Please also visit our Options Glossary page for general options terminology.
Please also visit our Trading Terminology page for our Trading Room vocabulary.
“CB” stands for
clear bar. A clear bar is a bar on any chart where the entire range of the bar
(top and bottom of the bar) is above or below a moving average. An example of
this is on a chart of the SPX on a 15-minute basis. In an up market a clear bar
below a 18 period moving average tends to be a good buy signal and vice versa.
Clear bars are also a great way to see if your position is wrong. If the range
of the clear bar signal, after a trade has been initiated, is easily violated
then that is a good sign that the trade may not go as planned.
DMI Plus and DMI Minus
These are the main components that comprise the ADX indicator. Independent study of these
components may yield some interesting trading signals based on thresholds. Some
numbers to examine in your trading studies are when either of these components
are above 40.
Last Time Octave Bar
In music, an Octave is interval of
eight diatonic degrees between two tones of the same name. In trading, a
time Octave, or one-eighth, is determined by taking the Regular Day Session
trading minutes and dividing it into eight equal parts. The bar that
corresponds the beginning of the last eighth of the trading day is called Last
Time Octave Bar. For ES & NQ, it is approximately 1415 CT.
Linear Regression is a concept also know as the "least
squares method" or "best fit." Linear Regression attempts to fit a
straight line between several data points in such a way that distance
between each data point and the line is minimized.
Micro M Tops & Micro W Bottoms
This indicator, essentially depicting short-term double tops or double bottoms on the
chart, often indicates very accurate support and resistance levels based on a well
defined chart pattern. As with many indicators the first appearance of
this indicator on a chart will be the strongest and most reliable signal
to trade off of. Each successive indication will be a bit weaker
thereafter. On the chart you'll basically see a line made up of Green
Pluses under the
bar for support or a line made up of Red Pluses above the bar for resistance. The longer
the timeframe the better the signal, i.e., a 15 minute first indication of
the Micro M/W will be more reliable then that of a 2 minute chart.
For more information on this excellent indicator, read Active Trader Magazine December 2001 cover story.
The Parabolic strategy, as described by Welles Wilder in his book New
Concepts In Technical Trading Systems, is a complete stop-setting
entry and exit trading strategy. The strategy is designed to allow more
leeway or tolerance for contra-trend price fluctuation early in a new
trade, then to progressively tighten a protective trailing stop order as
the trend matures. The Parabolic function provides the calculations
necessary to create the trading signal(s) for the Parabolic trading
strategy described by Wilder.
The R-Count is a
derivative of the work done by Al Gietzen who created the Reactivity
Index. You may want to read his earlier work entitled “Real-Time Futures
Trading” to gain insight into this interesting indicator. Basically the
R-count is a paint study that plots each time on the buy and sell side the
reactivity indicator reaches a threshold. Our work has found that, much
like octaves or harmonic levels, counting the number of times the
indicator reaches a threshold can create opportunities for very accurate
trading of market tops and bottoms. The
number of counts are directly related to market volatility, so be aware
that you can't count these bars in a vacuum, like everything in trading,
the trader must examine all of his tools to understand the current texture
of the market.
Shazde in Persian means "Born to Royalty". Persian Royalty, much like other
royal families throughout history, are usually very corrupt and
of course, always very very lazy. They have never worked an honest day in
their lives but always demand a ton of money to pay for their luxurious lifestyle.
I have a music and trading buddy named Max Vafi Qajar. He is the creative genius behind
the very eclectic and popular band called BlueMaxBerries.
His paternal great great grandfather was the younger brother of
Fath Ali Shah, the second monarch of the Persian Qajar Dynasty which ruled Persia from 1796 to 1925. Max and I
collaborated to come up with a special momentum indicator. With proprietary
moving averages overlaid on it, this forward looking indicator delivers what
a true Shazde would want, and hence the name. On certain indices, it
has demonstrated an uncanny ability to foretell market turns. Works
well on any time frame.
Here are some of Max's greatest hits:
Rainforest on Mars
The StochasticRSI oscillator invented by
Tushar Chande in his book, The
New Technical Trader, combines the two popular ideas behind
the RSI and the Stochastic oscillator. The stochastic oscillator
measures the location of closing prices within the recent high to low
range. Similarly, StochRSI measures the location of RSI
within its recent range, showing short-term momentum
True Strength Index (a simpler version of our CI Indicator)
Momentum-based indicators lead the market and moving average-based indicators lag it. Both types of tools have advantages and disadvantages. Here’s a process that combines the two, and an indicator approach that can help you catch shorter-term swings while staying in sync with the trend.
The True Strength Index (TSI) is a momentum-based indicator, developed by William Blau, designed to determine both the trend and overbought-oversold conditions. The TSI is applicable to intraday time frames as well as longer-term horizons.
For more information on this excellent indicator, read Active
Trader Magazine, January 2002 issue, P. 58.
Expansion Break-Out Pattern, popularized by
Jeff Cooper in his book, Hit
& Run Trading. This pattern, showing a pick up
in emotional buying,
usually repeats three to four times intraday before exhaustion and reversal.
Expansion Break-Down Pattern, popularized by
Jeff Cooper in his book, Hit
& Run Trading. This pattern, showing a pick up in
emotional selling, usually repeats
itself three to four times intraday before exhaustion and reversal.