below its peak at each point in time.

Trading Concepts

Crossover

When one indicator crosses above or below another. Common entry/exit signal. Example: Fast MA crosses above slow MA = bullish signal.

Overbought

Condition where price has risen too far too fast and may reverse downward. Often indicated by RSI > 70.

Oversold

Condition where price has fallen too far too fast and may reverse upward. Often indicated by RSI < 30.

Volatility

Measure of price variation over time. High volatility = large price swings.

Liquidity

Ease of buying/selling an asset without affecting its price. High volume = high liquidity.

Whipsaw

Multiple false signals in quick succession, causing losses. Common in ranging markets.

Slippage

Difference between expected trade price and actual execution price. More common in volatile or illiquid markets.

Transaction Costs / Fees

Costs of trading (commissions, spreads). Must be factored into strategy profitability.

Position Size

Amount of capital allocated to a single trade. Larger size = more risk and reward.

Risk Management

Stop Loss

Predetermined price level at which a losing position will be automatically closed to limit loss.

Take Profit

Predetermined price level at which a winning position will be closed to lock in gains.

Risk-Reward Ratio

Comparison of potential loss (risk) to potential gain (reward) on a trade. Example: 1:3 means risking $1 to make $3.

Portfolio

Collection of all positions and cash held.

Diversification

Spreading capital across multiple strategies or assets to reduce risk.

Leverage

Using borrowed capital to increase position size. Amplifies both gains and losses. (Advanced topic)

Statistical Terms

Parameter

Adjustable value that controls strategy behavior. Example: MA period = 20.

Optimization

Process of testing different parameter values to find best-performing combination.

Over-Fitting / Curve Fitting

Excessively optimizing strategy to historical data, resulting in poor future performance.

Sample Size

Number of data points or trades. Larger sample = more reliable statistics.

<30 trades: Unreliable
>100 trades: Reliable

Confidence Level

Statistical measure of result reliability. Higher confidence = more trustworthy results.

Robustness

Strategy’s ability to perform consistently across different markets, timeframes, and parameters.

Out-of-Sample Testing

Testing on data not used during strategy development to validate effectiveness.

Walk-Forward Analysis

Advanced testing method simulating real-world optimization and trading sequence.

Technical Terms

Python

Programming language used for strategy code. You don’t need to know Python to use Lona.

Parameter

Value that can be adjusted to change strategy behavior. Defined at top of strategy code.

Event Handler

Function called when specific events occur (e.g., on_bar_close when bar completes).

Indicator Registration

Process of storing indicator values so they can be visualized in charts.

Validation

Automatic checking of generated code for errors before execution.

CSV (Comma-Separated Values)

Text file format for storing tabular data. Required format for data uploads.

Expert Advisor (EA)

Automated trading program in MetaTrader 5. When you export a Lona strategy to MT5, it becomes an Expert Advisor.

MetaTrader 5 (MT5)

Professional trading platform for forex, stocks, and futures. One of the export targets supported by Lona. Strategies are converted to MQL5 code.

MQL5

Programming language used by MetaTrader 5. Lona exports strategies to this format for MT5 deployment.

Pine Script

TradingView’s programming language for creating custom indicators and strategies. Lona exports strategies to Pine Script v5 format.

TradingView

Popular web-based charting platform with social trading features. One of the export targets supported by Lona.

Timestamp

Date and time value marking when each data point occurred.

Market Terminology

Asset Class

Category of tradable instruments:

Equities: Stocks
Forex: Currency pairs
Crypto: Cryptocurrencies
Commodities: Gold, oil, etc.

Exchange

Marketplace where securities are traded (NYSE, NASDAQ, Binance, etc.).

Bull Market

Prolonged period of rising prices. Optimistic sentiment.

Bear Market

Prolonged period of falling prices. Pessimistic sentiment.

Ranging Market / Sideways Market

Market moving horizontally without clear trend. Challenging for trend-following strategies.

Trend

General direction of market movement over time (up, down, or sideways).

Support

Price level where downward movement tends to pause due to buying interest.

Resistance

Price level where upward movement tends to pause due to selling pressure.

Abbreviations

AI - Artificial Intelligence

Technology that powers Lona’s strategy generation and assistance.

API - Application Programming Interface

Technical connection between software systems (used internally).

ATR - Average True Range

Volatility indicator (see Technical Indicators section).

CSV - Comma-Separated Values

File format for data (see Technical Terms section).

DD - Drawdown

Decline from peak (see Maximum Drawdown).

EA - Expert Advisor

Automated trading program in MetaTrader 5 (see Expert Advisor).

EMA - Exponential Moving Average

Type of moving average (see Technical Indicators).

MA - Moving Average

Price average over time (see Technical Indicators).

MACD - Moving Average Convergence Divergence

Trend indicator (see Technical Indicators).

P&L - Profit and Loss

Financial result of trading activity.

PnL - Profit and Loss

Same as P&L.

ROI - Return on Investment

Percentage gain/loss on capital invested.

RSI - Relative Strength Index

Momentum indicator (see Technical Indicators).

SMA - Simple Moving Average

Type of moving average (see Technical Indicators).

UI - User Interface

Visual elements you interact with in Lona.

Common Phrases

”Backtest shows…”

Refers to historical simulation results.

”Going long / short”

Opening buy / sell positions.

”Paper trading”

Simulating trades without real money (practice mode).

”In the money”

Position currently showing profit.

”Underwater”

Portfolio below its previous peak value.

”Risk-adjusted return”

Return considering the risk taken (Sharpe ratio).

”Equity curve”

Chart of portfolio value over time.

”Regime change”

Shift in market conditions (trending to ranging, etc.).

Forward Testing

Testing strategy on new, unseen data (opposite of backtest).

Live Trading

Executing strategy with real money in real markets (beyond Lona’s scope).

Alpha

Excess return beyond market benchmark. Goal of active strategies.

Beta

Measure of correlation with overall market.

Correlation

Degree to which two assets move together. Used in diversification.

Need More Detail?

For in-depth explanations of how to use these concepts in Lona:

Trading Strategy Terms: See Creating Strategies
Performance Metrics: See Results & Analysis
Platform Features: See Getting Started
Technical Indicators: See Best Practices

This glossary covers terminology commonly used in Lona. Terms are explained in non-technical language suitable for all users.