August 16, 2015

Trading Abbreviations, Acronyms, and Terms Explained

A user posted a comment in a previous post asking if I could explain the abbreviations and terms that I use in my posts, which I completely understand. And that's the goal of this post, to thoroughly explain the abbreviations, acronyms, and terms that I use on a daily basis. If you think I missed something or if there's a term you'd like me to explain in more detail, please let me know in the comments section below!

Trend
     Consists of higher highs and higher lows (bull trend) or lower highs and lower lows (bear trend).
Trading range
     Consists of sideways price action, big up, big down, failed breakouts, and big confusion.
Channel
     A channel is synonymous with a trend. For example, a bull channel is a bull trend.
Trend bar
     A trend bar either closes above its open (bull trend bar) or below its open (bear trend bar).
Doji bar
     A doji bar opens then closes near its open (one bar trading range).
Wick
    Is above or below the body of a candle that represents where the price action went but was quickly rejected.
Support (sup)
     Support is a price level where buyers come in and sellers take profits.
Resistance (res)
     Resistance is a price level where sellers come in and buyers take profits.
TL (trendlines)
     A bull trendline is oriented upward left to right and is below the price action while a bear trendline is oriented downward from left to right and is above the price action.
TCL (trend channel-line)
     Is parallel and opposite the trendline. For example, the bull TCL is oriented upward left to right but is above the price action.
BO (breakout)
     A breakout happens when the price goes above or below a previous candle, trendline, trend channel-line, or any other technical level.
BOPB (breakout pullback)
     A pullback to the original breakout point.
BO test
     A test of a previous breakout point, similar to a BOPB.
BD (breakdown)
     A breakout below a previous low, TL, or TCL, etc.
H1, H2, H3... (high 1, high 2, high 3...)
     High 1s are the first breakout above the previous bar in a pullback. High 2s are the second occurrence in a pullback and so on.
L1, L2, L3... (low 1, low 2, low 3...)
     Low 1s are the first breakdown below the previous bar in a pullback. Low 2s are the second occurrence in a pullback and so on.
Signal bar
     Also called the setup bar which is used to determine when to get into the market.
Entry bar
     The bar in which you enter the market, which typically succeeds the signal bar.
MM (measured move)
     Expected price target based on previous price action.
20EMA (20 bar exponential moving average)
     The only moving average and technical indicator I use.
BLSHS (buy low, sell high, scalp)
     Trading strategy in trading ranges and weak trends.
1R (1 x risk)
     For example, if risking 30 cents on a trade, go for a profit target of 30 cents from the entry price.
2R (2 x risk)
     For example, if risking 30 cents on a trade, go for a profit target of 60 cents from the entry price.
Stop
     The price at which you are risking to on a trade, the price you will exit a trade if it goes against you.
Risk
     The amount of dollars you are risking on a trade as well as the price you will exit a trade if it goes against you.
Price target
     The price you will exit a trade to take profits (must be a price level that ensures you are trading a positive trader's equation).
Swing
     A trade with a wider stop and farther profit target, betting on trend resumption.
Scalp
     A trade with a tighter stop and closer profit target.
Momentum strength
     The amount of with-trend price movement in a stock or the lack thereof (consecutive trend bars, quantity and quality of pullbacks, presence of wicks, etc.).
Reversal
     Counter-trend price movement.
MTF (multiple time frame)
     Different time frame price charts. For example, an MTF breakout would be something like a breakout above the 5 minute chart's resistance as well as the 15 minute, 60 minute, and daily chart's resistance as well.
HTF (higher time frame)
     The longer time frame relative to the current one. For example, if you're looking at a 5 minute chart, a HTF chart would be the 60 minute chart, among others.
LTF (lower time frame)
     The opposite of higher time frame. For example, if you're looking at a 5 minute chart, a LTF chart would be the 1 minute chart, among others.

1 comment:

  1. The above described terms or abbreviations are mostly used in day to day trading deals.

    ReplyDelete