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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.

McClellan Summation Index

McClellan Summation Index

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It is a market breadth indicator, and interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends.

McGinley Dynamic Indicator

McGinley Dynamic Indicator

A little known technical indicator developed by John McGinley in 1990. The indicator attempts to solve a problem inherent in moving averages which use fixed time lengths (ie. a 10 or 21 period moving averages), a problem that causes those moving averages to be outrun in fast markets.

Momentum

Momentum

The rate of acceleration of a security's price or volume. The idea of momentum in securities is that their price is more likely to keep moving in the same direction than to change directions. In technical analysis, momentum is considered an oscillator and is used to help identify trendlines.

Money Flow

Money Flow

Calculated by averaging the high, low, and closing prices, and multiplying by the daily volume. Comparing that result with the number for the previous day tells you whether money flow was positive or negative for the current day.

Money Flow Index - MFI

Money Flow Index - MFI

A momentum indicator that uses a stock’s price and volume to predict the reliability of the current trend. Because the Money Flow Index adds trading volume to the Relative Strength Index (RSI), it’s sometimes referred to as volume-weighted RSI. 

Morning Star

Morning Star

Morning Star

A bullish candlestick pattern that consists of three candles that have demonstrated the following characteristics:
1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.
3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar's body.

Moving Average - MA

Moving Average - MA

Moving Average - MA

A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random price fluctuations. A moving average (MA) is a trend-following or lagging indicator because it is based on past prices. The two basic and commonly used MAs are the simple moving average (SMA), which is the simple average of a security over a defined number of time periods, and the exponential moving average (EMA), which gives bigger weight to more recent prices.

Moving Average Chart

Moving Average Chart

A tool used by technical analysts to track the price movements of a security or commodity. It plots average daily settlement prices over a defined period of time, anywhere from a few days to a couple years.

Moving Average Convergence Divergence - MACD

Moving Average Convergence Divergence - MACD

Moving Average Convergence Divergence - MACD

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.

Moving Average Ribbon

Moving Average Ribbon

Moving Average Ribbon

A technique used in technical analysis to identify changing trends. It is created by placing a large number of moving averages onto the same chart. When all the averages are moving in the same direction, the trend is said to be strong. Reversals are confirmed when the averages crossover and head in the opposite direction.

Multiple Tops

Multiple Tops

A reversal chart pattern that shows the failure of a security to break through to new highs on a number of occasions, and is therefore a strong sell signal. Multiple tops can be double or triple tops. A multiple top usually develops at the end of an uptrend in a security or index. As the uptrend fades out in the same general area many days or weeks apart, the security falls back on each occasion and establishes a support level, which is the price level at which the bulls shore it up. If it continues to fail to break through the stiff resistance offered by the multiple top region, at some point the bears will succeed in pushing it below the support level. The downside break of this support level would be conclusive evidence of the multiple-top pattern formation.

Negative Directional Indicator - -DI

Negative Directional Indicator - -DI

A component of the average directional index (ADX) that is used to measure the presence of a downtrend. When the -DI is sloping upward, it is a signal that the strength of the downtrend is increasing. This indicator is almost always plotted with the positive directional indicator (+DI).
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