Page 98 - NEW FOREX FULL COURSE

FOREX TRADING COURSE FOR BEGINNERS

Neckline
The level that indicates the lows of the head in the head and shoulders formation or the high
points in an inverse head and shoulders formation.
Night attack
A large order placed at the close to move the market.
Offset The term for closing trades. Longs are said to liquidate. Shorts are said to cover.
On-Balance Volume (OBV)
A cumulative volume figure. If prices close higher than the prior trading session, the volume for
the higher day is added to the OBV. Conversely, volume is subtracted from the OBV on days when
prices close lower than the previous day.
Open interest
Pertains to future contracts. It is the number of contracts that are still outstanding. It will be equal
to the total number of long and short positions, not the combination of the two.
Oscillator
An indicator based upon a momentum formula that moves above or below a zero line or on a
chart grid between 0 and 100 percent. They depict overbought and oversold conditions and
positive or negative divergences; r measures the velocity in a price movement.
Overbought
A term associated with specific oscillators to denote when a price has moved too far, too fast in
an upward direction.
Oversold
The same as the overbought definition except for it being in the downward direction.
Paper trading
A popular method using real-life trade circumstances and trading with imaginary trading funds.
Petrifying pattern
Another name for the Harami cross.
Protective stop
An order placed to limit losses on an existing position. If prices move to that level, a trade is
initiated to liquidate the position avoiding further loss potential.
Raindrop
Another name for the star formation.
Rally
Usually a strong upward price movement.
Reaction
A price movement that moves opposite the current trend.
Real body (or body)
The boxed area from the open to the close is what forms the body of the candle. When the close
is lower than the open, a black body is produced. A close above the open causes a white body to
be formed.
Relative Strength Index (RSI)
An oscillator developed by Welles Wilder. It compares the ratio of positive closes to negative
closes over a specific time period.
Resistance level
A trading level where obvious selling keeps the prices from advancing any further.

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