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BonTrade A-Z.

 

Useful Phrases


Learn these phrases - This is a list of phrases used on our site and in our Trade Room, it is not a comprehensive list of all Trading Phrases & Acronyms, but it is a start. A click on some of them for further reading is encouraged too as our explanations are basic, these are all expressions which will serve you well in your Day Trading Career, and ones we use regularly. A thorough investigation and revision of all these terms and their definitions, will see you well in your Basic Training.

A new Forum Thread on any of these is welcomed, please visit our FORUM>> to post a thread, or reply to an existing theme.

We welcome additions to the A-Z database. Please contact us with your suggestions via the FORUM

 

A

Ask - Price at which Traders offer to sell.

Arbitrage - (Arb) Taking advantage of price differentials between 2 or more markets, capitalizing on the imbalance. Generally very fast trades, with little or no downside risk as Institutional Traders engage in this practice, buying at the BID and selling at the ASK.

After Hours (A/H) - Outside of normal Market Hours. Liquidity can dry up, and stocks can be especially dangerous during this time.

ATM - Automatic system for opening and closing trades quickly. We utilize this inside our TOS Dome whilst Scalping. NinjaTrader feature too.

 

B

Bim Bom - Finished, end of story. Pointless mentioning it again. BonTrade EXCLUSIVE.

Bid - Price at which Traders request to buy.

Bull - Bull (Bullish) is when a given market (or all as a whole) are trending to the upside.

Bear - Bear (Bearish) is when a given market (or all as a whole) are trending to the downside.

Break Even (B/E) - A trade which is closed with ZERO profit or loss. A loss will still be incurred by the Commission of the trade.

BonHook (BH) - A pattern we use in our Trade Room - Bearish or Bullish

 

C

Capitulation - Seen to be market bottom. True "capitulation" is seen when everyone has given up and a final low is seen.

Crude - A type of oil traded on Nymex. CL is the main contract, QM the E-Mini.

COMEX - Commodities Exchange, part of NYMEX (both wholly owned by the CME now). Metals trade on COMEX, including GOLD itself.

Cover - To close ones position (or to partially close "some").

CME - Chicago Mercantile Exchange. The Largest Exchange in the world. www.CMEGROUP.com

Confluence - Merging of multiple (price action) signals to provide a stronger signal. Confluence of trading signals is key to our success.

Consolidation - Sideways market action within a narrow range, often after an extended move.

 

D

Dome - DOM - Depth of Market - Part of a Trading Platform which allows you to Trade quickly on the fly. Able to act very quickly, generally with speedy short cuts to place & amend orders in real time at the pace of the market.

Delayed Data - PaperTrading Platforms often contain delayed data. Live Traders must have Real Time Data.

Day Trading - The trading of Financial Instruments, opening and closing of the Trade within the normal trading hours of one Market day.

Dow - Perhaps the most known of all stock market indices. The Dow Jones Industrial Average comprises 30 large publicly owned US companies. It is a heavily traded liquid market. We often trade the Emini Futures equivalent known as /YM.

Divergence - When the "Price" of a Financial Instrument moves in the opposite direction to an "Indicator" attached to it. Often signaling that a reversal (or continuation) is ahead or in progress. Reverse Divergence and Normal Divergence should be researching thoroughly.

Doji - Candlestick type that we look for

 

E

ETF - Exchange Traded Fund - These trade much like Stocks do. Often leveraged they are intricate instruments. Not for the novice trader.

ETF - (In Live Trade Room) A Time Trade that we like to mention.

E-Mini - The EMinis are Futures Contracts designed for the Smaller Trader - They replicate the full contract which the Institutions Trade but they are smaller contracts, controlling less. We generally use these when Trading Futures - margin requirements are less than the Full Contract, and they are incredibly liquid during Market Hours. Trading on Globex, they work almost without stopping Sunday afternoon to Friday Afternoon. Examples... ES - S&P, YM - Dow, QM - Nymex Crude, NQ - Nasdaq.

Exchange - Place where all financial instruments are exchanged on behalf of the BUYERS/SELLERS. CME, NYSE, LSE etc.

Equity - Ownership that you have tied up in Stocks or other financial instruments. Can normally be liquidized into Cash quickly.

Engulfing - When one candle completely engulfs the preceding candle

 

F

Fade - Quick scalp trade against the current trend, can turn into a longer fade from extremes.

Fizzog - In a bad mood, got a mardy face on. BonTrade EXCLUSIVE.

Flatten - To exit all of ones trades. To be "Flat" is to be All Cash. Most platforms have a Flatten Button to exit all at once, at Market

Forex (Fx) - The Foreign Exchange Market Place. Where many budding traders begin their quest. Liquid and 24 hour trading.

Fred - Rubbish, crap, BS. Generally used as a response when someone is likely fabricating. Can be used in jest. Exclusive to BonTrade

Futures - Standardized contracts to BUY or SELL a specific Commodity of standardized quality at a certain date in the future at a market determined price. A way of farmers to hedge for instance, locking in their Corn price at today's date, even though the price may drop by the time the crop matures and is ready for the streets... Or Vice Versa of course. We trade them for profit daily. YM CL QM NQ ES

Fundamental Analysis - Evaluation of stocks and other instruments based upon individual company strengths, earnings, weaknesses, news, health, management and competitors etc. Fundamental basis for Futures and Forex are based upon the WorldWide Economy , Interest Rates and the Stock Markets in general. We rarely use Fundamental Analysis, preferring to use Technical Analysis which is better suited to the short term trading that we do.

 

G

Globex - The Electronic Trading Platform where approximately 70% of the CME trading volume is performed. Trading almost 24 hours per day, it is extremely efficient and matches the BUYERS and SELLERS together, all electronically.

 

H

Holy grail - Forget it. Where trading is concerned, there isn´t one. There is however a path to consistent profits, and you have already found the best resource for that !

Hedge - A green thing in your back (or front) garden, OR a way of covering both sides of a trade so you make money whichever way the market goes &/or to help limit loss. Well beyond the scopes of BonTrade, but fascinating never the less for die hard traders. See Hedging

 

I

Illiquid / Illiquidity - Term relevant to whether a "Financial Instrument" has enough buyers and sellers at all times during Market Hours. An illiquid market is sometimes difficult to enter and exit quickly. Further definition here - Opposite of Liquid. In an illiquid market an order placed at "market" can cause price to move drastically (against you), and/or can be very difficult to fill and execute. Examples of Illiquid Instruments are stocks such as SPAH - Very few shares traded daily - Trade illiquid instruments with your EYES OPEN.

Indicators - Various indicators can be used on your Trading Instruments to give ideas and "indication" of where the specific market is going to go. Examples are Bollingers, RSI, CCI, MACD and many more. There are price based indicators and Volume Indicators.

INO - An online institution where new traders can get free information. A trusted resource.

Instruments (Financial) - Financial Instruments are what we play with day in day out. Examples of Financial Instruments are Stocks (AAPL, SPAH, MS, BA etc etc) and also Futures (QM, YM, NQ, ZB, CL etc etc).

In the Money - Term to state when a trade has become profitable. Can be used on all trades, but increasingly so on OPTIONS TRADES where specific variables are met to make the trade profitable and "In the Money". Out of the money is the opposite when there is no current value to the option, in this case it is rarely used with other types of trades.

 

J

Jiggy - Phrase coined by Muddy to signify that a stock is getting attention. Muddy watches the stock Q Box, and the B/A gets incredibly fast.... If a stock is getting Jiggy, then it is best to watch it and learn ! Or Trade it and EARN !...

 

K

Keltner Channels - An indicator measuring price in relation to MA Bands

 

L

Liquid / Liquidity - Term relevant to whether a "Financial Instrument" has enough buyers and sellers at all times during Market Hours. A liquid market is easy to enter and exit quickly. Further definition here. During Market Hours, Instruments such as YM, CL, ES are extremely Liquid enabling very fast executions, as are stocks such as Apple (APPL) for instance.

Long (to trade) - Term indicating a BUY. To buy a stock or instrument, is to trade long (unless buying to cover).

Level 2 - Feature enabled on some Trading Platforms to see the Market Depth of a Financial instrument. Normally utilized with Stocks to see where the orders are placed around the trading market, it can be used on most traded items to see the Bid and Ask. You could write a book on how to use Level 2, and some people have. It is incredibly important when trading stocks, especially the lesser priced ones.

Leverage - Insane invention which allows someone to buy much more than they can afford. You can lose more than your investment with Leverage as the banks all showed in 2007/8 when the worst recession was caused primarily by over leveraging. FX has massive leverage options, as do Futures.

 

M

Market (To trade at) - This gives you an immediate entry into the Market at best price offered. Can be slippage in a fast market, even in a very liquid market like YM or CL. Be very careful of trading at market on illiquid instruments, and especially on OTCBB stocks for instance.

Market Hours - Depends upon the stock or instrument in question. For the purposes of BonTrade we use the US market which is open 0930am - 1600hrs EST, this is for stocks and the YM, ES and NQ. Oil has slightly different trading times of 0900am - 1400hrs EST. It should be noted that the Futures Markets trade almost 24hrs per day on Globex, although they are busier (more liquid) during the above Market Hours.

Market Profile - Intricate system showing Order Flow. Not interesting to us.

Money Management - Incredibly important part of Trading. The managing of trades and profit and loss per trade

Moving Averages ( MA) - Indicators added to the chart to show the average price or an instrument over a specific time frame.

 

N

NapNap - Bedtime. Time for a "nap". Exclusive to BonTrade. (LOL)

Nymex - New York Mercantile Exchange. Now part of the CME. Worlds largest physical Commodity Futures Exchange. Incorporates COMEX.

Nasdaq - National Association of Securities Dealers Automated Quotations - Although that acronym is now obsolete. This exchange is the largest Electronic Screen Based Exchange in the USA - It has the highest volume of any in the world. Mainly technology stocks, the likes of Apple (APPL) and Microsoft both trade on the Nasdaq. The Futures equivalent is the NQ, always one to watch, currently out performing both S&P and Dow (YM).
More here

NYSE - New York Stock Exchange

 

O

Open Outcry - The method of communication where Pit Traders still shout and scream at each other to execute trades in real time. Computers and large electronic screens play a big part in this now of course, but the shouting and hand signals are still utilized in Pits. The Pits only work "Normal Market Hours (depending on the pit and instrument), outside of these market hours Globex takes over.

Options - Intricate Financial Instrument that conveys the right, but not the obligation, to engage in a future transaction on some underlying Financial Instrument. We do not ever trade OPTIONS.

OTC / OTCBB - Over the Counter Trading Exchange, the equities on these exchanges are not normally listed and can be extremely dangerous to trade blindly. We are always careful and rarely use Market Orders with these. Often low volume and illiquid (and prime for Pump and Dump Schemes).

One Time Framing - Simple trading method to dictate the medium term trading trend. 30 minute bars are used in patterns to dictate the "real trend".

O/N - Over Night - The holding of any financial instrument Over Night. Risky and we rarely do it. Margin requirements can increase to hold positions overnight, so check with your broker if you are unsure.

Out of the Money - When an option is currently not profitable and has no value.

 

P

Papertrading - Trading Platform enabling the full trading simulation of Real Live Trading. No money is involved, so zero risk.

PDT - Pattern Day Trading Rule - Silly rule by the US govt. to stop retail traders with less than a 25k account trading more than 3 times per week.

Pit - Where the traders shout their orders at the Pro end of the market

PITA - Pain in the ass. Often talking about a price that won´t break for a trade we are in.

Platform - Software used to trade the markets

Pre-market - Time before the action open of the open outcry market - often less liquid

Price Action - PA is seen in the technical analysis and chart patterns.

Pump and Dump - A stock which has been artificially inflated so that some can get rid of their stock at higher than normal prices. Illegal activity that the SEC would be better off trying to stop, then maybe they can leave alone the pathetic PDT ruling.

 

Q

Quantum Fund - Started by Soros and Jim Rogers in the early 70s. Famous for breaking the BoE

 

R

Rally - Price surges in given markets, rallies are always to the top side, whether in Bear or Bull Markets.

Reverse - To immediately reverse ones positions. If you are short -2 QM for instance, you will buy 4 contracts to finally be +2 contracts. Most platforms have a superficial button available to reverse a trade immediately at market.

Resistance - Area which is hard for a given market to pass through to the upside, past support becomes resistance. Resistance is always above price

 

S

Scalp Trade - A fast fine tuned trade which takes small amounts from the moving market

Scale Out Trade - Part of money management. To take a partial amount of your position off, so you are locking in profit (or locking in price).

Shallow - Shallow pullbacks are looked for in markets, for buying (or selling) opportunities.

Spread - The spread is the difference between the BID and the ASK. A cost of trading.

Short (to trade) - Term indicating a SELL. To sell a stock or instrument before one buys it, is to trade short. This way the trader makes money if the market price drops - This often gets confusing for a new trader to understand, but just take it that you SELL it before you BUY it, you simply borrow the shares from the exchange - This helps add Liquidity to markets. Illiquid stocks are often "Hard To Borrow", where it is virtually impossible to SHORT them.

Scared money - Trading with more than one can comfortably lose. It´s never easy losing money but part of the course in a trading career. Trading with money that is scared is often a death sentence for that money and it will quickly be swallowed by the market. It is said that one should not consider the money whilst in a trade, only consider the trade itself and base your executions on that, the only way to do this in reality is to not be worried about the amount of money involved.

SEC - United States Securities & Exchange Commission. Perhaps the biggest joke in this industry. The "Governors" although they fail to pick up people like Bernie Madoff even though they had investigated him on numerous occasions. They prefer to pick on the little guy, and make laws such as PDT which is a pathetic attempt at who knows what.

S&P - S&P 500 Index, otherwise known as SP

Slippage - When the market moves so fast that your market order "Fill" slips along, getting you a price away from where you placed the order - Can be positive of negative slippage, but it has to be said, it is most often negative slippage.

Support - Price area where a given market finds it hard to pass through to the downside. Support can be past resistance, an old high, or calculated in many other ways. Support is below current price.

Swing Trade - A longer trade which bears in mind the daily swings that instruments can give. Large stops are needed and large profits can be had. Much more difficult than day trading in my opinion.

 

T

TOS - Think or Swim Trading Platform

Tim - Timothy Sykes. Extremely competent Penny Stock Trader - Short Bias

Technical Analysis - Subjective way of forecasting the prices of markets, whether on short or long term basis (seconds to years). Using charts and visual aids a (certain type of) Trader can work solely from Technical Analysis.

Trend - Indication of the direction a market is taking over a given period of time. The trend can be measured on many timeframes from seconds to years. Bull and Bear Markets are both "Trends".

Trend Lines - Temporary / Permanent horizontal to almost vertical lines dictating trends and their potential futures. Drawn on charts to signify where trends may continue to, or indeed where they may be broken. Mostly subjective.

 

U

Nada. Sorry :-) Feel free to suggest something for U.

 

V

Value Area - Measured points of (70% of) Trading Range for the previous days market hours action. Used in Futures, primarily YM, ES, NQ, and provided on our Forum every day for our clients to mark up their charts. These can be important numbers and play as excellent Support and Resistance as well as targets, given the right conditions.

Volume - Incredibly important indicator which we add to nearly all our charts. Showing exact details of how many shares or contracts are traded within a given time. Volume is higher during market Hours and can give good indication of price movement.

 

W

Wash - To strategically "flatten" ones trades, exiting the market.

Waves - The markets all move in waves, up down, up down, up down, etc. Quantifiable waves in some cases.

W 625 etc - To watch a certain price, for Price Action.

 

X

Nothing.

 

Z

Zero Line - Marked point on a technical indicator.

 

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