-A-
Above The Market: An order to buy or sell at a price set higher than the current market price of the security. Examples of above the market orders include: a limit order to sell, a stop order to buy, or a stop-limit order to buy.
This is a strategy that is often used by momentum traders. For example, a stop order would be placed above the resistance level to buy. Should the security's price break through the resistance level, the investor may be able to participate in the upward trend.
Absolute Breadth Index: A market indicator used to determine volatility levels in the market without factoring in price direction. It is calculated by taking the absolute value of the difference between the number of advancing issues and the number of declining issues. Typically, large numbers suggest volatility is increasing which is likely to cause significant changes in stock prices in the coming weeks.
This tool is classified as a breadth indicator because the number of advancing/declining values are the only values used to create it. This index can be calculated using any exchange, or a subset of an exchange, but traditionally the NYSE has been the accepted standard.
Accumulation/Distribution: A momentum indicator that attempts to gauge supply and demand by determining whether investors are generally "accumulating" (buying) or "distributing" (selling) a certain stock by identifying divergences between stock price and volume flow. It is calculated using the following formula:
Acc/Dist = ((Close – Low) – (High – Close)) / (High – Low) * Period's volume
For example, many up days occurring with high volume in a downtrend could signal that the demand for the underlying is starting to increase. In practice, this indicator is used to find situations in which the indicator is heading in the opposite direction as the price. Once this divergence has been identified, the trader will wait to confirm the reversal and make his or her transaction decisions using other technical indicators.
Actuarial Analysis: The analysis of an investment's risk done by an actuary.
A highly educated actuary will use statistics and historical data in an attempt to measure the risk of a particular investment.
Advance/Decline Index: A technical analysis tool that represents the total difference between the number of advancing and declining security prices. This index is considered one of the best indicators of market movements as a whole. Stock indexes such as the Dow Jones Industrial Average only tell us the strength of 30 stocks, whereas the advance/decline index can provide much more insight into the movements of the market.
In general, rising values of the advance/decline can be used to confirm the likelihood that an upward trend will continue. If the market is up but there are more declining issues than advancing ones, it's usually a sign that the market is losing its breadth and may be getting ready to change direction
Imagine that the advance/decline index on the S&P 500 is currently at 1835. If at the end of the last trading day, 300 stocks were up (advance) and 200 were down (decline), 100 would be added to the advance/decline index value, pushing it to 1935.
When this index is plotted on a chart, it is known as the "advance/decline line".
Advance/Decline Line - A/D: A technical indicator that plots changes in the value of the advance-decline index over a certain time period. Each point on the chart is calculated by taking the difference between the number of advancing/declining issues and adding the result to the previous period's value, as shown by the following formula:
A/D Line = (# of Advancing Stocks - # of Declining Stocks) + Previous Period's A/D Line Value
This indicator is used by many traders to confirm the strength of a current trend and its likelihood of reversing. If the markets are up but the A/D line is sloping downwards, it's usually a sign that the markets are losing their breadth and may be setting up to head in the other direction. If the slope of the A/D line is up and the market is trending upward then the market is said to be healthy.
Andrew's Pitchfork: A technical indicator that uses three parallel trendlines to identify possible levels of support and resistance. The trendlines are created by placing three points at the end of identified trends. This is usually achieved by placing the points in three consecutive peaks or troughs. Once the points have been placed, a straight line is drawn from the first point that intersects the midpoint of the other two. Also known as "median line studies".
The chart shown here makes it clear why this indicator is called a pitchfork. The first point drawn on the chart forms the handle, while the lines extending from the other two points will make up the prongs.
Arithmetic Mean: A mathematical representation of the typical value of a series of numbers, computed as the sum of all the numbers in the series divided by the count of all numbers in the series.
Arithmetic mean is commonly referred to as "average" or simply as "mean".
Suppose you wanted to know what the arithmetic mean of a stock's closing price was over the past week. If during the five-day week the stock closed at $14.50, $14.80, $15.20, $15.50, and then $14.00, its arithmetic mean closing price would be equal to the sum of the five numbers ($74.00) divided by five, or $14.80.
Ascending Tops: This refers to a series of peaks, each peak higher than the previous one on the instruments chart pattern. The chart below illustrates a series of four ascending tops.
This is considered a very bullish indicator.
Ascending Triangle: A bullish chart pattern used in technical analysis that is easily recognizable by the distinct shape created by two trendlines. In an ascending triangle, one trendline is drawn horizontally at a level that has historically prevented the price from heading higher, while the second trendline connects a series of increasing troughs. Traders enter into long positions when the price of the asset breaks above the top resistance. The chart below is an example of an ascending triangle:
You can filter out smaller price movements by increasing the box size
Autoregressive: Using past data to predict future data.
Essentially it's forecasting, similar to predicting the weather. Unfortunately, sometimes even the weatherman can be caught in an unexpected downpour.
Average True Range - ATR: A measure of volatility introduced by Welles Wilder in his book: New Concepts in Technical Trading Systems
The True Range indicator is the greatest of the following:
-current high less the current low.
-the absolute value of the current high less the previous close.
-the absolute value of the current low less the previous close.
The Average True Range is a moving average (generally 14-days) of the True Ranges.
Wilder originally developed the ATR for commodities but the indicator can also be used for stocks and indexes. Simply put, a stock experiencing a high level of volatility will have a higher ATR, and a low volatility stock will have a lower ATR
Traders use a move above 20 to suggest the start of a new trend (either up or down) and a move below 40 to suggest that the current trend may be coming to an end. The ADX is a derivation of two separate indicators known as direction momentum indicators (+DI and -DI). Unlike the ADX, these direction momentum indicators can be used to gauge trend direction and are commonly plotted alongside the ADX.
|
MFN © 2006 | Add Link | Quotes | MFN Does Not Except US Customers | Disclosure | Privacy Policy | The OTC | GLOBAL WARMING