Monday, September 19, 2016

Crazy Investment Terms

My company recently bought a brokerage firm. So, instead of dealing with basic consumer stuff like money market accounts, balloon mortgages, and such like, I now get to deal with this. (Source:

Hope you enjoy the pix as well. They're what you get when Google-image this stuff.

Abandoned Baby Pattern
A rare candlestick pattern in which an upside gap doji star (where the shadows do not touch) is followed by a downside gap black candlestick where the shadows also do not touch; considered a major top reversal signal.

Arms Ease of Movement
Developed by Richard W. Arms, Jr., this analysis routine expands on Mr. Arms' Equivolume charting tool by quantifying the shape aspects of the plotted boxes. The purpose of this quantifying is to determine the ease, or lack thereof, with which a particular issue is able to move in one direction or another. The ease with which an issue moves is a product of a ratio between the height (trading range) and width (volume) of the plotted box. In general, a higher ratio results from a wider box and indicates difficulty of movement. A lower ratio results from a narrower box and indicates easier movement. This ratio is then related to a comparison between today's and yesterday's trading-range midpoint values to determine the ease of movement value (EMV). A moving average is then applied to the EMV value-the moving average period can be varied in order to make the EMV flexible as a trading tool.

Bandpass Filter
An oscillator that accentuates only the frequencies in an intermediate range and rejects high and low frequencies. Implemented by first applying a low pass filter to the data and then a high pass filter to the resulting data (e.g., two SMA crossover system).

Bollinger Bands
Bollinger bands plot trading bands above and below a simple moving average. The standard deviation of closing prices for a period equal to the moving average employed is used to determine the bandwidth. This causes the bands to tighten in quiet markets and loosen in volatile markets. The bands can be used to determine overbought and oversold levels, locate reversal areas, project targets for market moves, and determine appropriate stop levels. The bands are used in conjunction with indicators such as RSI, MACD histogram, CCI and Rate of Change. Divergences between Bollinger bands and other indicators show potential action points. As a general guideline, look for buying opportunities when prices are in the lower band, and selling opportunities when the price activity is in the upper band.

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Box-Jenkins Linear Least Squares
The additive structure of Box-Jenkins models with a polynomial structure. Box-Jenkins Method From G.E.P. Box and G.M. Jenkins, who authored Time Series Analysis: Forecasting and Control. The method refers to the use of autoregressive integrated moving averages (ARIMA), which fit seasonal models and nonseasonal models to a time series.

Chaikin Oscillator
The Chaikin Oscillator is created by subtracting a 10-period exponential moving average of the Accumulation/Distribution line from a 3-period moving average of the Accumulation/Distribution Line.

Crack Spreads
The spread between crude oil and its products: heating oil and unleaded gasoline plays a major role in the trading process.

Cross on the Board
When an investment dealer has both an order to sell and an order to buy the same stock at the same price, the transaction is allowed without interfering with the limits of the prevailing market.

Cutler's RSI
Cutler's RSI is a slight variation of Welles Wilder's original Relative Strength Index. The RSI is a momentum oscillator used to identify overbought and oversold conditions by keying on specific levels, generally 30 and 70, on a chart scaled from 0 to 100. The study can also be used to detect the following:^1. Movement that might not be as readily apparent on the bar chart^2. Failure swings above 70 or below 30, which indicate reversals. Support and resistance. Divergences between RSI and price

A price series that has been smoothed by a mathematical technique such as a moving average. This first series of smoothed price data is then smoothed a second time.

Fast Fourier Transform
A method by which to decompose data into a sum of sinusoids of varying cycle length, with each cycle being a fraction of a common fundamental cycle length.

Gann Square
The Gann Square is a mathematical system for finding support and resistance based upon a commodity or stock's extreme low or high price for a given period. Attainment of a particular price level in a square tells you the next probable price peak or valley of future movement. The probable price levels tend to be more reliable if they are extrapolated from Gann Square values along one of the major axes of the Gann Square. The Gann Square is generated from a central value, normally an all-time or cyclical high or low. If a low is used, the numbers are incremented by a constant amount to generate the Gann Square. If a high is used, the numbers are decremented during the square generation.

Gray Knight
A term used to describe an acquiring company that outbids a white knight. Since the acquiring company is not unfriendly, management of the target company considers it better that the white knight be outbid by a gray knight than that the white knight be outbid by a hostile company or raider.

A strangle where the call and the put are in-the-money.

In candlestick terminology, a small real body contained within a relatively long real body.

Iron Butterfly
The combination of a long (short) straddle and a short (long) strangle. All options must have the same underlying and have the same expiration.

Irregular Flat
A type of Elliott wave correction that has a 3-3-5 wave pattern, where the B wave terminates beyond the start of wave A. A "flat" is in progress, implying that a larger pattern is developing. It will contain waves of one higher degree than the A-B-C waves just completed.
Descriptive measure of how flat or pointed a distribution is.

Leg Out
In rolling forward in futures, a method that would result in liquidating a position.

Ljung-Box Statistic
A chi-square test of significance of higher order correlation existence. The marginal significance level is the probability that a no more higher order correlation exists.

Naked Writer
A seller or writer who has sold stock or a stock option contract for stock that he or she does not own. Also referred to as a naked writer.

Norton High/Low Indicator
The Norton High/Low indicator uses results from the Demand Index and the Stochastic study and is designed to pick tops and bottoms on long-term price charts. Two lines are generated: the NLP line and the NHP line. The system also uses level lines at -2 and -3. The NLP line crossing -3 to the downside is the signal that a new bottom will occur in 4-6 periods, using daily, weekly, or monthly data. Similarly, the NHP line crossing -3 to the downside indicates a new top in the same time frame. The indicator tends to be more reliable using longer-term data (weekly or monthly). When either indicator drops below the -3 level, a reversal may be imminent. The reversal (or hook) is the signal to enter the market. For greater reliability, use the Norton High/Low Indicator together with other studies for confirmation.

Piggy Back Warrants
Some warrants entitle the holder to acquire shares plus additional warrants at a later date. The warrants that are received upon the exercise of the initial warrants are known as piggyback warrants.

Running Stops
Something which when quoted, floor traders use to move the market. When stops are bunched together, traders may move the market in order to activate stop orders and propel the market further.

A dedicated computer system for options calculations and simulations.

Schwarz und Weiß mit Neonlämpchen

Shaved Candlestick
In candlestick charting, when the shadows of a candle which mark the area between the real body and the extremes and give the appearance of being wicks are absent.

The linear interpolation between two adjacent points on a curve.

Stochastic Indicator
The Stochastic Indicator is based on the observation that as prices increase, closing prices tend to accumulate ever closer to the highs for the period. Conversely, as prices decrease, closing prices tend to accumulate ever closer to the lows for the period. Trading decisions are made with respect to divergence between % of "D" (one of the two lines generated by the study) and the item's price. For example, when a commodity or stock makes a high, reacts, and subsequently moves to a higher high while corresponding peaks on the % of "D" line make a high and then a lower high, a bearish divergence is indicated. When a commodity or stock has established a new low, reacts, and moves to a lower low while the corresponding low points on the % of "D" line make a low and then a higher low, a bullish divergence is indicated. Traders act upon this divergence when the other line generated by the study (K) crosses on the right-hand side of the peak of the % of "D" line in the case of a top, or on the right-hand side of the low point of the % of "D" line in the case of a bottom. Two variations of the Stochastic Indicator are in use: Regular and Slow. When the Regular plot of the Stochastic too choppy, the "Slow" version can often clarify the Stochastics.

Strange Attractor
A balance point between a set of conflicting forces.

Synthetic Straddle
Futures and options combined to create a delta neutral trade.

Telegrapher's Equation
A variation of the diffusion equation that describes minor differences in the drunkard's walk, in which the random decision controls the change in direction rather than the direction itself.

Weak Hands
A term referring to people who believe that declining markets will decline further because traders with long positions are not bona fide hedgers and will not accept delivery but will sell before maturity to reduce their risk.

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