19 March 2011

Trading Glossary - Part II (P-Z)

PIVOT: A market reference point. Our most frequently used pivots are swing highs and swing lows such as the high and low of a daily bar or the highs and lows of the hourly cycles.

PREMIUM (Nifty's): When the price of an index future is trading greater than Fair Value.

RAT TRADE: An afternoon breakout trade that is made in the generally taken place after 02:15 PM.

RESISTANCE: Area where Sellers have come in the past.

ROBUST: Refers to a method or system that is profitable across a variety of markets, time frames and parameters. It is the opposite 'curve-fit' or 'optimized.'

SCALP: A Short-term trade that capitalizes on the market's smaller fluctuations.

SHAKEOUT FAKEOUT: A sharp downward move following an area of distribution that quickly reverses itself and comes back up through the distribution area.

SHORT SKIRT: The name of a very short term pattern trade taken on a one-minuteNifty futures charts. A form of pullback trade on a very short time frame.

SKIDS: Slippage or the difference between the price that a stop order was placed and the actual fill price.

SLOP AND CHOP: Action in the market when institutions are absent and liquidity is poor.

SMA: Simple Moving Average.

SPRING: Originally a Wyckoff term, is used to denote an impulsive move often associated with a test of support. See also 'Upthrust.'

STOP ORDER: An order that becomes a market order when the price touches that level.

SUPPORT: Area where buyers have stepped in the past.

SWEET STUFF: Nickname for the sugar futures.

THREE PUSHES: A characteristic pattern that occurs near important turning points. Usually three distinct 'test' of a high or low level, followed by a reversal.

TICK: Smallest increment that a price can change. 1 tick on an Nifty contract = .05 points, which is the equivalent of Rs. 2.50.

TICKS: The difference between the number of issues on the NSE that are trading UP from the last trade versus the number of issues that are trading down.

TREND DAY: A day where the market opens on one end of its range, closes on the opposite end, shows range expansion and has an increase in volume.

TRIGGER: Level at which a trade will be initiated if a market trades to that price.

TRIN: The TRIN (also know as the Trading Index and the ARMS Index) was invented by Richard Arms in the 1970s. It is calculated as follows: (Advancing issues / Declining issues) divided by (Advancing volume / Declining volume). If the index is above one, the average volume of stocks that fell on the NSE was greater than the average volume of stocks that rose. If the index is below one, then the converse is true.

UPTHRUST: Originally a Wyckoff term, is used to denote an impulsive move often associated with a test of resistance. See also 'Spring.'

VIX: VIX is a weighted measure of the implied volatility for put and call options. VIX represents the implied volatility for this hypothetical at-the-money option.

VOLATILITY: The range of the price action over N -Number of bars.

WEDGE: A low volatility point in which a triangle type formation can be drawn on the bar charts. The market can break out in EITHER direction from this formation.

WHIPSAW: Is when the market rapidly reverses its direction several times in succession.

"Z" DAY: A consolidation day that typically follows a trend day

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