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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.

Close Location Value - CLV

Close Location Value - CLV

Close Location Value - CLV

A measure used in technical analysis to determine where the price of the asset closes relative to the day's high and low. The CLV ranges between +1 and -1, where a value of +1 means the close is equal to the high and a value of -1 means the close is equal to the day's low.



Commodity Channel Index - CCI

Commodity Channel Index - CCI

Commodity Channel Index - CCI

An oscillator used in technical analysis to help determine when an investment vehicle has been overbought and oversold. The Commodity Channel Index, first developed by Donald Lambert, quantifies the relationship between the asset's price, a moving average (MA) of the asset's price, and normal deviations (D) from that average. It is computed with the following formula:

Confirmation

Confirmation

1. The occurrence of two or more indicators corresponding with one another and thereby corroborating the predicted trend. 2. The written acknowledgment provided by a broker indicating that a trade has been completed. This includes details such as the date, price, commission, fees and settlement terms of the trade.

Confirmation On A Chart

Confirmation On A Chart

An indicator or chart pattern that provides evidence that the initial trading alert in question is indicative of an actual trading opportunity. Traders look to other technical indicators to confirm their expected prediction so that they can have as many technical factors working in their favor as possible. This increases the probability of making a highly successful trade.

Consolidation

Consolidation

In technical analysis, the movement of an asset's price within a well-defined pattern or barrier of trading levels. Consolidation is generally regarded as a period of indecision, which ends when the price of the asset breaks beyond the restrictive barriers. Periods of consolidation can be found in charts covering any time interval (i.e. hours, days, etc.), and these periods can last for minutes, days, months or even years. Lengthy periods of consolidation are often known as a base.

Continuation Pattern

Continuation Pattern

A technical analysis pattern that suggests a trend is exhibiting a temporary diversion in behavior, and will eventually continue on its existing trend.

Corrective Waves

Corrective Waves

A set of stock price movements that occur against the main trend according to the Elliot Wave method of technical analysis. According to the Elliott Wave theory, stock price movements occur in predictable cycles. These movements are broken up into motive waves and corrective waves. Motive waves are stock price movements in the direction of the trend, and corrective waves are movements against the trend. Together, motive waves and corrective waves form certain patterns which are the basis of the Elliott Wave theory.

Count

Count

A type of technical analysis that uses point and figure charts to estimate the vertical movement of prices. Count analysis involves using a series of X's that represent price increases, and O's that represent price decreases, with a normal scale and a predetermined reversal amount. Investors then examine the sequence of price fluctuations to estimate future price movements.

Countertrend Trading

Countertrend Trading

A type of swing-trading strategy that assumes a current trading trend will reverse and attempts to profit from that reversal. Countertrend trading is a medium-term strategy in which positions are held between several days and several weeks. Countertrend traders rely on graphs (such as the Bollinger Band®), indicators (such as the Aroon indicator) and oscillators (such as the relative strength index or Chande momentum oscillator) to make their decisions.

Crossover

Crossover

The point on a stock chart when a security and an indicator intersect. Crossovers are used by technical analysts to aid in forecasting the future movements in the price of a stock. In most technical analysis models, a crossover is a signal to either buy or sell.

Cumulative Volume Index - CVI

Cumulative Volume Index - CVI

A momentum indicator that gauges the movement of funds into and out of the entire stock market by adding the difference between advancing and declining stocks to a running total.

Cumulative Volume Index - CVI

Cumulative Volume Index - CVI

A momentum indicator that gauges the movement of funds into and out of the entire stock market by adding the difference between advancing and declining stocks to a running total.
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