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Questions and Answers
What is the name of the chart that posts a new vertical line for each change in trend?
What is the name of the chart that posts a new vertical line for each change in trend?
What is the term for the difference between the total premium of an option and its intrinsic value?
What is the term for the difference between the total premium of an option and its intrinsic value?
What is the purpose of a Trailing Stop?
What is the purpose of a Trailing Stop?
What type of security has its principal adjusted for inflation?
What type of security has its principal adjusted for inflation?
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What is the term for the level where declining prices stop falling?
What is the term for the level where declining prices stop falling?
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What is the term for separating the payments and principal of a security to increase liquidity?
What is the term for separating the payments and principal of a security to increase liquidity?
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What is the term for the count of price changes in a given time period?
What is the term for the count of price changes in a given time period?
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What is the term for when the price breaks upward out of a pattern and then retraces to the breakout level?
What is the term for when the price breaks upward out of a pattern and then retraces to the breakout level?
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What is the characteristic of a Downtrend in a chart?
What is the characteristic of a Downtrend in a chart?
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What is the purpose of Moving Average Envelopes in a trading strategy?
What is the purpose of Moving Average Envelopes in a trading strategy?
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What is an Exhaustion Gap in a chart pattern?
What is an Exhaustion Gap in a chart pattern?
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What is the characteristic of an Expanded Flat in Elliott Wave Theory?
What is the characteristic of an Expanded Flat in Elliott Wave Theory?
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What is the Drop-Off effect in a Moving Average?
What is the Drop-Off effect in a Moving Average?
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What is the Donchian Breakout Method in a trading strategy?
What is the Donchian Breakout Method in a trading strategy?
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What is the definition of Divergence in a chart pattern?
What is the definition of Divergence in a chart pattern?
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What is an Eve in a chart pattern?
What is an Eve in a chart pattern?
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What type of gap is a variation of an Elliott Flat corrective pattern where wave B retraces beyond the start of wave A?
What type of gap is a variation of an Elliott Flat corrective pattern where wave B retraces beyond the start of wave A?
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What term is used to describe a trend that measures in weeks or months?
What term is used to describe a trend that measures in weeks or months?
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What type of financial product has some form of asset guarantee in case of default?
What type of financial product has some form of asset guarantee in case of default?
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What occurs in the middle of a trend and can be used like a flag for projecting targets?
What occurs in the middle of a trend and can be used like a flag for projecting targets?
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What is the term used to describe a change in the direction of a trend?
What is the term used to describe a change in the direction of a trend?
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What type of market is where investors trade already existing securities with each other?
What type of market is where investors trade already existing securities with each other?
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What is the term used to describe the line extending above and beneath the Body of a candle?
What is the term used to describe the line extending above and beneath the Body of a candle?
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What is the term used to describe a transaction that allows the trader to profit from a falling security?
What is the term used to describe a transaction that allows the trader to profit from a falling security?
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What is the term for a bond that exceeds the rating threshold set by the ratings agencies?
What is the term for a bond that exceeds the rating threshold set by the ratings agencies?
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What is the term for a 54-year economic cycle?
What is the term for a 54-year economic cycle?
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What is the term for the risk that the asset will not be able to be sold for the desired price?
What is the term for the risk that the asset will not be able to be sold for the desired price?
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What is the term for the tendency for prices to return to their average when they move too far away?
What is the term for the tendency for prices to return to their average when they move too far away?
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What is the term for a purchase of a security where profits are made when the security's price rises?
What is the term for a purchase of a security where profits are made when the security's price rises?
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What is the term for a series of 5 waves that follow the primary trend?
What is the term for a series of 5 waves that follow the primary trend?
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What is the term for an order established with a broker that will automatically execute when the price reaches the requested level?
What is the term for an order established with a broker that will automatically execute when the price reaches the requested level?
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What is the term for the tendency for a cycle peak to the left of the expected centre of the cycle?
What is the term for the tendency for a cycle peak to the left of the expected centre of the cycle?
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What is the term for the gap between two securities with the same maturity?
What is the term for the gap between two securities with the same maturity?
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What is the term used to describe a security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date?
What is the term used to describe a security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date?
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What is the term for the study of purchasing the same item in different currencies?
What is the term for the study of purchasing the same item in different currencies?
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What is the term used to describe a pattern where price has a high probability of exiting the pattern opposite the entry, with trend in the same direction as the trend at the entry?
What is the term used to describe a pattern where price has a high probability of exiting the pattern opposite the entry, with trend in the same direction as the trend at the entry?
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What is the term for the right to buy or sell an underlying asset at a specified price?
What is the term for the right to buy or sell an underlying asset at a specified price?
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What is the term for the level where rising prices stop climbing?
What is the term for the level where rising prices stop climbing?
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What is the term used to describe a series of waves that moves counter to the primary trend?
What is the term used to describe a series of waves that moves counter to the primary trend?
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What is the term used to describe the interest payments made by the bond seller?
What is the term used to describe the interest payments made by the bond seller?
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What is the term for the average that resets its start point at certain events, such as earnings reports?
What is the term for the average that resets its start point at certain events, such as earnings reports?
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What is the term used to describe risk associated with a government or company not being able to meet their debt obligations?
What is the term used to describe risk associated with a government or company not being able to meet their debt obligations?
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What is the term for the cycle that impacts equity and bond markets?
What is the term for the cycle that impacts equity and bond markets?
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What is the term used to describe a recurring process that oscillates around a midpoint?
What is the term used to describe a recurring process that oscillates around a midpoint?
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What is the term for the return from an investment after it has been adjusted for inflation, taxes, and investment fees?
What is the term for the return from an investment after it has been adjusted for inflation, taxes, and investment fees?
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What is the term for the shorter counter-trend move against the direction of the larger trend?
What is the term for the shorter counter-trend move against the direction of the larger trend?
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What is the term used to describe a short, unsustained rally that follows a drastic fall in prices?
What is the term used to describe a short, unsustained rally that follows a drastic fall in prices?
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What is the term used to describe a 10-year cycle where years of the decade move in similar ways?
What is the term used to describe a 10-year cycle where years of the decade move in similar ways?
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What is the term used to describe a gap that occurs at the start of a new trend?
What is the term used to describe a gap that occurs at the start of a new trend?
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What type of oscillator has strict limits on its upper and lower values?
What type of oscillator has strict limits on its upper and lower values?
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What is the term used to describe a call option that gives the buyer the right to buy an underlying asset at a specific price?
What is the term used to describe a call option that gives the buyer the right to buy an underlying asset at a specific price?
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What is the term used to describe the slope of a regression line?
What is the term used to describe the slope of a regression line?
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What is the term used to describe a band around a central moving average that is based on standard deviations?
What is the term used to describe a band around a central moving average that is based on standard deviations?
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What is the term used to describe a bullish signal when an indicator forms a higher low while the price forms a lower low?
What is the term used to describe a bullish signal when an indicator forms a higher low while the price forms a lower low?
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What is the term used to describe an 8.6 year cycle identified by Princeton Economic?
What is the term used to describe an 8.6 year cycle identified by Princeton Economic?
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What is the term used to describe the part of a candle in a candlestick chart?
What is the term used to describe the part of a candle in a candlestick chart?
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What is the term for the date that an option and the right to exercise it will cease to exist?
What is the term for the date that an option and the right to exercise it will cease to exist?
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Which moving average helps avoid the drop-off effect?
Which moving average helps avoid the drop-off effect?
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What is the term for an impulse wave that is longer than the other two impulse waves in the five-wave structure?
What is the term for an impulse wave that is longer than the other two impulse waves in the five-wave structure?
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What is the term for the primary market where the Fed raises funds from large banks by selling bills, notes, and bonds?
What is the term for the primary market where the Fed raises funds from large banks by selling bills, notes, and bonds?
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What is the term for the rate that banks must keep in reserves, mandated by the central bank?
What is the term for the rate that banks must keep in reserves, mandated by the central bank?
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What is the term for a short-term counter-trend pattern that follows a sharp steep move?
What is the term for a short-term counter-trend pattern that follows a sharp steep move?
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What is the term for a type of debt that pays interest that varies along with Libor or another market rate?
What is the term for a type of debt that pays interest that varies along with Libor or another market rate?
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What is the term for the number of cycles that repeat in a given amount of time?
What is the term for the number of cycles that repeat in a given amount of time?
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Study Notes
Chart Patterns and Trading Strategies
- A pattern consisting of a Broadening pattern followed by a Symmetric Triangle is one of the most profitable patterns.
- Divergence occurs when price is rising (or falling) and an indicator derived from that price is falling (or rising).
- The Donchian Breakout Method is a trading strategy that examines the highest high and lowest low over the past four weeks, buying on a break of the high and selling on the break of the low.
Market Trends
- A Downtrend is identified by Lower Peaks and Lower Troughs on the chart.
- Economic Risk refers to the risk that the economy contracts, cutting government revenue and company earnings.
Moving Averages
- The Drop-Off effect occurs when a traditional Moving Average drops the oldest value, generating signals.
- Envelopes (also called Moving Average Bands) are a type of Moving Average that has been translated up and down by a fixed percentage, often used as a filter to mitigate whipsaw in crossover strategies.
Options and Securities
- An Eve is a rounded top or bottom in relation to Double Tops & Bottoms.
- Exhaustion Gap occurs at the end of a move and is usually filled within a few days.
- Expanded Flat is a variation of an Elliott Flat corrective pattern where wave B retraces beyond the start of wave A, and wave C ends beyond the end of wave A.
- STRIPS (Separate Trading of Registered Interest and Principal Securities) separates the payments and principal to give investors more options and increase liquidity.
Support and Resistance
- Support is a level where declining prices stop falling, where the number of buyers balances the number of sellers.
- Swing Chart is a chart that posts a new vertical line for each change in trend, with different styles based on rules for defining a change in trend.
Treasury Securities and Inflation
- TIPS (Treasury Inflation Protected Securities) have principals adjusted for inflation.
Trading and Risk Management
- Throwback occurs when price breaks upward out of a pattern and then retraces to the breakout level.
- Tick Volume is the count of price changes in a given time period.
- Time Value (Option) is the difference between the total premium of the option and the intrinsic value (if any) of the option.
- Total Volume is the total of all futures contracts for a market added together.
- Trailing Stop is a stop that follows the market, getting closer but never moving away, used to lock in profits when the market turns.
Trend Reversals
- Reversal is a change in the direction of the trend.
- Reversal Pattern is a pattern with a high probability of exiting the pattern on the same side as the entry, with the trend in the opposite direction as the trend at the entry.
Other Concepts
- Right Translation occurs when the cycle peak is to the right of the expected centre of the cycle.
- Runaway or Measuring Gap is a pattern that can be used to project targets.
- Running Flat is a variation of an Elliott Flat corrective pattern where wave B retraces beyond the start of wave A, and wave C fails to extend beyond the end of wave A.
- Seasonality refers to yearly cycles that affect commodities and equities affected by supply and demand.
- Secondary Market is where investors trade already existing securities with each other.
- Secondary or Intermediate Trend is a trend that measures in weeks or months, a term used for any period longer than the business cycle.
- Secular is a term used for any period longer than the business cycle.
- Secured refers to a financial product that has some form of asset guarantee in case of default.
- Sentiment refers to Market Breadth.
- Shadow is the line extending above and beneath the Body of a candle, also called a Whisker.
- Short Selling / Short Trade is a transaction that allows the trader to profit from a falling security.
- Shortfall (Patterns) occurs when price fails to retrace all the way to the expected bounds of the pattern.
Bond Market
- Investment grade bonds exceed the rating thresholds set by the ratings agencies.
- Junk Bonds are below the ratings thresholds set by the ratings companies.
Yield Curves
- Inverted Yields occur when yields on near-term bond maturities are higher than those on longer-term maturities, often preceding an economic slowdown and recessions.
Patterns and Trends
- Island Reversal is a lone bar at the end of a trend that has a gap before and after it.
- Line Chart is a simple chart where the closing price for each period is plotted on a XY chart where X is time and Y is price.
- Pullback occurs when price breaks downward out of a pattern and retraces to the breakout levels.
- Wedge pattern has one peak (or trough) that ends the initial thrust of the move, called the "Climax".
Orders and Risks
- Limit Order is an order established with a broker that will automatically execute when the price reaches the requested level.
- Market Order is an order to buy or sell at whatever price the market is currently trading at.
- Liquidity Risk is the risk that the asset will not be able to be sold for the desired price.
- Market Risk is the risk that prices will move so that the investment reduces in value.
Indicators and Analysis
- Market Breadth is an indicator that measures both positive and negative sentiment in the market.
- Momentum measures the rate of change in price over a defined period of time.
- Ratio Analysis involves creating a ratio from the prices of two securities and comparing that ratio against other ratios.
Cycles and Waves
- Kondratieff Wave is a 54-year economic cycle.
- Primary Trend is a trend measured in months or years.
- Real Estate Cycle is an 18.6 year cycle in the property market that impacts equity and bond markets.
Options and Bonds
- Callable bonds are securities with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date.
- Convertible bonds provide investors with the option to swap debt for equity.
- Coupon Payments are the interest payments made by the bond seller.
Risk and Correlation
- Credit Risk is the risk that a government or company will not be able to meet their debt obligations.
- Currency Risk is the risk that changes in the currency will reduce/increase demand for the securities.
- Correlation measures the relationship between two data sets, ranging from -1 (negatively correlated) to 0 (uncorrelated) to 1 (correlated).
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Description
This quiz covers various technical analysis patterns, including Broadening, Diamond Top, Symmetric Triangle, and Divergence, used in trading strategies.
