Education Glossary

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An occurrence where a market's price has fallen sharply, where the decline exceeds the level of it's true value.


An occurrence where a market's prices are unjustifiably high due to extensive demand (buying).

Outside Reversal

A daily bar chart pattern where the security's high is higher than the previous trading day.


A mathematical model for determining prices where a security is overbought or oversold. By identifying the extreme high and low prices, an oscillator can issue buy and sell signals when market activity nears either level.

Opening Range

The price range for the highest bid and the lowest offer during the first few minutes of the Exchange's official open.

Normal Distribution

The plotting of a data set with symmetrical frequency where the resulting pattern is a Bell Curve.

Noise Trader

A label given to stock traders who trade erratic and irrationally.

Monte Carlo Simulation

An algorithmic model that provides probabilities for various, different outcomes through analyzing random data samples.

Money Flow Index

Designed by Gene Quong and Avrum Soudack, this is a technical indicator that evaluates price and volume to assess buying and selling pressure.

Momentum Indicator

A trend predicting technical indicator that conveys the rate at which stock prices are rising or falling.

Sharpe Ratio

A technical formula designed by William F. Sharpe that calculates the average return minus the risk-free return, divided by the standard deviation of the return, on an investment.

Modified Sharpe Ratio

A formula based on the Sharpe Ratio that predicts the performance of an asset after risk adjustments.

McClellan Oscillator

Designed by Sherman and Marion McClellan, this technical indicator is applied to the NYSE to evaluate market breadth by analyzing the difference between Advancing and Declining issues.

Market Thrust

A technical indicator that evaluates momentum by taking advancing issues on a particular exchange and dividing by total issues (advancing and declining), then producing a 10 period Moving Average of the resulting percentage.

Market Technicians Association

A non-profit organization that exclusively provides the Chartered Market Technician (CMT) Program for professionals advancing their study of technical analysis theory and ethical practices within the investment community.

Moving Average Convergence Divergence (MACD)

Designed by Gerald Appel, this is a technical indicator that compares values of two Exponential Moving Averages at periods of 26 and 12 respectively to reveal trend strength, direction and duration as well as momentum.

Logarithmic Chart

A chart where price scale is skewed so that a specific distance represents a fixed change in price. Commonly used to express exponential changes in the magnitude of numbers (prices).

Linear Regression

Predictive analysis that conveys the correlation between one dependent variable and one or more independent variables.

Key Reversal

A price chart pattern occurring with stocks where the Open price is above the previous day's High, continues to rise, then falls below the previous day's Low OR Open price is lower than previous day's Low, continues to decline, then rebounds to exceed the previous day's High.

Keltner Channel

Designed by Chester Keltner, this is a technical indicator that applies Average True Range to an Exponential Moving Average and plots the results above and below price data, appearing as a channel.