Accumulation:
The first phase of a bull market. While most investors are discouraged with the market, and earnings are at their worst, some investors start buying shares. Or, this term can refer to an addition to a trader's position.

Adaptive Reasoning Model:
OmniTrader's knowledge-based capabilities, including testing and voting methodology, that generate trading recommendations on the Vote Line and in the Focus List.

Adaptive Systems:
A self-adjusting trading system that improves accuracy by adjusting parameters as a result market volatility and price/volume changes.

Algorithm:
Rules for computing, i.e., procedures for calculating mathematical functions.

Average True Range (ATR):
Average true range is defined as the average of the price movement over a preset number of bars. Also known as Wilder's volatility.

Bear Trap:
A false signal, which indicates that the rising trend of a stock or index has reversed when in fact, it has not.

Bearish:
A term referencing downward price movement on a given security or index.

Black Box:
A computerized trading system that generates trading signals without disclosing its logic.

Breadth (Market):
Relates to the number of issues participating in a market move. The move can be either up or down. As a rally develops, and the number of advancing issues is declining, the rally is suspect. As a decline develops, and the number of declining issues falls, the decline becomes suspect.

Breakout:
When a security breaks out of a consolidation or away from the current trend.

Bull Trap:
A false signal which is generated which indicates that the price of a stock or index has reversed to an upward trend but which proves to be false.

Bullish:
A term referencing upward price movement on a given security or index.

Candlesticks:
A type of bar chart, developed by the Japanese, in which the price range between the open and the close is either a hollow rectangle (if the close is higher) or a solid rectangle (if the close is lower). These charts have the advantage of making the price movement more visually apparent.

Candlestick Patterns:
Graphical identification of price movement based on candlestick formations on a chart. Helpful in identifying price and volume movement while prospecting for trading candidates.

Capitalization:
The amount of money in the underlying stock of a company.

Confirmation:
Information on a chart, whether it be an indicator or a chart pattern, that reinforces initial trade direction, as deemed by the trader.

Continuation:
Extension of price of volume direction over a given period of time.

Contracting Range:
When price movement, or bar formation narrows, based off of high and low prices, over a continuing period of time. Usually indicates decreased eagerness from buyers, or the beginning of a consolidation pattern.

Cycle Tops and Bottoms:
Based on historical high and low prices for a given security or index, these are used to forecast the most probable price movement for future trading direction, and the high and low prices the trade candidate is likely to reach.

Daily Charts:
A price chart showing the open high, low, and close and volume data for a given market day.

Daily Range:
The difference between the high and low prices during one trading day.

Day Trading:
Trading style based on entering and closing positions, before the market close for the trading day.

Double Bottom:
Sometimes called the "W" formation, a double bottom is when a securities price rally, fall back to previous lows, and then take off again.

Double Top:
Sometimes called the "M" formation, a double top is when a securities price recesses, rise to previous highs, and then fall off again.

Drawdown:
Reduction in account equity from a trade or series of trade.

End-Of-Day Trading:
Using daily and weekly charts to analyze symbols for potential trades.

Equity Curve:
The value of your account over time, illustrated in a graph.

Expanding Range:
When price movement, or bar formation, based off of high and low prices, increases over a continuing period of time. Indicates increased eagerness from buyers.

Extended Move:
A price movement, either up or down, that goes beyond the price/time relation of a markets established value.

Fiboacci Retracements:
A trading assistant used to indicate reversal points on a price chart using ratios computed from Fibonacci numbers.

Filter:
A way of selecting only data that meet specific criteria.

Fixed Loss Stop:
Protective stop, used when a price moves to the loss side, placed at a pre-determined level from the entry of the trade.

Fixed Profit Stop:
Gain based stop, placed at a pre-determined level from the entry of the trade.

Fundamental Analysis:
The study of market factors that influence supply and demand characteristics. In equities markets, fundamental analysis determines the value, the earnings, the management, and the relative data of a particular stock.

Gap:
A price change that occurs, when no actual trading occurred. This is a result of pre-post market trading, and large fluctuations in bid/ask prices. This can indicate a beginning of a new major trend.

Head & Shoulders Pattern:
This can also be inverted. It is a reversal pattern and it is one of the more common and reliable patterns. It is comprised of a rally, which ends a fairly extensive advance. It is followed by a reaction on less volume. This is the left shoulder. The head is comprised of a rally up on high volume exceeding the price of the previous rally. And the head is comprised of a reaction down to the previous bottom on light volume. The right shoulder is comprised of a rally up which fails to exceed the height of the head. It is then followed by a reaction down. This last reaction down should break a horizontal line drawn along the bottoms of the previous lows from the left shoulder and head. This is the point in which the major decline begins. The major difference between a head and shoulder top and bottom is that the bottom should have a large burst of activity on the breakout.

Higher High:
When a chart's current high price reaches a higher price than the day before.

Higher Low:
When a chart's current low price reaches a higher price than the low price of the day before.

Hit Rate:
The percentage of winning trades generated by a trading system giving a mathematical measurement of the system's success.

Indicator:
An algorithm or technique used to predict future price movement.

Inside Day:
A day in which the total range of price is within the range of the previous days price range.

Lagging Indicator:
A technical indicator that follows with latency, the price action of a given stock, security or index.

Limit Order:
An order to buy or sell at a fixed price. A person can also place a limit order with discretion. This enables the broker to buy or sell within a small range, usually 1/8 or 1/4 of a point.

Long Trade:
Owning a tradable item in anticipation of a future price increase. Also see Short Trade.

Loss Stops:
A protective stop meant to limit losses in the event of a trade turning against you.

Lower High:
When a chart's current high price reaches a lower high price than the day before.

Lower Low:
When a chart's current low price reaches a lower price than the low price of the day before.

Margin:
The minimum amount of money required to buy or sell a security. The investor is using borrowed money.

Margin Call:
The demand by a broker to an investor to put up money because his security(s) have declined in value. There are minimum amounts of capital required by the exchanges or the broker.

Market Maker:
An exchange member who makes a market by buying and selling for his own account when the public is not buying and selling.

Market Mode:
Term referring to a bullish trend, bearish trend, or the trading range of a market. Meant to emphasize the economic weakness or strength of the market at a given time.

Market Order:
An order to buy or sell a security at the present market price. As long as there is a market for this security, the order will be filled. This type of order takes precedence over all other orders.

Momentum:
This refers to an indicator that represents the change in price now from some fixed time period in the past. Momentum is one of the few leading indicators. Momentum as a market indicator is quite different from momentum as a term in physics which equals mass times acceleration.

Money Management:
A term that was frequently use to describe position sizing, but has so many other connotations that people fail to understand its full meaning or importance. For example, it also refers to:

1. managing other people's money
2. risk control
3. managing one's personal finances
4. achieving maximum gain; and many other concepts

Moving Average:
The average value as calculated over x number of periods.

Oscillator:
A technical momentum indicator showing the relationship between two moving averages, meant to show when to buy and sell a security.

Optimization:
The process of finding those parameters and indicators that best predict price changes in historical data. A highly optimized system usually does a poor job of predicting future prices.

Option:
The right to buy or sell an underlying asset at a fixed price up to some specified date in the future. The right to buy is a call option, and the right to sell is a put option.

Oscillator:
This term refers to an indicator that de-trends price. Most oscillators tend to go from 0-100. Analysts typically assume that when the indicator is near zero, the price is "oversold," and that when the price is near 100, it is "overbought." However, in a trending market, prices can be overbought or oversold for a long time.

Overbought:
When the price of a security has risen to such a degree, usually on high volume, that a price oscillator or technical indicator has reached it's upper bound, or beyond where it's true value resides.

Oversold:
When the price of a security has decreased to such a degree, usually on high volume, that a price oscillator or technical indicator has reached it's lower bound, or beneath where it's true value resides.

Pattern:
A graphical representation of buy/sell tendencies in a pictorial record or fashion. These can include support/resistance level identification, trendlines and candlestick patterns.

Pivot:
A marked point in time, where the price reverses it's current trend, usually identifying higher and lower boundaries on a chart.

Portfolio:
A record of your accounts, their balances, and all open and closed positions.

Position Trading:
Trading style of purchasing/selling securities, commodities, or currencies at a given price. Usually used for End-Of-Day trading, and longer term positions.

Primary Trend:
The main direction in which an index or security, is currently moving. An upward primary trend is known as a "Bullish" trend, and a downward primary trend is known as a "Bearish" trend.

Pullback:
The reveral of price from it's established peak level.

Range:
The difference between the high and low prices in which a security or index is trading.

Real Time Trading:
Trading during the day, with bars built from tick by tick information from the exchanges.

Rectangular Range:
A continuation pattern that forms as a trading range, during a pause in the trend.

Relative Strength:
A comparison of an individual stock's performance to that of a market index. Frequently the S&P 500 or the Dow Jones Industrial Index are used for comparison purposes. It is calculated by dividing the stock price by the index price. A rising line indicates that the stock is doing better than the market. A declining line indicates that the stock is not doing as well as the market.

Resistance:
A price level where a security's price stops rising and moves sideways or downward. It indicates an abundance of supply. Because of this, the stock may have difficulty rising above this level. There are short term and longer term resistance levels.

Retracement:
A price movement in the opposite direction of the previous trend. A retracement is usually a price correction.

Reversion To Mean:
A strategy based on the theory that prices move back to a historical "mean" or average price.

Reward-to-Risk Ratio:
The average return on an account (on a yearly basis) divided by the maximum peak-to-trough drawdown. Any reward-to-risk ratio over three that is determined by this method is excellent. It also might refer to the size of the average winning trade divided by the size of the average losing trade.

Seasonality:
A technical plot used to predict price movement based on past performance on an seasonal basis.

Short Trade:
Selling an item in order to be able to buy it later at a lower price. When you sell before you have bought the item, you are said to be "shorting" the market.

Snapback:
When the price quickly retraces after an extended move.

Stochastic:
An overbought-oversold indicator, popularized by George Lane, that is based upon the observation that prices close near the high of the day in an up trend and near the low of the day in a downtrend.

Stop Order:
An order placed which is not at the current market price. It becomes a market order once the security touches the specified price. Buy stop orders are placed above the present market price. Sell stop orders are placed below the present market price.

Stop Limit Order:
This is similar to a stop order. It is an order, which becomes a limit order once the specified price is reached.

Trading Strategy:
A set of rules that define what conditions to enter the trade, and when to get out.

Support:
A price level at which declining prices stop falling and move sideways or upward. It is a price level where there is sufficient demand to stop the price from falling.

Swing Trading:
A short term trading style of purchasing/selling stocks at repeated high and low price intervals looking ot take advantage of momentum swings.

System:
A system is a set of rules for trading. A complete system will typically have:

1. some setup conditions
2. an entry signal
3. a "worst-case scenario" stop to preserve capital
4. a profit taking exit and
5. a position sizing algorithm

Technical Analysis:
The study of historical price movements using mathematical formulas in an attempt to predict future prices. The types of data used include: price, volume, open interest, and market capitalization data.

Toolbox Program:
A software program that provides tools for assisting you with your trading.

Trading:
Opening a position in the market, either long or short, with the expectiation of either closing it out at a substantial profit or cutting losses short if the trade does not work out.

Trailing Profit Stop
Follows a trade in the gain direction, a certain amount behind the highest price for a long position, and the lowest price for a short position.

Trendline:
Constructed by connecting a series of descending peaks or ascending troughs. The more times a trendline has been touched increases the significance of a break in the trendline. It can act as either support or resistance.

Trendline Break:
Occurs when a connecting series of ascending or descending peaks is breached by price movement outside of the connecting area.

Volatility:
The measurement of how much an underlying security fluctuates over a period of time.

Volume:
The number of shares or contracts trades during a specified timeframe.

Whipsaw:
A condition where price moves in a direction and is immediately followed by a move in the opposite direction.