Aggressive orders are when a trader executes the order to buy or sell at market. They take place when spreads and depths are relatively low and they remove liquidity.
Average down
It is an ADVANCED method because you are adding to a losing position as you are presented with another setup.
Backtest
Backtesting evaluates the viability of a trading strategy by discovering how it would play out using historical data.
Bear market
A bear market occurs when price is continuously declining over a longer period of time. Price is making lower highs and selling pressure is bigger than buying pressure. Sentiment of the market can be negative.
Bull market
A bull market is the period when prices are generally rising. Price is making higher highs and buying pressure is bigger than selling pressure. The starting point is when retail traders are most pessimistic and ‘bearish’.
Bull Trap
It is a sign that is falsely showing a decreasing trend in an asset has reversed and is now heading upwards, when in fact it will continue to decline.
Compounding
When you are already in a trading setup and then another setup presents within the setup. If you take it, it means you compound. You would take this trade regardless – it is a trade itself.
Consolidation
Price is moving in a sideways range. It is a natural pattern from which it can break up or down though continuation of a trend is favoured.
Delta
Delta is a sum of aggressive trades. It shows us who was in control during that candle. To calculate the delta of a price we subtract the sells from the buys. Delta is either positive or negative.it helps us confirm the breakout instantly.
Downtrend
A downtrend is a series of lower highs and lower lows.
Laddering
You place multiple buy or sell orders when wanting to enter a trade setup and get an average entry price.
Liquidity
Liquidity refers to the ease with which an asset can be converted into ready cash without affecting its market price. Liquidity is extremely important without it you lose money.
Naked POCThis is where a POC from previous session
(24 hour periods for Crypto) has not been tapped. It generally gives a bounce
when approached for the first time but as always look for confluence.
Passive order
Passive orders add liquidity to markets. That are limit bid (buy) and ask (sell) orders which usually are not immediately executed.
Stop hunt
A strategy that attempts to force some traders out of their positions by pushing the price of an asset to a level where many would have chosen to set their stop-loss orders.
Swing trading
A style of trading where swing traders hold their position for some days or even weeks. Swing traders goal is to identify an overall trend and capture larger gains within it.
Scalp trade
A trading style that specializes in profiting off small price changes in a short period of time. It requires discipline and focus and good knowledge of TA.
Slippage
When something drops quickly and there is low liquidity you for instance have SL set at 5% but you get filled at 25%. Your loss is very big = rekt.
Spread
It is a difference between buy and sell (for instance buy bid is 25$, sell ask is 26$ – spread is 1$). You do not want to trade something with big spread because it means liquidity is low = you will lose money
Trend
The general direction of a market or asset’s price, essentially, momentum.
Uptrend
An uptrend is a series of higher highs and higher lows.
TERMS
AR
Automatic reaction (WYCKOFF distribution)
A very sudden and very sharp price retracement (usually) back to the area of PSY. It is big and unexpected and it happens on high sell volume.
AR
Automatic rally (WYCKOFF accumulation)
It occurs because of intense selling (SC). It does not take a lot of buying pressure for the price to rally up. It is also fuelled by shorts covering.
ATH
All time high
An asset reaches its higher value ever recorded.
ATL
All time low
An asset reaches its lowest value ever recorded.
ATR
Average True Range
An indicator that measures volatility – it shows how much price moves on average during a certain TF.
BB
Bollinger Bands
An indicator developed by John Bollinger.
Bollinger Bands are composed of three bands: upper and lower band and a simple moving average in the middle. Bands measure deviation – they tighten together when market is quiet and widen when market is volatile. They determine oversold (buying opportunity) and overbought (selling opportunity) levels.
BC
Buying climax (WYCKOFF distribution)
Buying volume reaches a climax (retail buying). There may also be some very bullish news accompanying this occurrence.
BE
Break even
Neither a loss nor a win.
BTC
Bitcoin
The first decentralised, digital cryptocurrency that enabled instant payments to anyone and anywhere in the world.
BU
Backup (WYCKOFF accumulation)
Old highs of AR are being tested, price flips the resistance into support and moves up higher.
DEX
Decentralized Exchange
Decentralized exchange is a cryptocurrency exchange which operates without a central authority. Trades occur directly between users (peer-to-peer) through an automated process.
DCA
Dollar cost averaging
This is the strategy of investors – they place a certain (fixed) dollar amount into an asset on a regular basis (for instance every month)
DCB
Dead cat bounce
A small, temporary recovery in a price of a declining asset. It is the most common retracement in bear market.
DOM
Depth of market
It is a list/window that shows how many open limit buy and limit sell orders there are at different prices in real- time. Depth of market measures the liquidity of a particular market.
dVAH
Daily value area high
dVAL
Daily value area low
dPOC
Daily point of control
DYOR
Do your own research
A term used for ‘warning’ people not to just blindly follow but research a coin/do TA etc. themselves.
EMA
Exponential moving average
An exponential moving average measures trend directions over a period of time. It is a type of moving average that places a greater weight and significance on the most recent data points. It is a lagging indicator.
EW
Elliott Wave
Elliott Wave theory is a theory developed by Ralph Nelson Elliott. He believed that stock markets (also applies on any other market) traded in repetitive patterns. He realized that stock prices move in waves and he also recognized “fractal” nature of markets and he analysed them in great detail. He discovered price patterns and began to look at how these repeating patterns could be used as predictive indicators of future market moves.
FA
Fundamental analysis
It is a method used by investors and traders to assess the intrinsic value of an asset by examining as most qualitative and quantitative factors as possible.
FOMO
Fear of missing out
Fear of missing out happens to many (especially newer) traders who do not have a strict discipline with taking trades. Crypto market is often driven by emotions rather than rationality, so FOMO is a huge issue in trading. Missing the profit you might make if you don’t buy a coin instantly regardless of its current price and the feeling of missing out could lead to entering trades without any thought.
One should always have a trading plan – clear point of entry, clear point of invalidation and clear TP areas.
FUD
Fear, uncertainty, doubt
FUD is believed to cause a drop in price of a ‘targeted’ asset. Very often the bad news is not even grounded in reality. Also, professional traders do not pay attention to fundamentals but simply read the chart which always makes sense itself.
GP
Golden pocket
The Fibonacci ratios between .618 and .65
GTC
Good till Cancel
A type of order (buy or sell) that remains active until either being filled or being cancelled by trader/investor.
H&S
Head and shoulders
It is a top reversal pattern that consists of three peaks – the outside two are about the same in height and the middle one is the highest.
HH
Higher high
Price forms a high that is higher than previous one.
HL
Higher low
Price forms a low that is higher than previous one.
HODL
Hold
Hold on for dear life. Some people believe in certain assets so much that they buy/accumulate a position and have no intention of selling it any time soon.
HTF
High time frame
A 4 hour + time frame
HVC
High volume cluster
An area where a large amount of volume has traded.
HVN
High volume node
An area where a large amount of volume has traded.
IB
Initial Balance
The price range of the first hour of the trading open.
iH&S
Inverse head and shoulders
It is a bottoming pattern after a big sell off that consists of three peaks – the outside two are about the same in height and the middle one is the highest.
ITM
In-the-money option
A call (put) option whose exercise price is below (above) the current price of the underlying asset.
LO
London open
LTF
Low time frame
A 1 hour or lower time frame
LH
Lower high
Price forms a high that is lower than previous one.
LL
Lower low
Price forms a low that is lower than previous one.
LPS
Last point of support (WYCKOFF accumulation)
After ‘jumping across the creek’ price retraces, flips resistance into support and bounces up showing SOS.
LPSY
Last point of supply (WYCKOFF distribution)
Price rallies from support (usually SOW) into resistance on declining volume. Demand is weakening, LPSY represents exhaustion of demand. Price will not reach previous high (resistance area) due to weakness.
LVC
Low volume cluster
An area where a small amount of volume has traded.
LVN
Low volume node
An area where a small amount of volume has traded.
MA
Moving average
A very popular indicator used by many traders. Moving average is a lagging indicator because it is based on (calculated from) past prices. It can help identify trend direction and can act as a support or resistance.
MACD
Moving average convergence/divergence
MACD is a trend-following momentum indicator that shows the relationship between two moving averages of price. It is calculated by subtracting the 26 EMA from the 12 EMA. It is designed to reveal changes in momentum, strength, direction and duration of a trend in an asset’s price.
MM
Market maker
An individual / financial institution / exchange that quotes both a buy and a sell price of an asset to provide a measure of liquidity.
mPOC
Monthly point of control
mVAH
Monthly value area high
mVAL
Monthly value area low
MS
Market structure
Market structure is basically a support and resistance levels on the charts, swing highs, and swing lows. These are levels, which are easily identified. It is a trend following tool that traders read and follow based on how the asset moves. It can be bullish or bearish.
OB
Order block
Order block is a different way to look at the supply and demand. It is the initial opposite move before the trend resumes making new highs or lows.
OBV
On balance volume
OBV is the cumulative total of positive and negative volume. It is a leading indicator – volume leads price. OBV can be used for identifying divergences at tops and bottoms.
OF
Order flow
Order flow is a form of data of the contracts sold and bought at a certain price that moves prices up and down.
OI
Open interest
Open Interest represents the total number of contracts, including both net longs (buy) and net shorts (sell) positions.
OTM
Out-of-the-money Option
A call (put) option whose exercise price is above (below) the current price of the underlying asset. OTM is the most aggressive option trading method with an extremely high profit and risk potential.
PA
Price action
Price action is a trading technique that consists of analysing basic price movement across a time frame. PA traders read the market and make subjective trading decisions based on the recent and actual price movements.
POC
Point of control
The price at which the largest trading volume has been made over a period of time. It is a is big horizontal S/R line.
PS
Preliminary support (WYCKOFF accumulation)
After a big selloff, substantial buying begins to provide a support. Preliminary support starts accumulation – it is the first bounce of the accumulation range.
PSY
Preliminary supply (WYCKOFF distribution)
After a long robust uptrend, price becomes climactic and supported with rising volume. Larger (professional) interests begin to unload.
R:R
Risk:reward
Risk to reward ratio shows how much profit a trader can potentially make if trade turns into winner and how much a trader can lose if trade turns into a loss. The R:R ratio should be at least 2:1, preferably 3:1.
RSI
Relative strength Index
It is a lagging indicator used to measure strength or weakness of an asset. RSI is based on the closing prices of a recent trading period.
Sat
Satoshi
The smallest sub-unit of Bitcoin. 1 Satoshi = 1/100.000.000 of a Bitcoin
SC
Selling climax (WYCKOFF accumulation)
Heavy selling (especially by retail) occurs that is suddenly absorbed by professional interest. It does not require a lot of volume to push price back up (AR).
Selling climax does not always have to occur on high sell volume though but it is better if it does.
SEC
Securities and Exchange Commission
The mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
SFP
Swing failure pattern
Price takes out the high and closes back below the high OR price takes out the low and closes back above the low = SFP (it can be bullish or bearish)
SL
Stop loss
A stop loss order is placed to buy or sell an asset when the asset reaches a certain price to close a losing position. It is a must in trading. Literally no one only wins trades, losses are a very natural part of trading. There should be a clear invalidation and SL should ALWAYS be placed.
Hard stop loss – it is placed in a an orderbook (mandatory for beginners and intermediate traders.
Soft stop loss – it is only mental stop loss (requires discipline, only for professionals)
SMA
Simple Moving Average
It is basically the average price over the specified period with equal weighting given to the price of each period.
SOS
Sign of Strength (WYCKOFF accumulation)
Price moves up on increase of volume showing strength.
SOW
Sign of weakness (WYCKOFF distribution)
Selling off on the very high volume towards support. Price weakness is obvious here and after reaching SOW price will go up for the final rally that sets up the conclusion of distribution.
S/R
Support/resistance
A price area where price finds enough demand to bounce or reverse = support.
A price area where there is a lot of supply and price finds it difficult to break through = resistance.
The more times they are tested the weaker they become.
ST
Secondary test (WYCKOFF accumulation)
Price revisits the area of SC, tests a demand and resistance flips into support. After this flip price makes a new high.
To rekt as much retail as possible price is pushed down again for another ST, price SFP the lows and bounces back up.
ST
Secondary test (WYCKOFF distribution)
Price revisits the area of BC, tests supply and support flips into resistance. After this flip price makes a new low.
TA
Technical analysis
Analysis that is based solely on analysing the chart with technical tools and indicators.
TF
Time frame
TP
Take profit
Take profit is an order that you place to (partially) close your position once it reaches a certain level of profit. One can have multiple TP points.
TPO
Time price opportunity
It displays the amount of trading activity based on time, for each price level the market traded at for any given time period.
TR
Trading Range
Trading range occurs when an asset consistently trades between a certain high and low price for a good amount of time. Top of the range is resistance and the bottom of the range is support.
TV
TradingView
TradingView is a social platform for traders and investors. It is a very popular site for charting. There are free and paid programs, depending on one’s trading level and desires.
UT
Upthrust (WYCKOFF distribution)
Price takes the high of the first push up (BC) on the lesser buy volume.
UTAD
Upthrust after distribution (WYCKOFF distribution)
Price goes above resistance and previous peaks in the distribution trading range. Price rises with conviction and can stay above resistance for some days or even weeks. When price breaks down it heads back to support area. After UTAD price becomes weak to and through support and into confirmed downtrend.
UTAD occurs only occasionally
VAH
Value area high
Value area high is the highest price in the value area that is marked on the chart. It acts as a resistance when the price ranges within the range.
VAL
Value area low
Value area low is the lowest price in the value area that is marked on the chart. It acts as a support when the price ranges within the range.
VWAP
Volume weighted average price
VWAP incorporates price and volume, it is a S/R line. When price is above VWAP it is ‘above value’ and when it is below
VWAP is it ‘below value’.
