Glossary- Trading glossary organized alphabetically

Average True Range Indicator: True Range measures the conventional range of a bar but checks the previous bar’s closing price to see if it is outside the current bar’s range. If it is outside the current bar's range, then that closing price is used instead of the high or low. That is, the previous bar’s close is considered part of the current bar’s range. This helps account for gaps between bars. The Average True Range indicator calculates and plots the average of these values over a certain number of bars. This indicator may be considered a tool for measuring the volatility of a market using a price range concept. Often, extremes in average true range are associated with a change in character of a market, from trending to trading range and vice versa. Auction: Trading Session.

ATR Trailing Strategy: This strategy generates a stop order (to exit a long position) at the highest price since the entry of the trade minus NumATRs (Input) times the average true range over the last ATRLength (Input) bars. This stop value moves up (trails) as the trade progresses.

Balanced Market: A market that rotates contained within a defined price range.

Bollinger Bands: The Bollinger Bands indicator calculates a simple arithmetic average of prices, specified by the input Price, from each of the most recent number of bars specified by the input Length. This indicator also calculates the standard deviation in those prices for the same number of bars. An upper band is plotted a specified number of standard deviations above this average and a lower band is plotted a specified number of standard deviations below the average. The average is not plotted. Bollinger Bands combine the trend identifying aspects of a moving average with a dynamic factor, each market’s own volatility, to plot an envelope. The distance between the bands is, therefore, a reflection of volatility. During sideways periods, prices reaching the bands may indicate overbought or oversold conditions. Strong movement up through the upper band or down through the lower band may indicate the beginning of a trend.

Buying Tail: Single Prints at the bottom of  the profile.

Bracket: A very well defined price range containing market activity within its upper and lower limits.

(b) Shape Profile: A profile shaped like the letter (b). This formation is typical of long liquidations.

CCI Commodity Channel Index: The Commodity Channel Index Average, like the Commodity Channel Index, is used primarily to identify beginning and ending of cycles in futures markets and is commonly used to identify buy and sell opportunities. The CCI is calculated so that 70-80% of all price activity falls between +100 and -100 on its vertical scale. Many analysts believe a long position is indicated when the CCI exceeds +100 while a short position is indicated when the CCI falls below -100 but these values should be based more on your market analysis. For example, you may decide that for the market you are evaluating, a -125 indicates taking a short position while a +150 indicates taking a long position.

Many analysts also use this indicator to indicate overbought and oversold markets, much like an oscillator. Breakouts above the OverBought line indicate an overbought market and breakouts below the OverSold line indicate an oversold market. The CCI often misses the early part of a new move because of the amount of time it spends in the neutral position (between the OverBought and OverSold lines). Many analysts believe the CCI Average crossing above or below zero identifies market conditions before the OverBought and OverSold lines are crossed.  

Candle Stick Chart: Candlestick chart is an art form that has been passed down from the 1600s when it was used to trade Japanese rice futures. The name “candlestick” is used because the data in the charts are plotted to resemble what looks like a series of candles with wicks. places candle stick charts place a great deal of importance on the relationship between the open and closing prices for each bar.

The candlestick uses the same price data as a bar chart, with each candlestick representing the open, high, low and closing price. The "thick" part of the candlestick is known as the "real body" and represents the range between the open and closing prices. A hollow real body represents a bullish market -the close price was higher than the open price. A filled real body represents a bearish market - the close was lower than the opening price. The thin line above the body represents the high, and the thin line below the body represents the low. 

A candlestick can be drawn with any data interval (except 1-tick bars). You are also able to apply any analysis technique to a candlestick that you can apply to a bar chart. When evaluating candlestick patterns, you can evaluate individual candlestick or groups of candlestick.

Distributing Market: A market that is down trending.

Double Bottom pattern: Tow equal or relatively equal swing point high’s which have only one swing point low in between the two swing point high’s shaping an M pattern – these patterns form after an extended rally.

Double Top pattern: Tow equal or relatively equal swing point low’s which have only one swing point high in between the two swing point low’s shaping W pattern – these patterns form after an extended break (price decline) and are classified as reversal patterns.  

Accumulating Market: A market that is up trending.

Ease Of Movement: The ease at which price goes up or down during a directional move.

Head and Shoulder Pattern: The Head and Shoulder pattern gets its name because the pattern resembles a head with two shoulders on either side. The firs shoulder is created as prices make higher highs and higher lows. As this trend loses momentum, prices retrace to the neckline and then begin to trend up farther than the first shoulder creating the head. Prices then retrace to the neckline and then the first shoulder pattern is repeated to create the second shoulder. 

Floor Pivots: Floor Pivots traders, in particular, have long used a calculated value called the pivot as a price fulcrum. Support and resistance levels may also be calculated from the Pivot.

Gap: A gap is an occurrence in a bar chart where the low is above the high of the previous day, or the high is below the previous day's low. Either of these situations will cause a gap between the bars that can be seen when the market is charted. Many factors can cause prices to move significantly enough to cause price gaps. For example, earnings reports or good economic news within a particular industry can lead to gaps.

Gap Buy Strategy: This strategy will generate a long entry order for the next bar if the current low price is higher than the previous bars high.  

Gap Sell Entry: This strategy will generate a long entry order for the next bar if the current bar is an inside bar (Low greater than the previous Low, High less than the previous High) and the Close is less than the Open. 

Initiative Buying: When commercial traders decide to buy above the Value area.

Initiative Selling: When commercial traders decide to sell below the Value area.

Initial Balance: Price range of the first hour of trading.

Imbalanced Market: A trending market.

Kagi Chart: Kagi charts were created in the 1870's when the Japanese stock market started trading. Kagi charts displays a series of connecting vertical lines whose thickness and direction are dependent on what is happening in the market. In TradeStation, the Kagi reversal amount can be specified as a fixed price or percentage.

 When the market moves in the same direction of a prior Kagi line, the line will be extended.

 When the market moves in the opposite direction by at least the reversal amount, a new Kagi line in the opposite direction will be displayed.

 The color and width of the Kagi line changes when the Kagi line breaks a prior high or low.  

Kase Bar Chart: Kase Bars are equal True Range bars previously known as Kase Universal Bars. The Kase Bar method creates bars with a true range based on a user's specified Target Range value by using only real price data. Kase charts look like a traditional bar or candlestick chart with the exception that the size of each bar is dictated by a Target Range value; all the bars are approximately the same size (range).

Kase Bars have two main advantages over other “equal range” bar methods.

1. Kase bars are based on equal true ranges, which takes into account gaps that may occur between the previous bar’s close and the current high or low into the bar’s range; as opposed to other “equal range” bar methods that only account for the high-low range and leave out any gaps.

2. Kase Bars are built using only real data.  If there are any gaps in the underlying data; such gaps are shown as opposed to filling the gap by creating synthetic bars. If the minimum range between two ticks exceed the target range, the actual minimum range is shown. This is in opposition to other “equal range” bar methods, which force bars to be an exact size using synthetic data. 

For example, if two sequential prices were $10.10 and $10.20, Kase Bars using a Target Range of .05 (5-cents) will not insert synthetic data, but instead will generate a 10-cent bar since that is as close to the target range as one can get with the real data. Other “equal range” would have to insert a synthetic tick at $10.15, breaking up the 10-cent move into two bars, each with a range of 5-cents.

Benefits gained in using Kase Bars:

 Real market gaps are displayed; such as breakaway, measuring or midpoint, and exhaustion gaps (which are important) in anticipating market behavior, as well as patterns such as morning and evening stars and island reversals.

 Alerts or orders produced by using analysis techniques or strategies will be generated by real data (actual prices traded in the market). This will provide greater reliability and accuracy of generated orders which is a reflection of real situations and opportunities.

 Because gaps are not filled-in and price moves are not broken up using synthetic data, the real risk in the market which is proportional to the real range of what actually traded, is clearly visible.  

Keltner Channel: The Keltner Channel indicator is used to identify overbought / oversold conditions as well as the trend strength of a market. When an asset’s price is closer to the upper band than the lower band, the market is considered overbought. Conversely, when an asset’s price is closer to the bottom band than the upper band, the market is considered oversold. An advantage of Keltner Channel analysis compared to other indicators used to analyze trend strength is that market lag is not as pronounced because Keltner Channel are extremely sensitive to fluctuations in volatility.

Key Reversal Buy Strategy: A key reversal is a chart pattern that consists of a new low and a higher close than the previous bar. When a Key Reversal pattern occurs, a long entry order is placed for the next bar at open.

Key Reversal SellStrategy: A key reversal is a chart pattern that consists of a new high and a lower close than the previous bar. When a Key Reversal pattern occurs, a short entry order is placed for the next bar at open.

Linear Regression channel: The Linear Regression channel is an analytical drawing tool that displays a pair of parallel lines above and below a Linear Regression trendline that is based on a user specified price (High, Low, Open, Close, H+L/2). The Linear Regression channel contains price movement with the bottom line providing support and the top line providing resistance. A common interpretation is that if prices remain outside the channel for a long period of time, a reversal in trend may be imminent.

The distance of the channel lines from the median line is based on either:

 A user specified number of standard deviations above/below the median line.

 The highest high and lowest low points between the points upon which the median line is based.  

Lower Value (LVA): Lower limit of the Value area.

Long Liquidation: A long liquidation takes place after an extended up move where some buyers decide to get out and sell their position.

MACD: The Moving Average Convergence Divergence indicator calculates 2 exponential moving averages of the lengths specified by the inputs FastLength and SlowLength. The difference between these 2 averages is then plotted as the MACD. This value is also averaged for the number of bars specified by the input MACDLength and then plotted as the MACDAvg. Finally, the difference between the MACD and the MACD average is calculated and plotted as the MACDDiff. As a trend-following indicator, the MACD may be interpreted similarly to other moving averages. When the MACD crosses above the MACD Average, it may be the beginning of an uptrend. Conversely, when the MACD crosses below the MACD Average, it may be the beginning of a downtrend. As an oscillator, the MACD can indicate overbought and oversold conditions.

MACD Buy & Sell Strategy: The MACD value shows the overall direction of the market. It is calculated by subtracting a slow exponential moving average of the closing prices from a fast exponential average of the closing prices. The MACD will be over zero when the two exponential averages are bullish and under zero when the two exponential averages are bearish.

Also, an exponential average of the MACD is calculated and used to establish the direction of the MACD.

This strategy generates a buy order for the open of the next bar when the MACD crosses above the exponential average of the MACD.

This strategy generates a sell order for the open of the next bar when the MACD line crosses below the exponential average of the MACD.

Mass Index: The Mass Index uses the range of the bars to calculate several values, including exponential averages of the ranges. It then calculates and plots an index of these calculations. The Mass Index is used in trending markets to monitor direction and warn of potential changes in market direction.

The Mass Index indicates a possible price reversal when the Mass Index line crosses above the setup line and subsequently falls below the trigger line. This is known as a reversal bulge. The Mass Index does not identify the trend direction, but rather warns of possible reversals.

Markets Natural Tendency:

1. Trend

2. Rotation

3. Retracement or continuation

Market Profile ® : A way to structure market activity by using time and price. The development of time and price opportunities is then distributed within a bell shape curved chart which can then be studied.

Market Profile's 80% Rule:  

If, after trading outside the Value Area, we then trade back into the Value Area (VA) and the market closes inside the VA in one of the 30 minute brackets then there is an 80% chance that the market will trade back to the other side of the VA.  

1. Wait for the trade to close inside the VA.

2. Try and get best possible trade entry. If possible, enter from VA level that was crossed in order to close inside VA.

3. Target most of the position at the other side of the VA.

Note: Although it is called 80% rule, the probability is lower.  

McClellan Oscillator: The McClellan Oscillator calculates the difference between Advancing Issues and Declining Issues, and then calculates two exponential averages of this difference. The difference between the 2 averages is then calculated and plotted on the chart. The difference between advancing issues and declining issues is known as market breadth. For example, if a stock market index is rallying but there are more issues declining than advancing, then the rally is narrow and much of the stock market is not participating. Note: For Tradestation users, McClellan Summation Index can be downloaded from our Tradestation Free Indicatosr library.

The McClellan Oscillator uses averages and differences based on this data to gauge market breadth. To plot McClellan Oscillator accurately, the chart must contain both the Advancing Issues and the Declining Issues and the inputs must specify the correct data number for each. Because the McClellan Oscillator uses exponential averages, the numeric value of the McClellan Oscillator will depend on the data available in the chart.  

Momentum Indicator: The momentum indicator calculates and plots the net change, expressed in points, between each bar’s price, as specified by the input Price, and that price the number of bars ago specified in the input Length. The default settings calculate and plot the net change between the close of a bar and the close ten bars earlier. Measuring current prices versus earlier prices sheds light on the pace of a trend and possible trend reversal. It may also be useful in identifying overbought and oversold conditions when the momentum becomes extremely strong or weak.

Momentum Buy Strategy: A long entry order is generated when the momentum is above zero and increasing (greater than the previous bar), and the strategy is not in a long position already. The order is generated at the current high plus one point.

Momentum Sell Strategy: A short entry order is generated when the momentum is below zero and decreasing (less than the previous bar), and the strategy is not in a short position already. The order is generated at the current low minus one point

Momentum Bar Chart: Momentum bars are charted as standard vertical bars with opens, highs lows and closes, yet each bar has a specified price range, rather than being charted in units of time or ticks. With a focus on price movement, long periods of consolidation may be condensed into just a few bars, removing excess noise in the market and highlighting "real" price movements. So it is possible that an entire month of daily bars could fit into a single momentum Bar, and the next month would have 30 momentum Bars.

momentum Bars are built by the underlying closing data that shows the directional trends as per the range amount momentum Bar charts are time independent so that time axis increments will not be fixed.  The size of the bars will always be the range size set by you and will never be anything smaller or larger unless it is the current bar that is building. 

momentum Bars look like standard bars, but are different in four ways:

1. momentum Bars are all equal in height, based on the Range specified by the user.

2. The open of each momentum Bar is always one price tick above or below the close of the previous momentum Bar; since a new bar cannot be started until the specified Range is exceeded.  This is the primary difference between momentum Bar and Range Bar charts.

3. momentum Bar closes are always at the top or bottom of the bar.

4. momentum Bars charts have no gap

Money Flow: The Money Flow indicator calculates an indexed value based on price and volume for the number of bars specified in the input Length. Positive Money Flow is calculated and summed for each of the last Length number of bars with an average price greater than the previous bar and then divided by the Money Flow for all the  bars specified in Length. The use of both price and volume provides a different perspective from price or volume alone. The Money Flow indicator tends to show dramatic oscillations and can be useful in identifying overbought and oversold conditions. 

Moving Average: The moving average may be the most widely used indicator. The Mov Avg 2 line indicator calculates and plots two simple arithmetic averages of the same prices, specified by the Price input, from each of the most recent number of bars specified by the Length inputs. For example, the default setting is to calculate and plot a simple average of the closing prices of the last 9 bars and a simple average of the closing prices of the last 18 bars. The average of shorter length (also known as the fast average) will be more sensitive to current price changes than the average of greater length (also known as the slow average).

Moving averages are generally used for trend identification. Attention is given to the direction in which the averages are moving and to the relative position of prices and the averages. Rising moving average values (direction) and prices above the short moving average and the short moving average above the long moving average (position) would indicate an uptrend. Declining moving average values and prices below the short moving average and the short moving average below the long moving average would indicate a downtrend. Displaced moving averages plot the moving average values of a previous bar or later bar on the current bar.

Exponential Moving Average: The Moving Average Exponential indicator calculates and plots an exponentially weighted average of prices, specified by the Price input, from each of the most recent number of bars specified by the Length input. This method of calculating a Moving Average gives greater weight to the market’s most recent price and a reduced weighting to older prices. (A simple moving average gives equal weight to all the prices in the series.) A moving average is generally used for trend identification. Attention is given to the direction in which the average is moving and to the relative position of prices and the moving average. Rising moving average values (direction) and prices above the moving average (position) would indicate an uptrend. Declining moving average values and prices below the moving average would indicate a downtrend. A displaced moving average plots the moving average value of a previous bar or later bar on the current bar.

Moving Average Buy Strategy: Long entry based on prices being above a moving average for a consecutive number of bars. A long entry order is placed for the next bar at open when the Price (Input) crosses above the moving average and remains above it for ConfirmBars (Input) number of bars.

Moving Average Sell Strategy: Short entry based on prices being below a moving average for a consecutive number of bars.A short entry order is placed at the open of the next bar when the Price (Input) crosses below the moving average and remains below it for ConfirmBars (Input) number of bars.

Moving Average Cross Buy Strategy: Long entry based on crossing moving averages.This strategy generates a long entry order for the next bar at open when the fast moving average crosses above the slow moving average.

Moving Average Cross Sell Strategy: Short entry based on crossing moving averages.This strategy generates a short entry order for the next bar at open when the fast moving average crosses below the slow moving average.

Neutral Day: A day when you have both a range extension up and down. Neutral days are formed when both the long term buyer and seller are involved in the same price range indicating their uncertainty. The day usually ends with little change.

On Balance Volume: The On Balance Volume indicator adds to a running total the volume of each bar with a higher close than the bar before and subtracts from the total the volume of each bar with a lower close. The running total is plotted as a line. The use of both price and volume provides a different perspective from price or volume alone. For example, higher prices with light volume will cause On Balance Volume to rise slowly, possibly indicating that the trend lacks conviction. Because On Balance Volume begins accumulating values from the left of the chart, the numeric value of On Balance Volume will depend on the data available in the chart. Therefore, the relative value, or trend direction, of On Balance Volume is more important than its numeric value.  

OHLC charts: Displays the open, high, low, and close for each bar (this is the default option). In a chart with a daily data interval, this bar shows the open, high, low, and close for that day's session. In a chart with a 1-tick data interval, the open, high, low, and close are the same because there is just one transaction. This results in a chart where a solid line connects the price of all transactions. 

Open interest: Open interest is the net total of outstanding contracts for an option. Open interest is expressed in the total number of option contracts open. For example, one order to purchase 10 calls to open increases the open interest for that contract series by 10. Each time a position is opened, the open interest of an option series increases. Conversely, the open interest decreases each time a position is closed.  

Open Interest Indicator: Open Interest (the number of open contracts) is often used to confirm trends and trend reversals for futures and options contracts. An increase in Open Interest along with an increase in price is said to confirm an upward trend. Similarly, an increase in Open Interest along with a decrease in price confirms a downward trend. An increase or decrease in prices while Open Interest remains flat or declining may indicate a possible trend reversal.

Open Auction: Type of open where price rotates up and down around the open without any clear conviction.

Open Drive: Price moves directionally right from the open.

Open Test Drive: After the market opens, price test a significant support/resistance level then turns around and drives into the opposite direction.

Open Rejection Reverse: When the open is so far out from the previous day’s Value area that price is rejected and market is reversed into the opposite direction.

Opening Range: Price range established within the first 2 minutes of trading.

(P) shape profile: A profile shaped like the letter (P).

Oscillator Indicator: An Oscillator Indicator helps determine whether a market is overbought or oversold. These indicators show us when a market has become extreme (moved too far in one direction). Oscillators also indicate a divergence, usually before it actually occurs, during the extreme price activity.

Parabolic SAR: The Parabolic SAR indicator, based on Welles Wilder’s Parabolic Time/Price Strategy, is based on the relationship between a market’s price and time. It is used to determine when to stop and reverse (SAR) a position utilizing time/price-based stops. Once a Parabolic SAR is reached, the current position is exited and a new position in the opposite direction is taken. It is primarily used in trending markets and is based on always having a position in the market. The indicator may also be used to determine stop points and estimating when you would reverse a position and take a trade the opposite direction. The indicator derives its name from the fact that when charted, the pattern resembles a parabola or French curve.  

Percent R (%R): The %R indicator is an overbought / oversold oscillator that is best applied to choppy markets and markets locked in a sideways price pattern or trading range. It can also be used to indicate when to buy on troughs in bull markets and sell on rallies in bear markets. In general, this indicator can help you take advantage of shorter-term countertrend moves occurring within longer-term trends. Larry Williams created %R.

An oversold market is believed to occur when the %R line is less than the OverSold line. Conversely, an overbought market is believed to occur when the %R line is greater than the OverBought line. 

Point & Figure Chart: Point & Figure (P&F) charts have been used as far back as the late 1800's.  This charting method focuses on price changes by eliminating time and volume; informing traders where price is relative to prior levels. Keeping this in mind, traders can decide whether today's price represents a continuation of a trend, a reversal or a breakout so that they may profitably trade the market tomorrow.   In addition, Point & Figure charts filters out time and insignificant price changes, leaving you with a chart that contains only price movements that are relevant to you. These chart types differ from bar charts in two important ways:

1. Price reversals below a user-defined minimum value are not shown - thereby filtering out price static.

2. The time scale is variable; meaning the intervals on the horizontal axis vary.  Therefore, a Point & Figure chart represents pure price movement.

Price changes are plotted as a series of vertical columns where up-trends are displayed as a column of Xs and down-trends are displayed as a column of Os. A column of Xs shows that demand is exceeding supply (a rally), and a column of Os shows that supply is exceeding demand (a decline).

Point of Control (POC): TPO POC is the highest time spent at price i.e. the price visited the most. Volume POC is the price where most volume traded aka Peak Volume Price (PVP).

Priced Controlled Market: A market controlled by its POC and developing around it.

Price Channel: The Price Channel indicator calculates the highest high and lowest low of the trailing number of bars specified by the input Length. Lines representing the trailing highs and the trailing lows are then plotted. When a market moves above the upper band, it is a sign of market strength. Conversely, when a market moves below the lower band, it is a sign of market weakness. A sustained move above or below the channel lines may indicate a significant breakout.

Price Channel Buy Strategy:This strategy looks for the current price to break above a price channel to place orders. It places a buy stop order on the next bar at the highest High of the last Length (Input) number of bars (upper band) plus one point. There are no other entry conditions. You can change the number of bars used to calculate the price channel.

Price Channel Sell Strategy:This strategy looks for the current price to break below a price channel to place orders. It places a sell stop order on the next bar at the lowest Low of the last Length (Input) number of bars (lower band) minus one point. There are no other entry conditions. You can change number of bars used to calculate the price channel.

Rate Of Change (ROC):The Rate of Change indicator calculates and plots the net change, expressed as a percent, between a bar’s price, as specified by the input Price, and that price the number of bars ago specified in the input Length. The default settings plot the percent change for the close of each bar compared to the close of 10 bars earlier. Measuring current prices versus earlier prices sheds light on the pace of a trend and possible trend reversals. It may also be useful in identifying overbought and oversold conditions when the Rate of Change becomes extremely strong or weak.

Random Market: A market lacking leadership. The long term traders are not involved and price fluctuate randomly mainly influenced by short term traders.

Range Bar Chart: Range Bars were developed in 1995 by a Brazilian broker and trader, Vicente M. Nicolellis, Jr. The purpose of Range Bars was to focus only on changes in price; thus they do not close at a specific time, but instead only when the range is complete. Each bar has a specified price range, rather than being charted in units of time or ticks.  With a focus on price movement, long periods of consolidation may be condensed into just a few bars, removing excess noise in the market and highlighting "real" price movements. So it is possible that an entire month of daily bars could fit into a single Range Bar, and the next month would have 30 Range Bars. 

Range Bars are built by the underlying closing data that shows the directional trends as per the range amount. Range Bar charts are time independent so that time axis increments will not be fixed.  The size of the bars will always be the range size set by you and will never be anything smaller or larger unless it is the current bar that is building.  

Range Bars look like standard bars, but are different in four ways:

1. Range Bars are all equal in height, based on the Range specified by the user.

2. The open of each Range Bar is always equal to the close of the previous Range Bar. This is the primary difference between Range Bar and Momentum Bar charts.

3. Range Bar closes are always at the top or bottom of the bar.

4. Range Bars charts have no gaps.

Range Extension (RE): Price range past the Initial Balance.

RSI Relative Strength Index: The Relative Strength Index RSI indicator calculates a value based on the cumulative strength and weakness of price, specified in the input Price, over the period specified in the input Length. For that number of bars, RSI accumulates the points gained on bars with higher closes and the points lost on bars with lower closes. These two sums are indexed, with the index plotted on the chart. The RSI plots as an oscillator with a value from 0 to 100. The direction of RSI should confirm price movement. For example, a rising RSI confirms rising prices.

RSI can also help identify turning points when there are non-confirmations or divergences. For example, a new high in price without a new high in RSI may indicate a false breakout. RSI is also used to identify overbought and oversold conditions when the RSI value reaches extreme highs or lows. This indicator automatically changes the color of the  RSI plot when it exceeds either of the levels specified in the inputs OverSold and OverBought. Horizontal reference lines are also plotted at these levels as visual aids.  

RSI Buy Strategy: When the RSI value crosses above the OverSold (Input) level, this strategy generates a long entry order for the next bar at open. You can change the number of bars used to calculate the RSI value and the OverSold level.

RSI Sell Strategy: When the RSI value crosses below the OverBought (Input) level, this strategy generates a short entry order for the next bar at open. You can change the number of bars used to calculate the RSI value and the OverBought level.

Renko Chart: Renko charts are similar to a Line Break chart, except that in a Renko chart each brick is of a fixed equal size.  In a Renko chart, a new brick can only be added in the direction of the current trend if the market has moved in that direction by at least a specified minimum amount, the Brick Size.  A new brick can only be added in the direction opposite current trend if the market moves opposite the current trend by that same minimum amount, the Brick Size, beyond the most recent brick.  

Responsive buying: When the commercial traders decide to buy below the Value area.

Responsive selling: When the commercial traders decide to sell above the Value area.

Rotational Market: A market confined by an upper price limit and a lower price limit and rotating back and forth from one side to the other - balanced market.  

Selling Tail: Single prints left at the top of the profile.

Sharp Ratio: Average monthly return (%) minus the risk-free rate divided by the standard deviation of monthly returns. The higher the number, the greater the return in relation to the risk. This calculation is based on the last 36 months. You can specify the interest rate when you adjust the strategy for costs.

Short Covering Rally: A short covering rally often takes place after an extended move down where the sellers decide to cover their short positions and cause the market to rally.  

Sideways Market: A horizontally developing market where buyer and sellers are in agreement and price is trading in a narrow range.

Spread Difference: The Spread - Difference indicator calculates the arithmetic difference between prices of 2 markets. This is primarily used to track futures spreads. Futures spread traders follow price relationships between related futures, such as S & P 500 and Dow Jones futures, as well as price relationships between different contracts in the same market, such as June T-bonds and December T-bonds.

Spread Ratio: The Spread - Ratio indicator calculates the ratio of prices of 2 markets. This is primarily used to track futures spreads. Futures spread traders follow price relationships between related futures. The Spread - Ratio indicator might be used to track the gold / silver ratio, or the ratio of soybean prices to corn prices.

Stochastic: The Stochastic Slow indicator calculates the location of a current price in relation to its range over a period of bars. The default settings are to use the most recent 14 bars (input StochLength), the high and low of that period to establish a range (input PriceH and PriceL) and the close as the current price (input PriceC).

This calculation is then indexed, smoothed and plotted as SlowK. A smoothed average of SlowK, known as SlowD, is also plotted. SlowK and SlowD plot as oscillators with values from 0 to 100. The direction of the Stochastic should confirm price movement. For example, rising Stochastic confirm rising prices.

Stochastic can also help identify turning points when there are non-confirmations or divergences. For example, a new high in price without a new high in Stochastic may indicate a false breakout. Stochastic are also used to identify overbought and oversold conditions when the Stochastic reach extreme highs or lows. Additionally, SlowK crossing above the smoother SlowD can be a buy signal and vice versa.  

Line Break or Three Line Break Chart: The Line Break chart is a "more subtle form of point and figure charts, where reversals are decided by the market", as described by a Japanese trader.   It is made up of a series of vertical blocks called lines, that use closing prices to indicate market direction.  

Line Break charts are most commonly known as "three-line break" charts.  This is because once there are three consecutive lines in the same direction, the Close must "break" the most recent three lines in order to draw a line in the opposite direction.  For example, once there are three consecutive Up Lines, the Close would have to break below the low of the prior three Up Lines before a Down Line can be drawn. 

Stochastic Buy Strategy: This strategy generates a long entry order for the next bar at open when the %K line crosses above the %D line and both values are below the OverSold (Input) level. You can change the number of bars used to calculate the Stochastics and the OverSold level.  

Stochastic Sell Strategy: This strategy generates a short entry order for the next bar at open when the %K line crosses below the %D line and both values are above the OverBought (Input) level. You can change the number of bars used to calculate the Stochastics and the OverBought level.

Tick Bar Charts: Tick bars plot the price of each transaction. Tick bars differ from time-based bars because Tick bars plot prices based on a transaction-by-transaction basis while time-based bars plot prices during a specified time period. A transaction can represent 100 shares, 200 shares, 1,000 shares, and so on. When plotting Tick bars, price and number of Tick are the only factors used, as time and volume are not considered.

For example, you can create a 5- Tick chart, where one bar is comprised of the Open, High, Low, and Closing Tick for each set of 5 Tick. The length of time in that 5- Tick bar could be a few seconds, a minute, an hour, or even a day.

In a 1- Tick chart, there is no reason to report the Open, High, Low, and Closing prices because the exact trade price is plotted. In a 1- Tick bar chart, the Open, High, Low, and Closing price are the same. Therefore, when creating a chart consisting of 1- Tick bars, the price data is not really displayed as a bar but rather a series of connected Ticks.

When you create a Tick -based chart where each bar contains a certain number of Ticks, each bar contains the range of Open, High, Low, and Closing prices for a specified number of Tick s(for example, 10 Ticks, 100 Ticks, 1000 Ticks, and so on). When you change the data interval to build bars based on multiple Ticks per bar, the bars look exactly like time-based bars in that they plot the Open, High, Low, and Closing prices for the specified number of transactions.  

Time Price Opportunity (TPO): Time spent at each price level.

Trade facilitation: The degree of price ease at which a particular market trades in a direction and the amount of volume generated during the move as a measure of liquidity.

TradeStation ®: A Trading Platform, Broker, and data provider with programmatic capability.

Triangle Pattern: A Triangle pattern is identified by sideways price activity where the price action begins to narrow. If trend lines were drawn at the peaks and troughs, they would appear to converge. An ascending Triangle has a flat trend line at the high end of the price range while the line along the bottom is rising. The descending Triangle has a flat trend line at the bottom with a falling line at the high end of the price range.  

Trix: The Triple Exponential Average (TRIX) indicator is an oscillator used to identify oversold and overbought markets and it can also be used as a momentum indicator. As is common with many oscillators, TRIX oscillates around a zero line. When used as an oscillator, a positive value indicates an overbought market while a negative value indicates an oversold market. As a momentum indicator, a positive value suggests momentum is increasing while a negative value suggests momentum is decreasing. Many analysts believe the TRIX crossing above the zero line is a buy signal while closing below the zero line is a sell signal. Also, divergences between price and TRIX can indicate significant turning points in the market.

TRIX calculates a triple exponential moving average of the log of the Price input over the period of time specified by the Length input for the current bar. The current bar’s value is subtracted by the previous bar’s value. This prevents cycles shorter than the period defined by Length input from being considered by the indicator.

Two main advantages of TRIX compared to other trend-following indicators are its excellent filtration of market noise as well as its tendency to be a leading rather than a lagging indicator. It filters out market noise using the triple exponential average calculation thus eliminating minor short-term cycles that may otherwise indicate a change in market direction. Its ability to lead a market stems from its measurement of the difference between each bar’s "smoothed" version of the price information. When interpreted as a leading indicator, TRIX is best used in conjunction with another market timing indicator to minimize the effect of false indications.

Upper Value (UVA): Upper limit of the Value area.

Value area (VA): Area where 68-70% of all trades take place.

Volume Rate Of Change:The Volume Rate of Change indicator compares the most current bar’s volume to the volume of a bar in the past (default is 14 bars ago). The difference is calculated as a percentage and plotted as a histogram, and like an oscillator, fluctuates above and below a zero line. Volume can provide insight into the strength or weakness of a price trend. This indicator plots positive values above the zero line, and negative below. A positive value suggests there is enough market support to continue to drive price activity in the direction of the current trend. A negative value suggests there is a lack of support and prices may begin to become stagnant or reverse.

Volume Distribution: Display of volume traded at different prices using a Market Profile Volume Profile chart.

Volume Histogram: Indicator which displays volume horizontally - it displays the precise volume of each bar interval.

Volume At Price: Indicator which display volume vertically - it displays the precise volume that trades at each price, this indicator is also known as Volume Profile. Often this indicator is confused with highest volume at price indicator which is the Volume Point of control aka peak volume price. 

Volatility Indicators: Technical indicators which measure volatility generally use the Average True Range method to determine volatility.

Volatility, Implied: Statistical volatility, as previously noted, is calculated using the historical price movement of the underlying asset. Implied  on the other hand, is calculated based on the currently traded option premiums. Implied volatility is important to traders because it is used as a measurement of whether option premiums are relatively expensive or inexpensive.

For any option that has a quote, it is possible to determine, by using an option pricing model, the volatility of the option. The volatility of an option is implicit in the price; hence the term implied volatility.  

In order to ascertain an option's implied volatility, an option pricing model is used in reverse. What is known is the price of the option and all the other variables except the volatility the marketplace is using. Instead of using the model to solve for the option's price, it is used to solve for the option's volatility. The option's price is inserted into the model, the volatility is left out (since it is unknown), and all other variables are kept the same. The implied volatility once calculated, can be used to decide if an option is over or under priced. This is done, for the most part, by comparing the implied volatility with the statistical volatility.  

Real-time/delayed data users will gain the most potential from using Market Implied volatility because the pricing model and calculations used to determine the implied volatility are using "today's" data which will yield the most accurate and timely volatility level possible.  

Volatility, Statistical: Statistical volatility is calculated using a standard deviation of underlying asset price changes from close to close trading during the past month (generally 21 days of historical data). This is the most common volatility model currently used and is usually available from your data provider.

You can also use the volatility indicator provided in OptionStation. This indicator can be applied to charted price data, or to the underlying asset in your Position Analysis window. This indicator is statistical in nature and provides a smoothed average of the underlying asset's true range (actual price moves from one bar to the next within a defined time frame) which gives a good indication of price activity and fluctuations.

Volatility Expansion Buy Strategy: Long entry based on a percentage of price movement beyond the average range. This strategy generates a long entry order for the next bar at a percentage of the average true range above the current close.

Volatility Expansion Sell Strategy: Short entry based on a percentage of price movement beyond the average range. This strategy generates a short entry order for the next bar at a percentage of the average true range below the current close.