Terminology/Lingo

This page covers the terminology used on this Website.

Balanced Market: A range-bound or rotational market where price movement is between a defined range. Entering Long at Support and Short at Resistance is a good strategy in a Balanced Market.

Balance Area: A structural trading range. Balance Areas can develop across many time-frames. The larger the balance in area in terms of Time spent in the range and the number of points covered by the range (think of it visually as the horizontal and vertical size of the balance/range), the more significant it can be.

Buying Tail: Thin volume area at the bottom of the Volume Profile indicating Larger Time-Frame Buyer activity.

Bull/Bear Zone: The Bull/Bear Zone is a reference area that can help us 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 the Bull/Bear Zone, and Sellers are in Control if price is trading below this Zone.

High Volume Node (HVN): A level of price area where a high amount of volume has transacted, indicating heavy acceptance at that price. Typically, price does not slice right through these areas on first touch. These are Price Areas which saw heavy acceptance/volume 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 larger time-frame activity. In other words, exercise caution if the market slices through a HVN.

Initiative Buying: Buying above the Value Area or above the recent Highs. This refers to situations in the market when Buyers are willing to Buy high, and continue buying at higher and higher prices. An upside trend day takes place when we get continuous Initiative Buying.

Initiative Selling: Selling below the Value Area or below the recent Lows. This refers to situations in the market when Sellers are willing to Sell low, and continue selling at lower and lower prices. A downside trend day takes place when we get continuous 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 holding above the IB High, and likewise, I'm cautious of entering Longs if price is holding below the IB Low. If price is well below the IB Low at a Key Support Areas, the IB Low can often be used as a Target.

Long Liquidation: After an extended up move, when buyers decide to sell and get out of their Long positions, which can result in a sharp downside move.

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 activity 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. LVNs are usually representative of break-out or break-down spots.

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 can be an important Intraday Support/Resistance Level on directional days. Buyers are dominant if price is holding above the Mid-Point, and Sellers are dominant if price is holding below the Mid-Point.

Normal Day: A day when the market trades within the Initial Balance (1st hour range), or when there's a very minor extension beyond the Initial Balance. This can also be considered a balanced or range-bound day.

Normal Variation Day: A day when the market breaks outside of the Initial Balance, and extends the range by roughly 100% of the 1st Hour Range.

Neutral Day: A day when you have a range extension above and below the Initial Balance . Neutral days form when Larger Time-Frame Buyers and Sellers 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.

NYSE TICK: The NYSE TICK is a measure of the net number of stocks on the New York Stock Exchange, trading on an up-tick vs. down-tick.

NYSE Advance/Decline (A/D): The net number of stocks on the New York Stock Exchange, trading above/below their previous day's Closing price.

Open Gap: A Previous Close that has not been tested during regular trading hours.

Open Drive: When the market moves directionally right from the Open.

Open Test Drive: When the market opens and price tests a significant Support/Resistance Level and then turns around and drives in the opposite direction.

Open Rejection Reverse: When the market opens too far outside the previous day's range, and is quickly rejected with the market reversing into the opposite direction (usually towards the Previous Close / 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.

Range Extension: Price movement beyond the Initial Balance (first hour range).

Responsive Buying: Buying activity below the recent range or near the bottom of the recent range. In this case, the market is viewed as trading too far below value (or being too cheap), and Buyers enter the market and push price back up towards Value (usually back up towards a prior VPOC or HVN).

Responsive Selling: Selling activity above the recent range or near the top of the recent range. In this case, the market is viewed as trading too far above value (or being too expensive), and Sellers enter the market and push price back down towards Value (usually back down towards a prior VPOC or HVN).

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 Larger Time-Frame Seller activity.

Trend Day: When the Larger 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 and can be considered fair value.