P1:a/b P2:c/d QC:e/f T1:g
gloss JWBK182-McDowell April 25, 2008 16:35 Printer: Yet to come
180 GLOSSARYARTneutral price bar On this price bar, the open and the close are at the 50
percent point on the bar when it closes. Both bulls and bears are in stalemate at the
close of the price bar.
ARTone-bar reversal (1B) This scalp signal identifies exact entries and exits.
It can also be used for scaling in and scaling out of trends. This reversal signal
requires only one price bar that is the signal bar, which determines both the entry
and also the stop-loss exit. It can be used on all markets and all time frames.
ARTsignal price bar Represents the price bar used for a trade entry when using
theARTreversals. TheARTtrading software designates theARTSignal Bar with a
1B or 2B directly above or below the price bar.
ARTtwo-bar reversal (2B) This scalp signal identifies exact entries and exits. It
can also be used for scaling in and scaling out of trends. This reversal signal requires
two price bars, the first price bar is used for the stop-loss exit and the second price
bar or signal bar is used for the entry. It can be used on all markets and all time
frames.
ask price Also known as the offer. The price a seller is willing to accept. The
difference between the bid and ask is known as the bid-ask spread.
asset Any possession that has value in an exchange.
asset allocation The process of deciding what types of assets you want to own,
and the percentage of each. As conditions change, the percent allotted to each asset
class changes.
at-the-money An option is at-the-money if the strike price of the option is equal
to the market price of the underlying asset.
average true range (ATR) Helps determine a market’s volatility over a given pe-
riod. It is calculated by taking an average of the true ranges over a set number of
previous periods. It is the (moving) average of the true range for a given period.
backtesting Backtesting is the use of historical data to test technical or funda-
mental theories or systems to determine the historical performance of a given set
of rules. Backtesting can give information on what the performance would have
been but does not guarantee future results. eSignal has a playback feature that en-
ables you to test your trading skills using historical data and playing it forward to
determine what your performance would have been. The value of the playback is
that you do not see the right side of the chart so you are testing your own ability to
make decisions without knowing what the next price bar will bring.
balance sheet A listing of all assets and liabilities for an individual or a business.
The surplus of assets over liabilities is the net worth, or what is owned free of debt.
basis This is your cost of the asset. If you pay $10 per share for a stock and $1 per
share for commission, your basis is $11 per share.
bear Someone who believes prices will decline and is generally pessimistic about
future market returns.