Terminology & “David Speak”

TERMINOLOGY AND ‘DAVID SPEAK’

ABC – An Elliott Wave Corrective Pattern. ie. a retracement.

ADX –  ADX is an indicator of market trend and the strength of the Trend.

*    Please Note:  Sometimes this translates in my transcripts as  “ATX”  but ‘should” say “ADX”.

AT MARKET – An order placed on the basis that you will accept a price at or about the market price for the shares at that time.

BACK ON YOUR BIKE Territory – The market confirms it is reversing and getting back with its’ trend – if you have been stopped out, consider getting back in.

BANK THE CASH – Take profits.

BARGAIN BASEMENT BUYS – Are usually long term buys at major levels.

BBB – BARGAIN BASEMENT BUYS.

BEAR PAWS – The BP list (Bear Paws Warnings) is an early warning indicating that everyone (except PHG members) will be wanting to buy it, but you have to wait for the trend change, it needs to show signs of weakness to confirm a decline. Watch for signs of death (SOD).

BLOW OFF – Letting off steam.  Blow off means a big excited move to the upside.  Basically you get in and out quickly.

BLUE CHIPS –  ‘Core stocks’ of a long-term investor’s portfolio.  Blue chips are considered the most reliable in terms of capital growth and dividend income, and are usually the least volatile shares on the market. (See also Top 50 below)

BLUE SKY – The possibility of making very large future gains, the reason why people buy speculative stocks.

BOB – Back On your Bike.  Re-entry of a previously held position.

BOO – Buy On Open.  Buying immediately the market opens.

BREAK  A break is normally understood to mean it crosses… therefore 1 tick beyond a level could be the order that one places into their trading system, unless the instruction is  “ a break & close below/above xxx price”.

*** But emphasis, this must always be checked with your broker to confirm their terminology and correct trade entry criteria, for their trading platform … plus ALSO SEE BELOW (bottom of page comments)

BREAKDOWN – “Goes down through” current resistance level.

BULLHORNS – The BH list (Bull Horns Warnings) is an early warning indicating that everyone (except PHG members) will be wanting to sell it, but you have to wait for the trend change, it needs to show signs of strength to confirm a rally.  Watch for signs of life. (SOL)

CFD – Contract for Difference – An equity derivative that represents a theoretical order to buy or sell a certain number of shares.  The price of a CFD is derived  from the spread quoted on the ASX: The value of the CFD mirrors the share price.

CIT – Change In Trend.

CYEB – Close Your Eyes Buy – A buying opportunity, where the stock/market  is looking very strong and going higher and where there does not appear to be a dip to buy into.

CYES – Close Your Eyes Sell – A selling opportunity, where the stock/market  is looking very weak and going lower and where there does not appear to be a rally to sell into.

DAGGER CATCH – Buying a share that has come down fast to a logical support area, with a favourable probability that it will move up from there.  Normally only a small position is taken on these.

DEAD CAT BOUNCE – A short term rally which will result in a further decline.

DEEP POCKETS TRADE –  A trade for those who are prepared for a bigger stop loss.  ie. Big Stop Loss required –  You need lots of money and not a care, often associated with an entry to Medium to Long term positions.

DITG – Dagger In The Ground – Means it has bottomed.

DIVIDEND – Portion of a company’s profits distributed to its shareholders.  An interim dividend is paid for the first six months of the company’s financial year, and a final dividend for the second half.  The two amounts make up the annual dividend.

DKI  An indicator to measure market sentiment.

DOJI – Means indecision, and is good for forecasting.  The open and close are approximately in the middle of that bar.

EFT = Exchange Traded Fund – A stock that represents a portfolio or index.

FALLING WEDGE – A potential sign of market change in trend.

FIRE BULLETS – A good place to go short – Sell.

FLOAT – The first time a company’s shares are sold on the share market, increasingly called an Initial Public Listing. (IPO)

FRANKING CREDITS – The personal tax credit received by a shareholder, attached to a company dividend, (tax already paid by the company on it’s profit).

GBO – Generational Buy Opportunity.

GOOD NEWS – Usually a reason to take profit, not get in.

INVESTOR – A share market user who buys and sells blocks or shares for profit.  Investors are not as interested in shorter term moves in the market instead being more interested and focused on looking to make money  over the Medium to Long Term.

KILLING ZONE – Place where we can sell with a high probability of making something out of it with a tight stop loss if we want to go short OR a place to take a reasonable amount of profit if long.

MOC – Buy or sell on ‘Close Of The Market” – last 5 minutes or if you can’t, buy next day on open of the Market. (MOO)

MOO – Buy or sell on “Open Of The Market”.

NIBBLE – Small position, small risk (difference between entry and Stop) only 0.5% of trading investing capital.

ONE-To-ONE – Equal range(100%) with a previous move.

Example – in Elliott Wave analysis of a retracement, a “C” wave may equal an “A” wave.

OPTION – A security that gives its’ holder the right to buy (or sell) a specified number of shares on or before a specified date at a predetermined price.

PAIRS TRADES – Pairs trades are used by hedge funds and active traders.  This is where you go long one stock and short in a related stock E.g. selling WBC.ASX and buying NAB.ASX in ratios usually related to the volatility of each individual share. Usually these are actioned best using , CFDs as they allow you to go easily short.

PHGtrades – Profit Hunters Group Trades—As I go through the day and do my analysis of various Shares/Markets, asked by my Gold members, some stand out as higher probability trades/investments, these become our PHGtrades… these are my favoured ones.

PRE-OPEN – The time before 10am at the ASX in which operators can enter, buy or sell orders and amend or cancel orders left over from the previous day.  These orders do not trade until the market opens at 10am.

RESISTANCE AREA – This is a price level that has previously acted as a barrier.  Historically, a price rise has stabilised at this level, and then reversed.

RETRACEMENT – A share or market movement that is opposite to the trend.

RIGHTS ISSUE – Offer of shares in which current shareholders are offered the opportunity to buy new shares at a price lower than the market price, on a pro rata basis, for example to buy one new share for every five held.

RISING WEDGE – A tip-off to get ready for a possible top coming.  Rising wedges can be Wave 5. Running out of steam. Getting tighter and looking to turn down.  A bearish signal when triggered.

SCENE OF THE CRIME – The place where the break up or break down occurred.   A significant previous level of support or resistance.

SCO  Stop Close Only—A  STOP that is an EXIT and executed (becomes live) in the last 5 minutes of the day’s session if your criteria dictates.

Example: so if the exit is a 68c SCO, then exit at the next price – a 68 cents stock will often trade 67.5c before 67c, therefore if you can not get out or miss it at that level, you get out at the open the next day if the open is at or below the stop. But if the open is above the stop then run a hard stop, at that price of 68c (as a price stop) all day – you might actually be given a repreive.

SHORT SELLING – Selling a stock that you don’t own, in the expectation that by the time you have to deliver it to the buyer, its’ price will have fallen and you will have bought it for less on the market, thus making a profit.

SMSF – Self-Managed Superannuation Fund.

SNEAKY BUY – One that everyone else is giving up on that still has value.

SOD – Signs Of Death.

SOL – Signs Of Life.

SOO – Selling On Open –  Selling immediately the market opens.

SOS – Sign Of Strength/Life.

SPREAD – Difference between the buy and the sell, or 2 markets. (SPI vs XJO)

STOP CLOSE ONLY – SCO – A  STOP that is an EXIT and executed (becomes live) in the last 5 minutes of the day’s session if your criteria dictates.

Example: so if the exit is a 68c SCO, then exit at the next price – a 68 cents stock will often trade 67.5c before 67c, therefore if you can not get out or miss it at that level, you get out at the open the next day if the open is at or below the stop. But if the open is above the stop then run a hard stop, at that price of 68c (as a price stop) all day – you might actually be given a repreive.

STOP LOSS – An order that tells your broker to exit your position in a particular market/share if it moves to a certain price ie. Entry – Stop Loss = the amount you risk.

SUPPORT AREA – Support is the opposite to resistance.  On a chart, support is the price level where a price fall has historically stabilised, and then risen again.

TAKEOVERS/MERGERS – Usually the company taking over is the one that is sold off, the Take Over Target Price goes up.  The Aggressor Price goes down.  Do not buy stock that is making a takeover.

TGIF – Thank God It’s Friday.

TMV – Is an ETF 20 year US Bond.

TOP 50 STOCKS – The largest 50 companies by Capitalisation listed on the ASX.

Top 50 Stocks

TP – Take Profit (abbreviation used on PHGtrade table/page)

TRADE PERIODS

ST = Short Term also referred to as “Traders timeframe”.(1day>>2wks)                      

MT = Medium Term – also referred to as “Intermediate timeframe”  (2wks>>3mths)

LT = Long Term also referred to as “Investors timeframe” (3mths>>12+mths)

TIME FRAMES

Traders timeframe – Short Term- ST – (1day>>2wks)

Intermediate timeframe – Medium Term – MT – (2wks>>3mths)

Investors timeframe – Long Term – LT – (3mths>>12+mths)

TRADING PSYCHOLOGY – I want to elaborate on Trading Psychology.

Normal human nature will want to get out when a trade that has been underwater for a long time gets back to break even and then they kick themselves often when it keeps on going up.  Your challenge is to manage this trade until it shows definite signs of a turn around and not just “Chucking The Baby Out With The Bath Water”. It’s a tough thing to do – but if you can, it will help you a lot in trading successfully.  The fact that you are in at X only means you are in at X.  Reaching X does not mean you should get out unless the market tells you to.

TRADER – A share market user who buys and sells blocks or shares for profit.  Traders don’t care how long they have owned a stock they simply are looking to make money often over the Short Term.

TRAILING STOP – Example, a stop on yesterday’s low for a tight trailing stop.

TREND – In technical analysis, the direction of the market or share price.

TRIANGLES – Means a triangle shape, where market test to the downside & upside repeatedly.   When you get these signals you can buy dips at or better than the entry price – Risk Reward – It’s better not to chase this share or market.

VOLUME – Total number of shares (or other security) traded in a given period.

WAVE 4 – Strategy is to sell rallies and buy dips.

YMYC – Your Money Your Call – Television program on Foxtel Sky Business News.