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Lined Up Books

Glossary

Alligator

A technical indicator is an integral part of technical analysis, aimed at helping traders forecast market trends. There are many indicators available, and some traders prefer using well-established ones, while others experiment with new indicators. Examples include the Williams Alligator Indicator, oscillators, trend indicators, and volume indicators. The Alligator Indicator, created by renowned trader Bill Williams, is based on several successful systems and strategies. It consists of three moving averages with different periods, derived from the average price. The indicator is named "Alligator" because its market behavior resembles that of an alligator. Therefore, the indicator's components are divided into three parts: the Jaw, the Teeth, and the Lips. The Alligator Indicator helps traders identify market trends and make informed decisions. It is particularly useful for determining the right time to enter the market, assessing the strength of a trend, or setting Stop Loss levels.

Ask Price

The price at which a broker offers to sell a financial instrument to a trader. It represents the price at which the seller is willing to sell their product. On a quote, this price is displayed on the right side. The Ask Price is always higher than the Bid Price.

Balance Only with Volume - OBV

An accumulation indicator based on trading volume, reflecting the relationship between the volume of contracts traded and the price movement of the asset.

Basis

The difference between the price of a futures contract and the value of the underlying asset. Over time, the basis may change, meaning the price may differ from the spot price at the time of purchasing the futures contract. The longer the time between opening and closing a futures position, the more the basis is subject to fluctuation.

Bid price

The price at which a trader can sell a financial instrument. On a quote, the Bid Price is displayed on the left side and is always lower than the Ask Price. Market orders, closing orders, pending orders, as well as Stop Loss and Take Profit orders are executed at the Bid Price.

Bollinger Bands Directive

An indicator that reflects changes in current market volatility, confirms trends, indicates the potential continuation or reversal of a trend, identifies consolidation phases, increases volatility during breakouts, and signals local price peaks and troughs.

Bottom

The lowest value of an indicator or price at a specific area on a chart. It is often observed that the price on the chart moves in a zigzag pattern (not simply up and down), forming peaks and bottoms. To sustain an uptrend, the peaks and bottoms will alternate in increasing values, while in a downtrend, the bottoms and peaks will alternate in decreasing values. To confirm a trend reversal, it is necessary to reassess the bottom.

Cash Flow Index - IFI

A technical indicator designed to assess the strength of cash flow into an asset by comparing price increases and decreases over a specified period, taking into account trading volume.

Clearing

The process of determining net positions to calculate the financial obligations of the trading parties.

Commodity Derivatives Trading

Commodity derivatives are financial tools that allow an investor to invest in a commodity and make a profit without actually owning it. A commodity derivative gets its value from ‘the underlying asset’, meaning its value is based on the physical commodity (e.g. wheat or gold) it represents. They can be traded on the market or used as exchange-traded derivatives (i.e. bought and sold on organised exchanges).

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