While refining my Emini trading system I’ve borrowed some terminology from other commentators and invented some of my own. If you’ve not come across a particular term, you might find it defined here:
Market participant – Amateurs are characterized by trading smaller volume. Although they might “love” trading they are usually the losers – entering late and getting the trend direction wrong. Also known as the “dumb money” – but this term is not used in this website. The opposite are Professionals.
Bot Signal (BOT)
Volume pattern – Signalled when the tape is flooded with a stream of approximately 500 single contract trades, all at the same bid/ask. Often seen at market turning points. I have hypothesised that this is high frequency trading (HFT) bots “talking” to each other – but this is purely a guess.
Cycle term – A breakout above a cyclical resistance level (or below a cyclical support level) often runs out of steam when it approaches a cyclical turning point in the next higher time frame. I call this being “caught” by the pattern being generated in the higher time frame.
Trading term – Futures contracts usually trade for 3 months, so back-testing a trading system over 5 years of data can be a time consuming exercise. To make life easier, traders have concatenated (or combined) different historical contracts into one single data stream. The Contract Rollover date is chosen as the day to switch to the new futures contract data.
Trading term – Invented by Byron A. to describe a sharp counter-trend move, usually 2-4 Emini points, designed to shake traders out of their positions and cause them to reverse incorrectly. Taken from the movie “The Hunt for Red October” starring Sean Connery, based on the novel by Tom Clancy.
Cycle term – A variant of the “End of Trend” signal. If the Pull Back level is broken the End of Trend signal will not print. You can assume an End of Trend signal with the first cyclical turn after the Pull Back signal. These cases are referred to as “dirty” signals, to distinguish them from “clean” signals.
End of Trend (End)
Cycle term – A cyclical pattern that occurs at trend extremes and turning points. The pattern is made up of a break into trend, then a Pull Back against the trend and then finally an exhaustion move in the direction of the trend that signals a possible end of that trend. End of Trend signals are confirmed with volume momentum divergence patterns (or Flush signals) and Professional activity. Shown on Emini-Watch.com charts with “END” text.
Fade
Trading term – A term that refers to a trade that is in the opposite direction of the current move. For example, to “Fade the Amateur break out” where the profitable trade is to anticipate a false breakout if it is being led by the Amateurs – who are usually the losers. See “RAMBO”.
Wyckoff term – Describes Professionals leading a downside breakout from consolidation leading to a downtrend move. Better Pro Am will show a Professional (blue) bar breaking down through a support level drawn by Better Sine Wave. The expression “Falling through the Ice” was originally coined by Richard D. Wyckoff – a famous trader and educator from the early 1900s. The opposite of “Falling through the Ice” is “Jumping the Creek”.
Volume pattern – Exhaustion volume that finally “flushes out” the last sellers before an up trend can begin (or last buyers before a down trend). Builds on the principle that markets bottom when all the sellers have sold (and markets top when all the buyers have bought).
Heat
Trading term – The amount a trade goes against you after you have entered. For example, if you go Long at 1,325.00 and the market immediately goes to 1,322.00 before climbing back to 1,325.00- you have taken 3.00 points of “heat” on the trade. The less “heat” you take on a trade, the more perfect your entry was.
Wyckoff term – Describes Professionals leading an upside breakout from consolidation leading to an uptrend move. Better Pro Am will show a Professional (blue) bar breaking up through a resistance level drawn by Better Sine Wave. The expression “Jumping the Creek” was originally coined by Richard D. Wyckoff – a famous trader and educator from the early 1900s. The opposite of “Jumping the Creek” is “Falling through the Ice”.
No Demand (NoD)
Volume pattern – Frequently seen at market tops. It indicates a lack of buyers able to push prices higher. Shown on Emini-Watch.com charts with “NoD” text. The reverse pattern at market lows is the No Supply volume pattern. The term was originally coined by Tom Williams in his VSA methodology.
No Supply (NoS)
Volume pattern – Frequently seen at market bottoms. It indicates a lack of sellers able to push prices lower. Shown on Emini-Watch.com charts with “NoS” text. The reverse pattern at market tops is the No Demand volume pattern. The term was originally coined by Tom Williams in his VSA methodology.
One Shot, One Kill (OSOK)
Trading term – The phrase usually refers to a sniper’s tactics or credo – using stealth and efficiency and only one bullet to kill a target. In my trading I use the term to refer to only taking one trade to achieve my daily profit target of 4 Emini points – and ideally be out of the market in the first 45 minutes of trade.
Exit signal – Combination of exhaustion volume and Professional activity. Once a trend move has got under way, this represents the first place that Professionals get back in and take profits. My preferred place to take profits as it is often at a price extreme and before any retracement.
Market participant – Professionals are characterized by trading larger volume. They make their living trading and are usually the winners – entering early and getting the trend direction right. Also known as the “smart money” – but this term is not used in this website. The opposite are Amateurs.
Profit Taking (PT)
Volume pattern – Frequently seen at market tops and bottoms. It indicates Professionals are taking profits and using the large volume traded to exit their Long trades at new highs (or Short trades at new lows). Shown on Emini-Watch.com charts with “PT” text.
RAMBO Pattern (R)
Volume pattern – Abbreviation for “Reversal of Amateur Break Out”. Shown on Emini-Watch.com charts with “R” text. Break outs to new highs or new lows lead by the Amateurs are often suspect. The RAMBO volume pattern is a reversal signal but needs confirmation with other indicators such as price cycles, exhaustion volume and declining volume momentum. More information in this video.
Trading term – Every quarter traders switch to the “front month” (or most current) futures contract. On this day, trading volume is split between the “old” and “new” contract. In addition, Continuous Contract data is re-calculated by data providers/charting platforms.
Runner
Trading term – A trade that starts to break into a trend move in your favour. First signalled by a break above resistance (or below support) on the 500 tick bar chart, then on the 1,500 tick bar chart. To maximize profits on a trade that turns into a Runner, move your profit target out from 4 to 6 or 8 points.
Stopping Volume (St)
Volume pattern – Shows a trend move is slowing down and traders are taking profits. Shown on Emini-Watch.com charts with “St” or “St*” text. The term was originally coined by Tom Williams in his VSA methodology.
Chart type – A tick is one trade. So a 500 tick chart plots a new price bar after 500 trades. Don’t confuse tick with the NYSE TICK Index (or $TICK in many charting programs). The NYSE TICK Index is a totally different thing. It measures the number of stock issues trading on an up tick versus a down tick.
Trading term – The act of Professionals buying the market so it closes at highs or new highs at the end of the month, and particularly at the end of a quarter. Professional fund managers are almost all “long only” and so have a vested interest in the market going up. They want to show their investors good performance numbers and encourage new funds and new investors.
