P1: a/b gloss
T1: g August 8, 2008
Printer: Yet to come
bearish reversal, momentum When momentum changes from a bullish to a bearish trend. With two-line indicators, when the fast line crosses below the slow line. A momentum bearish reversal is often a setup for a short trade or to exit a long trade. bull, momentum When a momentum indicator is positive. In a two-line indicator, the fast line is above the slow line. A basic part of the high probability strategy is to trade in the direction of the momentum. Only long trades would be considered if the momentum is bullish unless the momentum is bull OB.
When an indicator is bullish and has reached the overbought zone. With a two-line indicator, the fast line is above the slow line and both lines have reached the overbought zone. In most cases, bull OB momentum warns that the upside should be limited before a momentum high and probable price high is made.
bull OB, momentum
bullish reversal, momentum When momentum changes from a bearish to a bullish trend.
With two-line indicators, when the fast line crosses above the slow line. A momentum bullish reversal is often a setup for a long trade or to exit a short trade. The amount of capital (money) that may be lost if a trade moves against the initial position. In other words, the potential cost to find out if the trade decision will be profitable or not. Often called risk. The initial capital exposure per unit is the difference between the entry price and the initial protective stop price.
complex correction Any correction with more than three sections (waves). The form of a complex correction cannot be predicted in advance. The time and price targets for a complex correction are not as easily identified in advance as for a simple ABC correction. countertrend A correction against the main trend. The assumption is always that a correction will make at least three sections. An important part of a trading plan is to identify the possible end of a correction in order to place a trade in the direction of the trend. day trader A very short-term trader who is usually glued to the monitor during market
hours and enters and exits a trade during one trading day. The odds of success are very small unless the day trader has first perfected a consistently profitable trading plan for swing or position trades. Dual Time Frame Momentum Strategy
See Multiple Time Frame Momentum Strategy.
dynamic ratios A series of geometric and harmonic ratios used for Dynamic Time and Price Strategies, including .382, .50, .618, .786, 1.00, 1.272, 1.618, and 2.618. The uniqueness of the Dynamic Time and Price Strategies as taught in this book is that different ratios are used for time or price analysis. Plus the ratios are applied in unique ways depending on whether the market is making a trend or a correction. E-wave Elliott wave pattern analysis. See Elliott wave. Elliott wave (E-wave) Pattern analysis approach developed by R. N. Elliott. The idea is that trends and corrections are usually made in a limited number of patterns that conform to rules and guidelines that help distinguish if the section is part of a trend or correction. One of the most important values of Elliott wave pattern analysis is to help recognize if a market is in a position to complete a trend or correction. Trends are usually made in five distinct sections. Corrections should be at least three sections but may evolve into much more complex structures.