You’ve finally found a YouTube interview with a consistently profitable prop trader. You sit down, notebook in hand, ready to learn their secrets. But within two minutes, you’re completely lost.

They are talking about "sweeping liquidity" to find an "order block" during a "silver bullet" window. It sounds less like finance and more like a sci-fi novel.

While standard trading terms like "bullish" or "resistance" are still around, a new wave of terminology—often grouped under "Smart Money Concepts" (SMC) or Price Action trading—has taken over the prop trading space. If you want to understand the strategies being discussed in modern trading communities, you need a new dictionary.

This guide will demystify the jargon so you can stop scratching your head and start following the conversation.

The Basics: Sentiment and Market Movement

Before we dive into the complex algorithmic theories, let’s cover the foundational terms that describe simple direction and feeling in the market.

Bullish and Bearish

These are the oldest terms in the book, but essential. If a trader is Bullish, they are optimistic; they believe prices will rise. Conversely, if they are Bearish, they believe prices will fall. You will often hear a trader say, "My bias for the day is bullish," meaning they are only looking for buy opportunities.

Long Position

This simply means buying an asset with the expectation that its value will go up. If a trader is "Going Long," they are entering a buy trade.

Selling Pressure

This describes a scenario where there are aggressive sellers in the market, forcing the price down rapidly. It isn't just a slow decline; it is a heavy, forceful move downwards caused by an imbalance of supply.

Reversal

A reversal is exactly what it sounds like: a turnaround in the price direction. If a stock has been climbing for weeks and suddenly starts plummeting, that is a reversal.

Catching a Falling Knife

This is a famous trading idiom that serves as a warning. It refers to the dangerous act of trying to buy an asset that is dropping sharply in price. The logic is that you should wait for the price to hit the floor and stabilize before picking it up. If you try to grab it while it's still plummeting, you are likely to get "cut" (suffer immediate, heavy losses).

The Fuel: Understanding Liquidity

This is the most critical section for understanding modern prop trading. In Smart Money Concepts, price doesn't just move randomly; it moves to find orders.

Liquidity

In general finance, liquidity is how easily an asset can be bought or sold. However, in the prop trading world, Liquidity specifically refers to resting orders—specifically Stop Losses.

Traders view the market as an engine that runs on liquidity. If there are thousands of traders with Stop Loss orders sitting just above a specific high price, the market "sees" that as fuel.

Liquidity Levels and Build Up

These are specific areas on the chart where those orders are stacked. A Liquidity Build Up occurs during a period of consolidation. As the price moves sideways, retail traders place stop losses on both sides of the range. To an institutional trader, this looks like a pool of available orders waiting to be tapped.

The Liquidity Sweep

This is a common setup. A Liquidity Sweep happens when price moves rapidly above a high or below a low just far enough to trigger the pending orders residing there—effectively "sweeping" them up—before immediately reversing direction.

To a novice, this looks like a "fakeout." To a pro, it’s a necessary step for institutions to fill their large positions before moving the market the other way.

Order Flow

While technical analysis looks at patterns, Order Flow looks at the transaction history. Following order flow means trading in the direction of the dominant institutional buying or selling pressure, rather than just relying on static support and resistance lines.

Market Structure: How to Read the Map

Once you understand that liquidity is the fuel, you need to understand the map. These terms help traders identify when a trend is starting or ending.

Market Shift and Change of Character (ChoCh)

These are technical signals that the trend is changing. A Change of Character (ChoCh) is often the very first sign of a reversal. For example, in an uptrend, price makes higher highs and higher lows. If price suddenly breaks below the most recent higher low, that is a Change of Character. It signals that the buyers are losing control. A Market Shift (or Market Structure Shift) is the confirmation of this change, indicating that the trend has officially flipped.

Change in State

This sounds technical, but it simply refers to the "mode" the market is in. Is the algorithm in a "Buy Program" (seeking higher prices) or a "Sell Program" (seeking lower prices)? When a Change in State occurs, the underlying delivery of price shifts from one program to the other.

Head and Shoulders

Not purely an SMC term, but often cited in these interviews. This is a classic chart pattern that signals a reversal. It consists of a peak (shoulder), a higher peak (head), and then a lower peak (shoulder). It visually represents a trend losing momentum and is a favorite pattern for spotting reversals.

Zones of Interest: Where to Enter

Now that you know the direction and the structure, where do you actually click "buy"?

Order Blocks

If you learn one term from this list, make it this one. An Order Block is viewed as a specific footprint of institutional activity. Technically, it is often defined as the last candle of the opposing color before a strong, impulsive move that breaks market structure.

For example, if price explodes upwards, the last red candle before that explosion is the Bullish Order Block. Traders believe institutions left orders there and will defend that price level if the market returns to it, making it a prime location to enter a trade.

The Last Push

Often called an "exhaustion move," this is a final, aggressive move in the direction of the trend that traps late traders just before the market reverses. Identifying the "Last Push" helps traders avoid buying at the very top or selling at the very bottom.

The Strategy: Turning Theory into Setups

Finally, how do traders put this all together?

The Setup

A Setup is simply a specific checklist of conditions that must be met before a trader acts. It is the bridge between analysis and execution.

Swing Trade Setup

This refers to a trade intended to be held for days or even weeks. These setups rely on higher timeframe charts (like the 4-hour or Daily chart) and aim to catch larger market moves, rather than quick scalps.

The Silver Bullet

This is a viral term popularized by the "ICT" (Inner Circle Trader) community. The Silver Bullet is a time-based trading strategy. It involves looking for a specific pattern (usually a Fair Value Gap) specifically between the hours of 10:00 AM - 11:00 AM or 3:00 PM - 4:00 PM (New York time). It is famous for being a mechanical, repeatable setup that happens at the same time every day.

Conclusion

The vocabulary of prop trading can feel overwhelming, but it is mostly a new way of describing the age-old battle between supply and demand.

You don't need to master every term on this list to be successful. Start by identifying "Liquidity Sweeps" on your chart, or trying to spot an "Order Block." Once you see the market through this lens, those YouTube interviews will start making a lot more sense.