# Trading terms/concepts GLOSSARY At some point, we don’t realize how many trading-related abbreviations we use in our communication on a day-to-day basis. It’s only when new folks beginning in this business ask me what X or Y terms mean that I realize how confusing these terms could be to new folks. So, with this article, I want to create a reference document containing all the **TERMS**, **ABBREVIATIONS,** and **CONCEPTS** I use in my daily letters & education articles. Enjoy! ✌️ *** ### GENERAL TERMS GLOSSARY **10/21c** **-** 10dma/21dma cloud **72/89c** **-** 72dma/89dma cloud **AVWAP** **-** Anchored Volume-Weighted Average Price **AH** **-** After Hours **B/O** **-** breakout **DMA** **-** Daily Moving Average **DT -** Downtrend **DTL -** Down Trend Line **EC -** Equity Curve **EMA -** Exponential Moving Average **EOD -** End of Day **ER -** Earnings Report **ES/SPX/SPY -** S\&P500 **FL -** FocusList **FOMO -** Fear of missing out **H\&S -** Head & Shoulder **HL** - Higher Low **HOD -** High of Day (nHOD = new high of day) **IMO -** In My Opinion **KMA’s -** Key Moving Averages **LOD -** Low of Day (nLOD = new low of the day) **LT -** Long-Term **MC -** Mental Capital **MT -** Mid-Term **NNH -** Net New High **NQ/NDX/QQQ -** Nasdaq **OSC -** Oscillator **P\&L -** Profit & Loss **PB -** Pullback **PEG -** Power Earnings Gap **PF -** Portfolio **Pre -** Pre-market trades **R/R -** Risk/Reward **RS -** Relative Strength **RTY/RUT/IWM -** Russel 2k **S/R -** Support/Resistance **SHP -** Swing High Pivot **SLP -** Swing Low Pivot **SMA -** Simple Moving Average **ST -** Short-Term **U\&R** **-** Undercut & Rally **VWAP** **-** Volume-Weighted Average Price **WMA -** Weekly Moving Average *** ### ALEX’S TECHNICAL SETUPS ACRONYMS **WB -** Wedge break **WBPB -** Wedge break pullback **BORS -** Breakout Retest Short **BORL -** Breakout Retest Long **BO10PB -** Breakout 10ema PB **BO21PB -** Breakout 21ema PB **BO72PB -** Breakout 72/89ema PB *** ### TRADING CONCEPTS ### **Area** Two levels define a support/resistance area. Think of them as an area or even an **elastic** zone where the price can penetrate and overshoot but eventually find support or resistance.
### **Base area** The base area is either the **TOP** or **BOTTOM** area that conceals the multi-week or month consolidation. When the price goes at that top base area, it finds resistance, and when it goes at that bottom base area, it finds support.
### **Bounce** The term BOUNCE refers to the action of the price of a stock reversing, usually with momentum at a specific place (area, level, moving average, etc.). **e.g., Stock XYZ has bounced from the 10dma.** ### **Breakdown** BREAKDOWN refers to a stock’s action to break below, usually on momentum/strength, a critical level/area/kma. **e.g., Stock XYZ has a breakdown from the base top level.**
### **Breakeven** BREAKEVEN is when the price of a stock you are trading returns to your purchasing price. **e.g., My trade on XYZ is back to breakeven** ### **Breakout** A BREAKOUT is when a stock finally **exits a consolidation area** and makes a new higher high. **e.g., Stock XYZ breakout of its multi-month base**
### **Consolidation** After a price appreciation, A CONSOLIDATION is when a stock **stays within a range** or pullback over multiple weeks or months. It can be sideways or with a small declining action back to a critical level or kma. **e.g., Stock XYZ breakout of its multi-month base**
### **Divergence** When two instruments or metrics are used to move in the same direction and **suddenly move in the opposite direction**, then we say this is a DIVERGENCE. ### **Down Trend Line (DTL)** A DTL is a down-slopping line that encloses most of the highs and most of the price action during a pullback/consolidation. **e.g., Stock XYZ breakout of the DTL**
### **Failed breakout** A failed breakout occurs when the stock breakout from a pivot or an important level/area only to find resistance and finally close back below that entry pivot. **e.g., Stock XYZ failed his breakout and closed back below the entry pivot**
### **Follow-through** When a breakout occurs, one significant action we want to see is a **continuing upside action on the following day**. Seeing a higher volume on the second day (follow-through) is also a characteristic we want to see, as it confirms the interest and the buying of the stock out of the setup.
### **Gap-down** A gap-down is when a stock **opens lower than where it closed the day prior**. This happens when news, report, or any information affects the business's valuation. This is my worst nightmare… :)
### **Gap-up** A gap-up is when a stock opens **higher than where it closed the day prior**. This happens when news, report, or any information affects the business's valuation.
### **Higher High (HH)** If the stock breakout above our most recent swing high, which was the last LOWER HIGH (**LH**) in our pullback structure, THEN our next swing will create a new HIGHER HIGH (**HH**).
### **Inside day** An inside day is when the price action (high-low) is **contained inside the previous day’s price action** (high-low).
### **Lower High (LH)** When the stock starts to pull back and then rally but can’t return to the previous swing high, we say that this new high is “lower.” Hence a Lower High (LH).
### **Lower Low (LL)** When a pullback occurs, and the price makes a new low below the previous low in the structure, then we say that this unique point is a Lower Low (LL)
### **Measured Move** The market loves to move in equal distance moves. Something to look for during a correction or pullback is a **down leg #1 being of equal distance as the down leg #2**… typically when we get in this area, we see a bounce.
### **New High** A new high is when a stock price goes **higher than the previous highest price** of any past period. It could be the highest price for the last month, 6 months, or 52 weeks. **e.g., Stock XYZ made a new 52w high**
### **New Low** A new low is when a stock price goes **lower than the previous lowest price** of any past period. It could be the highest price for the last month, 6 months, or 52 weeks. **e.g., Stock XYZ made a new 52w low**
### **Pivot** {% content-ref url="education-articles/market-structure-and-pivots" %} [market-structure-and-pivots](https://traderslab.gitbook.io/primetrading/education-articles/market-structure-and-pivots) {% endcontent-ref %} ### **Reclaim** Once a stock broke below a pivot, level, or area and **came right back above** it, we say that it “reclaimed” that level. **e.g., Stock XYZ reclaimed its base support area**
### **Rejected** When a stock breaks an important S/R area and **cannot reclaim it, and instead gets rejected** by it on that retest…we say that it has been rejected. **e.g., Stock XYZ got rejected at its base area**
### **Relative Strength (RS)** Relative Strength (Not the Relative Strength Index RSI) is the **individual performance of a group of assets compared to a benchmark**, usually the S\&P500 (SPY). For example, we use this metric to know which assets hold and held the best during a market correction.
### **Resistance** Resistance is a level or area where the **selling pressure becomes more important than the buying** and acts as a “resistance” to push the stock price back down. We are looking for reversal & rejection in these areas unless they reclaim it.
### **Retest** Once an area has been breached (from either side) we normally see the **price coming back to “retest” that area**. If we get rejected, then that’s when this area will flip from support to resistance or vice versa. This offers a great low-risk entry as we gain confirmation from that particular action.
### **Scale-in** “Scaling-in” a position means that we begin with a small initial position, and we **add additional shares as the stock increase** in price over time. Building a bigger position as we get confirmation that the stock is going up. **e.g., I’m scaling in my stock XYZ trade** ### **Scale-out** “Scaling-out” of a position means that we **sell parts of a position as a stock increases** in price over time. **e.g., I’m scaling out of my stock XYZ trade** ### **Support** Support is a level or area where the **buying pressure becomes more important than the selling** and acts as a “support” to push the stock price back up. We are looking for reversal & bounce in these areas unless they break and can’t bounce.
### **Swing high** A swing high is the highest price of a price thrust upward (leg up). They can be either a Higher High (HH) or Lower High (LH).
### **Swing low** A swing low is the lowest price of a price thrust downward (leg down). They can be either a Higher Low (HL) or Lower Low (LL).
### **Trend** A trend is the action of a stock to have a **sustained and prolonged move up, or down**. When a stock is showing this type of action, we say that this is “trending”.
### **Up Trend Line (UTL)** A UTL is a **up-slopping line that encloses most of the lows** and most of the price action during a rally/bounce or even a trend.