P1:a/b P2:c/d QC:e/f T1:g
gloss JWBK182-McDowell April 25, 2008 16:35 Printer: Yet to come
Glossary 193New York Mercantile Exchange (NYMEX) This is the world’s largest physical com-
modity futures exchange, located in New York City. Its two principal divisions are
the NYMEX and the New York Commodities Exchange (COMEX), which were once
independent companies but are now merged.
New York Stock Exchange (NYSE) Known as theBig Board, this is a New York
City based stock exchange. The NYSE provides an efficient method for buyers and
sellers to trade shares of stock in companies registered for public trading. The ex-
change provides efficient price discovery via an auction environment designed to
produce the fairest price for both parties. As of January 24, 2007 all NYSE stocks
can be traded via its electronic hybrid market (except for a small group of very high
priced stocks). Customers can now send orders for immediate electronic execution
or route orders to the floor for trade in the auction market. In excess of 50 percent
of all order flow is now delivered to the floor electronically.
nontrending market This is also known as a bracketed, consolidating, channeled
or sideways market. Seebracketed market.
NYSE Composite Index A capitalization-weighted index designed to track the per-
formance of all common stocks listed on the New York Stock Exchange.
OBV Seeon balance volume.
on balance volume (OBV) This method is used in technical analysis to detect mo-
mentum, the calculation of which relates volume to price change. OBV provides a
running total of volume and shows whether this volume is flowing in or out of a
given financial instrument. It attempts to detect when a stock, bond, etc. is being
accumulated by a large number of buyers or sold by many sellers. Joe Granville
developed this indicator.
open interest In futures markets, the total number of open and short positions
are always equal. This total (long or short) is called the open interest. By definition,
when a contract month first begins trading, the open interest is zero. The open
interest then builds to a peak and declines as positions are liquidated, approaching
its expiration date.
open order An order to buy or sell a security that remains in effect until it is either
canceled by the customer or executed.
opening (OPG) At the opening, by choosing OPG, your order will be executed at
the opening price. If it is not executed at the opening, it will be canceled automati-
cally.
Optimalfformula This formula calculates for you the optimum fraction of capi-
tal, or percent of capital, to risk on any one trade based on your win ratio and pay
off ratio. It gives you a more aggressive calculation than the risk-of-ruin tables do.
It is sometimes referred to as the Kelly formula.
optimization This refers to optimizing software and the process of discovering
what impact is the result of varying a particular parameter across different values,