ABC’s

In the trading world there are so many concepts to learn - so many words or phrases that are confusing or just plain “new things” we have to learn. In this post I am going to attempt to build out a list of words or phrases that will hopefully develop into a “Traders Dictionary” of sorts.

While I will try to cover as much as possible - I can not use this same page as a detailed page for each thing I am going to list. There will be posts in the future to expand on these things listed and of course you can always just “Google It.”

This page will grow as time goes on - refer back often to see changes. If you are looking for something specific and do not see it then please reach out to me.

Average Daily Range (ADR) - The ADR I use is based on 21-days lookback (one market month). This is a average of the price movement (from high to low) day after day - over the past 21 days. It gives us a sense of a markets “typical daily movement.”

Advance Decline (AD) - The Advance Decline is a “market breadth” concept which looks at an index. Generally posted as “S&P-AD” or “NASDAQ-AD” - but in a generic way it can often be posted as AD. See Also ADVDEC or ADV/DEC. Be mindful that the AD can be “how many markets are advancing versus how many markets are declining” - but it can also be “total advancing volume versus total declining volume”

Advance Decline (ADV DEC) - See AD above. Generally assumed to reference the NYSE - unless a specific index is mentioned. So - if you see AD or ADVDEC but no index mentioned - then it’s likely a reference to the NYSE. Otherwise - you’ll see SP-ADV/DEC or you’ll see NQ-ADV/DEC.

BIAS - In the trading world having a bias can be a good thing; this is similar to having a thesis for the day. There is a “technical bias” and a “sentiment bias” for traders to use. With a Technical Bias - traders would use tools to perform technical analysis and then build a bias from that data. With Sentiment Bias - traders would use market breadth tools, options flows, macro events, and macro reports to develop a sentiment bias.

BTD - Buy the Dip. Can also be seen as BTFD: Buy the f*cking Dip

BTO - Buy to Open. A reference that generally focuses on options. We “Buy to Open” options but it can also imply Stock.

COG - Center Of Gravity is a phrase that Kaufman stole from John Ehlers. I can’t explain how we get COG levels in this post - but on the ES and SPX - a COG is all the 11’s, 32’s, and 92’. So for example - 5611, 5632, 5592, 5532, 5511 … ect.

Call Spread - (CS) - or CDS - a Call Spread is considered to be a bullish “bull call spread” but is undefined. While it’s a common thing to see - it’s better to say “Long Call Spread” or “Bull Call Spread” or even a CDS (call debit spread) rather than the generic term CS - which leaves the reader guessing if you bought or sold that spread to open the trade. Also can be wrote like “short CS” which tells traders you are short a call spread.

Call Wall - The Call Wall is the strike with the largest net call gamma. 

CD - Cumulative Delta. This can be Cumulative Volume Delta - or it can be something more specific like Market Buy Orders – Market Sell Orders (which is more granular than “volume.”

Dead Cat Bounce - (DCB) is the pullback we see in a falling market; generally implies that price has bounced on support but is expected to hit resistance in the bounce - roll over - and continue lower (through that previous support).

Delta - So many meaning! If you are looking at math - it will often mean “the difference of” and you may see something like “cumulative volume delta” - then it’s a reference to the difference between “buying volume” and “selling volume” - which sounds funny because both sides - are the same thing. For every buyer - there HAS TO BE a seller or there is no trade. (Do not Over-think this).

EMA - Exponential Moving Average. See also SMA, HMA.

EOD - End of Day. | EOW - End of Week. | EOY - End of Year.

ES - The E-mini S&P 500 Index Futures. Some people still call this the “Spuz’s” (or Spoo’s) … which was an early nickname for the ES futures which were first introduced in the Sept Contracts. There are 4 contracts which change quarterly - the ESH (March), ESM (June), ESU (September), and ESZ (December).

Expected Move - The “expected move” of a market is a price range developed from price, volatility, and time. If one of these three things changes then the distance price is expected to move (or the range that price is expected to stay within) also changes. At the OEC we use the “Weekly Expected Move” each week to define volatility for the week and to set a high / low range for the week.

Futures - In the OEC Blog Posts you will see reference to “the futures” quite often. While there are a lot of futures markets we can trade - I will most often use that phrase to imply E-mini S&P 500 Index Futures (/ES and /mES) or the NASDAQ 100 E-mini Index Futures (/NQ and /mNQ). If I need to discuss any other futures markets I will specifically say “Gold futures” or “Oil Futures” or which ever futures market I need.

Globex - Used frequently in the OEC Coaching blogs; this word means “Over-Night Trading Hours” and is a general reference to price action on anything that trades 22+ hours a day.

GO - Globex Open. | GH- Globex High. | GL - Globex Low.

Half Back - the half back (or -1/2 back) is the mid-point of a measured range. Anything that we measure from high to low - has a mid-point to it. Start marking it out - to begin understanding why it’s such a valuable level to keep track of.

HMA - Hull Moving Average. An extremely fast and smooth moving average

Initial Balance (IB) - One Hour Open Range for what-ever you are trading. If trading the Futures Index (like the ES or the NQ) then your Initial Balance is 6-7PM and if trading equities (things like $AAPL or $TSLA) then your initial balance is 9:30-10:30AM.

Institutional Pivots - The phrase comes from my psychology classes; in psychology we use the term “institution” to refer to things like Economic Institutions: These encompass financial systems, banks, regulatory bodies, and corporations. Examples include the Federal Reserve, stock exchanges, and major corporations like Apple and Amazon.

When it comes to “institutional pivots” - the concept is to imply “universally applied” or “universally recognized” pivots such as yesterdays high, low, and close. These are pivots that all people would recognize - versus you looking left and marking a near term pivot on your chart - that maybe no-one else has marked.

Location - Let’s face it; the United States markets are the most liquid and since I am American I will be posting things that generally reference the US Markets. A lot of these concepts can be used by traders in their home country but - unless I specifically mention a different location - it should be assumed that all my posts are in reference to the US markets and the US trading hours.

LOD - Low of Day. | LOW - Low of Week. | LOY - Low of Year.

Long - To have or to take a position that was bought. “Long Call” - means a call that was bought to open. “long put” - means a put that was bought to open. “Long $TSLA” - bought $TSLA calls - or bought $TSLA stock - or is somehow owning $TSLA.

LZ - Liquidity Zone - the area above & below a range. This “range” can be yesterdays high / low, the intraday 5-min open bar, the Econ Event bar, last weeks high / low … anything. Any Range. It’s a POV of where the resting orders of buyers or sellers are located.

MA- Moving Average. Typically a generic mention. Specifically - EMA, SMA, HMA.

MAG7 - at this point the old “FAANG + T” group has been shortened to just those stocks considered the Magnificent seven. Back in the day, the Facebook, Apple, Amazon, Net Flix, Google plus Twitter changed and morphed so many times that people eventually gave up and started collectively referring to these stand-out companies as the “MAG7” - even if there are not always 7 names in the group. Also - can be a term that means the NYFANG+ group.

nLOD - New low of Day. | nLOW - new low of week.

NYFANG - the NYFANG Index is an ETN developed to track a small basket of stocks with the largest market cap in the US Markets. The names can change - so check the list.

OCC - Opposite Candle Color. The OCC - is where we expect price to pause. If we have been falling (red candles) then the OCC is where we would expect the fall to pause; we would expect to see a green candle (or perhaps a doji). If we had been rising (green candles) then the OCC is where we would expect the rise to pause; we would expect to see a red candle (or perhaps a doji).

POC - Point of Control. The place where there was the greatest amount of volume (if looking at a volume profile) - or the place where there was the greatest number of trades taken (if you are looking at a TPO profile).

Put Wall - The Put Wall is our major support level, which measures the most amount of put gamma.

OCR - the One Candle Reversal concept is a newer form of technical analysis that focus traders towards candle patterns of 1 or 2 candles - (unlike the candle patterns like a Cup n Handle, Head n Shoulders, Wedges, or Flags that use multiple candles to define a pattern).

Option Level - This is a phrase I use to describe a level on the chart that we typically would expect to see trading flows increase - even if it is not registered that day as a call wall, put wall, volatility trigger, gamma level, ect. Typically these “options levels” are things like round numbers (5600, 5650) and quarterly levels (5625, 5675).

ORB - The Open Range Breakout is a strategy that focus on price breaking out from a defined range of time. A popular trade strategy is called a 15-min ORB … which marks the highest and lowest part of the first 15 minutes of the trading day (from 9:30am to 9:45am).

PC - Previous Close. | PH - Previous High. | PL - Previous Low. | PO - Previous Open.

POC - the POC is the “Point of Control” and is a reference to a level in profile charts such as a TPO chart or a Volume Profile chart. In the Volume Profile - the POC is the place where there was the greatest amount of volume. In a TPO chart - the POC is the place where there was the greatest amount of trades.

PT - Price Target

RTH - Regular Trading Hours is a term used frequently in the OEC Coaching blogs; this word means the “intraday” trading hours from 9:30am-4:00pm.

Short - opening or having a position short. “Short calls” - sold to open calls. “Short Put” - sold some puts to open a trade. “Short $TSLA” - can be a put trade or can be a “$TSLA short stock” or in some way a position that will profit if $TSLA falls.

SMA - Simple Moving Average. See also EMA or HMA.

STO - Sell to Open. Generally a reference to a option position. We generally “STO” options and not so often we STO stock.

TINA - There is no Alternative. Often connected to BTD on MAG7

TLDR - Too Long - Don’t Read or (too long, didn’t read).

TPO - the TPO chart is a profile chart which looks very similar to a Volume Profile chart. TPO stands for Time, Price, Opportunity. A TPO Chart is often considered “Volume by Time” while a typical Volume Profile chart is often considered as “Volume by Price.”

UOA - Unusual Options Activity is a quick way to highlight trading activity on options like sweeps, blocks, golden sweeps, or just a large concentration of open interest. Generic for anything unusual in the options flows.

Volatility Trigger - If the stock is above the VT, then we anticipate lower volatility and more stable underlying movement.

• The Volatility Trigger™ (VT) is our proprietary indicator which detects the level below which we expect bearish feedback loops (chain reactions) to start kicking in. Above this level we expect relatively lower market volatility.

• In relation to the other levels, the Volatility Trigger is generally the last major support above the Put Wall. 

VP - Volume Profile. Volume plotted on the candle chart (not under the candle chart) running horizontal across the chart.

VPOC - An untouched Point of Control.

Weekly Expected Move - an expected move range that is calculated each week for next weeks trading. Unlike typical expected move tools - this one does not update as time passes because we want to see the range defined throughout the week.

Weighted AD - The Weighted Advance Decline is an indicator developed by Peter’s crew at Shadow-Trader. It looks at the top 9 sectors in the markets and uses their collective advancing / declining movements to gauge the days price action. It’s an indicator that I can not share - but I did find one that is close to it; that I have shared in the TOS Discord.

YC - Yesterday Close. | YH - Yesterday High. | YL - Yesterday Low. | YO - Yesterday Open.

Zero Gamma - Zero Gamma behaves like the eye of the storm, where feedback loops are not expected unless decently above or below it.

• Zero Gamma stands out as a SpotGamma level which is not support and resistance, but rather informative of the regime and climate of the market. 

• Specifically, Zero Gamma sets the line of where negative or positive market gamma begins