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Forex Technical Analysis / Trading Glossary

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ABC Wave
A term used in Elliott Wave that describes a simple correction after a trending move. It is comprised of three-wave (waves A, B and C) forming a corrective or countertrend price movement.

Account Balance (Account Information)
The section of a trading screen that shows the amount of money in a trader’s account, including net profit or loss of any open positions.

Account Information (Account Balance)
The section of a trading screen that shows the amount of money in a trader’s account, including net profit or loss of any open positions.

Adaptive Techniques
These represent the alternative to fixed parameter techniques. Most indicators will include look back periods in their calculation. By considering factors such as adjustments in recent volatility, or the error between the forecasted price and real price, mathematical algorithms can be used to continually adjust formula weights to smooth the price series.

Adverse Excursion
Developed by John Sweeney, adverse excursion reviews past trades and scans for the largest open loss and typical open loss occurring in a trading system. This information can be used to determine stop loss points.

All or None
A limit price order that instructs the broker to fill the whole order at the stated price or not at all.

Alternation
(Elliott Wave)
Alternation is one of Elliott’s observations. He noticed that it was common that if Wave 2 in an impulsive wave is short and fast, then Wave 4 is sideways (flat) and slow. If Wave 2 retraces a large percentage of Wave 1 then Wave 4 will tend to be a shallow retracement.

Andrews Method
Also known as the Andrews pitchfork and developed by Dr. Alan Andrews, this is a technique for identifying upper and lower parallel lines for a trend. By identifying key first moves in a trend and the correction, a potential trend channel can be drawn.

Ascending Triangle
A pattern of corrective trading that develops between two converging lines where the support line is rising and the resistance line is horizontal. This pattern is generally described as a continuation pattern but can also be a reversal pattern.

Ask (Offer)
The price at which a dealer or trader is willing to sell a currency; also the price at which a trader can buy a currency.

Ask Price/ Ask Rate
The price at which a currency is offered for sale (as in bid/ask spread).

Ask Size
The number of lots being offered for sale at the ask rate.

Aussie
A market term for the Australian Dollar.

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Back Office
The department and processes related to the settlement of financial transactions, including written confirmation and settlement of trades, and record keeping.

Back-Testing
The process of testing a set of rules that constitutes a mechanical trading system on historical data to determine the viability of the method. This normally involves optimization of the parameters for the trading rules employed and should also include Walk Forward testing to ensure the optimized parameters are stable.

Balance
Amount of money in a trading account.

Balance of Payments
A record of a nation’s claims and transactions with the rest of the world over a particular time period. These include imports and exports, services and capital flows.

Bandpass Filter
An algorithm that rejects high and low frequencies and passes only the frequencies in a predetermined range.

Bar Chart
A chart of price bars. Each bar shows the opening, closing, high and low price of a currency for a specific time period, with the length of the bar representing the range of prices traded for that time period.

Base Currency
(Traded Currency)
The first currency in a currency pair. The base currency is the currency against which the second or pricing currency is quoted. In the Forex market the U.S. Dollar is most frequently the base currency.

Basis Points
One basis point equals 0.01% yield of a bond or note and therefore 100 basis points equals 1% of yield.

Bear Market
A period of sustained declining prices.

Bear Trap
This occurs when prices decline through a previously identified key support level (perhaps a triangle base) but is immediately reversed causing short positions to be stopped out and therefore is considered as providing a false bearish signal.

Bearish
If the market is “Bearish” it implies that the underlying price data has conditions that suggest the price should decline.

Bid
The price at which a dealer or trader is willing to buy a currency; also the price at which a trader can sell a currency.

Bid/Ask Spread
The difference between the bid and ask (offer) prices.

Big Figure
100 basis points of the underlying foreign exchange rate. This equates to 1.00 in USDJPY and 0.0100 in EURUSD.

Blow Off Top
This is a dramatic rise in price that resembles a rising exponential curve. It is generally accompanied by strong volume and is often followed by a complete collapse in prices.

Boolean
George Boole, English logician (1815-1864), is credited with the invention of 'Boolean logic' in which information is represented as only one of two choices available such as true or false, 0 or 1, on or off.

Breakaway Gap
As a consolidation period or reversal formation is completed, price will exit the pattern with an opening price that causes a gap from that pattern. This could be a break through a trend line, a support or resistance line or even through a key point of the pattern such as the neckline of a head and shoulders pattern. Breakaway gaps are often filled during a brief correction after the break.

Breakeven Stop
Guards against a profitable trade turning into a loss. When the profit on a trade exceeds a certain amount, a breakeven stop order is generated at the trade entry price.

Breakout
The price point when the market price moves through key level of support of resistance and causes a sustained move in the direction of the break. This could be generated by break of a band of sideways trading or of a price pattern.

Broker
A firm that matches buyers and sellers in the currency market.

Bull Market
A period of sustained rising prices.

Bull Trap
This occurs when prices rally through a previously identified key resistance level (perhaps a triangle top) but is immediately reversed causing long positions to be stopped out and therefore is considered as providing a false bullish signal.

Bullish
If the market is “Bullish” it implies hat the underlying price data has conditions that suggest the price should rise.

Buy Order
An order to purchase the first, or base currency in terms of the pricing, or quote currency.

Buy Limit Order
Placed below the current market price, in an attempt to buy a currency for less than its current price.

“Buying the Dips”
The process of buying retracements or pullbacks in an uptrend.

Buyline
A number below which an indicator must fall before an upturn is considered significant.

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Cable
Nickname for the Great Britain Pound.

Candlestick Charts
This is a form of price presentation similar to bar charts which is used to identify localized price patterns that represent market psychology that Japanese originated in the 1600s to analyze the price of rice contracts. As with bar charts, Candlestick charts use an open, high, low and close in which the high and low are plotted as a single vertical line while the range between the open and the close is plotted as a rectangle and is referred to as the body. The lines above and below the body are referred to as “shadows”. If the close is above the open, the body is white. If the close is below the open, the body is black.

Capital Account
Measures short and long-term movements of financial assets between countries.

Capital Risk Limit
Limits on the amount of trading capital that is risked.

Central Bank
Controls a country’s money supply and is responsible for monetary policy and the maintenance of financial stability within a country. The U.S. Federal Reserve Bank is an example of a central bank.

Channel
Used to identify price resistance or support areas for short-term profit taking and to initiate positions. Channels are formed by drawing a standard trendline with a parallel line. In the case of an uptrend the parallel line runs along price highs forming a channel; in the case of a downtrend the parallel line runs along price lows.

Channel Line
A line parallel to the standard trendline that shows potential areas of price resistance or support.

Chart-Based Stops
Signal when to exit a trade, often by a break in a trendline, moving average, or other key measure of support or resistance.

Closed Trades
The listing for the liquidation of open positions by either selling long positions or buying back to cover short positions.

Commercial Banks
Trade billions of dollars daily on behalf of their customers and for their own accounts.

Commission
Brokerage fees.

Comparative Relative Strength
This is a method of measuring the relative performance of one price against another. It is normally used to compare the performance of one price item against its index or to another item.

Congestion Area or Pattern
A sideways trading range with no follow through buying or selling. It is generally characterized by short, sharp movements in price that are then reversed in a choppy, volatile manner. These will often provide support or resistance once price has broken away from the pattern.

Consolidation
A leveling off of prices, often after a swift price move up or down. Consolidation is generally comprised of one of a range of price patterns such as triangles, flags or pennants representing a pause or correction in the current trend of the market.

Continuation Patterns
Price patterns associated with market pauses or price consolidations. Continuation patterns are created by sideways price action that often narrows as the market consolidates. Continuation patterns have names like their shapes; wedges, triangles or flags. (See Congestion Area of Pattern.)

Contract
A standard trading lot, typically 100,000 units of the base currency.

Coppock
Developed by Edwin Sedgwick Coppock in 1962 as a long-term price momentum indicator for the Dow Jones Industrial Average or any other index.

Correction
A retracement of the previous major trend. When prices climb or fall too far too fast, a market often retraces part of the trend move. This situation is described as a market correction. Often the degree of the retracement is measured utilizing a Fibonacci Ratio.

Corrective Wave
(Elliott Wave)
Corrective Wave
Corrective waves are those that form corrective patterns against the main direction of the trend. For example, wave 2 corrects wave 1 and wave 4 corrects wave 3. Once a 5-wave pattern has been completed there will be a simple, or complex, correction of the entire move that will develop as a single or multiple three-wave move. The numbered phase of A-B-C waves are also corrective.

Correlation Coefficient
This is a measurement of the relationship between two variables that varies between +1 (highly correlated) and -1 (highly uncorrelated).

Counter Trend
A minor trend move that runs against the direction of the underlying major trend.

Cover
To close out a foreign currency trading position.

Credit Spread
The difference in value of two options, where the premium of the option sold exceeds the cost of the option purchased.

Cross Rate
An exchange rate between two non-U.S. Dollar currencies. Popular cross rate currency pairs include EUR/GBP, EUR/JPY and AUD/CAD.

Cup and Handle
A period of accumulation observed as a price pattern on bar charts that lasts from seven to 65 weeks. The initial price pattern is the shape of a cup or shallow 'U'. The handle typically lasts for just one or two weeks. The handle is a slight retracement of the last rally with low trading volume during the right-hand side of the formation.

Currency
Foreign Currency (see Currency Pairs). Paper money or banknotes. Also the section of a trading screen that provides currency reference information, such as the high and low prices for a trading day.

Currency Nicknames
Many currencies and currency pairs are referred to by shortened versions of their names, or by nicknames. Examples include: Sterling, Pound & Cable (for Great Britain Pound), Kiwi (for the New Zealand Dollar), Aussie & Looney (for the Australian Dollar), Euro (for the European Currency), Goose (for the Canadian Dollar), Swissie (for the Swiss Franc).

Currency Pairs
FX trading is always conducted using currency pairs, with one currency priced in terms of another. The first currency in the pair is called the base or traded currency; the second currency is called the pricing or quote currency.

Currency Prices
In FX, currencies are priced in pairs. The first currency shown in the pair is referred to as the base or traded currency, and the second is the pricing or quote currency.

Current Account
The net result of a country’s Trade Balance and its Services Account.

Curve-Fitting
The process during the development and testing of a mechanized system where rules are created that map every event in the historical data of a security. However, since these are not applied to a previously untested section of data history the risk is for losses to occur due to the failure to ensure the system’s rules are not generic. The rules are accurate in hindsight only.

Cycle
A repetitive wave form that attempts to measure the time measurements of price highs to price highs, price lows to price lows and price highs to price lows.

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Daily Range
The difference between the high price and the low price during one day's trading.

Dark Cloud and Piercing Line
(Candlestick Reversal Pattern)
Dark Cloud and Piercing Line
The Piercing Line is a bullish reversal in a downtrend. During this trend a long black day develops following which price opens below the low of the black day and rallies to form a long white day. The close of the white day will be below the close of the black day but above the mid point.

The pattern suggests that the underlying bearishness may be overdone and a further move higher to breach the high of the white day will confirm further gains.

A Dark Cloud is the opposite of the Piercing Line. During an uptrend a long white day develops. The following day’s open will be above the high of the white day and price then declines in a long black day to close above the white day’s close but below the mid price.

The pattern suggests that the underlying bullishness may be overdone and a further move lower to breach the low of the black day will confirm further losses.

Day Trading
Trading positions are squared up by the end of the trading day. No positions are carried overnight.

Dead Cross
A Dead Cross is created when shorter moving average crosses below a longer moving average. This is generally considered a bearish signal.

Dealer
An individual or FX brokerage firm that risks its own capital, offering buy and sell quotes in a currency market. One that consistently makes two-way prices, providing both bids and offers.

Dealing Rates (Trade Entry)
The section on a trading screen that shows prices at which you can buy and sell currencies.

Debit Spread
Buying one option and selling another option, creating a spread position where the value of the long position exceeds the value of the short position.

Delta
The percentage amount by which the price of an option changes for every dollar move in the underlying instrument.

Derivatives
An over-the-counter (OTC) or exchange-traded financial contract whose value depends on the value of the underlying instrument. Some examples are futures contracts, stock options, equity indexes, and mortgage backed securities, and OTC Forex options.

Descending Triangle
A pattern of corrective trading that develops between two converging lines where the support line is horizontal and the resistance line is declining. This pattern is generally described as a continuation pattern but can also be a reversal pattern.

Detrend
The removal of the underlying trend in price. One method of detrending prices is to subtract price from its average and represent the result around a zero line.

Devaluation
When a Central Bank abandons the pegging of its currency to a fixed rate of exchange, resulting in a significant drop in its currency’s value (example: Argentine Peso 2002). Also used when a government actively promotes a dramatic decline in its country’s exchange rate (example: Japanese Yen 2001-2002).

Diagonal Triangle
(Elliott Wave)
DIAGONAL TRI
This is a five-wave pattern in which the waves are constructed of three waves. The pattern emerges normally between two rising (or falling) converging lines, though they can be parallel. It is most commonly found in wave 5 positions, but can also occur in wave A or wave C. In classic technical analysis it is called a wedge.

Diffusion Index
A measurement of the percentage of individual cases that are positive when compared with the aggregate group. For example, the number of stocks within the S&P 500 that are above their 200 day moving average.

Divergence
Occurs when an oscillator line and prices move in opposite directions providing early warning of a possible trend reversal.

A Bullish Divergence is identified when price declines make new lows while the underlying momentum indicator (eg RSI or Stochastics) does not make new lows.

A Bearish Divergence is identified when price rallies make new highs while the underlying momentum indicator (eg RSI or Stochastics) does not make new highs.

The implication of momentum and price making divergences is important. It implies that the movement in price in one direction is slowing and highlights the risk for reversal. Divergence commonly occurs after a trend and therefore highlights potential for the trend to complete or reverse. It is important to ensure that other analysis confirms the possibility of a reversal.

Doji
(Candlestick)
Doji
A Doji occurs when the open and close are the same value (or very close). The length of the shadow is not important and interpretation will depend on the position and length of the shadows. They can occur at market reversals since they indicate a balance of buyers and sellers. (Indecision of buyers in an up trend, of sellers in a downtrend). By themselves single bars do not necessarily provide any indications but will contribute to a group that represent a candlestick pattern.

Doji Stars - Morning and Evening
(Candlestick Reversal Pattern)
Morning and Evening Stars
The Morning Doji Star is a reversal in a downtrend. During a downtrend a long black day is formed. The next day is a short day with the open having gapped lower below the low of the black day but which also closes around the same level as the open. The next day price gaps open once again, but to above the high of the Doji Star and forms a white day.

The long black day in the downtrend fuels the underlying bearish sentiment. However, this is not continued on the day of the Doji Star and the gap higher again leaves many traders short and causes squaring of those positions.

The Evening Doji Star is a reversal in an uptrend. During an uptrend a long white day is formed. The next day is a short day with the open having gapped higher above the high of the white day but which also closes around the same level as the open. The next day price gaps open once again, but to below the low of the Doji Star and forms a black day.

The long white day in the downtrend fuels the underlying bullish sentiment. However, this is not continued on the day of the Doji Star and the gap lower again leaves many traders long and causes squaring of those positions.

Doji Star Up and Down
(Candlestick Reversal Patterns)
DOJI UP DOWN
The Doji Star may be both bullish and bearish reversals. In a Bullish Doji Star a long black day develops in a downtrend. This is followed by a Doji Star that opens below the low of the black day and closes at, or around, the level of the open. The shadows of the star should not be long.

The fact that a Doji Star occurs in a downtrend signifies that the bearish sentiment is becoming weaker with traders uncertain of committing to a short position. A subsequent open above the high of the star would cause further short covering.

In a Bearish Doji Star a long white day develops in an uptrend. This is followed by a Doji Star that opens above the high of the white day and closes at, or around, the level of the open. The shadows of the star should not be long.

The fact that a Doji Star occurs in an uptrend signifies that the bullish sentiment is becoming weaker with traders uncertain of committing to a long position. A subsequent open below the low of the star would cause further long covering.

Dollar Risk Stop
Also referred to as a money management stop. It exits a trade at a pre-determined monetary loss.

Double Bottom
The opposite of a double top. When price declines once to a level then rebounds, and over a period of time once again declines to the same approximate level then rallies above the peak between the two troughs a double bottom is confirmed at the two equal price lows. This can be likened to the shape of a 'W'. A target can be generated by measuring the distance from the lows to the peak and projecting this value upwards from the intervening peak.

Double-Smoothed
A price series that has been smoothed first by a mathematical algorithm such as an exponential moving average and then the output of the first smoothing is then smoothed a second time by a similar method.

Double Top
The opposite of a double bottom. When price rallies once to a level then rebounds, and over a period of time once again rallies to the same approximate level then declines below the trough between the two peaks a double top is confirmed at the two equal price highs. This can be likened to the shape of an 'M'. A target can be generated by measuring the distance from the highs to the trough and projecting this value downwards from the intervening trough.

Double Zig-zag
(Elliott Wave)
DOUBLE ZIG ZAG
This is an extended correction in which two ABC patterns occur with a Wave X separating them.

Dow Theory
Originated by Charles Dow, describes the action of price trends. Dow Theory is used by technical analysts to chart the direction of market prices.

Downtrend
Price movement characterized by a series of lower price highs and lower price lows.

Downtrend Line
Needs at least two descending price highs with a third for confirmation of the trendline.

Drawdown
The reduction in the equity of an account as a result of a losing trade or series of losing trades.

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Economic Indicator
Measures the strength or weakness of all or part of a country’s economy.

EMA
See Exponential Moving Average

Engulfing - Bullish and Bearish
(Candlestick Reversal Pattern)
ENGULFING
The first bar of the pattern is a long black/white day, which is then followed by a white/black candlestick that completely engulfs the total range of the first day.
In a downtrend, the market opens at a new low but buying pressure is so strong that it closes at or above the previous day’s open. This strong reversal suggests that the bulls are in control and may overwhelm the bears.
In an uptrend, the market opens at a new high but selling pressure is so strong that it closes at or below the previous day’s open. This strong reversal suggests that the bears are in control and may overwhelm the bulls.
It is very similar to a Key Reversal Day.

Envelope
Trading bands that are plotted as lines above and below a market normally by plotting a percentage of price around a central moving average.

Euro
Introduced on January 1, 1999, this currency combined its European member nations’ individual currencies into a new single currency, the Euro.

European Central Bank (ECB)
The regulatory body charged with setting monetary policy and controlling the money supply of the Euro.

European Monetary Unit
The Euro.

Evening Star and Morning Star
(Candlestick Reversal Pattern)
EVENING STAR
The first bar to develop in a morning or evening star is a long white/black day. This is followed by a gap in the direction of the trend and then a Short Day.

There will be no overlap between the first and second candlesticks. (The short day may be substituted with a Doji).

Finally there is a second black/white long day, gapping in the opposite direction, with no overlapping shadows.

The pattern is similar to an “Island Reversal” in classical patterns, representing a market that has over-extended in one direction, with little supporting sentiment. It is always preferable to have other supporting technical evidence of a potential reversal such as a bullish/bearish divergence or break of trend line.

Exchange Rate
The value, or price of one currency quoted in terms of another.

Expanded Flat
(Elliott Wave)
EXPANDED  FLAT
Occasionally in a correction the end of wave B will penetrate the extreme of the end of the impulsive wave. Wave C will normally retrace to the extreme of wave A. Wave A will be comprised of three waves. Wave C will be comprised of five waves. These normally occur before an extended wave and will signal a significant trend. This is also called an “irregular correction”.

Expanding Triangle
(Elliott Wave)
This is a five-wave pattern in which the waves are constructed of three waves. There are two different forms of this:
(1) The pattern emerges normally between two rising (or falling) diverging lines. It is most commonly found in wave 5 positions and occur before a large reversal in trend direction.
EXPANDING TRIANGLE
.

(2) The pattern emerges normally between one rising and one falling diverging lines. In this situation it is a continuation pattern and is merely an inverted standard triangle.
EXTENDED WAVE


Exponential Moving Average (EMA)
A technical indicator that addresses the weighting limitations of the Simple Moving Average by assigning greater value to the most recent closing price, and a declining value to older prices, making it easier to see the general direction of a trend underlying market action.

Extended Wave
(Elliott Wave)
EXTENDED WAVE
On occasion one of the impulsive waves can extend. An extending wave will be constructed of more than five internal waves, and the additional waves will be of the same degree as the others. Normally there will be 7 or 9 waves in an extended wave. Most often wave 3 will extend, but extensions in wave 5 are also very common.

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Failed Fifth
(Elliott Wave)
FAILED FIFTH
A failed fifth wave occurs when the completion of the fifth wave does not penetrate the extreme of the third wave. It is indicative of either the price target having been met or a sharper reversal in prices.

Falling and Rising Three
(Candlestick Continuation Pattern)
A Rising Three pattern is a bullish continuation pattern in an uptrend. The first bar develops as a long white bar. The following three bars are all short days but which fail to move below the low of the first day’s long white bar. On the fifth day a further long white bar develops that breaks above the high of the first long white day.

The failure of the correction that lasts over three days to retrace past the low of the first long white bar signals that the selling pressure is weak and that bulls can dominate once again.

A Falling Three pattern is a bearish continuation pattern in a downtrend. The first bar develops as a long black bar. The following three bars are all short days but which fail to move above the high of the first day’s long black bar. On the fifth day a further long black bar develops that breaks below the low of the first long black day.

The failure of the correction that lasts over three days to retrace past the high of the first long black bar signals that the buying pressure is weak and that bears can dominate once again.

Fast Fourier Transform
Decomposes a periodic series of data into its component frequencies.

Failure Swing
The market not trading to a new high and thereby not reaffirming the uptrend, or not trading to a new low in a downtrend. Also used when an oscillator does not move to a new high when the market makes a new high, or the oscillator does not make a new low when the market makes a new low.

Failure
An event in the Elliott Wave Principal, when the fifth wave of a five-wave pattern fails to move above the top of the completed third. This will normally be a precursor to a strong reversal.

Federal Reserve (Fed)
The central bank of the United States.

Fibonacci
Leonardo Fibonacci was an Italian 13th century mathematician who developed a sequence of “magic” numbers that many consider has a natural place in the financial market place. The sequence was developed by taking zero and adding one to this, then adding the current number in the sequence to the previous number to create the next in the sequence:
0 - 1 - 1 - 2 - 3 - 5 - 8 - 13 - 21 - 34 - 55 - 89 - 144 etc.
>From this sequence of numbers certain ratios such as 38.2% and 61.8% can be derived and used in determining support and resistance.

Filter
A mathematical routine that alters the price series. This may be achieved by measuring the movement of price around a moving average that smoothes the price data to remove noise. Alternatively filters may be used in developing trading rules to eliminate loss making trades.

5-3-5
(Elliott Wave)
5 3 5
This is a method of referring to a simple ABC pattern that is comprised of five-wave waves A and C divided by a three-wave wave B. The diagram shows this pattern.

Fixed Exchange Rate
Also referred to as a pegged rate. An exchange rate that has been set by a country’s central bank against one or more currencies. Example: from 1993 - 2002 the Argentine Peso was fixed against the U.S. Dollar but floated freely against other currencies.

Flag
A pattern formed during a short consolidation in price movement that is contained by two parallel lines and thus looks similar to a flag on a flagpole. Additionally, the price movements before and after the flag are generally equal in length.

Flat Correction
(Elliott Wave)
FLAT CORRECTION
Occasionally in a correction the end of wave B will complete at the extreme of the end of the impulsive wave. Wave C will normally retrace to the extreme of wave A. Wave A will be comprised of three waves. Wave C will be comprised of five waves.

Foreign Exchange
(Forex or FX) Terms used to describe the process of trading one currency against another at a set price or rate. Also names for the global currency market, itself.

Forex - See Foreign Exchange.

Frequency
The number of cycles within a time period. For instance a 13 week cycle would have an annual frequency of four.

Front and Back Office
A phrase used in banks to differentiate the area that conducts trades (front office), and the area that process trades (back office).

Front-Loaded
The fees and commission are subtracted from the initial investment before trading.

Fundamental Analysis
Examines the affect of economic, social and political events on currency prices.

Fundamental Factors
Financial, Economic, Political, and Social events affecting the FX market.

FX - see Foreign Exchange

FX-Strategy System
Developed by Doug Schaff in the 1990s, this back-tested technical trading system is designed to give traders a clear picture of the overall momentum or trend of a currency market.

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Gann's Square of 9
Originated by W. D. Gann, the square is constructed by spiraling numbers outwards from "one" in an anti-clockwise direction. The first completed spiral is achieved by the number “9” and subsequent progression of the spiral will construct a price pattern tool that associates prices to degrees on a circle.

Gap
An empty space on a bar chart where no price overlap between two adjacent bars exists. In other words the current day’s low is above the previous day’s high or the current day’s high is below the previous day’s low. Gaps typically occur due to overnight news developments.

GDP (Gross Domestic Product)
Measures a country’s economic growth.

Golden Cross
A Golden Cross is created when shorter moving average crosses above a longer moving average. This is generally considered a bullish signal.

Golden Ratio
The ratio of any two consecutive numbers in the Fibonacci Sequence (0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55...). After development of the sequence the ratio between one number and it’s preceding number is 1.618 and in the opposite direction is 0.618. These ratios were used by the Egyptians to build pyramids, by the Greeks to build the Parthenon and also occur in nature.

Good Till Canceled (GTC)
A trading order that remains in force until the trader cancels it. Gross Domestic Product (GDP)
Measures a country’s economic growth.

GTC - See Good Till Canceled

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Hammer and Hanging Man
(Candlestick Reversal Pattern)
In a Hammer, during a downtrend, there is an initial sharp sell off to new lows. However, by the end of the day, the market rallies to close at or near its high for the day.

The sharp recovery suggests that the bearish sentiment may be beginning to wane and if a move above the high of the Hammer days occurs during the next day’s trading there is a stronger risk of complete trend reversal.

In a Hanging man, during an uptrend there is a sharp sell off after the market. By the end of the day, the market rallies to close at or near the high for the day.

This pattern definitely requires confirmation. The recovery in price over the day could mean the bulls are still in control. However, a break to new highs on the next trading day is required to confirm. Alternately, a decline to test the low of the Hanging Man day will suggest a trend reversal.

Harami - Bullish and Bearish
(Candlestick Reversal Pattern)
HARAMI BULLISH BEARISH
The first bar to develop is a long black/white day.
The second day will usually be comprised of a short day that is completely engulfed by the real body of the first.
Following a long black day at end of a downtrend, a white candlestick opens higher than the previous day’s close. Price is then unable to follow through the previous day selling pressure and the uncertainty causes shorts to be covered. (Bullish Harami)
Following a long white day at end of an uptrend, a black candlestick opens lower than the previous day’s close. Price is then unable to follow through the previous day selling pressure and the uncertainty causes long positions to be covered. (Bearish Harami)
The pattern is indicative that a reversal is possible. However, it is always preferable to have other supporting technical evidence of a potential reversal such as a bullish/bearish divergence or break of trend line.

Harami Cross - Bullish and Bearish
(Candlestick Reversal Pattern)
HARAMI CROSS BULLISH BEARISH
The first bar to develop is a long black/white day.
The second day a doji cross that is completely engulfed by the real body of the first will complete.
Following a long black day at end of a downtrend, a white candlestick opens higher than the previous day’s close. Price is then unable to follow through the previous day selling pressure and the uncertainty causes shorts to be covered. (Bullish Harami Cross)
Following a long white day at end of an uptrend, a black candlestick opens lower than the previous day’s close. Price is then unable to follow through the previous day selling pressure and the uncertainty causes long positions to be covered. (Bearish Harami Cross)
The pattern is indicative that a reversal is possible.
However, it is always preferable to have other supporting technical evidence of a potential reversal such as a bullish/bearish divergence or break of trend line.

Head and Shoulders
A price pattern associated with market peaks, composed of three prominent price highs. In an uptrend there is one prominent high in the middle with two slightly lower highs on either side. The pattern is said to resemble a head and shoulders. When a line is drawn through the two lows on either side of the “head”, and prices break through that “neckline”, then a downtrend may be beginning. When the same pattern occurs in reverse as price declines it is called an “Inverse Head and Shoulders”.

Hedge Funds and Portfolio Managers
Investors of customer funds in the FX markets.

Higher/Lesser Degree
HIGHER LESSER DEGREE
All waves are constructed internally of impulsive and corrective waves and ultimately all waves will be part of a larger wave pattern. Therefore, within a five-wave move higher that is labeled wave 1, waves 1, 3 and 5 (the impulse waves) will be constructed of five internal waves. These internal waves will be of “one lesser degree” to the larger wave 1. Also, the larger wave 1 may continue to develop as a five-wave move higher itself. These larger waves are of “one higher degree”.

In the example shown, the waves labeled in blue are of “one lesser degree” to the waves labeled in red. The waves labeled in red are of “one lesser degree” to the waves labeled in green and of “one higher degree” to the waves labeled in blue. The waves labeled in green are of “one higher degree” to the waves labeled in red.

Histogram
Indicators may often be plotted as vertical lines around a zero line.

Historic Volatility
There are many forms of measuring volatility, the most common is Historic Volatility that considers the standard deviation of the log value of the daily difference in closes over the length detailed in the parameter. The result is then normalized on an annual basis and plotted.

Volatility is utilised by many option traders as a tool to determine how volatile price has been and compare this with market traded volatility.

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Importers/Exporters
Produce a regular flow of trading volume in the FX market.

Impulse Wave
(Elliott Wave)
IMPULSE WAVE
Impulse waves are those that define the main direction of the trending move. They are labeled as waves: 1, 3 and 5. They are comprised of five waves of lesser degree.

Independent Traders
They speculate in the FX markets to make money. With the growth of the Internet and lower trading costs, their numbers are increasing.

Indicators
Indicators are calculated by using mathematical algorithms and are used to represent different characteristics such as overbought/oversold, trending or underlying price direction.

Inflation
Rate at which the prices of goods and services are increasing.

Initial Margin
The amount of money required by a brokerage firm for a trader to execute online currency trades.

Inside Bars and Outside Bars
Inside bars and outside bars are single bar patterns that are often identified as having important qualities and break of the bar’s extremes imply a continuation of the underlying direction.
An “Inside Bar” occurs when the current bars high and low are within the range of the previous bar. This is often interpreted as market price pausing and being uncertain of the underlying direction of the market.
An “Outside Bar” occurs when the current bars high and low exceed the extremes of the previous bar. This is often interpreted as the market having two conflicting views, the market has both buyers and sellers entering the market and thus break of the extremes (high or low) may provoke a further move in one direction.
Often, market players will look at the underlying volume to provide additional evidence of a potential move.

Interbank Market
The market for foreign exchange trading conducted by banks throughout the world, by phone or electronic network.

Interbank Rates
Forex prices quoted by the Interbank Market. Online FX trading now makes Interbank currency prices available to the independent trader.

Interest Differential
Each currency carries an interest rate. Depending on the difference between what interest rates are in one country compared to another (the so-called interest differential), traders can either earn interest on their trading positions over time or they will have to pay out interest.

Interest Rate
The amount of money paid on a bank deposit, expressed as an annual percentage.

Intermarket Analysis
This form of analysis was popularized in separate works by Martin Pring and John Murphy. Comparing the price action or trend of one market to the trend or price movement of another market to anticipate the impact one market may have on another. For example, following the trend of interest rates relative to the trend of the stock market.

Intermediate-term Trend
Represents corrections in a long-term trend.

Intrinsic Value
The difference between the price of the underlying instrument and the strike price of an option.

Inverted Hammer and Shooting Star
(Candlestick Reversal Pattern)
The Inverted Hammer develops in a downtrend and after a long black day a new low is formed with the body at the lower end of the range. The upper shadow is normally twice the size of the body, or slightly less, and there is only a small lower shadow.

After the long black day, the price opens below the close of the previous day. Price then rallies but remains below the previous day’s close. This obviously displays the desire to sell rallies, to maintain the downtrend. On the next trading day, if the price opens above the body of the Inverted Hammer, it implies short covering and further gains.

The Shooting Star develops in an uptrend and after a long white day price opens above the close, rallies to a new high but declines to leave a short body to the low of the day’s range. Normally the upper shadow is two or three times the size of the body and there is almost no upper shadow. An open on the following day below the short body would imply further losses.

Irregular Flat
(Elliott Wave)
IRREGULAR FLAT
Occasionally in a correction the end of wave B will penetrate the extreme of the end of the impulsive wave. Wave C will normally retrace to the extreme of wave A. Wave A will be comprised of three waves. Wave C will be comprised of five waves. These normally occur before an extended wave and will signal a significant trend. This is also called an expanded flat.

ISO Codes
Three-letter abbreviations assigned by the International Standards Organization to designate currencies traded in the FX markets. The first two letters generally are an abbreviation of the country name. The last letter in the code is usually the first letter of the country’s currency.

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Key Reversal Bar
KEY REVERSAL BAR
Essentially a Key Reversal Bar is an Outside Bar that has particular properties and most commonly occurs at the end of a trend. Before following this type of event it is important to analyse market conditions further to decide whether the Key Reversal Bar is valid.

Thus a Downward Key Reversal Bar will occur at the end of an uptrend and the close of the bar will be below the low of the previous bar. This is said to represent an initial follow through of the upward trend to new highs but then failure as the market declines to close below the previous day’s low.

Thus an Upward Key Reversal Bar will occur at the end of a downtrend and the close of the bar will be above the high of the previous bar. This is said to represent an initial follow through of the downward trend to new lows but then failure as the market rallies to close above the previous day’s high.

Kicking - Bullish and Bearish
(Candlestick Reversal Pattern)
KICKING   BULLISH AND BEARISH
The first day of this pattern is a Black/White Marubozu day. This is followed by a White/Black Marubozu day that gaps against the direction of the first day.
The dramatic reversal in price direction is a strong sign that the market is headed in the direction of the second day’s gap.
The significantly strong selling pressure of the first day implied by the Black Marubozu, (in a Bullish Kicking), is reversed the next day by the gap opening. This is most likely caused by an unexpected fundamental event.
The significantly strong buying pressure of the first day implied by the White Marubozu, (in a Bearish Kicking), is reversed the next day by the gap opening. This is most likely caused by an unexpected fundamental event.

Kiwi
A market term for the New Zealand Dollar.

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Lag
The number of bars that an indicator trails the current price. For example, a moving average will peak by a number of periods after the market price peaks. This period is generally half the length of the moving average.

Lead
The number of bars that an indictor designed to change prior to the price changing is ahead of the current price. For example, a rate-of-change oscillator may peak before the price peaks.

Leading Indicators
Economic indicators thought to forecast the future level or direction of economic activity.

Least Squares Method
A statistical method to derive the formula for a line that fits the data points by minimizing the sum of the squares of the deviations of the given points from the line. This method is used in calculating linear regression.

Lesser/Higher Degree
LESSER HIGHER DEGREE
All waves are constructed internally of impulsive and corrective waves and ultimately all waves will be part of a larger wave pattern. Therefore, within a five-wave move higher that is labeled wave 1, waves 1, 3 and 5 (the impulse waves) will be constructed of five internal waves. These internal waves will be of “one lesser degree” to the larger wave 1. Also, the larger wave 1 may continue to develop as a five-wave move higher itself. These larger waves are of “one higher degree”.

In the example shown, the waves labeled in blue are of “one lesser degree” to the waves labeled in red. The waves labeled in red are of “one lesser degree” to the waves labeled in green and of “one higher degree” to the waves labeled in blue. The waves labeled in green are of “one higher degree” to the waves labeled in red.

Lettered Phase
(Elliott Wave)
LETTERED PHASE
Some analysts refer to the “lettered phase”. This refers to the section of the wave structure that forms the major corrective waves that are labeled A-B-C and occasionally also D and E.

Leverage
The ability to use a small amount of money to control a large trading position.

Limit Order
Used to enter the market at a specific price, or to exit a market at a specific profit target.

Line Chart
Plots the movement of currency prices over a successive period of time. Closing prices are most commonly used to construct line charts.

Liquidate
To close or get out of an existing position.

Liquidity
Over 85% of all FX transactions involve seven major currencies (AUD, CAD, CHF, Euro, GBP, JPY and USD). In a 1.5 trillion dollar daily market, traders are usually able to get in or out of currency positions in the major currencies.

Locked Limit
A market that has reached the maximum allowable price move permitted by an exchange, such as on a stock exchange. There is no such limit in the Foreign Exchange market.

Long
Trader has bought a currency with the expectation of selling it at a higher price.

Long Bars
(Candlestick)
LONG BARS
A long bar is one in which the body is longer than average and where the body (between the open and close) is considerably longer than head and tail. A long bar represents a large shift in market perception of value from open to close. By themselves single bars do not necessarily provide any indications but will contribute to a group that represent a candlestick pattern. Long-term Trend
The overall direction in market prices are moving.

Lookback Interval
The number of periods of data used for the calculation of an indicator.

Lot
Refers to a standard trading contract, typically 100,000 units of the base currency.

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MACD
(Moving Average Convergence Divergence) Developed by Gerald Appel in the 1960s, this oscillator uses three exponential moving averages to show changes in currency trends. The MACD fluctuates above and below a zeroline.

Major Currencies
Eighty-five percent of all FX transactions involve seven major currencies: the U.S. Dollar (USD), Japanese Yen (JPY), Euro (EUR), British Pound (GBP), Swiss Franc (CHF), Australian Dollar (AUD), and Canadian Dollar (CAD).

Margin
The amount of money a Forex brokerage firm requires a trader to keep in his/her account to support a currency position.

Marked to Market
The calculation of the value of a market traded position based on the settlement prices for the day.

Market Maker
A Forex dealer or FX brokerage firm that risks its own capital offering buy and sell quotes in a currency market. One that consistently makes two-way prices, providing both a bid and an offer.

Market Order
An order to execute a trade “at the market” or best available price.

Market Regulation
Unlike the U.S. Stock Market, which is subject to regulation by the Securities and Exchange Commission (SEC), the FX markets are still largely unregulated. There are no licensing requirements for FX brokers, no capital requirements and no federal or industry protection for your account.

Market Sentiment
A measurement of views expressed by market participants and generally measured through surveys, a gauge of bullish or bearish attitudes among investors and traders.

Market Timing
Using technical tools to devise timely entry and exit strategies.

Market Trend
The overall direction in which currency prices are moving.

MarketView
As used by FX-Strategy, a market forecast based on the overall direction and momentum of a market trend.

Marubozu
(Candlestick)
MARABOZU
A Marubozu is a bar where the open and close are at the extremes of the bar. The body is long and has no shadows. A Marubozu represents a large shift in market perception of value from open to close that are at the extremes.

By themselves single bars do not necessarily provide any indications but will contribute to a group that represent a candlestick pattern.

Mat Hold - Bullish and Bearish
(Candlestick Continuation Pattern)
MAT HOLD BEARISH BULLISH
A Bearish Mat Hold occurs during a downtrend. The first day is a long black day. On the second day, price opens below the close of the first black day, makes a new minor low, but the bar develops with a short body. The third and fourth days also see small bodies rising from the low of the second day, but in which the bars remain below the high of the first long black day. On the fifth day a further long black day occurs that declines below the low of the first day.
The pattern represents a holding pattern in a downtrend and when three short bars cannot rally back above the high of the first long black day, sellers once again dominate trading.

A Bullish Mat Hold occurs during an uptrend. The first day is a long white day. On the second day, price opens above the close of the first white day, makes a new minor high, but the bar develops with a short body. The third and fourth days also see small bodies declining from the high of the second day, but in which the bars remain above the low of the first long white day. On the fifth day a further long white day occurs that rallies below the high of the first day.
The pattern represents a holding pattern in an uptrend and when three short bars cannot fall back below the low of the first long white day, buyers once again dominate trading.

Maximum Adverse Excursion
Developed by John Sweeney. Measuring negative price performance of a series of trades. This information is used to determine a reasonable stop-loss level based on the historical analysis.

Maximum Entropy Method
A technique for spectrum analysis and a method of adaptive filtering and trend forecasting.

Mean
Another method of describing the average price.

Mean Deviation
The average value on an absolute basis of the difference between the mean (average) price and the individual prices in the lookback period.

Minor Currency
Lesser-traded currencies, in terms of daily volume of trades and liquidity. The Singapore Dollar and Mexican Peso are examples of minor currencies.

Momentum Oscillator
Measures the momentum or rate of change of currency prices within a specific time interval. The momentum oscillator fluctuates around a central zeroline.

Money Markets
Markets for instruments, such as CD’s and other bank deposits that carry short-term interest rates.

Morning Star and Evening Star
(Candlestick Reversal Pattern)
MORNING STAR AND EVENING STAR
The first bar to develop in a morning or evening star is a long white/black day. This is followed by a gap in the direction of the trend and then a Short Day.
There will be no overlap between the first and second candlesticks. (The short day may be substituted with a Doji).
Finally there is a second black/white long day, gapping in the opposite direction, with no overlapping shadows.
The pattern is similar to an “Island Reversal” in classical patterns, representing a market that has over-extended in one direction, with little supporting sentiment. It is always preferable to have other supporting technical evidence of a potential reversal such as a bullish/bearish divergence or break of trend line.

Moving Average
A series of averaged price data plotted on a currency chart. This technical indicator makes it easier to see the general direction of a trend underlying market action.

Moving Average Convergence Divergence - see MACD

Moving Average Crossovers
It is common for traders to employ two or more moving averages to identify turn points in the trend of the market. A shorter-term moving average rising above the longer-term moving average is called a “Golden Cross” and is a buy signal, while a sell signal would be the shorter-term moving average closing below the longer-term moving average, otherwise known as a “Dead Cross”.

Moving Average Stops
A moving average whose price is used in a stop order. The lagged nature of a moving average makes it easily applicable as a trailing stop.

Multiple Time Frames
The use of more than one time frame to determine trades. For example, look to the weekly chart for the trend, support and resistance levels, then trade on signals generated by the daily chart only if they are supported by the weekly chart.

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Narrow Range Bar
A trading bar with a smaller price range relative to the previous bar's price range or a smaller price range as compared to an average of a period of previous bars.

Neckline
During the development of a reversal or consolidation pattern, a trend line may be drawn along the support or resistance that are implied by the troughs or peaks around the head and from where the shoulders have developed. Eventual break of the neckline confirms completion of the pattern.

Normalized
The adjustment of an indicator to have readings between 0 and 100 or -100 and +100.

Numbered Phase
(Elliott Wave)
NUMBERED PHASE
Some analysts refer to the “numbered phase”. This refers to the section of the wave structure that forms the main direction of the trend. This is the five-wave moves including the two corrective waves, 2 and 4.

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O.C.O. (One Order Cancels The Other)
An order that, if executed, automatically cancels another order.

Offer (Ask)
The price at which a Forex brokerage firm or trader is willing to sell a currency; also the price at which a trader can buy a currency.

Open Orders (Trader’s Orders)
The section of a trading screen that shows unfilled trades left by a trader.

Open Trades (Open Positions)
Any current position that has not been liquidated and thus on which the trader is still at risk. Also that section of a trading screen that shows a trader’s currency positions and their values.

Opening Range
The range of prices occurring during the first trading of the day. The actual time period is determined by the rules of the exchange.

Optimization
A process of improving the performance of a trading system by testing for optimal input values.

Oscillator
An oscillator is a technical indicator for which the value ranges between zero to 100, -100 to 100, or vacillates around a central zero line. They are most often used to identify overbought and oversold price regions, but can assist in identifying the direction and strength of trends.

OTC (Over-the-Counter)
Trades made between counter-parties via the telephone or through an electronic network, rather than on an exchange floor. FX is an Over-The-Counter market.

Out-of-Sample Data
Price series used for testing the parameters of an indicator that has not been used for determining the parameters (in-sample data). This is most often used in Walk Forward testing of a mechanized system to ensure that the results generated from in-sample data also provide adequate results over other areas of the price history.

Outside Bars and Inside Bars
OUTSIDE AND INSIDE BARS
Inside bars and outside bars are single bar patterns that are often identified as having important qualities and break of the bar’s extremes imply a continuation of the underlying direction.

An “Inside Bar” occurs when the current bars high and low are within the range of the previous bar. This is often interpreted as market price pausing and being uncertain of the underlying direction of the market.

An “Outside Bar” occurs when the current bars high and low exceed the extremes of the previous bar. This is often interpreted as the market having two conflicting views, the market has both buyers and sellers entering the market and thus break of the extremes (high or low) may provoke a further move in one direction.
Often, market players will look at the underlying volume to provide additional evidence of a potential move.

Outside Reversal Bar
When the bar trading range, high to low, exceeds the previous bar’s high to low range and closes opposite the previous period’s close. When employed during a trend, they often occur at trend reversal.

Overbought
When market prices have reached a point an exhaustion of buyers exists. Momentum indicators are employed to identify overbought conditions but are generally only accurate in consolidating markets. Note: Overbought conditions within a downtrend can alert traders to selling opportunities.

Overbought/Oversold Indicator
An momentum indicator that defines when prices may have reached a potential point for a reversal due to a lack of buyers or sellers. The use of momentum indicators as overbought/oversold signals is generally only accurate in consolidating markets.

Overfitting
Using the highest profit point for the selection of parameters of a trading system over a specific time period without determining the likelihood that the parameters will retain their profitability over other periods of price data. Also known as “Curve Fitting”.

Oversold
Market prices that have declined to a point that there is a lack of any new sellers. Momentum indicators are employed to identify oversold conditions but are generally only accurate in consolidating markets. Note: Oversold conditions within an uptrend can alert traders to buying opportunities.

Over-the-Counter (OTC)
Trades made between counter-parties via the telephone or through an electronic network, rather than on an exchange floor. FX is an over-the-counter market.

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Par
The principal amount of an investment instrument (e.g. 100) or where price equals the original value.

Parabolic Stop
Wells Wilder introduced the Parabolic Indicator, whose shape resembles the curve of a parabolic arc. The Parabolic is useful as a trailing stop because it has an acceleration factor that, over time, moves it closer to prices.

Parameterep
A variable setting for an indicator, such as the lookback period for a moving average, or a rule for a system.

Peak
A price high on a currency bar chart.

Penetration of a Trendline
When a currency trades below an uptrend line or above a downtrend line.

Pennant
A pattern formed during a short consolidation in price movement that is contained by two parallel lines and thus looks similar to a triangular flag on a flagpole. Additionally, the price movements before and after the pennant are generally equal in length.

Percentage Retracements
Price corrections often retrace a prior move by a specific percentage, and then resume moving in the original direction of the trend. Charles Dow noticed, as have traders since, that prices often retrace half of a prior move, before continuing in the same direction. In addition to 50% retracement percentage, Dow used one-third and two-thirds retracement levels. Percentage retracements are calculated by taking the distance between a significant price high and low, and multiplying by the selected percentages. Subtract those amounts from the price high to project retracements within an uptrend. Add those amounts to a price low to identify potential retracements within a downtrend.

Piercing Line and Dark Cloud
(Candlestick Reversal Pattern)
PIERCING LINE AND DARK CLOUD
The Piercing Line is a bullish reversal in a downtrend. During this trend a long black day develops following which price opens below the low of the black day and rallies to form a long white day. The close of the white day will be below the close of the black day but above the mid point.
The pattern suggests that the underlying bearishness may be overdone and a further move higher to breach the high of the white day will confirm further gains.
A Dark Cloud is the opposite of the Piercing Line. During an uptrend a long white day develops. The following day’s open will be above the high of the white day and price then declines in a long black day to close above the white day’s close but below the mid price.
The pattern suggests that the underlying bullishness may be overdone and a further move lower to breach the low of the black day will confirm further losses.

Pip (Point)
The smallest incremental value by which an exchange rate move is measured in Forex markets. For most currencies a Pip is one 10,000th of an exchange rate, 0.0001. Noted exceptions: Dollar-Yen and Euro-Yen, where a Pip is valued at one 100th or 0.01 of an exchange rate.

Pivot Levels
Pivot levels are created when price fails in the same area on several occasions. Once this level is breached it is common for price to come back and test the same price area, which then reverses its role. i.e. Support becomes resistance and resistance becomes support.

Point (Pip)
The smallest incremental value by which an exchange rate move is measured in Forex markets. For most currencies a Point is one 10,000th of an exchange rate, 0.0001. Noted exceptions of lower valued currencies: Dollar-Yen and Euro-Yen, where a Point is valued at one 100th or 0.01 of an exchange rate.

Point & Figure Charts
The Point and Figure (PF) charting method is a technique that has been used for many years in analyzing the variations in prices of stocks and commodities. The principal advantage of a PF chart is that it is much easier to read and interpret than other types of charts. Two basic symbols are used:

X Denotes the continuance of an increase in price and is always "stacked" in the vertical direction.

O Denotes the continuance of a decrease in price and is always "stacked" in the vertical direction.

While prices are rising, X's are used. When falling, O's are used. They are always plotted on rectangular grid graph paper such that columns of X's and O's alternate. A Point and Figure chart is characterized by the specification of two parameters: box size and reversal number. The box size dictates the price range associated with a particular box (cubical area within the grid), while the reversal number specifies the conditions which terminate a column of X's and begin a column of O's and vice-versa.

Position
The outstanding contracts that a trader is holding in his/her account.

Position Limits
Determining position size, maximum dollar loss per trade, number of contracts being traded and number of points per stop loss.

Positive Carry
A market position held overnight where the currency owned pays a higher interest rate than the one that it is priced against.

Pound
A market term for the Great Britain Pound.

Price Breakout
Price action that breaks or moves beyond a trendline or consolidation pattern, indicating an increase in momentum or a possible change in direction of prices.

Price Chart
Composed of historical and current prices. Used for the purpose of forecasting the direction of currency prices.

Pricing Currency (Quote Currency)
The second currency in a currency pair. Used to price the first or base currency.

Price Filters
Used to identify valid trendline penetrations and to eliminate false signals, known as “whipsaws”. Price filters require that prices break through a trendline by some predetermined price increment in order to signal a valid trend reversal.

Price Retracement
A price move that runs counter to the direction of a trend.

Profit Exit
An exit order that reduces or closes a position once an initial profit target is met.

Pyramid
To increase the size of a position as the market moves in a profitable direction.

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Quote
A price quote that includes a bid and ask (offer) price.

Quote Currency (Pricing Currency)
The second currency in a currency pair. The quote currency is used to price the first or base currency.

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R squared
The coefficient of determination. The percentage of variation in the dependent variable that is explained by the regression equation.

Random Walk
An academic theory stating there is no correlation between prices from one day to the next and that prices will act unpredictably.

Range
The distance between the high and the low of a price bar.

Realized Profit and Loss
The profit or loss resulting from closed trades.

Reaction High
Price high of a retracement or correction within a downtrend.

Reaction Low
Low price of a retracement or correction within an uptrend.

Relative Strength Index (RSI)
Developed by Welles Wilder to improve upon the classic momentum oscillator. Used as an overbought/oversold indicator and to identify divergence.

Resistance
A price level where selling pressure has overcome buying pressure and prices turn downward. Commonly thought of as indicating oversold or overbought conditions.

Resistance Level
Usually identified on a chart by a price high or series of high points, above the market, where prices previously “met resistance” or “ran into resistance” and stopped rising.

Retracement
A price movement in the opposite direction of the primary trend. When prices climb or fall too far too fast they often retrace part of a trend move, or pause by trading sideways.

Retracement Zones
A combination of Dow and Fibonacci percentages to create zones where the market is likely to find support or meet resistance.

Reward-Risk Ratio
An estimate of the potential gain of a trade versus the potential loss.

Reversal Stop
Also known as stop and reverse. A stop order placed after a trade that reverses the current trading position, e.g., from long to short.

Reverse Trade Entry Signals
Once a position has been taken, a technical trading system may continue to generate new trade entry signals as market conditions change. A system may generate reverse trade entry signals before a stop loss order is executed. Such an order, if executed, closes the existing position and opens a new position in the opposite direction.

Rising and Falling Three
(Candlestick Continuation Pattern)
RISING AND FALLING THREE
A Rising Three pattern is a bullish continuation pattern in an uptrend. The first bar develops as a long white bar. The following three bars are all short days but which fail to move below the low of the first day’s long white bar. On the fifth day a further long white bar develops that breaks above the high of the first long white day.

The failure of the correction that lasts over three days to retrace past the low of the first long white bar signals that the selling pressure is weak and that bulls can dominate once again.

A Falling Three pattern is a bearish continuation pattern in a downtrend. The first bar develops as a long black bar. The following three bars are all short days but which fail to move above the high of the first day’s long black bar. On the fifth day a further long black bar develops that breaks below the low of the first long black day.

The failure of the correction that lasts over three days to retrace past the high of the first long black bar signals that the buying pressure is weak and that bears can dominate once again.

Risk Capital
The amount of money a trader has in his/her trading account.

Risk Management
The process of implementing techniques to monitor and control risk. This includes risk limits on position size and capital, as well as knowing the types of orders, such as stop orders, that are used to limit losses.

Rollover
To establish a new position in a foreign currency by simultaneously liquidating the current position and establishing the same position at a value date in the future. Depending on the difference between the interest rates in one country compared to another (the so-called “interest differential”) traders can either earn interest on their trading positions over time or they will have to pay out interest. Day traders do not hold positions overnight, so they are not affected by rollover.

Rounded Bottom
A chart formation that shows a gradual decline then a gradual rise in prices with the resultant effect of price taking a saucer-shaped pattern. (Is also known as a Saucer Pattern)

RSI (Relative Strength Index)
Developed by Welles Wilder to improve upon the classic momentum oscillator. Used as an overbought/oversold indicator and to identify divergence.

Running Market
Market conditions where the prices are moving rapidly in one direction.

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Saucer Pattern
A chart formation that shows a gradual decline then a gradual rise in prices with the resultant effect of price taking a saucer-shaped pattern. (Is also known as a rounded bottom)

Schaff Indicators
First developed by Doug Schaff in the 1990s, based on the FX-Strategy System, and used to create proprietary, back-tested trading signals.

Schaff TC Trigger ™
Provides a setup and trigger approach to create automated trade entry and exit signals, based on the Schaff TC™ Indicator.

Schaff TC/TC1 Trigger™
Provides a setup and trigger approach to create automated trade entry and exit signals, based on a combination of both the Schaff TC™ and Schaff TC1™ indicators.

Schaff TC1 ™ Indicator
An oscillator used to identify trend momentum.

Schaff Trend Cycle™ Indicator
An oscillator used to identify trend momentum.

Schaff Trend RSI™
This oscillator measures the strength of a trend against its own past performance.

Seasonality
A tendency for a change in market activity during a particular time of the year. Forex rates may be affected in this way by fiscal year end flows.

Segregated Accounts
A designated trading account, set up and monitored by a Forex brokerage firm in the name of the account holder.

Sell
Selling a base currency in terms of the pricing currency.

Sell Order
An order to sell a base currency in terms of a pricing currency.

Sell Limit Order
Placed above the current market price, a sell limit order attempts to sell a currency at a higher price.

“Selling the Rallies”
Describes the process of selling retracement rallies or pullbacks in a downtrend.

Sensitivity
The degree to which an indicator responds to the changes in the market. For example, the rate-of-change of the moving average in response to the movement of the market.

Separating - Bullish and Bearish
(Candlestick Continuation Pattern)
SEPARATING BULLISH AND BEARISH
The first day is a black/white long day followed by a white/black long day whose opening price is around the previous day’s open.

A black day occurs in an uptrend, suggesting potential for a corrective decline. However, the next day, when the market gaps higher and opens at around the open of the first day (towards the high), the subsequent rally to close even higher suggests that the uptrend is still firmly in place.

A white day occurs in an downtrend, suggesting potential for a corrective rally. However, the next day, when the market gaps lower and opens at around the open of the first day (towards the low), the subsequent decline to close even lower suggests that the downtrend is still firmly in place.

Services Account Balance
Income on services, such as investment fees, consulting, tourism, earnings on foreign investments, overseas insurance and banking fees.

Settlement
In the Interbank Market, the process of receiving one currency and paying out another.

Setup Bar
Occurs when one or both of FX-Strategy’s key indicators are rising from below the buyline, or falling from above the sell line.

Sharpe Ratio Method
A return/risk measure used to compare the performance of a trading system or a money manager, where:
E = Expected return
I = Risk-free interest rate
SD = Standard deviation of returns

Shooting Star and Inverted Hammer
(Candlestick Reversal Pattern)
SHOOTING STAR AND INVERTED HAMMER
The Inverted Hammer develops in a downtrend and after a long black day a new low is formed with the body at the lower end of the range. The upper shadow is normally twice the size of the body, or slightly less, and there is only a small lower shadow.

After the long black day price opens below the close of the previous day. Price then rallies but remains below the previous day’s close. This obviously displays the desire to sell rallies, to maintain the downtrend. On the next trading day, if price opens above the body of the Inverted Hammer, it implies short covering and further gains.

The Shooting Star develops in an uptrend and after a long white day price opens above the close, rallies to a new high but declines to leave a short body to the low of the day’s range. Normally the upper shadow is two or three times the size of the body and there is almost no upper shadow. An open on the following day below the short body would imply further losses.

Short
Trader has sold a currency with the expectation of buying it back cheaper.

Short Bars
(Candlestick)
SHORT BARS
A Short bar is one in which the body is shorter than average and where both body and shadows are short. A short bar represents little shift in the market’s perception of value. By themselves single bars do not necessarily provide any indications but will contribute to a group that represent a candlestick pattern.

Short Position
A position resulting from the sale of a base currency.

Short-term Trend
Represents fluctuations in an intermediate trend.

Side by Side - Bullish and Bearish
(Candlestick Continuation Pattern)
SIDE BY SIDE BULLISH AND BEARISH
In a Bullish Side by Side pattern the first two days develop as a long white days where the second day creates a gap opening above the high of the first white day. The subsequent day is also a white day that has an opening price at, or around, the open of the second day and in spite of the lower open, continues to rally to close around the area of the close of the second day.

This rally after a potentially bearish open after the second day is a sign that there are still plenty of buyers to push price higher. A break above the high of the third day would confirm the move.

In a Bearish Side by Side pattern the first two days develop as a long black days where the second day creates a gap opening below the low of the first black day. The subsequent day is also a black day that has an opening price at, or around, the open of the second day and in spite of the higher open, continues to decline to close around the area of the close of the second day.

This decline after a potentially bullish open after the second day is a sign that there are still plenty of sellers to push price lower. A break below the low of the third day would confirm the move.

Sideways Market
A market characterized by prices staying in a narrow range.

Simple Moving Average
A series of averaged price data plotted on a currency chart. A simple moving average can be constructed by taking the closing prices for the number of sequential price bars that you want to analyse, adding those prices together and dividing that sum by the number of price bars. This technical indicator makes it easier to see the general direction of a trend underlying market action.

Skew
Data is either disproportionately to the right or to the left of the center point of the data.

Smoothing
A mathematical technique that removes excess noise from the data. This is commonly performed by moving averages.

Spike
A sharp rise or fall in price over a relatively short period of time.

Spike Bottoms and Tops
SPIKE AND BOTTOM TOPS
Spike Bottoms and Tops are reversal patterns. They normally generate a reversal in trend. They are characterised by an extremely strong move at the end of a trend and a reversal that is normally more aggressive and lasting half the time of the final trending move.
In a Spike Bottom price will decline sharply over a number of periods, accompanied by significant bearish sentiment. The reversal will occur with a sudden and normally unexpected power that brings a retracement of some 50% to 61.8% within a much shorter period.
In a Spike Top price will rally sharply over a number of periods, accompanied by significant bullish sentiment. The reversal will occur with a sudden and normally unexpected power that brings a retracement of some 50% to 61.8% within a much shorter period.

Spinning Tops
(Candlestick Pattern)
SPINNING TOPS
Spinning Tops are bars with small bodies and a longer head and tail and represent periods when there is indecision between bulls and bears. By themselves single bars do not necessarily provide any indications but will contribute to a group that represent a candlestick pattern.

Spot Deal
An FX deal whereby one party will deliver a specified amount of a certain currency and receive a specified amount of another currency based on an agreed rate of exchange, within two business days; one day in the case of the Canadian Dollar.

Spot Price
The execution price of a currency to be delivered or settled two days hence, or in the case of the USD/CAD, in one day. A currency’s exchange rate.

Spread
a) The difference between the bid price and the ask price for a currency. b) A trade in which one of two related currencies/stocks/bonds/options is bought while the other is sold in order to exploit the differences in price-change between the two.

Stair-stepping
A descriptive method of the trend of the market where the market moves in an orderly fashion with minor counter trend movements.

Standard Deviation
Standard Deviation returns a value that represents how widely dispersed the individual price is away from the mean average (using the same parameters).

Standard Trading Lot
100,000 units of base currency.

Sterling
A market term for the Great Britain Pound currency.

Stochastic
Originated by George Lane, this oscillator measures the position of a currency in relation to its own recent trading range. It uses a range of 0 percent to 100 for overbought and oversold conditions. There are multiple variations of the Stochastic, including fast and slow studies.

Stop Entry Order
Becomes a market order to enter a position once a specific price has traded. Used to enter a market once market momentum has proved itself.

Stop Loss
The trade is liquidated to halt any further decline in profit value.

Stop Loss Order
Becomes a market order to exit a position once a specific price has traded. Used to set an exit point for a losing trade.

Stop Order
Becomes a market order when the market reaches a predetermined price.

Stops
Orders used to enter or exit positions.
Buy stops are orders placed at a price above the current price of the market. (ie at a worse price than the current price) The order becomes a 'buy at the market' order if the market trades at or above the price of the stop order. Sell stops are orders that are placed with a price below the current price. (ie at a worse price than the current price) Sell-stop orders become 'Sell at the market' orders if the market trades at or below the price of the stop order.
Entry Stops are used when trading break-out strategies.
Exit Stops are used to liquidate trades to halt any further decline in profit value.

Strategy-Based Stops
A stop order that is placed at a price which would invalidate the reasons for taking a position.

Summary
A section of a trading screen that monitors position size, account value and current margin requirements.

Support
A price level that is below the market and has been tested at least once and held.

Support Level
- See Support

Swing Chart
A charting technique where a straight line is drawn from a price extreme, such as a high, to the next price extreme, such as a low, using a set criteria such as percentage movement. For example, a 2% swing chart will only change if the price movement is 2% or greater. The resultant effect will resemble zig-zags drawn on the chart.

Swing High
Technical analyst, W.D. Gann described price peaks “swing highs”. A “swing high” is a price bar that is higher than a certain number (typically at least two) of price bars coming before and after it.

Swing Low
Technical analyst, W.D. Gann described price troughs “swing lows”. A “swing low” is a price bar that is lower than a certain number (typically at least two) of price bars coming before and after it.

Swissie
A market term for the Swiss Franc currency.

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Tasuki Gap - Upside and Downside
(Candlestick Continuation Pattern)
TASUKI GAP
In a bearish Tasuki Gap the market develops in a downtrend in which two long black days develop in succession. The second long black day gaps below the first on the open. These are then followed by a white day that opens within the body of the second black day (has gapped higher on open) and closes within the gap between the first and second days.

The impact of the second black day gapping lower and declining causes a day of profit taking and since this cannot penetrate higher than the gap between the first and second black days, it implies that there is sufficient impetus to reverse the trend.

In a bullish Tasuki Gap the market develops in an uptrend in which two long white days develop in succession. The second long white day gaps above the first on the open. These are then followed by a black day that opens within the body of the second white day (has gapped lower on open) and closes within the gap between the first and second days.

The impact of the second white day gapping higher and rallying causes a day of profit taking and since this cannot penetrate lower than the gap between the first and second white days, it implies that there is sufficient impetus to reverse the trend.

Technical Analysis
The study of historical currency price behavior, primarily through the use of charts, for the purpose of forecasting the direction of future prices.

Technical Indicator
Mathematical formulas applied to currency prices to provide information on their behavior for the purpose of forecasting future price action. Indicator results are usually plotted on currency charts.

Tick
A market term for a Pip or Point.

Time Filters
Used to identify valid trendline penetrations and to eliminate false signals, known as “whipsaws”. Time filters require that prices break through a trendline by some predetermined time increment in order to signal a true trend reversal.

Trade Balance
The difference between the total value of a country’s imports and its exports.

Trade Deficit
When a country imports more goods and services than it exports.

Trade Entry (Dealing Rates)
The section on a trading screen that shows prices at which you can buy and sell currencies.

Trade Surplus
When a country exports more goods and services than it imports.

Trader’s Orders (Open Orders)
The section on a trading screen that shows unfilled trades left by a trader.

Trading Bands
Lines plotted in and around the price on the chart that form an envelope. Often used to identify near-term extreme price movements. Examples of Trading Bands are FXS-Adaptive Moving Average Bands, Bollinger Bands or Keltner Channels.

Trading Currency
- See Base Currency.

Trading Hours
In the Forex market, trading begins Monday morning in the Far East (7 PM EST, Sunday) and moves around the globe through various trading centers, until it closes Friday afternoon, at 3:00 pm EST in New York.

Trading Platform
Online currency trading software.

Trading Range
A sideways chart pattern, often a resting period for the market before resuming the original trend.

Trailing Stop
A technical tool for letting profits run. A moving level that trails price higher in an uptrend and lower in a downtrend. If long, a stop-loss order is adjusted higher by the trader as the trend advances. If short, the stop loss order is adjusted down as the market declines in price.

Transaction Cost
Brokerage fees.

Trend
TREND
Trends occur when price moves consistently in one direction. If the direction is higher the trend is considered to be bullish. If the direction is lower, then the trend is considered to be bearish. However, in defining a trend it is important to ensure that price peaks and troughs are pointing in the same direction. Thus in a bullish trend price highs and lows should be moving higher. In a bearish trend the price highs and lows should be moving lower.

Trend Channel
Frequently price trends develop between two parallel trendlines, reacting at the channel highs and lows. Once the channel is broken the trend lines reverse influence - i.e. a channel support line, when broken becomes resistance and vice-versa. An approximate target for a price reaction will be the vertical width of the channel projected from the point of break-out.

Trend-Following
A trading technique where the trader looks for a major trend to begin and holds positions in the direction of the trend.

Trendless
Sideways price movement with no clear direction.

Trend Line
TREND LINE
When a trend occurs, in many cases it is possible to draw support lines under an uptrend or resistance lines above a downtrend. It is considered that once these lines are broken that the trend has completed. This implies that it should result in a correction at the very least and possibly a reversal in the trend.

Trend Reversal
A change in the direction of market prices. Trend reversals often follow a 4-step pattern. The market makes a new high. The trendline is broken and the market makes an intermediate low. The next rally does not exceed the previous high. Prices subsequently break the previous low. Popular trend reversal patterns include Double and Triple Tops and Bottoms, and Head and Shoulders patterns.

Triangle
(Standard)
TRIANGLE
A period of price action where the market range narrows between two converging trend lines in the shape of a triangle. It is a corrective pattern and it is normal that price will resume the underlying trend once complete.
(Elliott Wave)
This is the same formation as in the standard triangle but Elliott applied a more rigid pattern definition, defining this as having five waves of three and developing between two converging trend lines.

Triangular Moving Average
A moving average in which each bar's value is multiplied by a weight that increases in value at steady increments to a peak value, then declines to the first weight at equivalent increments. The sum of the weighted daily data is divided by the number of weights.

Triple Bottoms
A price pattern associated with a trend reversal. In a downtrend a triple bottom is a price chart with three significant price troughs at around the same price low. If the price closes lower than the prior price troughs the downtrend will likely resume. However if prices rise above the previous intermediate high, a trend reversal may be beginning.

Triple Three
(Elliott Wave)
TRIPPLE THREE
This is an extended correction in which three ABC patterns occur with a Wave X separating each of them.

Triple Tops
A price pattern associated with a trend reversal. In an uptrend a triple top is a price chart with three significant price peaks at around the same price high. If the price closes higher than the prior price peaks the uptrend will likely resume. However if prices fall below the previous intermediate low, a trend reversal may be beginning.

Trough
Price low on a currency chart.

True Range
Developed by J. Welles Wilder. The largest of the following:
   Today's high minus today's low
   Today's low minus yesterday's close

Turnover
A term for trading volume or liquidity.

Two-Way Price
A quotation with both the bid and offer price.

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Unrealized Profit or Loss
The profit or loss status of open trades.

Uptrend
Characterized by a series of higher price highs and higher price lows.

Uptrend Line
A line drawn through least two ascending price lows, with a third needed for confirmation of the trendline.

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Value Date
The maturity date of a foreign exchange contract, at which time two currencies are exchange. A spot deal is usually done for value two business days from the trading date.

Variation Margin
The minimum funds required by an FX brokerage firm to support an open position.

Violation of a Trendline
When a currency trades below an uptrend line or above a downtrend line.

Volatility
A measure the tendency of price to move up and down, based on its daily price history over the some time period ranging from 30 days to 12 months.

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Wave
In Elliott wave theory, a sustained move (such as an impulse wave or corrective wave) by the market's price in one direction.

Wave 1
(Elliott Wave)
WAVE 1
The first impulse-wave, comprised of five internal waves - three impulsive (1, 3 & 5) and two corrective (2 & 4).

Wave 2
(Elliott Wave)
A correction to wave 1. It will normally be comprised of three waves, A-B-C but can become more complex.

Wave 3
(Elliott Wave)
The second impulse-wave, comprised of five internal waves - three impulsive (1, 3 & 5) and two corrective (2 & 4). Commonly (but not always) wave 3 is the longest of the impulse waves.

Wave 4
(Elliott Wave)
The second corrective wave. It is a correction to wave 3. It will normally be comprised of three waves, A-B-C but can become more complex.

Wave 5
(Elliott Wave)
WAVE 5
The third and final impulse-wave, comprised of five internal waves - three impulsive (1, 3 & 5) and two corrective (2 & 4). It is also possible for wave-5 to develop as an extension (see extended waves).

The example shown displays the entire wave structure leading to the final wave 5 rally.

Wave A
(Elliott Wave)
WAVE A
The first wave in a corrective pattern. In simple corrections (A-B-C) or linked combinations of A-B-C corrections, wave A will be constructed of five waves. However, in more complex corrections wave A is constructed of three waves.
In the diagram shown, notice the wave A in waves (2), (4), the wave [2] of one higher degree and the wave a in wave (B).

Wave B
(Elliott Wave)
 
The second wave in a corrective pattern. Wave B is always constructed of three waves or a combination of three-wave patterns. It can be the most complex of all waves with a wide variety of three-wave combination patterns that can develop.

The diagrams show a simple three-wave wave (B) on the left and a complex Wave (B) constructed of a five-wave (each of three-waves) triangle on the right.

Wave C
(Elliott Wave)
 
The third wave in a corrective pattern. In a simple corrective pattern (A-B-C) or a linked combinations of A-B-C corrections wave C is always constructed of five waves. However, in more complex corrections wave C is constructed of three waves.

The diagrams show a simple (A)-(B)-(C) on the left where the wave (C) is constructed of five waves. On the right we see a complex correction in which there are many examples of wave c (in blue) that are part of the triangular wave (B).

All the c waves (in blue) will be constructed of five waves as part of a series of a-b-c patterns. The third wave of this is a wave C (in green) which is constructed of three waves (ie a-b-c) and the final wave (C) (in red) is also constructed of five waves.

Wave D
(Elliott Wave)
WAVE D
The fourth wave in a correction, being of a triangle. Wave D will always be constructed of three waves and will only appear in a triangle.
The diagram displays a wave (B) triangle in which wave D is constructed of three waves.

Wave E
(Elliott Wave)
The fifth wave in a correction, being of a triangle. Wave E will almost always be constructed of three waves and will only appear in a triangle. In very rare occasions this wave E can be constructed of a triangle itself and thus will be constructed of five waves of three.

The diagram displays a wave (B) triangle in which wave E is constructed of three waves to complete the triangle.

Wave (i)
WAVE i
The first wave of a complex impulsive wave, these commonly being a diagonal triangle or an expanding triangle. While it is normal for an impulsive wave to be constructed of five waves, on occasions these five waves develop in three-wave patterns (and not five-wave) and appear in the patterns mentioned. These complex impulsive waves normally appear in wave 5 of an impulsive move although there have been rare instances of being associated to a wave 1 position.

The diagram displays a wave (i) in a diagonal triangle wave 5 (in green) that has developed in five waves of three, each being labeled in red.

Wave (ii)
(Elliott Wave)
WAVE ii
The second wave of a complex impulsive wave, these commonly being a diagonal triangle or an expanding triangle. While it is normal for an impulsive wave to be constructed of five waves, on occasions these five waves develop in three-wave patterns (and not five-wave) and appear in the patterns mentioned. These complex impulsive waves normally appear in wave 5 of an impulsive move although there have been rare instances of being associated to a wave 1 position.

The diagram displays a wave (ii) in a diagonal triangle wave 5 (in green) that has developed in five waves of three, each being labeled in red.

Wave (iii)
(Elliott Wave)
WAVE iii
The third wave of a complex impulsive wave, these commonly being a diagonal triangle or an expanding triangle. While it is normal for an impulsive wave to be constructed of five waves, on occasions these five waves develop in three-wave patterns (and not five-wave) and appear in the patterns mentioned. These complex impulsive waves normally appear in wave 5 of an impulsive move although there have been rare instances of being associated to a wave 1 position.

The diagram displays a wave (iii) in an expanding triangle wave 5 (in green) that has developed in five waves of three, each being labeled in red.

Wave (iv)
(Elliott Wave)
WAVE iii
The fourth wave of a complex impulsive wave, these commonly being a diagonal triangle or an expanding triangle. While it is normal for an impulsive wave to be constructed of five waves, on occasions these five waves develop in three-wave patterns (and not five-wave) and appear in the patterns mentioned. These complex impulsive waves normally appear in wave 5 of an impulsive move although there have been rare instances of being associated to a wave 1 position.

The diagram displays a wave (iv) in an expanding triangle wave 5 (in green) that has developed in five waves of three, each being labeled in red.

Wave (v)
(Elliott Wave)
WAVE v
The fifth wave of a complex impulsive wave, these commonly being a diagonal triangle or an expanding triangle. While it is normal for an impulsive wave to be constructed of five waves, on occasions these five waves develop in three-wave patterns (and not five-wave) and appear in the patterns mentioned. These complex impulsive waves normally appear in wave 5 of an impulsive move although there have been rare instances of being associated to a wave 1 position.

The diagram displays a wave (v) in a diagonal triangle wave 5 (in green) that has developed in five waves of three, each being labeled in red.

Wave X
(Elliott Wave)
WAVE X
A three wave pattern that divides extended corrections in a series of A-B-C waves. Within a Double Zig-zag there will be one wave X between the two ABC patterns. In a Triple Three there will be two instances of a wave X, each being between the three ABC patterns.

Wedge
(Standard)
WEDGE
A period of trading within which the price action is either rising or falling within two converging trend lines.

(Elliott Wave)
This is a five-wave pattern in which the waves are constructed of three waves. The pattern emerges normally between two rising (or falling) converging lines, though they can be parallel. It is most commonly found in wave 5 positions, but can also occur in wave A or wave C. In classic technical analysis it is called a wedge.

Whipsaw
To buy and have the price collapse, and then sell short and watch the market rally.

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X-Bar Trailing Stop
- Used with a long position, the X-Bar Trailing Stop begins as an order to sell at the lowest price of the last “X” number of bars. Used with a short position, the X-Bar Trailing Stop begins as an order to buy at the highest price of the last “X” number of bars.

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Zig Zag
(1) A filter that only shows moves of a predetermined percentage. Any moves of less than the set percentage are ignored. This is the same as Swing Charts.
(2) A corrective three-wave pattern in Elliott Wave comprised of two five-wave moves separated by a three-wave move.

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Thank you for visiting the glossary section. If you have any suggestions or additions please contact us.





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Trading Ideas for 18 December 2017

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1.

Amazing Trader EVENT RISK Calendar:

Mon 18 Dec
10:00 EZ- final HICP
Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account
Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude
Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP
Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes
Mon 25 Dec
00:00 Christmas Holidays

Forex Trading Outlook


Potential Trading Opportunities

  • POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.


  • POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
  • POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity

  • POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
  • POTENTIAL PRICE RISK: Medium- Wed --15:30-- US- EIA Crude

John M. Bland, MBA
co-founding Partner, Global-View.com EXCLUSIVE: Global-View Daily Trading Chart Points Updated

EXCLUSIVE: Global-View Free Forex Database updated




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Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog

Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.

 

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