Fluxy · Glossary
The quant trading glossary
The vocabulary of systematic trading and fund operations, defined the way we use them in the engine — plain English, no hand-waving, with links into the engineering write-ups where a definition deserves a full story.
A–Z
Terms
Non-custodial (trading)
An automation model where your assets stay in accounts you control — your own exchange account or wallet — and the platform holds only a scoped permission to trade there. The platform can place orders but can never withdraw or hold your funds.
What non-custodial actually means →Trade-only API key
An exchange API key scoped to read and trade permissions with withdrawals disabled at the venue level. The exchange itself enforces that funds cannot leave the account, whatever the connected software does.
The trade-only key guide →Funding rate
The periodic payment between longs and shorts on a perpetual futures contract that tethers the perp price to spot. Positive funding means longs pay shorts; negative means the reverse. Settlement cadence varies by venue — commonly every 8 hours, hourly on some venues.
Funding rates explained →Basis / carry trade
A market-neutral strategy that captures the spread between related instruments — classically long spot (or one venue’s perp) against short another perp — earning the funding differential rather than betting on direction.
Look-ahead bias
A backtest defect where a decision at time t uses information that only became available after t. It inflates results silently; the structural fix is point-in-time data joins that make future rows unreachable.
No look-ahead by construction →Survivorship bias
The distortion introduced by building a test universe from assets that still exist today, silently excluding everything that was delisted or died — and with it, most of the losses a real strategy would have taken.
The delisting problem →Walk-forward analysis
A validation procedure that repeatedly tunes a strategy on one window (in-sample) and evaluates it on the next unseen window (out-of-sample), concatenating only the test windows into the judged track record.
Walk-forward in crypto →In-sample / out-of-sample (IS/OOS)
The split between data used to fit or tune a strategy (in-sample) and data reserved untouched for judging it (out-of-sample). The gap between IS and OOS performance is a direct measurement of overfitting.
Volatility targeting
A position-sizing discipline that chooses a target risk level and scales exposure by target volatility divided by realized volatility (capped), so the risk you carry stays roughly constant while position size floats with the regime.
Vol targeting in crypto →High-water mark
The highest value an investor’s holding has previously reached, per investor. Performance fees apply only to gains above it, so a manager cannot charge twice for recovering the same drawdown.
Fees that align everyone →Hurdle rate
A minimum return threshold that must be cleared before performance fees apply, layered on top of the high-water mark in most institutional fee structures.
Drawdown
The decline from a portfolio’s peak to its subsequent trough, usually in percent. Maximum drawdown is the deepest such decline over a period — often the first risk number an allocator reads.
Reduce-only order
An order flagged so it can only decrease an existing position, never open or grow one — a venue-level guarantee used to make closing logic incapable of accidentally adding risk.
Kill switch
A control that halts all automated trading immediately — at the platform level (stop the engine) or the venue level (revoke the API key). Serious automation is designed so both always work.
Guardrails for live capital →Unitized fund accounting
Accounting where investors hold units of a pooled book rather than tracked dollar amounts. All flows settle at NAV-per-unit, making pro-rata attribution automatic and statements reproducible.