Advance-Decline Line : Running sum reflecting advancing - declining issues. AD(J) = AD(J-1) + advancing issues(J) - declining issues(J).
Alarm : Any trading configuration (security, trading method and trading settings) can be converted into an alarm. Then TradEdit warns you any time a trade signal occurs.
American Option : A put or call that can be exercised at any time prior to expiration.
American Stock Exchange (AMEX) : The second-oldest U.S. stock exchange, located on Wall Street in New York City.
AMEX Composite - XAX : The XAX is a market capitalization-weighted, price appreciation index.
ADX : Average Directional Movement Index, indicator developed by J. Welles Wilder to measure market trend intensity.
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%B = (Close - Low Boll) / (High Boll - Low Boll). This indicator gives the price position within Bollinger bands.
Back-Testing : A strategy is tested or optimized on historical data and then the strategy is applied to new data to see if the results are consistent.
Bollinger Bands : curves created by John Bollinger. Low Boll = MA - 2 * Standard Deviation and High Boll = MA + 2 * Standard Deviation (usually MA length is 20).
Breakout : The point when the market price moves out of the trend channel.
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Call : A contract that gives the holder the right to buy a certain quantity of an underlying security from the writer of the option, at a specified price (the strike price) up to a specified date (the expiration date).
Candelesticks : A charting method, originally from Japan, in which the high and low are plotted as a single line and are referred to as shadows. The price range between the open and the close is plotted as a narrow rectangle and is referred to as the body. If the close is above the open, the body is white. If the close is below the open, the body is black.
Channel : When prices trend between two parallel trendlines, this is referred to as a channel.
Close : The price at which a security closed for trading on a given day or moment.
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Day Trading : Buying or selling the same security within the same day. Day trading usually involves closing out all positions by the end of the day.
Dividend : Distribution of earnings to shareholders, prorated by the class of security.
Doji : A session in which the open and close are the same (or almost the same). Different varieties of doji lines (such as a gravestone or long-legged doji) depend on where the opening and close are in relation to the entire range. Doji lines are among the most important individual candlestick lines. They are also components of important candlestick patterns.
Double Bottom (Top) : The price action of a security or market average where it has declined (advanced) two times to the same approximate level, indicating the existence of a support (resistance) level and a possibility that the down ward (upward) trend has ended.
Dow Jones Industrial Average - DJIA : Price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including American Express Co. and American Telephone and Telegraph Co. The DJIA is quoted in points, not in dollars.
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Elliott Wave Theory : A pattern-recognition technique published by Ralph Nelson Elliott in 1939, which holds that the stock market follows a rhythm or pattern of five waves up and three waves down to form a complete cycle of eight waves. The three waves down are referred to as a "correction" of the preceding five waves up.
EMA : Exponential Moving Average.
Engulfing Pattern : In candlestick terminology, a multiple candlestick line pattern; a major reversal signal with two opposing-color real bodies making up the pattern.
Envelope : Lines surrounding an index or indicator that is, trading bands.
European Option : An option that can only be exercised at the end of its life.
Expiration Date : The date on which an option, futures trading contract, rights or warrant expires, and becomes worthless if not exercised.
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Flag : A continuation price pattern which resembles a parallelogram that slopes against the prevailing trend. The flag represents a minor pause in a dynamic price trend.
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Gap : A day in which the daily range is completely above or below the previous day's daily range.
GLOBEX : Global after-hours electronic trading system.
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Harami : In candlestick terminology, a small real body contained within a relatively long real body.
High : The 'high' is the highest execution price of a trade that day.
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ISIN: International Securities Identification Numbers (ISIN).
Index : A benchmark against which financial or economic performance is measured, such as the Dow Jones Industrial, S&P 100, S&P 500, NASDAQ 100, NASDAQ Composite or the Consumer Price Index.
Index Option : An option whose underlying security is an index.
Indicator : Data which provide information about or predict the overall health of the economy or the financial markets.
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January Effect : The tendency for securities prices to recover in January after tax-related selling is completed before the year-end.
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Kurtosis : Descriptive measure of how flat or pointed a distribution is.
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Liquidity : The ability of an asset to be converted into cash quickly and without any price discount.
Low : The 'low' is the lowest execution price of a trade that day.
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MACD (Moving Average Convergence Divergence) : The crossing of two exponentially smoothed moving averages that are plotted above and below a zero line. The crossover, movement through the zero line, and divergences generate buy and sell signals.
Market Trend : The general direction of the market at any period in time
Momentum : A time series representing change of today's price from some fixed number of days back in history.
Momentum Filter : A measure of change, derivative or slope of the underlying trend in a time series. Implemented by first applying a low pass filter to the data and then applying a differencing operation to the results.
Momentum Indicator : A market indicator utilizing price and volume statistics for predicting the strength or weakness of a market and to note turning points within the market.
Moving Average (MA) : A mathematical procedure to smooth or eliminate the fluctuations in data and to assist in determining when to buy and sell. Moving averages emphasize the direction of a trend, confirm trend reversals and smooth out price and volume fluctuations or "noise" that can confuse interpretation of the market.
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Nasdaq Composite Index : This index measures all Nasdaq common stocks listed on The Nasdaq Stock Market. It is market-value weighted.
NYSE Composite Index : Market value-weighted index which relates all NYSE stocks.
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On-Balance Volume (OBV) : Plotted as a line representing the cumulative total of volume. The volume from a day's trading with a higher close when compared with the previous day is assigned a positive value, while volume on a lower close from the previous day is assigned a negative value.
Open : This is the price at which a security opened for trading on a given day.
Oscillator : Technical indicator used to identify overbought and oversold price regions. An indicator that detrends data, such as price.
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Parabolic SAR : Developed by Welles Wilder, creator of RSI and DMI, the Parabolic SAR sets trailing price stops for long or short positions. Also referred to as the stop-and-reversal indicator (SAR stands for "stop and reversal"), Parabolic SAR is more popular for setting stops than for establishing direction or trend. Wilder recommended establishing the trend first, and then trading with Parabolic SAR in the direction of the trend. If the trend is up, buy when the indicator moves below the price. If the trend is down, sell when the indicator moves above the price.
Pennant :This continuation price pattern is similar to the flag, except that it is more horizontal and resembles a small symmetrical triangle. Like the flag, the pennant is typically followed by a resumption of the prior trend.
Point and Figure Chart : A price-only chart that plots up prices as Xs and down prices as Os. The minimum price recorded is called the box size. Typically, a three-box reversal indicates a change in the direction of prices.
Put : An option contract that gives the holder the right to sell a certain quantity of an underlying security to the writer of the option, at a specified price (strike price) up to a specified date (expiration date). This is also called a put option.
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Quick Ratio : Indicates a company's financial strength; a company's cash and equivalent divided by current liabilities.
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Resistance : A price level at which rising prices have stopped rising and either moved sideways or reversed direction.
Retracement : A price movement in the opposite direction of the previous trend.
Reversal Gap : A chart formation where the low of the last day is completely above the previous day's range with the close above midrange and above the open.
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Short Position : When a trader has "sold short" a stock and still holds the position.
Short Selling : Short selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume the risk that they will be able to buy the stock at a more favorable price than the price at which they sold short.
Spectrum : The frequency decomposition of time series data. This is used to detect periodic fluctuations or cycles in historical price data.
Support : A historical price level at which falling prices have stopped falling and either moved sideways or reversed direction.
Standard and Poor's 500 - $SPX : The S&P 500 Composite Stock Price Index is a european-style, capitalization-weighted index (shares outstanding multiplied by stock price) of 500 stocks that are traded on the New York Stock Exchange, American Stock Exchange and Nasdaq National Market.
Standard Deviation : The positive square root of the expected value of the square of the difference between a random variable and its mean.
Stochastic: An overbought/oversold indicator that compares today's price to a preset window of high and low prices. These data are then transformed into a range between zero and 100 and then smoothed.
Stops : Buy stops are orders that are placed at a predetermined price over the current price of the market. The order becomes a "buy at the market" order if the market is at or above to the price of the stop order. Sell stops are orders that are placed with a predetermined price below the current price. Sell-stop orders become "Sell at the market" orders if the market trades at or below the price of the stop order.
Stop and Reverse (SAR) : A stop that, when hit, is a signal to reverse the current trading position, i.e., from long to short. Also known as reversal stop.
Stop Loss : The risk management technique in which the trade is liquidated to halt any further decline in value.
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Technical Analysis : A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict market trends.
Trading Bands : Lines plotted in and around the price structure to form an envelope, answering whether prices are high or low on a relative basis and forewarning whether to buy or sell by using indicators to confirm price action.
Trading Range : The difference between the high and low prices traded during a period of time; in commodities, the high/low price limit established by the exchange for a specific commodity for any one day's trading.
Trend : The general drift, tendency or bent of a set of statistical data as related to time.
Trend Channel : A parallel probable price range centered about the most likely price line. Historically, this term has been used to denote the area between the base trendline and the reaction trendline defined by price moves against the prevailing
Trendline : A line drawn that connects either a series of highs or lows in a trend. The trendline can represent either support as in an uptrend line or resistance as in a downtrend line. Consolidations are marked by horizontal trendlines.
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Univariate : Involving only one variable.
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Volatility : The degree of price fluctuation for a given asset, rate, or index; usually expressed as a variance or standard deviation.
Volume : The number of shares, traded during a given period, for a security or an entire index or exchange. This is also called trading volume. The analysis of volume is essential in technical analysis. Volume provides evidence of intensity with a given price move. As volume often leads price, it is a valuable indicator, especially for price peaks.
Volume Moving Average (VMA) : The average of volume over a certain period determined by the user.
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Warrant : A certificate issued by a company giving the holder the right to purchase securities at a stipulated price within specific time limits or perpetually.
Wave : In Elliott wave theory, a sustained move by a market's price in one direction as determined by the reversal points that initiated and terminated it.
Wave Cycle : An impulse wave followed by a correction wave, the impulse wave being made up of five smaller, numbered waves of alternating direction designated 1, 2, 3, 4 and 5, and the correction wave being composed of three smaller alternating waves designated a, b, and c.
Wedge: Continuation price pattern similar to a wedge.
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X : No item for X...
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Yates's Correction : When a small amount of data is available for testing, the chi-square formula is adjusted to account for the small sample base.
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Zigzag :In a bull market, an Elliott three-wave pattern that subdivides into a 5-3-5 pattern with the top of wave B noticeably lower than the start of wave A. In a bear market, this pattern will be inverted.
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