# Essential Terms Related to RA Algos by AlgoTest
Author: AlgoTest
Author URL: https://algotest.in/blog/author/algotest/
Published: 2025-07-10
URL: https://algotest.in/blog/essential-terms-related-to-ra-algos-by-algotest/

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**Term**

**Explanation**

[**Max Drawdown (MDD)**](https://algotest.in/blog/why-max-drawdown-matters-in-risk-management/)

The maximum observed loss from a peak to a trough in the equity curve. It tells you how much your capital could’ve dropped historically.

**P&L**

Stands for Profit & Loss. It reflects the overall return (gains or losses) from a strategy over a given period.

[**Slippages**](https://algotest.in/blog/what-is-the-impact-of-slippage-on-an-algo/)

The difference between expected entry/exit price and actual execution price. Critical in live trading. [Learn more](https://algotest.in/blog/what-is-the-impact-of-slippage-on-an-algo/)

**RA**

Short for Research Analyst – a SEBI-registered individual or entity providing algorithmic strategies for trading.

**Algos**

Algorithmic strategies built by RAs for automated or semi-automated trading. Each algo follows a defined logic.

**Backtest**

Simulated performance of a strategy using historical data to assess its viability. Doesn’t guarantee future results.

**Forward Test**

Testing a strategy in near real-time with virtual capital (not live orders). A bridge between backtest and live trading. [Read more](https://algotest.in/blog/difference-between-backtesting-forward-testing-and-live-execution-in-ra-algos/)

**Algo Trade**

Automated execution of trades based on strategy signals, with no manual intervention.

**Taxes & Charges**

Includes brokerage, exchange charges, GST, SEBI fees, etc. These impact net returns and are factored into realistic simulations.

**Margin Required**

Minimum funds blocked by the broker to carry out a trade, based on exchange rules and broker policy.

**Capital Required**

Total amount of funds needed to deploy a strategy, inclusive of margins and potential drawdowns.

**Strategies vs Algos**

A _strategy_ is a logical idea or trading plan. An _algo_ is a coded, ready-to-deploy version of that strategy built by an RA.

**Intraday**

Strategies that enter and exit positions within the same trading day. No overnight risk.

**Overall MTM**

Mark-to-Market profit or loss across all trades, calculated on a daily basis. Used to track real-time performance.

[**Win %**](https://algotest.in/blog/understanding-strategy-win-rates-what-does-50-really-mean/)

Percentage of profitable trades over total trades. A higher win % doesn’t always mean higher profits. [Why win rate alone can be misleading](https://algotest.in/blog/understanding-strategy-win-rates-what-does-50-really-mean/)

**Loss %**

Percentage of trades that closed in a loss. Balanced against win %, and crucial for evaluating strategy reliability.

**Historical Simulations**

Backtests run across multiple years to simulate various market cycles like bull, bear, and sideways trends.

**Reward to Risk Ratio**

Measures how much reward you get for every unit of risk. A 2:1 ratio means ₹2 profit for every ₹1 risked.

**Expectancy Ratio**

Shows the average expected return per trade over time. It factors in both win rate and reward-to-risk.

**Underlying**

The actual instrument on which the algo trades, e.g., Nifty, Bank Nifty, or a stock like Reliance.

**Deployment Days**

Total number of days the algo has been actively deployed in forward testing or live execution.

**List of Brokers**

Brokers supported for algo deployment via AlgoTest, such as Dhan, Zerodha, Groww, AngelOne, 5Paisa, etc.


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