As with many other fields, traders have their own arcane terms and phrases to describe various conditions. Trading newcomers may be frustrated by a lingo they do not understand and which seems to make no sense at all.
A glossary of terms on this site provides the meaning of many words used by traders, but here are some of the more widely used trading terms and their explanations so you won’t be confused when you see or hear them used to describe some basic trading concepts.
“Dead-cat bounce.†Many times a market will experience a modest rally (a bounce) from depressed price levels. But most of this price rise is due to short-covering or weak long positions getting back into a market that very likely will exert little or no upside power.
“The trend is your friend.†This simple sentence is a very powerful one and is important for most traders. If you trade with the market’s trend, your odds for success are higher than if you trade against the trend. Most successful traders employ some type of trend-following trading strategy.
“Buy the rumor, sell the fact.†This is a frequently occurring phenomenon whereby a market makes a price move in anticipation of an expected result of a fundamental event. Then, when the event does actually occur and the result was as expected by traders, the market price will move
No comments:
Post a Comment