A trend following indicator that is used to predict when a given security's momentum is reversing. The indicator is used by traders to eliminate random price fluctuations and attempts to profit when the trend changes. The Zig Zag tool is often used in wave analysis to determine the positioning of the stock in the overall cycle. Like many trend following indicators, the disadvantage is that the result is based off past price history and doesn't change direction until a certain move occurs. Given the lag, many traders will want to use the Zig Zag indicator to confirm the direction of the trend rather than timing an entry/exit.
A ratio of the total number of winning trades to the number of losing trades. It does not take into account how much was won or lost simply if they were winners or losers.Win/Loss Ratio = Winning Trades : Losing TradesThe win/loss ratio is also known as the "success ratio". For example, if you made 30 trades and of them 12 were winners 18 were losers, your win/loss ratio would be 2:3. Your probability of success would be 40%. The win/loss ratio is used in calculating the risk/reward ratio. It is not very useful on its own because it does not take into account the monetary value won or lost in each trade. For example, a win/loss ratio of 2:1, means the trader has twice as many winning trades than losing. Sounds good, but if the losing trades have dollar losses three-times as large as the dollar gains of the winning trades, the trader has a losing strategy.
In technical analysis, it is a naturally occurring trading pattern present in all financial markets. The pattern is composed of five waves showing supply and demand and a fight towards an equilibrium price. These patterns can develop over short- and long-term time frames such as minutes or weeks and are used to predict where a price is heading and when it will get there. Source: www.harmonictrader.com If identified correctly, Wolfe waves can be used to accurately predict the scope (equilibrium price) of the underlying security. To identify Wolfe waves, they must have the following characteristics:Waves 3-4 must stay within the channel created by 1-2Wave 1-2 equals waves 3-4 (shows symmetry)Wave 4 is within the channel created by waves 1-2There is regular time between all wavesWave 5 exceeds trendline created by waves 1 and 3 and is the entry pointThe estimated price is a price along the trendline created by waves 1 and 4 (point 6).
A description of the price range of a stock on a particularly volatile day of trading. Wide-ranging days occur when the high and low prices of a stock are much farther apart than they were the day before. Some technical analysts identify these days by using the volatility ratio. Wide-ranging days mean the most to traders after a strong day of trading. One of these days after a sharp up- or downtrend can indicate that the trend will reverse. Extreme wide-ranging days generally portend a major reversal.
A point on a candle stick chart representing a day in which the underlying price has moved up. Candlesticks will have a body and usually two wicks on each end. The bottom of the white body represents the opening price and the top of the body represents the closing price. The top and bottom tips of each wick are the day's highest and lowest price respectively.Also known as an "open candlestick." Candlestick charts are primarily used by technical traders because of how quick a day's price movement is conveyed. There are many formations which can be used as a buy, sell or hold indicator. Red/black candlesticks represent a downward movement for the day, which are opposite of white candle sticks. Most charting software will allow you to change the colors of these candles. Even though white is the common color for this type of candlestick, any color can and is used by traders.
A group of investments which, when combined, create a zero net value. Zero-investment portfolios can be achieved by simultaneously purchasing securities and selling equivalent securities. This will achieve lower risk/gains compared to only purchasing or selling the same securities. Zero-investment portfolios have many uses, including:1. Reducing taxes, because they generate little or no interest income.2. Reducing risk by protecting against unexpected shifts in the value of the held securities. 3. Protecting the overall value of the portfolio so that investment can be made at a later date.4. Determining if the average portfolio returns are statistically different from zero.For example, if John bought (that is, took a long position) one share of XYZ Corp., he would be fully exposed to the change in value of that stock. If, however, John sold the same stock (that is, took a short position), then any movement up or down would be canceled out. The combination of these two positions creates a zero-investment portfolio.
Buying and selling stocks according to a screen based on predetermined criteria, usually with the help of technical indicators such as relative strength or momentum. This method allows traders to enter transactions without emotion and backtest their strategies by using historical data from any time period. For example, one of the most common mechanical investing systems is called the Dogs of the Dow. This strategy involves buying the 10 stocks on the Dow Jones Industrial Average with the highest dividend yield at the beginning of each year. The portfolio is then adjusted each year to only include the 10 highest yielding stocks. Proponents of mechanical investing say that using this method of investing removes all emotion by allowing a computer to do the work of deciding whether investing in a certain asset is warranted.英文名称：MechanicalInvesting中文名称：机械化投资 根据预定的投资选择标准买卖股票称为机械化投资。
The decreased economic well-being caused by the imposition of a tax. Taxing any product or activity makes it less attractive and gives people less incentive to purchase or undertake it. Taxpayers not only suffer from having less money because of the tax, they also suffer because the tax may change their behavior. Taxation results in deadweight loss which results in the economy functioning below optimal levels. The market inefficiency that occurs when people change their behavior to avoid a tax creates a loss to society. A tax may cause individuals to buy less than they would prefer or to buy a different product or service than they really wanted. A tax can also cause workers to take additional leisure time rather than to work more when they know they will lose 35% of any additional dollar they earn to taxes. The higher the tax, the greater the welfare loss of taxation.
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