FREQUENTLY USED TERMS
1. 50 DMA: benchmark indicator used by pro traders and investors that shows the average closing price over the past 50 sessions.
2. 200 DMA: benchmark indicator used by pro traders and investors that shows the average closing price over the past 200 session.
3. Bear market: indexes down ≥ 20% off recent high.
4. Correction: indexes down ≥10 and <20% off recent high.
5. Death cross: 50 DMA crosses down 200 DMA, typically occurs 5-7 months after the absolute peak, confirms the down trend.
6. Delta: directional risk; change in an options’ price given a $1 move in the stock price.
7. Distribution: professional/institutional selling, loss of ≥0.2% in one of the major indexes on volume higher than on the previous session.
8. Doji: powerful reversal candlestick where the opening close prices are the same (or just a few ticks apart); only has significance in trending markets [example].
9. Institutional investors (eg hedge funds, mutual funds, investment banks, insurance companies): accounts for lion's share of each day's market activity; since they have the most supply and demand we trade on the side of institutional investors.
10. Long delta position: bullish, either short put or long call.
11. Marijuana stocks (high IV): CRON, NEPT, NBEV, TLRY, XXII, ZYNE
12. Option premium = (intrinsic value) + (time value) + (volatility)
13. Short delta position: bearish, either short calls or long puts.
14. Theta: rate of decay of an options contract, positive for sellers and negative for buyers.
15. VXX (VIX short-term futures): implied volatility of SPY.
Appreciate you sharing the definitions! Feel like I have a TON to learn! If there are any videos or articles in particular that you think help the most let us know. Did a pretend losing paper trade today. Even though I didn't actually lose money it makes you feel like you did.
@WendyIrene I usually follow Tim and Warrior Trader on youtube. You just have to find time and go over many many charts and kinda pick what you think your good at. Some people are just better trading LONG. I am better SHORTING stocks. You just have to find your niche. Paper trading is the way to go. I did paper about 6 months and being in Tim S room just studying his videos and looking at charts why he called a certain alert..
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