Glossary

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Glossary

  • Absorption: the situation when market orders (aggressive trades that consume liquidity of passive resting limit orders) are unable to consume the liquidity at a given price and thus price does not move beyond the level where the passive resting limit orders are absorbing the aggressive market orders.
  • Air Pocket: a large area of low volume, single prints, or zero prints. Makes for a tall, thin TPO area, and can be moved through very quickly if price gets back to it. An area of significant weakness.
  • A-K trade: Ace-King trade, as in a Texas holdem poker game, the best initial hand/best quality ranking of a trade setup. Alternatively, some members use scales of 1-5, A-F, 5 stars, etc.
  • Auction: markets are auctions. Imagine an auction on eBay; price goes up as buyers bid it up, except that in financial markets price can go down as well, as sellers push bids down.
  • Bubba: a “Docism” (saying of Doc’s); finding YOUR Bubba – it’s your personally developed trade process and setup. Your Bubba is something unique to you and is ever evolving.
  • Cat stop: Catastrophic Stop Loss. A cat stop is a safe guard against loss of connection to the trade server; it is not related to the exit of your trade setup.
  • Christmas – Generally referring to trading on both sides, lots of red and green i.e. “Christmas colors”. No clear direction or winner in the market (shorts. vs. longs). See also “Rainbow Tape”.
  • Combine: term coined by TopStepTrader for an evaluation that can result in using their funds in exchange for a profit share. Other firms call it different things, e.g. evaluation, Gauntlet, etc.
  • CT: Counter Trend trade, as in fading (selling) a move up.
  • Delta:  although a general math term for ‘difference’, in order flow analysis it is typically used to describe the difference in quantity of contracts bought and sold using market orders, or more simply whether trades are executing on the buy or sell side of the tape.
  • DOM: Depth Of Market is trading visualization that shows the number of contracts available to buy or sell a security or currency at different prices at a given moment in time. DOM, also known as the order book, is essentially a measure of the advertised supply and demand for a particular underlying.
  • Ebb & flow: price action that has a rhythm up and down in a range for a period of time. Orderly, not chaotic.
  • ECON: economic impact
  • Edge/Ledge: Edges are top or bottom of a volume profile. Ledge is the edge of a volume profile for a particular session.
  • ETH: Extended Trading Hours. The ‘overnight’ (ON, ‘Globex’ in CME terminology) session for a given contract that trades for an extended period beyond RTH: Regular Trading Hours.
  • Exhaustion: shorthand for the situation where we are running out of aggressive buyers or sellers.
  • FHH/L: First Hour High or Low of Regular Trading Hours aka IB Range.
  • FLIP: occurs typically after a strong run up or down and in the next session ‘flips’ in the opposite direction with strong conviction. Often referred to as ON FLIP or Over Night FLIP.
  • FLOW: like Chi, or water, the energy and activity of your Process that puts you in the best state of mind and body to execute your trading strategies. Also can refer to the energy in the market.
  • FOMO – Fear Of Missing Out (leads to overtrading or taking less than A-K trades)
  • Footprint:  a type of chart that exposes volume-related information at each price level, e.g. the quantity of contracts bought and sold using market orders; the total volume traded at each price level; the net difference between buy and sell market orders. It is multi-dimensional in nature, and can provide an trader with more information for analysis, beyond just the security’s price.
  • FURU: Fake Guru – this is a NO FURU zone.
  • GEO: Geo-political
  • HMomo:  High Momentum
  • HVReversal : High Volume Reversal – characterized by a spike in volume at a significant price reversal.
  • HVN: High Volume Node – an area of high volume (a “bulge”) on the volume profile. Indicates many traders interested in doing business at this price area.
  • Inflection point: Inflection points (IP) are areas of previous interest. For example, a previous day’s high or low or an edge that has held once or twice before. They are areas of interest that we look for potential places to watch and look for a trade opportunity.
  • IB: Initial Balance, aka IB Range aka FHH/L is the price range the first hour’s RTH trading session – a concept from Market Profile. Initial Balance may help define the context of the trading day. (see also Opening Range).
  • Inside Market: The current price quote, or Bid by Ask. For example 3972.50 x 3272.75 (Bid x Ask)
  • LGBT: “Let’s Go Back To”, short for “Let’s Go Back To That Place We Traded Before”. This is Lee’s approach to trading the open. Based around the idea that during the open we may tend to move towards meaningful nearby IPs and then inflect. This is a “Trade To” setup.
  • Liquidity: Also known as “Market Depth”. A measure of how many bids and offers are currently being shown in the market. Usually referred to as either “thick” or “thin”. Markets will tend to be more volatile when liquidity is low/thin. Price Discovery is the ultimate example of thin liquidity.
  • LRC: Linear Regression Channel – the 2 standard deviation range of price over a given period used to provide context to the range of prices that a market has during this period. IT IS NOT A TREND OR A CHANNEL. It does not indicate direction, only an indication of what is relatively high and low over this period. Useful for us in shorter time frames (10, 15 or 20 sec charts) especially in fast moving/high volatility markets to help see the action in the DOM more clearly.
  • Market Microstructure: a view of the market that considers the order flow (the volume of market orders traded) at each price level.
  • Market Structure: a view of the market defined by time (e.g. RTH/ETH sessions) combined with the price boundaries (High; Low; Open; Close) for these sessions. This can also take into account concepts from Market Profile, e.g. high/low prices achieved during fixed time periods such as the first hour of RTH trading (“Initial Balance”).
  • MAE/MFE: Maximum Adverse Excursion / Maximum Favorable Excursion. The most a trade went against you or in your favor. Standard units of measure in most trading platforms, also referred as Max Open Loss or Max Open Profit.
  • MECH: Mechanical; we like to take the emotion out of trading. Mechanical does not mean inflexible. It means you’ve made decisions ahead of time and follow a Process without emotion.
  • Motleys/Motley Crew: a nick name given to the group that started with Doc towards the end of 2019 and then continued in a smaller, more intensive group in Jan 2020 before combining with the TRG family. The name comes from a specialized group of highly successful IBM sales engineers.
  • OF: Order Flow. The bid/ask or buy/sell orders and trades in real time. Any method of monitoring the markets that incorporates nothing more than price, time, and volume.
  • 1TD: One tick drill – A simple drill making one tick and doing so without unnecessary risk. The purpose of the drill is to get good entries.
  • Opening Range: We focus on two, the Open 5 minute range (Open5a/b) and the first hour high/low range (FHH/L). These ranges are measured from the start of regular trading on the NYSE, i.e. 09:30am Eastern Time (US).
  • Open 5: The first five minutes of Regular Trading Hours. Open 5a (an HMOMO setup), and Open 5b (trading the extremes of the range that developed during the first 5 +/- minutes).
  • Outside In/Inside out – trades taken based on Market Profile structure, FHH/FHL range established. Trading from the outer edges toward the middle or from the middle toward the outer edges.
  • NEWZ: “news” as in a catalyst that may have an impact on the market. The news itself is irrelevant, it is the reaction that matters.
  • Nibble: A term Jeff uses to indicate a first “bite” at a trade idea where he may be looking to build a position of multiple contracts, and the current price level it a potentially decent place to begin entering despite having no firm conviction. “It’s interesting enough to look at, let’s try it and see what happens.”
  • PA: Price Action
  • Playbook: your set of Bubbas or trade setups and ideal environments that you have developed over time that work for YOU.
  • Price discovery:  times of thinner-than-normal liquidity and erratic price action where the market “discovers” agreed-upon value.
  • Price Rejector: a pattern found within the Footprint that combines exhaustion, a finished auction and potentially absorption.
  • Process: the single most important concept new traders need to learn. Process encompasses your entire approach to trading; including your playbook, setups, preparation, journaling, etc.
  • Rainbow Tape: On Jeff’s Jigsaw tape, when trading is happening in both directions in totally random (Price Discovery) ways… will see lots of red, green, blue, purple, pink, i.e. a rainbow. See also “Christmas”.
  • Range: when a market trades between certain prices (high/low, or ebb & flow) for a period of time in an orderly manner.
  • RTH: Regular Trading Hours – the ‘day session’ for a given trading contract. This may be aligned to the underlying instrument (e.g. ES future RTH = NYSE stock exchange trading hours) or the legacy trading pit hours for a given contract.
  • (TPO) Single Prints: A range of prices in the middle (not the extremes) of the profile that only traded for a single TPO period.
  • SLLS: ‘stop, look, listen, smell’ (take a few seconds to assess the situation/circumstances)
  • SOH: Sit On Hands – your default position.
  • Spr/UpT: Spring/Upthrust.  Wykoff term; break out of a price range with volume
  • Structural scalping: taking scalp trades based on market structure, as opposed to “video game” scalping short-term price action extremes.
  • TOD:  Time of Day
  • TPO: Abbreviation for Time Price Opportunity. Alternative name for Market Profile.
  • Unfinished business: when traded volume indicates there is still demand (or supply) at the top (or bottom) of a particular interval bar. By implication there is a price beyond this level where demand (or supply) will run out (exhaust).
  • Video game scalping: scalping fast moving price action extremes, as opposed to structural scalping.
  • Weak High/Low: A TPO/Market Profile concept where two or more TPO periods make the same high or low at the session ledge. This can occur across session boundaries. As a result there is no demonstration of excess buying (or selling) at the ledge which would otherwise be seen as a trail of single TPO prints. This pattern is analogous to a double top chart pattern and can be used as the basis for multiple setups.
  • Zero Print: A pattern visible in the Footprint traded volume that demonstrates that no volume transacted on either the bid or ask at a given price.
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