Stockopedia Chartable Glossary

Candlestick charts represent a day's share price using a thick bar with vertical tails. The tails represent the high and low price on the day, while the bar spans the open and close prices on the day. A red bar indicates a close price lower than the open, while a green bar indicates a close price higher than the open.

A line chart plots the close price of each trading day and connects the datapoints with a line.

OHLC stands for the open, high, low and close prices of a share's price on a trading day.

Normally on a chart this is visually represented by a vertical line between the low price and the high price with a left and right horizontal ledge showing the open price (left) and close price (right).

Normally a green bar indicates a close price above an open price and a red bar indicates a close lower than the open

Bollinger Bands are a volatility indicator that are used to measure the current price of a security relative to previous trading periods.

In calculating a Bollinger Band the 'period' (number of days, weeks, months) must be defined in order to calculate a moving average from which is defined

• an upper band at a multipe of standard deviations above the MA
• a lower band at the same multiple of standard deviations below the MA.

The Donchian channel is created by taking the highest high and lowest low of the previous N trading periods for a security. A channel is created between the high and low prices which is often filled with a colour on stock trading charts as illustrated below.

Stockopedia offers a 20 period and 55 period Donchian Channels as default in the chart package.

Most traders use the Donchian channel as an indicator to judge breakouts. If a stock moves above or below the previous Donchian Channel high/low it indicates a purchase or sale point.

Parabolic Stop and Reverse or Parabolic SAR was originated by the famous technician J Welles Wilder. The idea was to find changes in share price trends. Many investors use Parabolic SARs to set trailing stop losses on stocks.

Stockopedia uses the following defaults in the chart package for Parabolic SAR: Initial Acceleration 0.02, Incremental Acceleration 0.02, Maximum Acceleration 0.2

A price envelope is defined as a channel around a moving average - a ratio of 0.2 creates an envelope 20% above and below a moving average. It can be visually displayed as a band around a moving average as below.

The optimum percentage envelope is best based on the volatility of the security with more volatile stocks requiring broader envelopes.

An exponential moving average is similar to a [[Simple Moving Average]] but the average is calculated weighting the previous day's share prices according to an exponential function. For a complete definition please refer to wikipedia

A simple moving average is basic arithmetic mean (average) price over the previous N periods in a share price chart. The period used can be minutes, days, weeks etc. Generally the moving average is plotted as a line on a chart alongside the share price in order to show the general/overall trend in the price. It tends to appear much smoother than a daily price chart thus highlighting trends more deftly.

This is a version of the [[Simple Moving Average]] but it is double averaged.:

SMA = (P1 + P2 + P3 + P4 + ... + Pn) / n
TMA = (SMA1 + SMA2 + SMA3 + SMA4 + ... SMAn) / n

The Weighted Moving Average (WMA) is a weighted version of the Simple Moving Average (SMA) giving greater weight to more recent trading.

The definition is:

WMA=(1P1+2P2+3P3....+nPn) / ((n*(n+1))/2)

While the SMA has n/2 time lag the WMA has only n/3 time lag.

This is a momentum indicator based on the difference between two moving averages expressed as a percentage. The PPO is found by subtracting the longer moving average (26 day EMA) from the shorter moving average (12 day EMA) and then dividing the difference by the longer moving average.

It is similar to the MACD. As with its cousin, MACD, the Percentage Price Oscillator is shown with a signal line (the 9 day EMA), a histogram and a centerline. While MACD measures the absolute difference between two moving averages, PPO makes this a relative value by dividing difference by the slower moving average (26-day EMA).

The Percentage Volume Oscillator (PVO) is a momentum oscillator for volume. PVO measures the difference between two volume-based moving averages (26 day vs. 12 day) as a percentage of the larger moving average. As with MACD and the Percentage Price Oscillator (PPO), it is shown with a signal line (9 day), a histogram and a centerline.

Percentage Volume Oscillator (PVO): ((12-day EMA of Volume - 26-day EMA of Volume)/26-day EMA of Volume) x 100. The PVO has a maximum of 100, but no minimum value.

A trend-following indicator used to gauge the strength of a current trend and the likelihood that it will continue. The Aroon indicator system consists of three lines: Aroon Up, Aroon Down, and the Aroon Oscillator which reflects the difference between the two. The Aroon Oscillator oscillates between -100 and 100 with zero as the centre crossover line - signals an upward trend when it rises above zero and a downward trend when it falls below zero.

A trend-following indicator used to gauge the strength of a current trend and the likelihood that it will continue. The Aroon indicator system consists of three lines: Aroon Up, Aroon Down, and the Aroon Oscillator which reflects the difference between the two. The Aroon Up and Aroon Down indicators signal the start of a new trend. Chande recommends the following signals:

• Aroon Up above 70 indicates a strong up-trend.
• Aroon Down above 70 indicates a strong down-trend.
• Aroon Up below 50 warns that the up-trend is weakening.
• Aroon Down below 50 signals that the down-trend is weakening.

The average directional movement index (ADX) was developed in 1978 by J. Welles Wilder as an indicator of trend strength. The ADX ranges between 0 to 100 : the higher the oscillator, the stronger the trend. Generally, ADX readings below 20 are said to indicate trend weakness, and readings above 40 indicate trend strength. An extremely strong trend is indicated by readings above 50.

Average true range (ATR) is a technical analysis volatility indicator originally developed by J. Welles Wilder, Jr. for commodities. The indicator does not provide an indication of price trend, simply the degree of price volatility. The average true range is an N-day exponential moving average of the true range values. Wilder recommended a 14-period smoothing, which is what we use.

The true range is the largest of the:

• Most recent period's high minus the most recent period's low
• Absolute value of the most recent period's high minus the previous close
• Absolute value of the most recent period's low minus the previous close

Indicator that displays the width of Bollinger Bands.

Was developed by Marc Chaikin. An oscillator that helps signal if a stock is undergoing accumulation or distribution. It is calculated from the daily readings of the Accumulation Distribution Line. The CMF is unlike a momentum oscillator in that it is not influenced by the daily price change. Instead

Indicator that is calculated by subtracting a 10 period exponential moving average from a 3 period moving average of the Accumulation Distribution Line.

Chaikin Volatility is an indicator measuring volatility using the percent change in a moving average of the high versus low price over a given time. It quantifies the volatility value based on a widening of the maximum and minimum rates over a specified number of periods.

Our measure uses a 10 day period to smooth the range and 10 day period to compute the rate of change of the smoothed range.

The detrended price oscillator (DPO) is an indicator in technical analysis that attempts to eliminate the long-term trends in prices by using a displaced moving average so it does not react to the most current price action. This allows the indicator to show intermediate overbought and oversold levels effectively.

The formula for DPO = Close - Simple moving average [from (n / 2 + 1) days ago

The width of Donchian Channels is a useful indicator for seeing the volatility of a market price. If a price is stable the Donchian channel will be relatively narrow. If the price fluctuates a lot the Donchian channel will be wider.

Developed by Richard Arms, Ease of Movement (EMV) is a volume-based oscillator that fluctuates above and below the zero line. As its name implies, it is designed to measure the "ease" of price movement. It highlights the relationship between volume and price changes and is particularly useful for assessing the strength of a trend.

The Ease of Movement default is set at 10 days smoothing by an exponential moving average.

The Stochastic Oscillator is a momentum indicator that measures where the close is in relation to the recent trading range. The Stochastic Oscillator is made up of two lines that oscillate between a vertical scale of 0 to 100. The %K is the main line and it is drawn as a solid line. The second is the %D line and is a moving average of %K. The %D line is drawn as a dotted line. The Fast Stochastic is the average of the last three %K and a Slow Stochastic is a three day average of the Fast Stochastic.

The MACD is the difference between a 26-day and 12-day exponential moving average of closing prices. A 9-day EMA, called the "signal" line is plotted on top of the MACD to show buy/sell opportunities. The basic MACD trading rule is to sell when the "slow line" of the MACD falls below the faster 9-Day EMA line (known as a "signal line crossover") and similarly, a buy signal occurs when the MACD rises above its signal line.

Invented by Donald Dorsey, the Mass Index indicator is used to identify trend turns. The Mass Index attempts to predict reversals by comparing the trading range (High minus Low) for each period. Reversals are signalled by a bulge in the index line. This formula uses intraday range values: not the "true range," which adjusts for full and partial gaps.

An oscillator that measures the rate of price change (as opposed to the actual levels themselves). It is calculated by taking price differences for a fixed time interval. This positive or negative value is plotted around a zero line.

Momentum is used to detect trend weakness and likely reversal points. It is often underrated because of its simplicity. High Momentum readings (positive or negative) occur when a trend is at its strongest.

The Money Flow Index (MFI) is an oscillator that uses both price and volume to measure buying and selling pressure. Money flow is defined as the typical daily price times today's volume, a kind of approximation to the dollar value of a day's trading. MFI is the percentage of the total money flow that is up.

The money flow index is calculated by using the following formula:

• Typical Price = (High + Low + Close) / 3
• Money Flow = Typical price * Volume
• Money Ratio = Positive Money Flow/Negative Money Flow
• Money Flow Index = 100 - (100/ (1 + Money Ratio))

The two indicators are based on the assumption that the smart money dominates trading on quiet days and that the uninformed crowd dominates trading on active days.

A technical indicator calculated by keeping a running total of the volume. When the price closes higher or lower than the previous day the volume is added or subtracted respectively.

The Performance indicator displays the percentage that the security has increased since the first period displayed. It is then displayed as a positive or negative value. For example, if the Performance indicator is 10, it means that the security's price has increased 10% while a value of -10% means that the security's price has fallen by 10% since the first period displayed.

Rate of Change (ROC) displays the value of the current price relative to the price n periods ago. The ROC measures changes in prices during a certain time and displays them in the form of an oscillator showing the cyclical movements. The centre line is at 100 and a value above this means that the price was higher.

Developed J. Welles Wilder, RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. Specifically: RSI = 100 - 100/(1 + RS) where RS = Average of x days' up closes / Average of x days' down closes. An asset is deemed to be oversold once the RSI falls below the 30 level, meaning that it may be getting undervalued and is a good candidate for a uptick. RSI uses all the price changes that occur over a given period in order to derive the average price change.

The Stochastic Oscillator is a momentum indicator that measures where the close is in relation to the recent trading range. The Stochastic Oscillator is made up of two lines that oscillate between a vertical scale of 0 to 100. The %K is the main line and it is drawn as a solid line. The second is the %D line and is a moving average of %K. The %D line is drawn as a dotted line. The Fast Stochastic is the average of the last three %K and a Slow Stochastic is a three day average of the Fast Stochastic.

Trix (or TRIX) is a technical analysis oscillator developed in the 1980s by Jack Hutson, editor of Technical Analysis of Stocks and Commodities magazine. It shows the slope (i.e. derivative) of a triple-smoothed exponential moving average.

The oscillator is a technical analysis oscillator developed by Larry Williams based on a notion of buying or selling "pressure" represented by where a day's closing price falls within the day's true range. An oscillator that attempts to combine information for several different time periods into one number. Three different time periods are used: 7, 14 & 28 days.

Williams had specific criteria for a buy or sell signal. A buy signal occurs when:

• Bullish divergence between price and the oscillator is observed, meaning prices make new lows but the oscillator doesn't
• During the divergence the oscillator has fallen below 30.
• The oscillator then rises above its high during the divergence, i.e. the high in between the two lows. The buy trigger is the rise through that high.

Williams %R, or just %R, is a technical analysis oscillator showing the current closing price in relation to the high and low of the past N days. It was developed by a publisher and promoter of trading materials, Larry Williams. Its purpose is to tell whether a stock or commodity market is trading near the high or the low, or somewhere in between, of its recent trading range.

Williams considered values below -80 as oversold and above -20 as overbought. But they were not to be traded directly, instead his rule to buy an oversold was

• %R reaches -100%.
• Five trading days pass since -100% was last reached
• %R rises above -95% or -85%.

Developed J. Welles Wilder, RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. Specifically: RSI = 100 - 100/(1 + RS) where RS = Average of x days' up closes / Average of x days' down closes.

An asset is deemed to be overbought once the RSI exceeds the 70 level, meaning that it may be getting overvalued and is a good candidate for a pullback.

Developed J. Welles Wilder, RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. Specifically: RSI = 100 - 100/(1 + RS) where RS = Average of x days' up closes / Average of x days' down closes.

An asset is deemed to be oversold once the RSI falls below the 30 level, meaning that it may be getting undervalued and is a good candidate for a uptick.

On a stock chart, the Death cross occurs when the 50-day MA falls below the 200-day MA. As the name implies, a Death Cross is associated with sharp downward price movement and can be used as a sell signal in the belief that a significant downtrend will follow.

The reverse of this event is known as a Golden Cross where the 50-day MA rises above the 200-day MA, a bullish signal.

A Gap Down is when a stock opens at a lower level than the previous day's low. For example, if the previous day's high was 500, and the stock opened at 495, there would have been a 5 point gap down. This is considered a bearish signal.

This is also known as a Full Gap Down (as opposed to a Partial Gap Down which is when the stock just opens below the previous day's close).

A Gap Up is when a stock opens at a higher level than the previous day's high. For example, if the previous day's high was 500, and the stock opened at 505, there would have been a 5 point gap up. This is considered a bullish signal.

This is also known as a Full Gap Up (as opposed to a Partial Gap Up which is when the stock just opens above the previous day's close).

On a stock chart, the golden cross occurs when the 50-day MA rises sharply and crosses over the 200-day MA. Usually, a golden cross is associated with sharp upward price movement and can be used as a buy signal in the belief that a significant uptrend will follow.

The reverse of this event is known as a Death Cross where the 50-day MA falls below the 200-day MA, a bearish signal.

The MACD is the difference between a 26-day and 12-day exponential moving average of closing prices. A 9-day EMA, called the "signal" line is plotted on top of the MACD to show buy/sell opportunities.

The basic MACD trading rule is to sell when the "slow line" of the MACD falls below the faster 9-Day EMA line (known as a "signal line crossover") and similarly, a buy signal occurs when the MACD rises above its signal line.

The MACD is the difference between a 26-day and 12-day exponential moving average of closing prices. A 9-day EMA, called the "signal" line is plotted on top of the MACD to show buy/sell opportunities.

The basic MACD trading rule is to sell when the "slow line" of the MACD falls below the faster 9-Day EMA line (known as a "signal line crossover") and similarly, a buy signal occurs when the MACD rises above its signal line.

The MACD is the difference between a 26-day and 12-day exponential moving average of closing prices. It is popular to buy/sell when the MACD goes above/below zero (known as a "centreline crossover").

The MACD is the difference between a 26-day and 12-day exponential moving average of closing prices. It is popular to buy/sell when the MACD goes above/below zero (known as a "centreline crossover").

This shows stocks that are trading at their highest price over the last 52 weeks (12 months). Academic research suggests that stocks at or close to their 52 week highs tend to outperform.

This shows stocks that are trading at their lowest price over the last 52 weeks (12 months). Academic research suggests that stocks at or close to their 52 week lows tend to outperform.