P1:a/b P2:c/d QC:e/f T1:g
gloss JWBK182-McDowell April 25, 2008 16:35 Printer: Yet to come
184 GLOSSARYcountertrend trade A trading strategy where an investor or trader attempts to
make small gains through a series of trades against the current trend.
cover To liquidate an existing position (such as sell if one is long; buy if one is
short).
covered call To sell a call option. At the same time you own the same number of
shares represented by the option in the underlying stock.
covered put To sell a put option. At the same time you are holding a short position
in the underlying stock.
data Live streaming market data are provided to the trader or investor by data
providers and brokerage houses. These data are used to conduct technical analysis
and provides price and volume information. Real-time data is sent by the minute
during the trading day. Generally data providers charge more for real-time data
because they are more labor intensive to provide. Real-time data are used by day
traders. End-of-day data are provided at the end of the day and give you final price
and volume information for the market you are analyzing. Data providers charge
less for end-of-day data, and this type of data is used more by investors and position
traders.
day trade A trade that is liquidated on the same day it is initiated.
day trader Day trading refers to the practice of buying and selling financial in-
struments within the same trading day such that all positions will usually (not nec-
essarily always) be closed before the market close. Traders that participate in day
trading are day traders.
debt-to-equity ratio Ratio demonstrating an institution’s debt relative to its
equity. Just one component used by corporations in assessing optimal capital
structures.
decimals Increment of movement in the stock market.
deflation A drop in average product and services price levels, usually caused by
excessive tightening of money supply. Deflation can lead to reduced economic de-
mand and higher unemployment. Not to be confused with disinflation.
discretionary trader A trader who makes decisions based on his own analysis of
the market, rather than in response to signals generated by a computerized black
box system. The best discretionary traders are those who develop a systematic ap-
proach and then use discretion in their entries, exits, and position sizing to improve
performance.
disinflation The slowing growth of average product and services price levels. This
can be thought of as the slowing of inflation. Not to be confused with deflation.
divergence The failure of a market or indicator to follow suit when a related mar-
ket or indicator sets a new high or low. Some analysts look for divergences as a
signal of impending market tops and bottoms.