52 week high/low: The 52 week high is the highest point that the price of a given asset was able to reach over the past 52 weeks. Conversely, the 52 week low is the lowest point that price reached over the past 52 weeks. 52 week highs and lows can be used as a technical indicator, for example, a 52 week high would represent a resistance level, the low would represent a support level.
The 52 week range: The 52 week range indicates the area of price in between the 52 week high and the 52 week low. This information can be used to either volatility or strong growth depending on fluctuation.
Absolute return: The absolute return is the return on investment of a given asset over a measured period of time. This differs to a relative return which is a return compared to another benchmark such as an index, or other investment.
After-hours trading: After-hours trading is trading on a market after that exchange closes. After-hours trading can be beneficial for traders or investors that want to take advantage of breaking news before the market re-opens, thus maximising potential return.
Alpha: The term Alpha describes the ability of a strategy to beat the return of a given market. Alpha is used as a performance measurement of a trader, or strategy, and the ability to beat the market over a given period of time. You may see Alpha rankings for investments described as “+2” or “-3” which indicates the percentage over or under the performance of the market.
Anti Money Laundering (AML): The Anti Money Laundering law was established in order to eliminate the ability to launder money via trading. When opening a trading account you are likely to agree to the AMLCTF (Anti-Money Laundering and Counter-Terrorism Financing Act).
AFSL (Australian Financial Services License): An Australian Financial Services License or “AFS License / AFSL” is a license required by the governing body ASIC in order to conduct financial services. When choosing a financial education provider it is important to choose one that holds a current AFSL or is a Corporate Authorised Representative (CAR) of an AFSL holder. This not only shows that the educator is qualified to provide education of a financial nature, but also allows certain protections as there is strict governance for these educators.
Australian Securities and Investment Commission (ASIC): ASIC is the government regulatory agency for trading, investments, and companies. It is ASICs job to define and uphold rules and regulations and maintain, facilitate and improve the performance of the financial system in Australia.
As a corporate authorised representative (CAR) of an Australian financial services license (AFSL) holding company, ASIC requires that we uphold a high level of compliance with their regulations. This ensures that we do not provide to you, any information that we are not qualified to, and that we do not provide personalised advice. Most importantly it requires that we be honest and transparent with what services we offer and the performance of those services.
Ascending channel: An ascending channel is a pattern formed when price movement is contained within two upward sloping parallel lines called trend lines. The trend lines provide support and resistance that constrains price to that channel. In an ascending channel higher highs and higher lows will be created as price continues to follow the channel as it trends upward. A channel provides the opportunity for a trader to look to take advantage of price bouncing off of support or resistance. A trader could also look for a breakout which occurs when price breaks out of the channel and begins to show momentum.
Ascending triangle: An ascending triangle is a popular trading pattern amongst day traders. The pattern is formed when a mostly horizontal line can be drawn across recent highs, and an upward trend line can be drawn on across recent lows.
Ask/Ask price: The Ask price, sometimes called the offer price, is the price that a seller is willing to accept for a given security. The buyer has what is called the “bid” price, this is always lower than the ask price. The difference between the bid and ask price is called the spread. The larger the spread the more difficult it is to be profitable in a trade. This is because you are buying at the top of the spread and selling at the bottom meaning that you need price to move further in your favour.
Asset: An asset is a resource held by an individual, company, or government that has monetary value.
Asset class: Asset classes are essentially a grouping of assets that are similar. The most common asset classes include equities (stocks), bonds, futures, and commodities.
Grouping assets into classes makes it easier to diversify investments into different areas.
ATM (Auto Trade Management): This is a feature of the NinjaTrader trading platform. This feature allows you to program your Trades. You can set your target, stop loss and Trailing Stop (or Moving Stop). These settings can always be manually overridden.
Available Balance: Your available balance comprises all of your funds minus any funds that are currently tied up in a trade or in margin. These are the funds that are immediately available to you.
Average Daily Trading Volume (ADTV): Daily volume is the number of contracts or other assets that are exchanged during a given day. The average daily trading volume can be applied to a number of days to find the average volume for that period of time.
Back-testing: When it comes to trading, back-testing describes applying a strategy to a simulated account that trades on past data. This is done in order to prove that a strategy can be profitable before it is traded live.
Any strategy that does not have a track record should be back tested in order to prove it works in principle.
Bag holder: A bag holder is any investor that refuses to exit a trade and holds an open position until the asset is of a dramatically lesser value.
Bandwagon effect: Th
Bar chart: A bar chart is a visual representation of the movement in price of a given asset or market. Each bar in a bar chart represents the opening and closing price for a given period of time (5 minute, 1 hour, 1 day, etc). The vertical line indicates both the low and the high for the given period of time. The horizontal lines represent where price opened and where price closed for that period of time. The opening price for a bar is displayed by a horizontal line on the left of the bar, and the closing price is displayed in the same way, on the right.
Bear market: A bear market is one in which the sentiment of traders is negative. A bear market will see prices drop due to a high level of sellers in the market. The way in which a trader can take advantage of a bear market would be to seek short (selling) positions to profit off of the fall in price.
Bearish Engulfing Pattern: A bearish engulfing pattern is a trading chart pattern that may indicate that there will be further price movement down. This pattern consists of a green candlestick (upward movement in price) followed by a large red candlestick (downward movement in price). In a bearing engulfing pattern the red candle is larger than the green candle therefore “engulfing” it. This indicates that the sellers are in control and are moving price downward with more strength than the buyers.
Binary Options: Binary Options are a highly risky form of trading. Binary Options have 2 outcomes, either the trade is a winner and profit is made, or the trade is a loser and the full investment is lost. A binary options contract has an expiry, upon expiry the account is either credited or debited depending on which side of the strike price the assets ends up being on that date.
Bracket buy order: A buy order that is accompanied by a sell limit order above the buy order’s price and a sell stop order below the buy order’s price. These three component orders will all be set at a price determined by the investor at the time the order is entered. This type of order allows investors to lock in profits with an upside movement and prevent a downside loss, without having to constantly follow the position.
Bracket sell order: A sell order on a short sale that is accompanied (or “bracketed”) by a buy stop order above the entry price of the sell order and a buy limit order below the entry price of the sell order. As the three component orders are based on set prices, this type of order protects the investor from the downside but also potentially locks in a gain without the investor constantly monitoring price.
Binary Options: Binary Options are a highly risky form of trading. Binary Options have 2 outcomes, either the trade is a winner and profit is made, or the trade is a loser and the full investment is lost. A binary options contract has an expiry, upon expiry the account is either credited or debited depending on which side of the strike price the assets ends up being on that date.
Breakout: A Breakout can occur at either support or resistance levels. There will be a breakout when price meets and then breaks support and continues to drop rather than pivot as expected. The opposite scenario sees a break at the resistance level and a continuation higher. A breakout is normally an indicator of higher volume and faster movement in price.
Broker: e.
Brokerage account: e.
Brokerage fee: e.
Bull market: A bull market is one in which the sentiment of traders is positive. A bull market will see prices rising due to a high level of buyers in the market. A bull market provides the opportunity for traders to take long positions in order to profit, assuming they correctly predict the market movement..
Bullish engulfing pattern: A bullish engulfing pattern is a trading chart pattern that may indicate that there will be further price movement upward. This pattern consists of a red candlestick (downward movement in price) followed by a large green candlestick (upward movement in price). In a bullish engulfing pattern the green candle is larger than the red candle therefore “engulfing” it. This indicates that the buyers are in control and are moving price upward with more strength than the sellers..
Buy and hold: Buy and hold describes the purchase of stocks (or other assets) in order to hold onto and then sell at a futures date, hopefully at a profit.
Buy limit order: An order to purchase a security at or below a specified price. A buy limit order allows traders and investors to specify the price that they are willing to pay for a security, such as a stock. By using a buy limit order, the investor is guaranteed to pay that price or better, meaning that he or she will pay the specified price or less for the purchase.
While the price is guaranteed, the filling of the order is not. In other words, if the specified price is never met, the order will not be filled and the investor may miss out on the trading opportunity.
Buy stop order: An order to buy a security which is entered at a price above the current offering price. It is triggered when the market price touches or goes through the buy stop price.
Buy the dip: The dip is any substantial movement downward in price. Buying the dip is an attempt at purchasing stocks (or other assets) at a lower price in anticipation of price moving upward in the near future.
Buying power: Buying power is the funds available to utilise for trading. Funds that are currently in active trades, along with any margin requirements will not be a part of the buying power as they cannot be utilised.
Call: B
Candlestick: A candlestick is a component of one of the most commonly used trading charts, which is simply named a ‘candlestick chart’. A Candlestick represents a given amount of time (eg 5 minute, 4 hour, daily, etc) and depicts the opening and closing price for that period as well as the highs and lows (wicks/shadows. For more information about candlesticks you can refer to our free book on reading candlestick charts.
Clearing house: An agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery and reporting trading data. Clearing houses act as third parties to all futures and options contracts as a buyer to every clearing member seller and a seller to every clearing member buyer.
Chicago Mercantile Exchange (CME): B
Commission: B
Commodity: B
Consolidation: B
Contract: Each Instrument, tradeable asset, has several contracts in a year. The contract consists of 3 dates and they are the start, rollover and end dates.
Contract end date: The official finishing date of the contract. From this date no sell or buy orders can be placed on the particular contract.
Contracts For Difference (CFD): Contracts for difference are another form of derivative like Futures and Options. They can be traded on shares, commodities, currency pairs as well as stock indices. CFDs require a trader to trade via a broker unlike trading Futures which can be done directly to the exchange.
Contract rollover date: This is the date when trades are officially moved from the previous contract to the new contract. With longer term trades like with Overnight Position this would require the trader to close the current trade on the previous contract and place a new one on the current contract. IDTA system requires traders to move to the new contract, next contract, when the current contract volume becomes smaller in value than the next contract volume.
Contract start date: The date when the contract becomes active and trades can be placed on it.
Corporate Authorised Representative (CAR): E
Currency: E
Currency exchange: E
Daily chart: A trading chart that shows movement in the market for a given asset where each candlestick represents a single trading day.
DAX Stock Index: A
Day trader: A
Dead cat bounce: A
Dealer: A
Dealer market: A
Deleverage: A
Delta signal: An International Day Trading Academy proprietary trading indicator that has been specially designed to assist in trading the strategy that we teach.
Demand: .
Derivative A derivative is an asset that derives its value from an underlying asset. For example, a Futures contract is a derivative, it gains it’s value from the asset outlined in the contract, which could be a stock index, gold, oil, etc.
Direct Market Access (DMA): DMA describes a direct connection to a given market. Individual investors typically do not have direct market access and require a middle man brokerage firm for trade execution. At the International Day Trading Academy we are able to connect directly to the Futures exchanges via our trading platform. This means that we do not need to use a broker, and our data (price) comes directly from the exchange. A broker will set their own price for a given asset and we are able to avoid this.
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Doji: .
Double bottom: .
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Downtrend: .
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Drawdown: .
E-mini: .
Economic calendar: .
Economic cycle: .
Efficiency: .
Equity: .
Evening star: .
Exit strategy: .
Exponential Moving Average (EMA): .
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Falling knife: .
Fibonacci extension: .
Fibonacci retracement: .
Financial market: .
Financial Times Stock Exchange Group (FTSE): .
Float: .
Foreign exchange risk: .
Forex / FX: .
Fundamental Analysis: .
Futures Commission Merchant (FCM): .
Futures Contract: .
Futures Market: .
Gain: Gain is another word for profit, this can be either unrealised or realised profit.
Gap: A break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Gaps can be created by factors such as regular buying or selling pressure, earnings announcements, a change in an analyst’s outlook or any other type of news release.
Hammer candlestick: A hammer is a special kind of candlestick that has a short body and long upper or lower wick. Named a hammer because of the visual similarity to the tool. A hammer is formed when the opening of the candle and the closing of the candle are close in price. This creates the short body, the ‘handle’ of the hammer is either an upper or lower wick (not both) which is larger than the ‘head’ of the hammer.
Head and shoulders pattern: A
High Frequency Trading (HFT): A
Hindsight bias: A
