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Thursday, March 28, 2024
Knowledge BaseGlossary

Glossary

Algorithmic Trading can be a complex subject. Keep your knowledge current with this glossary of key concepts, terminology, and technical indicators.

Klinger Oscillator

Klinger Oscillator

A technical indicator developed by Stephen Klinger that is used to determine long-term trends of money flow while remaining sensitive enough to short-term fluctuations to enable a trader to predict short-term reversals. This indicator compares the volume flowing in and out of a security to price movement, and it is then turned into an oscillator.

Know Sure Thing (KST)

Know Sure Thing (KST)

A two-line indicator used determine momentum in stock trends. As an oscillator it fluctuates above and below zero, providing trade signals and analytical insight based on divergence with price and KST and signal Line crossovers. The indicator formula utilizes four different time frames to show overall momentum, and not just momentum over one specific timeframe:

Line Chart

Line Chart

Line Chart

A style of chart that is created by connecting a series of data points together with a line. This is the most basic type of chart used in finance and it is generally created by connecting a series of past prices together with a line.

Long-Legged Doji

Long-Legged Doji

A type of candlestick formation where the opening and closing prices are nearly equal despite a lot of price movement throughout the trading day. This candlestick is often used to signal indecision about the future direction of the underlying asset.

Low Volume Pullback

Low Volume Pullback


A technical correction toward an area of support that occurs on lower-than-average volume. The low volume is a signal to traders that the trend is not reversing and that it is only the weak longs looking to lock in a quick profit. Frequent moves that occur in the opposite direction of a trend, which are accompanied by low volume, are normal fluctuations and generally deemed to be insignificant. On the other hand, a large spike in volume in the opposite direction of the trend could be used to signal that the smart money is starting to look for the exits and that the trend is getting ready to reverse.

MACD - Moving Average Convergence Divergence

MACD - Moving Average Convergence Divergence

MACD - Moving Average Convergence Divergence

A trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals.

Market Breadth

Market Breadth

A technique used in technical analysis that attempts to gauge the direction of the overall market by analyzing the number of companies advancing relative to the number declining. Positive market breadth occurs when more companies are moving higher than are moving lower, and it is used to suggest that the bulls are in control of the momentum. Conversely, a disproportional number of declining securities is used to confirm bearish momentum.

Market Indicators

Market Indicators

A series of technical indicators used by traders to predict the direction of the major financial indexes. Most market indicators are created by analyzing the number of companies that have reached new highs relative to the number that created new lows, also known as market breadth.

Marubozo

Marubozo

A type of candlestick charting formation that appears when a security's price does not trade outside the range of the opening and closing prices.

Mass Index

Mass Index

A form of technical analysis that examines the range between high and low stock prices over a period of time. The Mass Index, developed by Donald Dorsey in the early 1990s, suggests that a reversal of the current trend will likely take place when the range widens beyond a certain point and then contracts. 

Mat Hold Pattern

Mat Hold Pattern

A pattern found in the technical analysis of stocks that ultimately indicates the stock will continue its previous directional trend (bullish or bearish). The pattern is initially indicated by a significant trading day in one direction or another, followed by three small opposite trending days. The fifth day then continues the first day's trend, pushing higher or lower, in the same direction as the first day's movement.

McClellan Oscillator

McClellan Oscillator

A market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE. It is primarily used for short and intermediate term trading.
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