Borrowed Vocabulary That Causes Real Confusion
A large part of trading vocabulary was taken from somewhere else. Statistics supplied several words, physics supplied a few by analogy, options trading supplied more, and ordinary speech supplied the rest. Borrowed words arrive with their original meanings attached, and readers who know the source discipline hear something the writer may not have intended. The mismatches are systematic enough to be worth listing.
Volatility
In statistics and in options, volatility is a precise quantity: the standard deviation of returns, usually annualised, sometimes implied by option prices rather than measured from history. It has units, it has a calculation, and two people computing it from the same data arrive at the same number.
In common trading speech it means something much looser, closer to how much the market is moving around, and it often describes a single session or even a short stretch of bars. Neither usage is wrong, but a claim that a strategy performs well in high volatility means different things depending on which is meant. The statistical version is testable. The impressionistic version is not, and the two frequently disagree, because a market can travel a long way smoothly or very little in a jagged fashion.
Momentum
Momentum is borrowed from physics, where it is mass times velocity and is conserved. Neither part transfers. There is no mass, and nothing is conserved, so the physical intuition that a moving object continues unless acted upon has no counterpart in a market.
The word also has a technical meaning in finance, referring to the empirical tendency of past returns to persist over certain horizons, which is a measured statistical property rather than a metaphor. And it has an indicator meaning, referring to a specific calculation plotted on a chart. A trader saying a move has momentum is usually using none of these three and simply means it is moving quickly, which is fine so long as nobody reasons from the physics.
Support and Resistance
These come from engineering by analogy, and the analogy carries an implication worth examining. A physical support holds a load because of what it is made of. A price level holds because participants place orders there, which is entirely different: the level has no properties of its own and exists only while people are acting on it.
The practical consequence is that a level can stop working without anything visible changing. The orders that made it a level were filled or cancelled, and what remains is a line on a chart with nothing behind it. The engineering metaphor also suggests a level weakens with repeated tests, in the way a material fatigues, which is a physical intuition rather than an observation about order flow.
Edge and Expectancy
Edge is borrowed from gambling, where it has a precise meaning: the expected value per unit staked, known in advance because the probabilities are known. In markets the probabilities are not known. They are estimated from a limited sample, and they change. The word carries a confidence its trading usage cannot support.
Expectancy is the same quantity under a more formal name and with the same problem. Both are calculated from historical results and then discussed as though they were properties of the strategy rather than estimates drawn from a sample. The gambling sense implies a fixed, knowable number. The trading sense is a measurement with uncertainty around it, and the borrowed word quietly discards the uncertainty.
A Habit Worth Having
The check is short. When a term feels technical, ask where it came from and whether the original meaning is the one being used. If it is, the term is doing real work and can be treated precisely. If it is not, the word is functioning as a metaphor, and metaphors are useful for description and unreliable for reasoning.
The words that cause the most trouble are the ones that sound most authoritative, because their apparent precision discourages the question. A vague word invites clarification. A borrowed technical term does not, and that is exactly why it can carry an unexamined assumption a very long way.