Day Trading Terms to Know

Actionary waves
An Elliott wave term. Actionary waves or trend waves are those whose direction agrees with the trend of one higher degree of which it is a part.

Average rise or decline
Average is the sum of the samples divided by the number of samples. The average rise/decline measures from the breakout price to the ultimate high or ultimate low.

Average True Range: Technical Analysis volatility that provides an indication of price volatility. Range of day’s trading is high-low. The true range extends it o yesterday’s closing price if it was outside today’s range. This is a moving average of the last 14 periods.

Bear market
The decline in the S&P 500 Index from March 24, 2000 to October 10, 2002.

Best 10-day performance rank (candlesticks)
Ten days after the breakout, the price move is evaluated and displayed is the best rank from the combinations of bull/bear markets and up/down breakout directions.

Best average move in 10 days (candlesticks)
Ten days after the breakout, the average price move is evaluated and shown is the best result from the combinations of bull/bear markets and up/down breakout directions.

Best percentage meeting price target (candlesticks)
Usually the height of the candle pattern added to the top or subtracted from the bottom of the candlestick pattern to get a target price. This is the best result from the combinations of bull/bear markets and up/down breakout directions.

Break even failure rate.
A measure of the number of patterns that fail to rise (upward breakout) or decline (downward breakout) by at least 5%. Think of the break even failure rate as the percentage of patterns that fail to cover the cost of trading.

When price pierces a chart pattern trendline or above the top or below the bottom of a chart pattern. In the case of a head-and-shoulders, a neckline pierce is used or the right shoulder armpit.

Breakout volume
The volume on the day of a chart pattern breakout as compared to the average of the prior 3 months.

Bull market
Everything outside of the March 24, 2000 to October 10, 2002 bear market .

Busted patterns
Price that moves less than 10% after the breakout before reversing and zipping to the other side of the chart pattern, thus trending in a new direction. The move busts the original breakout direction.

Days to cover: Calculated as the aggregate short interest for the month divided by the average daily share volume traded between short interest settlement dates. Also known as “short interest ratio.”

Fee rate: Interest rate charged on borrowed shares.

Market Capitalization: The value of a company that is traded on the stock market, calculated by multiplying the total number of shares by the present share price: the company had seen its stock price soar, giving the whole enterprise a market capitalization of more than $20 billion. Market Cap is shown on the Level 1 Quote.

Price Earning Ratio: The current market price of a company share divided by the earnings per share of the company.

Rebate rate: Fed funds or other currency-relevant Benchmark rate minus the interest rate charged on borrowed shares.

Short % of Float: Percentage of short interest shares to float shares outstanding. Percentage of Float % = short interest/float shares x 100.

Short Interest Change: The percentage that the short interest shares have changed compared to the previous period.

Short Outstanding Ratio: Percent of short interest to total shares outstanding.

Shortable Shares: The number of shares available for shorting.

Support: An Area where Buyers come in and support the stock and preventing it from dropping any lower. Resistance will become Support when it has been broken because Day traders will come in at the Support level

Resistance: An area where sellers will come in and resist the stock from increasing any higher. Typically if a stock suddenly decreases, there will be a volume of buyers who will sell at that point to “break even” which would create the resistance point.

Volume: Amount of shares being exchanged. High volume allows you to enter and exit a trade easier.

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