Education Glossary

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Term Definition
Correlation

The measurement of the relationship between changes in two securities.

Vega

How much the price of an option will change in relation to the volatility of the underlying asset.

Theta

Rate at which an option loses value as the amount of time to expiration changes. Also known as time decay factor.

Rho

Change in option value that results from a change in interest rates.

Implied Volatility

The market's estimate of where volatility will be in the future.

Historical Volatility

The measure of how an underlying asset has moved in the past.

Gamma

Rate at which an option gains or loses deltas over a $1 change in the price of the underlying security.

Emini

An electronically traded futures contract on the Chicago Mercantile Exchange that represents a portion of the normal futures contracts

Delta

Rate of change in the theoretical value of an option for a $1 change in the underlying asset.

Corrective Wave

A principle of Elliott Wave Theory, it's a set of security price movements that counter the main prevailing trend.

Continuation Chart

Common to price charts for Futures contracts, the historical price scale is adjusted to collapse transitions from one contract to the next.

Congestion

A period of time where a security trades below Resistance or above Support.

Commodity Channel Index

A momentum oscillator designed by Donald Lambert that identifies cycle turns in commodities markets.

Chikou Span

A lagging technical indicator which is an element of theIchimoku Kinko Hyo indicator that plots price movement 26 periods behind the most recent closing price.

Charting

A market analysis approach that uses visual statistical data of securities prices as a decision support tool in making trades based on price trend.

Chartered Market Technician

A designation granted by the Market Technician Association to individuals who have demonstrated mastery of technical market analysis via a series of three exams.

Chande Momentum Oscillator

A technical indicator which measures momentum, designed by Tushar Chande. The difference between the sum of losses and the sum of gains are divided by the sum of prices for a given period.

Chaikin Oscillator

A technical indicator designed by Mark Chaikin that measures momentum by starting with the Accumulation/Distribution line and applying two Exponential Moving Averages of varying lengths. The indicator is a plot of the difference of the value of the two preceding formulas.

Candlestick Chart

A different price chart format display of the high, low, open and closing prices which resemble candlesticks -- wide vertical bars with thin lines that extend above and below.

Bullish Engulfing Pattern

A Candlestick price chart pattern where a small black candlestick is followed by a large white candlestick that engulfs the candlestick bar preceding it.