VOCAB CHEAT SHEET
1. Confluence
Combining alignment of multiple technical factors that increase the quality of
decision-making ability.
2. Order Flow
Real-time visualization and analysis of buying and selling efforts, helping a trader
understand the data driving the market in one way or another. How orders are placed,
executed, and how it affects price action.
3. Mean Reversion Theory
A theory that suggests asset prices and returns tend to revisit their average/mean over
time. This can be a time-based mean (market profile), a volumetric-based mean (volume
profile), or a simple average price mean (SMA/EMA.)
4. Long
Buying the market speculating a move higher.
5. Short
Shorting the market (selling first then buying back) speculating a move lower.
6. LOD
Low of day.
7. HOD
High of day.
8. Support
A price that has been supported before. Usually a more specific price than demand
zones. (like a daily low for example.)
9. Supply
A general area of price where sellers have entered the market willing to hold it down.
Usually not as specific of a price, more of a zone.)
10. Demand
A general area of price where buyers have entered the market, willing to hold it up.
11. Balance Range
A range of price where the market has respected a specific supply level above and a
demand level below. Bouncing back and forth inside of it like a tennis match until the ball
(price) goes out of bounds.
12. Indicator
A calculation that derives from data such as price, volume, and/or volatility, and/or open
interest in a specific instrument.
13. Timeframe
Eg. 1min, 15min, 60min, daily. A length of time to look at price data through.
14. Candlestick
Represents a certain timeframe of price, showing the open, high, low, and close.
(OHLC.)
15. Moving Average
An SMA-simple moving average, or an EMA-Exponential moving average- shows the
average price of an instrument over a specific period of time, either simply or
exponentially.
16. Fibonacci
The golden ratio of life and all that we know. The Fibonacci sequence is a sequence in
which each element is the sum of the two elements that precede it.
Price tends to move in respect to Fibonacci's sequence.
17. Volume
The total number of shares/contracts traded. Either over a specific time frame, or at a
specific price.
18. Bid
The highest price somebody is willing to passively buy a security for.
19. Ask
The lowest price somebody is willing to passively sell a security for.
20. Depth/Thickness of Book
The number of shares/contracts on the bid or ask side of the market that aggressive
participants have to buy from or sell into for price to move.
21. Level 2
The passive orders available below or above current price- which are available for
aggressive “at the market” participants to buy from or sell into. These orders can be
pulled (spoofing) and “iceberged” to manipulate the market and move capital under the
table/quietly.
22. Auction
A market determined by the highest price a buyer is willing to buy, and the lowest price a
seller is willing to sell.
23. Auction Market Theory
A theory that suggests buyers and sellers battle for prices, constantly exploring new
points of balance and range, with one goal in mind- finding the equilibrium.
24. Equilibrium
The balance in pressure between buyers and sellers.
25. Standard Deviation
A statistical measure that quantifies the amount of variation/dispersion of data.
26. Normal Distribution
A probability distribution that is symmetric about the mean.
27. Value Area
The 1 standard deviation range of data. (usually 68-70% of total data lies within one
standard deviation of the mean.)
28. VPOC
The volume point of control. The highest volume traded price in the set of data looked at.
Eg. new york volume profile VPOC, session profile VPOC, weekly profile VPOC.
29. LVN
An area of price where market participants have not transacted as much volume at.
30. HVN
An area of price where market participants have transacted a lot of volume at.
31. Vwap
Volume weighted average price. The average price of a security over a certain
timeframe, that is weighted by volume transaction.
32. Delta
Ask-bid. If the volume on the ask is 900, and volume on the bid is 600, there is a +300
positive delta.
If the volume on the bid is 1400, and the volume on the ask is 1150, there is a -250
negative delta.
33. Cumulative Delta (CVD)
Measures the net difference between aggressive buying and selling volume over time.
Divergences between price and delta happen often and can signal trapped participants
that are not getting paid on their transaction efforts.
34. Footprint Chart
A chart that is focused on showing the volumetric data on the bid and ask. Can be
shown as a bid/ask format, or a delta format. Can be shown in a range format (20 tick) or
a time format (15min.)
35. Volume Profile
A drawing that shows the distribution of volume over certain prices, over a certain length
of time. Can look many different ways- even, p shaped, b shaped, double distribution,
thin, etc. Built into this tool is the value area, the upper limit, and lower limit, and the
VPOC.
36. Market Profile
A drawing that shows the distribution of time spent at specific prices. Can help show
areas people like to transact at, and dislike, and for how long.
37. P-shaped Profile
A p shape is a profile where most of the volume is transacted near the upper limit.
Looking like a P.
38. B-shaped Profile
A b-shaped profile is a profile where most of the volume is transacted near the lower
limit. Looking like a lowercase b.
39. Double Distribution
A profile where volume is split into two main areas, the upper limit, and the lower limit.
Looking like an uppercase B.
40. VPOC Flip
A phenomenon where the VPOC will move from one area of high volume to a new area
of higher volume. Signaling a change in the character of the auction process.
41. Re-Bid
A bid that reloads after sellers sell into all of the bid depth, signaling passive buyers are
willing to keep buying.
42. Re-Offer
An offer that reloads after buyers buy into all of the offer depth, signaling passive sellers
are willing to keep selling.
43. Thin volume Tail
An area of price on a profile, or a footprint candle where the volume significantly drops
off, showing a lack of interest to transact at this area.
44. Trapped Buyers
Often seen on volume data as positive delta, this is more aggressive buying than selling,
with a lack of price lifting. Buyers buying but not getting paid.
45. Trapped Sellers
Often seen on volume data as negative delta, this is more aggressive selling than
buying, with a lack of price dropping. Sellers selling but not getting paid.
46. Absorption
Directly pertaining to “trapped” participants- this is a term used to refer to aggressive
participants that are putting market orders in that are absorbed and “eaten” by passive
participants.
47. Aggressive Effort
The effort put forth by “at the market” participants.
48. Limit Order
An order you put in specifying a transaction at a specific price, prioritizing the price at
which the order is filled over how quick the order is filled.
49. Market Order
An order you put in that directly hits an offer or a bid, getting you into the market as fast
as possible, prioritizing speed over the specific price transacted at.
50. Failed Auction
An area of price where the market failed to meet the final buyer or seller.
On footprint, this will show as size executed on both the bid and ask, at the top or bottom
of the candle.
51. Finished Auction
An area of price where the market successfully found its last buyer or seller. A finished
auction always has a 0 on the bid or the ask signifying the last buyer or seller has been
found before the market moves the other way.
52. 0 Print
A 0 print is a recent move through a certain price or price(es) where the market failed to
execute on the bid, ask, or both. Skipping an important step of the auction process. This
can be due to a dried up book, very aggressive participants, a volatility/news event, etc.
These prices are 80%+ likely to be re-touched at some point throughout the open cash
session. They can be excellent high-probability confluences for a target/scale point.
53. Iceberg Order
Iceberging refers to the slow execution of many smaller trades, that add up to large size,
which are deployed quietly to minimize noise/large volume transactions to hide
intentions.
54. Block Order
Unlike iceberg orders, these orders are very large and are usually hit at once.
55. Accumulation
The buying up or short selling of a security at a specific area.
56. Distribution
The exiting of the accumulation. Whether it is buying or selling depends on the market
context.
57. Breakout
A price action scenario where price moves quickly above a previous area of supply or
resistance and claims new ground above.
58. Fakeout
A price action scenario where price moves above a previous area of supply/resistance
and fails to claim new ground above, reclaiming back inside the previous range, and
trapping the buyers who bought the break. This can apply to buying and selling efforts.
For example, a fakeout of HOD, or a fake breakdown of LOD.
59. Time and Sales (TAPE)
A receipt tape of every transaction that occurs in a specific instrument’s market. Quite
literally like a store receipt. Time+price+size executed. This is a hard copy of business
that has BEEN DONE. These are only orders that are executed, unlike a DepthOfMarket
which shows passive orders that can be pulled.
60. Edge
A strategy that gives you a unique advantage over other market participants.
61. Stop Loss
An order that protects you from more losses if a position goes against you. Automatically
exits your position when the market hits the order.
62. Volatility
A period of unpredictable, sharp, erratic price movement.
63. Risk-reward/R-Multiple
The ratio of assumed risk on a position relative to the potential reward from an exit
target.
