Day Trading Terms

SchoolOfTrade Chat Room Terms

1CT - 1st Channel Test
1KV - 1000v Chart
2CT - 2nd Channel Test (Usually a limit entry from the 1CT)
1L or 1S - 1st Entry Long or Short
1LF or 1SF - 1st Entry Long Failure or Short Failure
2L or 2S - 2nd Entry Long or Short
2LL or 2SH - 2nd Entry Long and short from highs and lows
2LF or 2SF - 2nd Entry Long Failure or Short Failure
2L2SF - 2nd Long & 2nd Sell Fail – This could also be just Combo Long
2S2LF - 2nd Sell & 2nd Long Fail –This could also be just Combo Short
AIAO - All in, All out
AO - Add-On - Adding to an already open position
AOI - Area of interest
b[#] - Referring to a bar on the 5m chart -- IE, b15 would be the 15th bar
BE - Break Even
BO - Break out
BOPB - Breakout pullback (combination of BO and PB)
Brick Candle - A candle with no wick on top or bottom
BRN - Big Round Number
CT - Counter Trend
DB - Double Bottom
DD - Double Down
Dev - Deviation
DT - Double Top
DU - Double Up
ER - Expansion Range
ETH - Electronic Trading Hours
FFC [Market]- First 5 minute candle of the day after RTH open
Fauxpen or FOpen - A market that no longer has a pit but still reacts at the open - A faux open
FBH - Fake Break High
FBL - Fake Break Low
FC - Failed Close
FOBO - Fake Out Break Out
FOMO - Fear of Missing Out
GC2O - Gapping candles from close to open
HnR - Hit and Run formation
HnRF - Hit and Run formation failure
IB - Initial Balance – This is usually the first hour of trading
IDBY Candle - I Don't Believe You candle -- a large, out of the norm candle
KOD- Kiss of Death – The final trap before an anticipated large move
MD - Master Download
MM - Measured Move
MMM - Micro Measured Move
NF - No fill
NT - NinjaTrader
OR - Opening Range
OS - Overshoot
PA - Price Action
PAT - Price Action Trading
PB - Pullback
PHOD - Previous high of day
PLOD - Previous low of day
POI - Point of interest
PP - Pivot Point – Also S1-S3 and R1-R3 which are variations of the normal PP level.
QS’- Quad Squad which is our stock counterparts to the energy markets we trade -- CVX/XOM/OXY/COP
R50 -- Range 50% Level
R/E - Re-Entry
RTH - Regular Trading Hours (Pit)
S/CH - Spike and Channel
SH - Swing High
SL - Swing Low
SOH - Sit on hands
SOT - School of Trade
S/R - Support and Resistance
SS - Screenshot
STR - Strength
STSR - Short Term Support and Resistance
TD - Triple Down
TMM - Triple Measured Move -- Where the market makes a 3 push MM
TTT - To the tick
TU - Triple Up
UFC - Just like the sport, when a market goes into UFC it is expected to fight over a level or area
US - Undershoot
WT - With Trend

Important Trading Terms:
Commission:  the fee charged to enter and exit a position.  Also called ‘round-turn’ or ‘round-trip’ and includes both acts of getting into and out of a new position.

Chart:  we use a computer to connect to the internet, where we download market data directly from the exchange and it creates a chart using Ninja Trader.

Anchor Chart:  this is the slowest chart timeframe used to find the long-term-trend and short-term trend from which we will trade with.

Entry Chart:  this is the fastest timeframe used to find entry patterns and triggers to enter a new position based on things we’ve noticed on the anchor chart.

VIP Chart:  this is a medium timeframe used to find the ‘very important price levels’ we need for the session ahead of us such as Market-Profile, Open, High, Low and Close information.

Contract Expiration:  all futures contracts expire either every 1, 2, or 3 months.  At that time you must trade the next month in sequence.

Front-Month:  the current contract month we are trading, usually has the most volume of all the available contract months.

Contract Rollover: after contract expiration, this is the process of closing positions on one contract month and then opening the position on the next month.

Tick:  the smallest increment of price movement.  “Crude Oil moved 10-ticks”

Bearish:  the price-action on the chart is moving lower.  We look for lower-lows and lower-highs.

Bullish:  the price-action on the chart is moving higher.  We look for higher-highs and higher-lows.

Bid:  the price where buyers begin buying

Broker: A person paid a fee or commission for executing buy or sell orders for a customer. In commodity futures trading, the term may refer to: (1) Floor Broker--a person who actually executes orders on the trading floor of an exchange; (2) Account Executive, Associated Person, registered Commodity Representative or Customer's Man--the person who deals with customers in the offices of futures commission merchants; or (3) the Futures Commission Merchant.

Ask: the price where sellers begin selling

Spread:  Difference between the ‘bid’ and the ‘ask’, or the difference between where sellers are selling and where buyers are buying.

Closing Price / Closing-print:  the price that was trading when the market closed.

Opening Price / Opening-print:  the price that was trading when the market opened.

Final Settlement Price:  may be different than the closing price, this is the last price that was traded on the exchange after ALL orders are settled for the day at the exchange.

‘Commercial’ (or) ‘Paper’ Trader:  someone who is professionally managing money for someone else, also known as ‘paper traders’

Local Trader:  someone trading for himself/herself on the trading floor of the exchange.

PIT:  Another name for the trading floor of the exchange

Squawk:  a service for day traders to listen to commentary and relayed audio directly from the PIT/Trading Floor.

Counter-Trend Trading:  trading that is done against the long-term-trend

Trend-Trading:  trading this is done with the long-term-trend

Daily Price Limit:  the limit to the daily trading range for the market you are trading.  Also called ‘limit up’ and ‘limit down’

Day Trader:  also called ‘intra-day trader’ this person never holds a trade overnight and may take as many as 15 trades during the trading session.

Scalper:  also considered an ‘intra-day trader’ this person is looking for very small fluctuations in price-action to make small pieces of profit many times throughout the day.

Swing Trader:  this person is trading over multiple days and weeks, using the long-term-trend as the basis for entering a trade.

Position Trader: this person is trading over multiple weeks, month and sometimes years.  This trader uses a macro approach and typically is a professional asset-manager.

Auto-trader:  this is a piece of software that runs on Ninja Trader that will execute orders, enter and exit trades, manage the position and even stop you from trading 100% automatically.  Also known as ‘algorithmic trading’, ‘automated trading’ or ‘black box trading’

Instrument:  another term for the market you are trading.  “What instrument are you trading today?”

Delta:  this is the difference between the number of buyers and the number of sellers at a specific price level.

Regular Divergence:  when two things are moving in opposite direction.  This is used to find price-reversals in the market you are trading when the price-action makes a new higher-high but the indicator does not.

Hidden Divergence:  when two things are moving in opposite direction.  This is used to find price continuations in the market you are trading when the indicator makes a new higher-high but the price-action does not.

Discretionary Trading:  this is when you make the decisions to enter or exit a trade based on experience or a belief that the market will move in a specific direction based on price-action.

Mechanical Trading:  this is when you follow a specific set of trading rules as part of a trading plan.  There is no emotion or ‘discretion’ involved with this type of trading.

Automated Trading:  this is when the computer does all the trading for you using a predefined set of trading rules.  The trader does nothing, the computer does everything.

Elliot Wave: (1) A theory named after Ralph Elliot, who contended that the stock market tends to move in discernible and predictable patterns reflecting the basic harmony of nature; (2) in technical analysis, a charting method based on the belief that all prices act as wavers, rising and falling rhythmically.

Reading Tape:  the act of watching the orders as they come into the market using the time and sales window provided by Ninja Trader charting software

Volume Analysis:  the act of analyzing the volume as it enters the market using the “Volume Ladder”

Front Running:  the act of entering or exiting a trade before someone else who is expected to be entering or exiting at the same price.

Fundamental Analysis:  The act of making trading decisions based on the underlying factors of supply and demand in the market as it applies to the global marketplace.

Technical Analysis:  the act of making trading decisions based solely on chart patterns.

Futures Contract:  an agreement between two parties to purchase or sell a commodity for delivery in the future, which has a specific date and price.

Globex:  An international electronic trading system for futures and options that allows participating exchanges to list their products for trading after the close of the exchanges' open outcry trading hours.

Gold Fixing:  The setting of the gold price at 10:30 AM GMT (first fixing) and 3:00 PM GMT (second fixing) in London by five representatives of the London Gold Market

Good till Cancelled (GTC):  Order which is valid at any time during market hours until executed or canceled. 

Hedging: Taking a position in a futures market opposite to a position held in the cash market to minimize the risk of financial loss from an adverse price change; a purchase or sale of futures as a temporary substitute for a cash transaction that will occur later.

Introducing Broker (or IB): Any person (other than a person registered as an "associated person" of a futures commission merchant) who is engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on an exchange who does not accept any money, securities, or property to margin, guarantee, or secure any trades or contracts that result therefrom.

Limit (Up or Down): The maximum price advance or decline from the previous day's settlement price permitted during one trading session, as fixed by the rules of an exchange. 

Limit Order: An order in which the customer specifies a price limit or other condition, such as time of an order, as contrasted with a market order which implies that the order should be filled as soon as possible.

Liquidation: The closing out of a long position. The term is sometimes used to denote closing out a short position, but this is more often referred to as covering. 

Liquid Market: A market in which selling and buying can be accomplished with minimal price change.

Live Trade Room:  this is a web-based trading room where we watch charts, call trades, teach our strategies, and answer questions that are typed into the chat box.

Local: A member of a U.S. exchange who trades for his own account and/or fills orders for customers and whose activities provide market liquidity. See Floor Trader.

Long: (1) One who has bought a futures contract to establish a market position; (2) a market position which obligates the holder to take delivery; (3) one who owns an inventory of commodities. See Short.

Lot: A unit of trading. “I am trading 5 lots on Crude Oil today”

Margin: The amount of money or collateral deposited by a customer with his broker, by a broker with a clearing member, or by a clearing member with the clearinghouse, for the purpose of insuring the broker or clearinghouse against loss on open futures contracts. The margin is not partial payment on a purchase. (1) Initial margin is the total amount of margin per contract required by the broker when a futures position is opened; (2) Maintenance margin is a sum which must be maintained on deposit at all times. If the equity in a customer's account drops to, or under, the level because of adverse price movement, the broker must issue a margin call to restore the customer's equity

Margin Call: (1) A request from a brokerage firm to a customer to bring margin deposits up to initial levels; (2) a request by the clearinghouse to a clearing member to make a deposit of original margin, or a daily or intra-day variation payment, because of adverse price movement, based on positions carried by the clearing member.

Market-if-Touched (MIT) Order: An order that becomes a market order when a particular price is reached. A sell MIT is placed above the market; a buy MIT is placed below the market

Market Marker: A professional securities dealer who has an obligation to buy when there is an excess of sell orders and to sell when there is an excess of buy orders. By maintaining an offering price sufficiently higher than their buying price, these firms are compensated for the risk involved in allowing their inventory of securities to act as a buffer against temporary order imbalances. In the commodities industry, this term is sometimes loosely used to refer to a floor trader or local who, in speculating for his own account, provides a market for commercial users of the market. 

Market Order: An order to buy or sell a futures contract at whatever price is obtainable at the time it is entered in the ring or pit. 

Momentum: In technical analysis, the relative change in price over a specific time interval. Often equated with speed or velocity and considered in terms of relative strength.

National Futures Association (NFA): A self-regulatory organization composed of futures commission merchants, commodity pool operators, commodity trading advisors, introducing brokers, leverage transaction merchants, commodity exchanges, commercial firms, and banks, that is responsible--under CFTC oversight--for certain aspects of the regulation of FCMs, CPOs, IBs, LTMs, and their associated persons, focusing primarily on the qualifications and proficiency, financial condition, retail sales practices, and business conduct of these futures professionals.

NFA: National Futures Association.

Offer: An indication of willingness to sell at a given price; opposite of bid.

Opening Price (or Range): The price (or price range) recorded during the period designated by the exchange as the official opening.

Open Interest: The total number of futures contracts long or short in a delivery month or market that has been entered into and not yet liquidated by an offsetting transaction or fulfilled by delivery. 

Open Outcry: Method of public auction required to make bids and offers in the trading pits or rings of commodity exchanges.

Overbought: A technical opinion that the market price has risen too steeply and too fast in relation to underlying fundamental factors. Rank and file traders who were bullish and long have turned bearish.

Pit: A specially constructed arena on the trading floor of some exchanges where trading in a futures contract is conducted. On other exchanges the term "ring" designates the trading area for a commodity

Point: A measure of price change equal to 1/100 of one cent in most futures traded in decimal units. In grains, it is of one cent; in T-bonds, it is one percent of par. See Tick.

Position: An interest in the market, either long or short, in the form of one or more open contracts

Position Size:  this refers to the size of the position we take in the market.  A position size of 1-contract is the smallest, and there is virtually no limit to the position as long as the trader has enough in the account to cover margin.  Position size is used to calculate risk percentage.

Position Trader: A commodity trader who either buys or sells contracts and holds them for an extended period of time, as distinguished from the day trader, who will normally initiate and offset a futures position within a single trading session.

Price Discovery: The process of determining the price level for a commodity based on supply and demand factors.

Rally: An upward movement of prices. 

Range: The difference between the high and low price of a commodity during a given period.

Range Chart:  refers to a chart that uses specific trading range as the criteria to generate new candlesticks.  Each candlestick is within a specific ‘range’ of prices.

Renko Chart:  A type of chart, developed by the Japanese, which is only concerned with price movement; time and volume are not included. It is thought to be named for the Japanese word for bricks, "renga". A Renko chart is constructed by placing a brick in the next column once the price surpasses the top or bottom of the previous brick by a predefined amount. White bricks are used when the direction of the trend is up, while black bricks are used when the trend is down. This type of chart is very effective for traders to identify key support/resistance levels. Transaction signals are generated when the direction of the trend changes and the bricks alternate colors.

Resistance: In technical trading, a price area where new selling will emerge to dampen a continued rise. Also see Support.

Retracement: A reversal within a major price trend.  “I am selling retracements in a downtrend”

Reversal: A change of direction in prices. “I am looking for a price reversal at a levels of support”

Risk/Reward Ratio: The relationship between the probability of loss and profit. This ratio is often used as a basis for trade selection or comparison.

Roll-Over: A trading procedure involving the shift of one month of a straddle into another future month while holding the other contract month. The shift can take place in either the long or short straddle month. The term also applies to lifting a near futures position and re-establishing it in a more deferred delivery month.

Round Turn: A completed transaction involving both a purchase and a liquidating sale, or a sale followed by a covering purchase.

Scale In/Out:
 To purchase or sell as price moves up or down. “I am going to scale into a new position at price levels X, Y and Z” or “I am going to scale out of this current position by selling a X, Y and Z”

 A speculator on the trading floor of an exchange who buys and sells rapidly, with small profits or losses, holding his positions for only a short time during a trading session. Typically, a scalper will stand ready to buy at a fraction below the last transaction price and to sell at a fraction above, thus creating market liquidity.

 The practice of trading in and out of the market on very small price fluctuations. A person who engages in this practice is known as a scalper.

 (1) The selling side of an open futures contract; (2) a trader whose net 
position in the futures market shows an excess of open sales over open purchases. See Long.

Short Selling:
 Selling a futures contract with the idea of delivering on it or offsetting it at a later date.

 In commodity futures, an individual who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements.

Stop Limit Order:
 A stop limit order is an order that goes into force as soon as there is a trade at the specified price. The order, however, can only be filled at the stop limit price or better.

Stop Order:
 This is an order that becomes a market order when a particular price level is reached. A sell stop is placed below the market, a buy stop is placed above the market. Sometimes referred to as Stop Loss Order.

 In technical analysis, a price area where new buying is likely to come in and stem any decline. Also see Resistance.

Technical Analysis: An approach to forecasting commodity prices which examines patterns of price change, rates of change, and changes in volume of trading and open interest, without regard to underlying fundamental market factors.

Tick: Refers to a minimum change in price up or down. See Point.

Tick Chart:  refers to a chart that uses ‘ticks’ to form new candlesticks.  The number of ‘ticks’ define the size of each candlestick.

Trend: The general direction, either upward or downward, in which prices have been moving.

Trend line: In charting, a line drawn across the bottom or top of a price chart indicating the direction or trend of price movement. If up, the trend line is called bullish; if down, it is called bearish.

No comments:

Post a Comment

Thank you for your comment! Your comment will be reviewed and posted asap, thank you for your patience.