The degree by which the delta changes with respect to changes in the underlying instrument’s price.
Gann’s Square of 9
A trading tool that relates numbers, such as a stock price, to degrees on a circle.
Various analytical techniques developed by legendary trader W.D. Gann.
A day in which the daily range is completely above or below the previous day’s daily range.
Algorithms that mimic the characteristics associated with evolution and that are well-suited to optimization problems such as optimizing neural network parameters.
In artificial intelligence, this form of programming automatically generates a program from a set of primitive constructs.
When a broker executes an order for another broker’s client and the two brokers split the commission; the client pays nothing extra.
Golden Mean or Golden Ratio
The ratio of any two consecutive numbers in the Fibonacci sequence, known as phi and equal to 0.618; a proportion that is an important phenomenon in music, art, architecture and biology.
Any length divided so that the ratio of the smaller to the larger part is equivalent to the ratio between the larger part and the whole and is always 0.618.
Jargon; a loose term encapsulating a set of risk variables used by options traders.
Gross Domestic Product
Value of all goods and services produced domestically.
A more speculative mutual fund made up primarily of the growth or performance stocks that are expected to appreciate in price more than the broad market over an extended time period.
Guaranteed Investment Contracts (GICs)
A single lump-sum deposit that earns a guaranteed interest until a known maturity date. GICs are issued by insurance companies.
where weight (W) at point J in window width of N points is determined by this formula.
In candlestick terminology, a small real body contained within a relatively long real body.
Head and Shoulders
When the middle price peak of a given tradable is higher than those around it.
A mutual fund involving speculative investing in stocks and options.
Herrick Payoff Index
An index requiring two inputs, one of which is a smoothing factor known as the multiplying factor and the other of which is the value of a one-cent move.
The use of rules of thumb for decisions.
Problem solving approached by trying out several different methods and comparing which pro vides the best solution.
(computer science)Computational rules of thumb. Distinct from algorithms, which are programs guaran teed to generate the correct result under all circumstances, heuristics may only turn out to be correct a certain percentage of time.
Elements that give a neural network the ability to learn nonlinear patterns. The hidden nodes math ematically transform inputs by passing weighted sums of those inputs through nonlinear functions.
Hierarchical Neural Network
In artificial intelligence, a neural network in which predictions derived from networks at one level of the hierarchy are incorporated as inputs at another level. This architecture lends itself to faster training, as each network focuses learning solely on its own output.
High Pass Frequency Filter
A detrending filter that lets pass the high frequency noise and rejects low frequency trend. Implemented by first applying a low pass filter to the data, then subtracting the filtered data from the original data.
To pay the offered price.
A modified put/call ratio that refines traditional option ratio analysis by including the open interest figures in the equation and can be defined as (Total put volume/Total put open interest) divided by (Total call volume/Total call open interest)
How much contract price has fluctuated over a period of time in the past; usually calculated by taking a standard deviation of price changes over a time period.
A series of past daily, weekly or monthly market prices (open, high, low, close, volume, open inter est).
A trading day in which the open is above/below the previous day’s high/low and the close is below/above the previous day’s close with narrow range.
The excess return expected from a stock to justify its current weighing in the portfolio.
The volatility computed using the actual market prices of an option contract and one of a number of pricing models. For example, if the market price of an option rises without a change in the price of the underlying stock or future, implied volatility will have risen.
A sharply defined change in a series of input data being studied, such as market prices or volume.
A wave or cycle of waves that carries the current trend further in the same direction.
A stock that is the focus of a public bidding contest, as in a takeover or bear raid.
A call option whose strike price is lower than the stock or future’s price, or a put option whose strike price is higher than the underlying stock or future’s price. For example, when a commodity price is $500, a call option with a strike price of $400 is considered in-the-money.
Payments to mutual fund shareholders consisting of dividends, interest and short-term capital gains earned on the fund’s portfolio securities after deduction of operating expenses.
A mutual fund that replicates the behavior of a given index.
The progress from statements describing particular events to a general statement.
Behavioral finance. Driven by frame dependence and heuristic bias, when market prices stray from fundamental values.
The first or first two half-hour trading periods in the CBOT Market Profile during which prices tend to converge; the initial auction of the trading day.
Initial Public Offering
When a stock is officially available for the public to buy.
A day in which the daily price range is completely within the previous day’s daily price range.
Interest Rate Swaps
An arrangement that requires both sides of the transaction to make payments to each other based on two different interest rates. The most commonly traded requires one side to pay a fixed rate and the other to pay a floating rate.
Observing the price movement of one market for the purpose of evaluating a different market.
The portion of an option’s premium that is represented when the cash market price is greater than the exercise price; a known constant equal to the difference between the strike price and underlying market price.
Small, private organizations in which a group of investors, usually novices, pool their time and resources to learn more than they could on their own about various forms of investments and then invest their own money as a group.
Individual Retirement Account. An employer’s retirement plan that, as specified by tax law, allows employees to elect to have their federal taxable income be deducted and set aside for retirement.
A type of Elliott wave correction that has a 3-3-5 wave pattern, where the B wave terminates beyond the start of wave A. A “flat” is in progress, implying that a larger pattern is developing. It will contain waves of one higher degree than the A-B-C waves just completed.
Electronic communications network.
The tendency for securities prices to recover in January after tax-related selling is completed before the year-end.