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Don’t start investing or trading in stock market without proper knowledge. In Indian stock market or in any stock market few standard terms are used with the relevance of technical analysis. Sharetipsinfo suggest investors or traders must read complete glossary to understand stock market better. Learn basics of stock market with our glossary.
The measure of diversification that determines how closely a particular fund’s performance parallels an appropriate market benchmark over a period . The market is understood to have an R Squared of 100%. Therefore , a fund with an R Squared of 95% contains of the market’s diversification and risk . The remaining 5% is unique to the fund manager’s actions.
The distance between the high price and the low price for a given time period . For example, the daily range is equal to the day’s high minus the same day’s low .
A momentum oscillator that measures the percent change in price from one period to the next. The plot forms an oscillator that fluctuates above and below the zero line as the rate –of –change moves from positive to negative. The oscillator can be used as any other momentum oscillator by looking for higher lows , lower highs , positive and negative divergences , and crosses above and below zero for signals.+
The use of a ratio to compare the relative strength between any two entities. For example, an individual stock divided by the Nifty index can determine whether that stock is outperforming or underperforming the stock market as a whole .A rising ratio indicates that the numerator in the ratio is outperforming the denominator. Trend analysis can be applied to the ratio line itself to determine important turning points.
A continuation chart pattern where prices move sideways between two different levels for a period of time and then continue moving in the direction of the previous trend .
Relative Strength Index
A popular oscillator developed by Welles Wilder, Jr. and described in his self-published 1978 book “New Concepts in Technical Trading Systems”. RSI is plotted on a vertical scale from 0 to 100. Values above 70 are considered overbought and values below 30, oversold. When prices are over 70 or below 30 and diverge from price action, a warning is given of a possible trend reversal.
Resistance is a price level at which there is a large enough supply of a stock available to cause a halt in an upward trend and turn the trend down. Resistance levels indicate the price at which most investors feel that prices will move lower.
A decline that retraces a portion of a previous advance, or an advance that retraces a portion of a previous decline. Retracements typically cover 1/3 to 2/3 of the previous move, and a retracement of more than 2/3 typically signals a trend reversal.
Reversal – Inside Day
A two-period chart pattern that suggests a potential reversal or decleration of the current trend. The relationship of the two periods has the follow characteristics.
Reversal – Outside Day
A two-period chart pattern that suggests a potential reversal or decleration of the current trend. The relationship of the two periods has the follow characteristics:
A chart pattern that occurs before an existing trend reverses direction. For example, a Head and shoulders reversal pattern marks a change in trend. A break below neckline support indicates that the H&S pattern is complete and the prior uptrend has reversed.
Market turns that happen very quickly with little or no transition period. Spikes often occur when market has become very overextended in one direction , when a sudden piece of adverse new causes a sudden reversal .Reversal spike highs (aka blow offs) and lows (aka selling climaxes ) can signal a reversal or deceleration of a trend , but unfortunately they are very difficult to forecast.
A calculation equal to the potential reward divided but the potential risk of a position. A long position entered at 100 with potential reward estimated at 120 and potential risk of 90 would have a reward-to-risk ratio of 20:10, or 2 to 1. Generally, a higher reward-to-risk ratio is more appealing trade. For a long position, potential reward might be based on breakout projections, resistance levels or retracements estimates. Potential risk might be based on support levels, stop or loss requirements.
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