This page covers the terminology used on this Website.
Balanced Market: A rotational market where price movement is between a defined range.
Buying Tail: Thin volume area at the bottom of the Volume Profile indicating Other Time-Frame Buyer activity.
b Shaped Profile: A profile shaped like the letter b; thin volume at the top and heavier volume at the bottom. This is typically due to Long Liquidation.
Bull/Bear Zone (Line in Sand): The Bull/Bear Zone (Line in Sand) is a simple way to establish Bias. It is a Key Price Zone/Level that is used to determine which side is in Control. Buyers are in Control if price is trading above this Zone/Level, and Sellers are in Control if price is trading below this Zone/Level.
High Volume Node (HVN): A price range with a high amount of volume (heavy acceptance). Typically, price does not slice right through these areas on first touch. These are Price Areas which saw heavy acceptance in the past, and price usually rotates around these areas before making its way through. Think of it as a golf ball hitting the rough; it doesn't move through very easily. In the event that price slices right through it, that can be used as a valuable piece of information and is indicative of aggressive other time-frame activity. In other words, don't fade it!
Initiative Buying: Buying above the Value Area. Simply, on the micro time-frame, this is buying activity when offers are being lifted. Buying at the Ask Price can be viewed as Initiative Buying.
Initiative Selling: Selling below the Value Area. On the micro time-frame, this is selling activity when bids are being hit. Selling at the Bid Price can be viewed as Initiative Selling.
Initial Balance (IB): The price range of the first hour of trading (8:30 AM CST - 9:30 AM CST in case of the E-Mini S&P 500 Futures). The Initial Balance High (IB High) is the 1st hour High, and Initial Balance Low (IB Low) is the 1st hour Low. These price levels tend to act as magnets and Support/Resistance areas during the day. Buying activity above the IB High indicates a strong market, and selling activity below the IB Low indicates a weak market. I am cautious of entering Shorts if price is trading above the IB High, and likewise, I'm cautious of entering Longs if price is trading below the IB Low. If price is well below the IB Low at one of my Strong Support Areas, I will use the IB Low as a Target to get out of my Long positions.
Value Area Low: Bottom of the Value Area
Value Area High: Top of the Value Area
Long Liquidation: After an extended up move, when buyers decide to sell and get out of their Long positions. This typically results in a "b" Shaped Profile.
Low Volume Node (LVN): Price range with a low amount of volume. These areas represent a set of prices where there wasn't much trade facilitation between buyers and sellers. The market usually rejects these prices quickly on a re-test; it either bounces off them quickly, or slices right through. Think of this as a golf ball hitting a glass window; it will either bounce off right away, or break through the window. Risk management and trade execution is even more important when entering trades at these areas.
Mid-Point: This price level marks the center of the current day's range. I keep track of the Mid-Point on the 24-hour Chart as well as the Day Session (Regular Trading Hours) Chart. This is an important Intraday Support/Resistance Level. Buyers are in Control above, and Sellers are in Control below the Mid-Point.
Normal Day: Small range extension beyond the Initial Balance.
Normal Variation Day: After the first hour of trading, range is extended two times the Initial Balance.
Neutral Day: A day when you have a range extension up and down (outside day). Neutral days form when the Other Time-Frame Buyer and Seller are involved in the same price range, and we get Responsive Buying below the range, and Responsive Selling above the range. This also indicates uncertainty in the market, and the day usually ends with little or no change in price.
NVPOC: Naked VPOC, meaning a VPOC that has not been tested during regular trading hours.
Open Auction: Price trades up and down around the Opening price without any clear direction.
Open Drive: Price moves directionally right from the Open.
Open Test Drive: Market opens and price tests a significant Support/Resistance Level and then turns around and drives in the opposite direction.
Open Rejection Reverse: When price opens too far outside the previous day's Value Area, and is quickly rejected with the market reversing into the opposite direction (gap fill).
Opening Range: The price range established during the first few minutes of trading. To keep it simple, you can use the first 5-minute bar to define the Opening Range.
P Shaped Profile: A profile shaped like the letter P; thin volume at the bottom and heavier volume at the top. This is typically due to a Short Covering Rally.
Range Extension: Price movement beyond the Initial Balance.
Responsive Buying: Buying activity below the Value Area. In this case, price is viewed as too far out of value (too cheap), and buyers enter the market and push price back up towards Value. On the micro time-frame, this can be viewed as Buying at the Bid.
Responsive Selling: Selling activity above the Value Area. In this case, price is viewed as too far out of value (too expensive), and sellers enter the market and push price back down towards Value. On the micro time-frame, this can be viewed as Selling at the Offer (Ask).
Rotational Market: A market where price is moving up and down within a defined range. Also referred to as a Balanced Market.
RTH: RTH stands for Regular Trading Hours, which are 8:30 AM - 3:15 PM (CST/Chicago)
Selling Tail: Thin volume area at the top of the Volume Profile indicating Other Time-Frame Seller activity.
Trend Day: When the Other Time-Frame Buyer or Seller is in control from the open into the close.
Value Area: Price range/area where 70% of the trading activity takes place. The top of the range is the Value Area High, and the bottom of the range is the Value Area Low.
Volume Point of Control (VPOC): The price level with the heaviest volume for the day. This is the price level with heavy acceptance by both, buyers and sellers.