Glossary › Indicators

Trading glossary

Indicators words

48 words, each explained first as you would tell a ten-year-old.

1. %DThe slower helper line on a 0 to 100 gauge of where price closed in its recent range. Crossing the fast line hints at turns.
2. %KThe fast line on a 0 to 100 gauge that shows where the latest close sits between the recent highest and lowest prices.
3. 61.8% levelA popular place for a pullback to stop and turn, a little more than halfway back along the last big move.
4. ATRA number that shows how big candles have been lately, so you know how far price usually moves in one step.
5. ATR expansionWhen a very quiet market suddenly makes one giant candle that bursts out of its small box, like a gust after still air.
6. bearish divergenceWhen price climbs to a new high but a strength meter does not, a hint that the push up is getting tired.
7. Bollinger BandsThree lines around price: a middle average and two outer lines that move apart when price jumps around and squeeze together when it is calm.
8. bullish divergenceWhen price drops to a new low but a strength meter does not, a hint that the selling is getting tired.
9. crossoverWhen one line on a chart crosses another, like a fast average passing a slow one, which can hint that the direction is changing.
10. death crossWhen a slower average price line drops below a very slow one, which some people read as a sign prices may be turning down.
11. divergenceWhen price and a strength meter disagree, like price making a new high while the meter does not. It can warn of a turn.
12. dynamic resistanceA moving line, like an average price line, that price keeps bumping into from below while a fall goes on.
13. dynamic supportA moving line, like an average price line, that price keeps bouncing up from while a rise goes on.
14. exponential moving averageAn average price line that pays more attention to the newest prices, so it turns faster than a plain average.
15. false signalA hint from a chart or tool that turns out to be wrong, so price does not do what it seemed to say.
16. Fibonacci retracementLines drawn at special in-between points of a big move, where a pullback often pauses or turns.
17. golden crossWhen a slower average price line climbs above a very slow one, which some people read as a sign prices may be turning up.
18. high-volume nodeA price where lots of trading happened in the past. Price often slows down or pauses there again.
19. histogramA chart made of bars whose height or length shows how big something is, like the gap between two lines.
20. indicatorA helper line or bar drawn from past prices and trading, used to describe what price has been doing.
21. lagWhen a helper line reacts late, because it needs several candles before it changes.
22. MACDA tool that compares a fast and a slow average price line to show whether a move is speeding up or slowing down.
23. MACD lineThe main line of a tool that measures the gap between a fast and a slow average price line.
24. momentumHow strongly and quickly price is moving in one direction, like how fast a ball is rolling.
25. moving averageA line that shows the average price over the last several candles, smoothing out the ups and downs.
26. OBVA score that adds up trading on up days and takes it away on down days, to see if buyers or sellers are stronger.
27. overboughtWhen price has climbed so hard and fast lately that the rise may need a rest.
28. oversoldWhen price has fallen so hard and fast lately that the drop may need a rest.
29. periodThe stretch of time one candle covers, like one hour or one day, or how many candles a tool looks back over.
30. point of controlThe price where the most trading happened over a chosen stretch of time.
31. RSIA gauge from 0 to 100 that shows how strong recent price moves up have been compared with moves down.
32. running totalA number you keep adding to or taking away from as you go, like keeping score in a game.
33. signal lineA slower helper line that a faster line crosses, used as a hint that a move is changing.
34. simple moving averageThe plain average of the last few closing prices, drawn as a smooth line on the chart.
35. smoothingAveraging prices so the line looks calmer and the tiny wiggles fade away.
36. smoothing factorThe number that decides how much the newest price counts in a special average.
37. squeezeWhen price swings get smaller and smaller and price gets squashed into a tight space, often before a bigger move.
38. standard deviationA number that shows how scattered prices are around their average. Bigger means prices jump around more.
39. stochastic oscillatorA 0 to 100 gauge that shows where the latest close sits between the recent highest and lowest prices.
40. true rangeHow far price really moved in one candle, counting any jump from the last candle's close too.
41. typical priceA simple middle price for a candle: add its high, low and close, then divide by three.
42. value areaThe band of prices where most of the trading happened over a chosen stretch of time.
43. volatilityHow much and how fast prices jump around. Calm markets move a little; wild markets move a lot.
44. volume profileA sideways bar chart that shows how much trading happened at each price, not at each time.
45. VWAPThe average price everyone paid today, where busier moments count more, often used as the day's fair price.
46. VWAP reclaimWhen price spends a while below the day's average price, then climbs back above it, hinting buyers are taking over.
47. whipsawWhen a signal says go one way, then quickly flips the other way, making you lose on both.
48. zero lineThe middle line at zero on some helper charts. Crossing it can show a move changing from up to down or back.