Champion Online Trading is designed to help struggling traders become confident in their ability to read and understand markets by teaching the exact process used to attempt to become a consistently profitable day trader. Beginner Traders are welcomed.

ES E Mini Futures

7 Weeks learning material. Every week a new lesson is unlocked. Coaching and Mentorship continues until you cancel.

No, we believe that achieving long-term, consistent profitability in futures trading comes from developing your own skills, not relying on copying others’ signals. The goal is to become a self-sufficient trader with a deep understanding of your strategy.

This is a mean reversion strategy. Mean reversion is the opposite of momentum and trend following. Trading strategies are often put into these two buckets: mean reversion or trend following, and they are often mutually exclusive. What is mean reversion? Mean reversion is the opposite of momentum and trend-following. The Mean reversion definition is that asset prices and historical returns eventually return to their long-term average or mean. This concept implies that high and low prices are temporary and a price will tend to move back to its average over time. It’s often used in various trading strategies, assuming that prices or returns will adjust back to their historical average, regardless of short-term fluctuations. In statistics, this term is called regression to the mean. We are going against moves in certain directions,

No. We are not registered brokers and do not make trades on your behalf. We are NOT financial advisors and anything that we say should not be seen as financial advice. We only share our biased opinion based off speculation and personal experience. You should always understand that with investing there is always risk and you should always do your own research before making any investment.

No. Options involve risk and are not suitable for all investors. You could lose all or some of your money on any trade.

No. Individuals have different amounts of capital. We have large investors who follow our trades, as well as small mom & pop investors who trade our recommendations. Please choose your own size for our trade recommendations.

As with all trades, risk of total loss of capital is always possible. Please see the disclaimer. This trading does NOT use stops, and using stops will have a negative impact on this strategy. Also, trades are held overnight.

If you meet the requirements of the brokerage firm and the exchanges to open an account, and have access to the Internet and/or a telephone, you can trade your account from wherever you live.

Yes and No. No because we do not get signals every day. Yes in that when signals occur, though no guarantee, we have multiple targets in which to exit in the same day.

Yes.

To accumulate means to acquire as much stock as you can without moving price up with your own buying, until there are no more shares available at the current level buying was taking place at. This usually occurs after a bear move or sell off. Once this inventory is removed there is little selling, so the resistance to higher prices has been removed

Algorithmic trading is a process for executing orders utilizing automated and pre-programmed trading instructions to account for variables such as price, timing and volume. An algorithm is a set of directions for solving a problem. Computer algorithms send small portions of the full order to the market over time. Algorithmic trading makes use of complex formulas, combined with mathematical models and human oversight, to make decisions to buy or sell financial securities on an exchange.

Alpha (α) is a term used in investing to describe an investment strategy's ability to beat the market, or its "edge." Alpha is thus also often referred to as “excess return” or “abnormal rate of return,” which refers to the idea that markets are efficient, and so there is no way to systematically earn returns that exceed the broad market as a whole. Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over some period. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole. A positive alpha of 5 (+5) means that the portfolio’s return exceeded the benchmark index’s performance by 5%. An alpha of negative 5 (-5) indicates that the portfolio underperformed the benchmark index by 5%. An alpha of zero means that the investment earned a return that matched the overall market return, as reflected by the selected benchmark index.

Backtesting is the general method for seeing how well a strategy or model would have done ex-post. Backtesting assesses the viability of a trading strategy by discovering how it would play out using historical data. If backtesting works, traders and analysts may have the confidence to employ it going forward. Key Takeaways Backtesting assesses the viability of a trading strategy or pricing model by discovering how it would have played out retrospectively using historical data. The underlying theory is that any strategy that worked well in the past is likely to work well in the future, and conversely, any strategy that performed poorly in the past is likely to perform poorly in the future. When testing an idea on historical data, it is beneficial to reserve a time period of historical data for testing purposes. If it is successful, testing it on alternate time periods or out-of-sample data can help confirm its potential viability.

This term refers to a weak market. This means traders think the price of a specific market will be going down. If they are bearish, they may sell their bullish positions or even take short positions

A bear trap is a technical pattern that occurs when the price action of a stock, index, or another financial instrument incorrectly signals a reversal from a downward trend to an upward trend. A technical analyst might say that institutional traders try to create bear traps as a way of tempting retail investors to take long positions. If the institutional trader is successful, and the price moves higher briefly, it gives the institutional traders the ability to unload larger positions of stock that would otherwise push prices much lower. A bear trap occurs when there is a bullish correction or reversal in the midst of an overall downtrend. A bounce, or correction, higher sees short covering temporarily overcome selling pressure, and lead to a rebound in prices. The rebound may be small or large, potentially failing at recent price lows in the downtrend, or it might extend higher to a significant Fibonacci retracement level.

A bid-ask spread is the amount by which the ask price exceeds the bid price for an asset in the market. The bid-ask spread is essentially the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept. An individual looking to sell will receive the bid price while one looking to buy will pay the ask price. Key Takeaways A bid-ask spread is the difference between the highest price that a buyer is willing to pay for an asset and the lowest price that a seller is willing to accept. The spread is the transaction cost. Price takers buy at the ask price and sell at the bid price, but the market maker buys at the bid price and sells at the ask price. The bid represents demand and the ask represents supply for an asset. The bid-ask spread is the de facto measure of market liquidity.

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, severe impact, and the widespread insistence they were obvious in hindsight. Black swan events can cause catastrophic damage to an economy by negatively impacting markets and investments, but even the use of robust modeling cannot prevent a black swan event.

A breakout is price moving outside a defined support or resistance level with increased volume. A breakout trader enters a long position after price breaks above resistance or enters a short position after price breaks below support. Once the stock trades beyond the price barrier, volatility tends to increase and prices usually trend in the breakout's direction. Breakouts occur in all types of market environments. Typically, the most explosive price movements are a result of channel breakouts and price pattern breakouts such as triangles, flags, or head and shoulders patterns. As volatility contracts during these time frames, it will typically expand after prices move beyond the identified ranges.

This term refers to a strong market of stocks or futures, etc moving up. This can even be used to reference a specific position trader is taking. If they are bullish, they expect the price to rise.

A candlestick chart (also called Japanese candlestick chart or K-line) are a form of technical analysis and charting used in the stock market, forex market and all other markets. They can be used in all time frames, from those looking for long term investments to those who use swing trading or day trading, It is similar to a bar chart in that each candlestick represents all four important pieces of information for that day: open and close in the thick body; high and low in the “candle wick”. Being densely packed with information, it tends to represent trading patterns over short periods of time, often a few days or a few trading sessions. Candlestick charts are most often used in technical analysis of equity and currency price patterns. They are used by traders to determine possible price movement based on past patterns, and who use the opening price, closing price, high and low of that time period.They are visually similar to box plots, though box plots show different information. Candlestick charts are composed of candles lined up next to one another, each of which shows price movement between the specified time period. Because candles show price changes in certain time periods, traders can use charts to see trends and try to predict price changes. Candlestick charts are thought to have been developed in the 18th century by Munehisa Homma, a Japanese rice trader.[5] They were introduced to the Western world by Steve Nison in his book Japanese Candlestick Charting Techniques, first published in 1991. They are often used today in stock analysis along with other analytic. Just like a real candle, a candlestick also has a wick on top and it casts a shadow under the candle. The rectangular body shown in the figure is called the body of a candlestick. The upper shadow or the wick represents the high price of a stock in a trading session. The lower shadow or the lower wick represents the low price of a stock in a trading session. The next thing to note is the color of the candle. It can either be red or green. But what makes the candle green or red? Well, it depends on the closing price of a stock. If a stock manages to close above the open price, then it is said that the bulls were victorious and the candle is painted in green color. If a stock closes below the open price, then it is said that the bears were victorious and the candle is painted in red color.

Futures and options contracts are derivative instruments that have values based on an underlying asset, which can be an equity or a commodity. When a futures contract or options contract is expired or exercised, the conceptual recourse is for the holder of the contract to deliver the physical commodity or transfer the actual shares of stock. This is known as physical delivery and can be much more cumbersome than a cash settlement. A cash settlement is a settlement method used in certain futures and options contracts where, upon expiration or exercise, the seller of the financial instrument does not deliver the actual (physical) underlying asset but instead transfers the associated cash position.

Confluence is the combination of multiple strategies and ideas into one complete strategy. Confluence occurs when two or more separate ideas or strategies are used together to form a comprehensive investment strategy that is in line with an investor's risk profile and goals. This term can also be used when employing technical analysis, by looking at charts with multiple indicators or overlays and developing levels where different indicators are combined to help identify possible opportunities.

In the world of financial trading, asset correlation establishes how and when the prices of different financial instruments move in relation to each other. There are three recognizable forms of asset correlation: positive, negative and no correlation. If two assets’ prices move up or down in the same direction simultaneously, they show a positive correlation, which could be either strong or weak. However, if an asset tends to move down when another rises, then the correlation is negative. The level of correlation is measured as a percentage figure, from -100% to 100%, also known as a correlation coefficient and it is established by analyzing the historical performance of the assets. For instance, if two assets have a correlation of 50%, it means that, historically, when one of the assets’ value was rising or falling, there was a corresponding rise or fall in the same direction in the value of the correlated asset, about 50% of the time. Conversely, a -70% correlation means that analysis of historical market data shows the assets moving in opposite directions at least 70% of the time. A zero correlation means that the asset prices are completely uncorrelated. This means that the movement of the price of one asset has no noticeable effect on the price action of the other asset. It is also essential to understand that the fact that correlations exist on average over a period of time, does not necessarily mean they exist all the time.

To close a short position a trader must “cover” their position. This is the buying back of the futures or stocks . Like a long-sided trader, they can scale out of the short position in small increments.

The CME SPAN methodology evaluates overall portfolio risk by calculating the worst possible loss that a portfolio of derivative and physical instruments might reasonably incur over a specified time period (typically one trading day). This is done by computing the gains and losses the portfolio would incur under different market conditions. At the core of the methodology is the CME SPAN risk array, a set of numeric values that indicate how a particular contract will gain or lose value under various conditions. Each condition is called a risk scenario. The numeric value for each risk scenario represents the gain or loss that particular contract will experience for a particular combination of price (or underlying price) change, volatility change, and decrease in time to expiration. CME SPAN Methodology

Cross margining is the process of offsetting positions whereby excess margin from a trader's margin account is transferred to another one of their margin accounts to satisfy maintenance margin requirements. It is allowing the trader to use their available margin balance across all of their accounts. Cross margining is an offsetting process whereby excess margin in a trader's margin account is moved to another one of their margin accounts to satisfy maintenance margin requirements. The process allows a company or individual to use all of their available margin across all of their accounts. Cross margining increases a firm's or individual's liquidity and financing flexibility by reducing margin requirements and lowering net settlements. The unnecessary liquidation of positions and therefore potential losses is also avoided through cross margining. Cross margining services are calculated through clearing houses and clearing members, including prime brokerages that offer cross margining services to their clients. As a strong risk management tool, cross margining is particularly useful in volatile markets and for long-term trading strategy

The maximum price range permitted a contract during one trading session. Trading limits are set by the exchange for certain contracts.

Dark pool liquidity is the trading volume created by institutional orders executed on private exchanges; information about these transactions is mostly unavailable to the public. The bulk of dark pool liquidity is created by block trades facilitated away from the central stock market exchanges and conducted by institutional investors (primarily investment banks). Dark pool liquidity is also referred to as the upstairs market, dark liquidity, or dark pool. The dark pool gets its name because details of these trades are concealed from the public until after they are executed; these transactions are obscure like dark, murky water. Some traders who employ strategies that are partially based on the liquidity of the market feel that information about dark pool liquidity should be made available to the public—and not kept secret—in order to make the stock market more transparent for all parties involved.

A day trader is a type of trader who executes a relatively large volume of short and long trades to capitalize on intraday market price action. The goal is to profit from very short-term price movements. Day traders can also use leverage to amplify returns, which can also amplify losses. Day traders are traders who execute intraday strategies to profit off relatively short-lived price changes for a given asset. Day traders employ a wide variety of techniques in order to capitalize on market inefficiencies, often making many trades a day and closing positions before the trading day ends. Day trading is often characterized by technical analysis and requires a high degree of self-discipline and objectivity. Day trading can be a lucrative undertaking, but it also comes with a high degree of risk and uncertainty.

A security whose price is dependent upon or derived from one or more underlying assets. Common types of derivatives include futures, options, warrants and convertible bonds. Common underlying assets include stocks, bonds, commodities, currencies, market indexes and interest rates.

A designated market maker (DMM) is a market maker responsible for maintaining fair and orderly markets for an assigned set of listed stocks. Formerly known as specialists, the designated market maker is the official market maker for a set of tickers and, in order to maintain liquidity in these assigned stocks, will take the other side of trades when buying and selling imbalances occur. The DMM also serves as a point of contact on the trading floor for the listed company, and provides the company with information, such as the general market conditions, the mood of traders, and who is trading the stock.

Dollar cost averaging is a strategy to manage price risk when you’re buying security. Instead of investing in a particular security at one time, with a single purchase price, with dollar cost averaging you divide up the amount of money you’d like to invest and buy small quantities over time at regular intervals. This decreases the risk that might pay too much before market prices drop.

The terms refer to different viewpoints on the way monetary policy should influence the economy. Hawks are primarily concerned about limiting inflation. They trend toward raising interest rates to restrict the supply of money. When interest rates rise, borrowing becomes more expensive and consumers and businesses are less likely to take out loans to make purchases and investments. Restraining consumption helps keep a lid on price increases, and limiting hiring by businesses similarly limits wage growth. Doves, on the other hand, typically try to get interest rates to go lower. They want an increase in the money supply, more economic growth and, particularly, more jobs. When interest rates are lower, it makes it less costly for consumers to borrow to purchase goods and services. This tends to increase demand, motivating businesses to invest in hiring more workers and expanding their production facilities. Lower borrowing costs also makes it less costly for businesses to take out loans to support their expansions.

The Dow Jones Industrial Average (DJIA), also commonly referred to as “the Dow Jones” or simply “the Dow,” is one of the most popular and widely-recognized stock market indices. It measures the daily stock market movements of 30 U.S. publicly-traded companies listed on the NASDAQ or the New York Stock Exchange (NYSE). The 30 publicly-owned companies are considered leaders in the United States economy. The DJIA is one of the stock indices created by Dow & Jones Company founder and Wall Street Journal editor Charles Dow.

A trade for a security at a price lower than the previous transaction. Downtick is also used to describe the downward price movement in such a transaction.

An exchange-traded fund (ETF) is a type of pooled investment security that operates much like a mutual fund. Typically, ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies. The first ETF was the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index, and which remains an actively traded ETF today.

Expiration - the date at which the options contract expires, or ceases to exist. OTM options will expire worthless.

The Fibonacci retracement is a trading chart pattern that traders use to identify trading levels and the range at which an asset price will rebound or reverse. The reversal may be upward or downward and can be determined using the Fibonacci trading ratio. Fibonacci retracement is a technical trading pattern that helps traders identify support and resistance levels at which the existing trend, whether upward or downward, will rebound or reverse. It uses the Fibonacci sequence of natural numbers (0, 1, 1, 2, 3, 5, 8, 13, 21, 34, and 55 to infinity) to calculate these levels. The unique attributes of these numbers give retracement ratios (23.6%, 38.2%, 61.8%, and so on) that help predict retracement in the asset value. The Fibonacci retracement levels enable traders to decide on placing buy and sell orders and identify the two extreme points (peak and trough) for buying or selling assets to make more profits.

Flash crashes happen when securities prices make drastic drops and rebound very quickly—all within the same day. It almost seems as though the crash never even happened by the end of the trading day.1 This was the case when the U.S. market experienced a sudden drop on May 6, 2010, and recovered by the end of the day. Flash crashes are exacerbated by aberrations in the market, such as heavy selling by high-frequency traders in one or many securities.1 As such, computer trading programs automatically react to these conditions and begin selling large volumes of securities at an incredibly rapid pace to avoid losses. A flash crash refers to rapid price declines in a market or a stock's price because of a withdrawal of orders followed by a quick recovery—usually within the same trading day. High-frequency trading firms are said to be largely responsible for flash crashes in recent times. Regulatory authorities in the U.S. have taken rapid steps, such as installing circuit breakers and banning direct access to exchanges, to prevent flash crashes. The biggest drop in DJIA's history occurred on May 6, 2010, after a flash crash wiped off trillions of dollars in equity. According to some estimates, there are approximately 12 mini flash crashes that happen on any given day.

The prohibited action of taking a position on a financial instrument based upon non-public information regarding an impeding transaction by another person in the same or related instrument.

Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price. The buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date. Underlying assets include physical commodities and financial instruments. Futures contracts detail the quantity of the underlying asset and are standardized to facilitate trading on a futures exchange. Futures can be used for hedging or trade speculation. Understanding Futures Futures—also called futures contracts—allow traders to lock in the price of the underlying asset or commodity. These contracts have expiration dates and set prices that are known upfront. Futures are identified by their expiration month. For example, a December gold futures contract expires in December. Traders and investors use the term futures in reference to the overall asset class. However, there are many types of futures contracts available for trading including: Commodity futures with underlying commodities such as crude oil, natural gas, corn, and wheat Stock index futures with underlying assets such as the S&P 500 Index Currency futures including those for the euro and the British pound Precious metal futures for gold and silver U.S. Treasury futures for bonds and other financial securities

A futures contract is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange. The buyer of a futures contract is taking on the obligation to buy and receive the underlying asset when the futures contract expires. The seller of the futures contract is taking on the obligation to provide and deliver the underlying asset at the expiration date. Futures contracts are financial derivatives that oblige the buyer to purchase some underlying asset (or the seller to sell that asset) at a predetermined future price and date. A futures contract allows an investor to speculate on the direction of a security, commodity, or financial instrument, either long or short, using leverage. Futures are also often used to hedge the price movement of the underlying asset to help prevent losses from unfavorable price changes. There are tradeable futures contracts for almost any commodity imaginable, such as grain, livestock, energy, currencies, and even securities. In the United States, futures contracts are regulated by the Commodity Futures Trading Commission (CFTC). Here is a comprehensive list of futures contracts Commodities – corn, soybeans, wheat, oats, rice, milk, whey, butter, cheese, cattle, hogs, pork bellies, lumber, cocoa, coffee, cotton, sugar Energies – crude oil, natural gas, electricity, ethanol Interest Rates – Eurodollar, Fed funds, 30-year bonds, 10-year notes, 5-year notes, Euro-Bund, Euro-BOBL Metals – gold, silver, copper, platinum, uranium Stock Indexes – S&P 500, S&P Midcap, Nasdaq-100, Dow, Nikkei 225, CCi, FTSE 100, Euro Stoxx, DAX Cryptocurrency – Bitcoin, Ether

Futures margin is the minimum amount of funds you need in your trading account to initiate a buy or sell futures position. This margin is usually a fraction of the contracts’ total value. The actual amount varies from market to market and typically differs if the trader makes a day trade or holds the position overnight. Futures margin rates are set by futures exchanges, not by brokers. At times though, brokerage firms will add an extra fee to the margin rate set by the exchange, in order to lower their risk exposure. The margin is set based on how stable the market is (or isn't), and the risk of changes in pricing. When market volatility or price variance moves higher in a futures market, the margin rates rise. How Are Futures Margins Calculated? The exchange governs the futures margins through a calculation algorithm known as the Standard Portfolio Analysis of Risk (SPAN) margining system. It uses a highly sophisticated methodology to determine futures margin requirements by analyzing the “what-ifs” of just about any market scenario. The CME is one of the most popular exchanges for futures contracts. Therefore, other exchanges and clearing organizations use CME’s SPAN parameters to compute their desired degree of risk coverage. These parameters include: Price scan ranges (Scan risk) – This refers to the highest price movement that is most likely to occur for each instrument under a specified time period. Volatility scan ranges – This is the highest level of change that is most likely to occur with the underlying volatility affecting each futures option’s price. Intra-commodity spreading parameters – These are the rates and rules used to evaluate risks of closely related products among portfolios. Inter-commodity spreading parameters – These are the rates and rules used to evaluate risk offsets between related products. Delivery (spot) risk parameters – These are the rates and rules used to evaluate the heightened risk of futures positions that involve physically-deliverable products, as the delivery period approaches.

Futures contracts are only active for a specific amount of time before they expire. Each market has its specific expiration sequence throughout the year and often extends into the next year. Prior to a contract expiring, futures traders must either exit their active position or roll their position to a later date, which extends the expiration period. This is called rolling a contract.

Gapping occurs when the price of a stock, or another asset, opens above or below the previous day's close with no trading activity in between.

A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting or opposite position in a related security. Hedging is somewhat analogous to taking out an insurance policy. If you own a home in a flood-prone area, you will want to protect that asset from the risk of flooding—to hedge it, in other words—by taking out flood insurance. In this example, you cannot prevent a flood, but you can plan ahead of time to mitigate the dangers in the event that a flood did occur. There is a risk-reward tradeoff inherent in hedging; while it reduces potential risk, it also chips away at potential gains. Put simply, hedging isn't free. In the case of the flood insurance policy example, the monthly payments add up, and if the flood never comes, the policyholder receives no payout. Still, most people would choose to take that predictable, circumscribed loss rather than suddenly lose the roof over their head. In the investment world, hedging works in the same way. Investors and money managers use hedging practices to reduce and control their exposure to risks. In order to appropriately hedge in the investment world, one must use various instruments in a strategic fashion to offset the risk of adverse price movements in the market. The best way to do this is to make another investment in a targeted and controlled way. Of course, the parallels with the insurance example above are limited: In the case of flood insurance, the policy holder would be completely compensated for her loss, perhaps less a deductible. In the investment space, hedging is both more complex and an imperfect science.

The term herd instinct refers to a phenomenon where people join groups and follow the actions of others under the assumption that other individuals have already done their research. Herd instincts are common in all aspects of society, even within the financial sector, where investors follow what they perceive other investors are doing, rather than relying on their own analysis.1 In other words, an investor who exhibits herd instinct generally gravitates toward the same or similar investments as others. Herd instinct at scale can create asset bubbles or market crashes via panic buying and panic selling.

High-frequency trading, also known as HFT, is a method of trading that uses powerful computer programs to transact a large number of orders in fractions of a second. It uses complex algorithms to analyze multiple markets and execute orders based on market conditions. Typically, the traders with the fastest execution speeds are more profitable than traders with slower execution speeds. In addition to the high speed of orders, HFT is also characterized by high turnover rates and order-to-trade ratios. Some of the best-known HFT firms include Tower Research, Citadel LLC, and Virtu Financial. HFT is complex algorithmic trading in which large numbers of orders are executed within seconds. It adds liquidity to the markets and eliminates small bid-ask spreads. HFT is criticized for allowing large companies to gain an upper hand in trading. Another complaint is that the liquidity produced by this type of trading is momentary—it disappears within seconds, making it impossible for traders to take advantage of it.

Intraday means "within the day." In the financial world, the term is shorthand used to describe securities that trade on the markets during regular business hours. These securities include stocks and exchange-traded funds (ETFs). Intraday also signifies the highs and lows that the asset crossed throughout the day. Intraday price movements are particularly significant to short-term or day traders looking to make multiple trades over the course of a single trading session. These busy traders will settle all their positions when the market closes. Intraday is shorthand for securities that trade on the markets during regular business hours and their price movements. Day traders pay close attention to intraday price movements, timing trades in an attempt to benefit from the short-term price fluctuations. Scalping, range trading, and news-based trading are types of intraday strategies used by traders.

Intraday trading works the same way buying and selling securities works, only they are bought and sold within one day. Traders making these short-term moves analyze the patterns of the price movements and try to gauge when to buy and sell them to maximize their profits. Intraday trading requires significant experience with trading and is considered a high-risk investing strategy. Some examples of intraday trading strategies include scalping, momentum trading, range trading, and technical analysis. Intraday trading has a number of advantages, but it also has downsides to consider. Here are a few pros and cons of intraday trading: Pros Profits Speed Technology Cons Risk Smaller earnings Restrictions

First introduced in 1983 as the Nasdaq Quotation Dissemination Service (NQDS), Level 2 is a subscription-based service that provides real-time access to the NASDAQ order book. It is intended to display market depth and momentum to traders and investors.1 The service provides price quotes from market makers registered in every NASDAQ-listed and OTC Bulletin Board securities. The Level 2 window shows the bid prices and sizes on the left side and ask prices and sizes on the right side.

Leveraged trading consists of trading with borrowed capital from your broker in order to enhance your buying power. When a broker gives you a leverage factor (multiplier) of 1:10, 1:20 or any other, they’re referring to the amount of times that you’re buying power is amplified to. Brokers offer leverage at a cost based on the amount of borrowed funds you’re using and they charge you per each day that you maintain a leveraged position open.

A Limit order is an order to buy or sell at a specified price or better. The Limit order ensures that if the order fills, it will not fill at a price less favorable than your limit price, but it does not guarantee a fill.

Price circuit breakers - or what is commonly known as the ‘limit up’ and ‘limit down’ rule - were implemented to address extreme price moves in equities and the broader equity index. The limit up and limit down rules have been set to allow time for quick reflection and assessment, and to understand if the move is correct and valid. During periods of extreme volatility the limit down and up rules may affect your ability to trade in and out of positions, so it’s worth understanding the basics behind the rules. In fast-moving markets and extreme sell-offs and rallies, you may not be able to place a trade at market. Inspired by the 1987 Black Monday crash and reworked in the wake of the 2010 ‘flash crash’, the limit up and limit down rule was implemented to address extreme price moves in equities and the broader equity index. This was because, aside from a rush of one-sided order flow, an extreme move could be catalyzed by a pricing error or market manipulation.

Liquidity refers to the efficiency or ease with which an asset or security can be converted into ready cash without affecting its market price. The most liquid asset of all is cash itself. Understanding Liquidity Liquidity describes the degree to which an asset can be quickly bought or sold in the market at a price reflecting its intrinsic value. Cash is universally considered the most liquid asset because it can most quickly and easily be converted into other assets. Tangible assets, such as real estate, fine art, and collectibles, are all relatively illiquid. Other financial assets, ranging from equities to partnership units, fall at various places on the liquidity spectrum. Market Liquidity Market liquidity refers to the extent to which a market, such as a country's stock market or a city's real estate market, allows assets to be bought and sold at stable, transparent prices. In the example above, the market for refrigerators in exchange for rare books is so illiquid that, for all intents and purposes, it does not exist. The stock market, on the other hand, is characterized by higher market liquidity. If an exchange has a high volume of trade that is not dominated by selling, the price a buyer offers per share (the bid price) and the price the seller is willing to accept (the ask price) will be fairly close to each other.

The term long position describes what an investor has purchased when they buy a security or derivative with the expectation that it will rise in value.

Maintenance margin is the minimum equity an investor must hold in the margin account after the purchase has been made; it is currently set at 25% of the total value of the securities in a margin account as per Financial Industry Regulatory Authority (FINRA) requirements. Maintenance margin is the minimum amount of equity that an investor must maintain in the margin account after the purchase has been made. Maintenance margin is currently set at 25% of the total value of the securities in a margin account as per FINRA requirements.1 The investor may be hit with a margin call if the account equity falls below the maintenance margin threshold which may necessitate that the investor liquidate positions until the requirement is satisfied.

The term “margin” refers to the amount deposited with a brokerage when borrowing money to buy securities. When an investor buys securities on margin, it means they are using borrowed money from the brokerage to invest in securities. In such a case, the broker acts as the lender; the investor acts as the borrower and must prove collateral for the loan in the form of cash deposits and purchase securities. Customers earn a return on the invested capital if the purchased securities appreciate in value. However, if the value of securities depreciates, the investor will incur a loss. Margin represents the amount of money that investors can borrow from a brokerage to purchase financial products such as stocks and bonds. Buying on margin allows investors to earn higher returns than they would otherwise have when buying securities using cash only. When buying on margin, the investor provides cash deposits and purchased securities as collateral for the margin loan.

If the funds in your trading account drop below the maintenance margin, you may receive a margin call. In this case, you will need to deposit more funds immediately to bring it back up to the initial margin level. If you cannot meet the margin for some reason, you could reduce your position depending on funds remaining in your account. Alternatively, you could close out your position. Sometimes your broker will close your position within a certain time period if you do not address the margin call. For example, suppose you opened a new account with your broker and deposited $15,000. Let’s say you then purchased E-mini S&P 500 futures contracts. The initial margin required was $6,600 per contract, so you could buy two contracts worth $13,200 (2 X $6,600). Let’s say the maintenance margin required was $6000 per contract, so $12000 for the two you just bought. However, market volatility did not swing in your favor. The position incurred losses, and your account balance fell to $10,000. This is $2,000 below the maintenance margin and will result in a margin call from your broker. To retain the positions, you need to increase your account balance by $3,200 to bring it back up to the $13,200 initial margin. Alternatively, you could close one of your positions so that the maintenance margin drops to only $6,000. Or you could close out both positions at that loss and continue trading as desired.

The percentage a trader has to pay their broker in exchange for borrowing money.

Market impact is the change in the price of an asset caused by the trading of that asset. Buying an asset will drive its price up while selling an asset will push it down. The extent to which the price moves is a reflection of the liquidity of the asset: the more liquid the asset, the less any one trade will affect its price. Trading an asset can also affect the prices of other assets, a phenomenon known as cross impact. Trading algorithms are designed to optimize the rate of trading so as to minimize market impact but also to minimize volatility risk. For example, a large trade can be broken into a series of smaller trades rather than executed in one go. But this exposes the trader to the risk of the market moving against them while those trades are being executed.

Market impact cost is a measure of market liquidity that reflects the cost faced by a trader of an index or security. The market impact cost is measured in the chosen numeraire of the market, and is how much additionally a trader must pay over the initial price due to market slippage, i.e. the cost incurred because the transaction itself changed the price of the asset. Market impact costs are a type of transaction costs.

The term market maker refers to a firm or individual who actively quotes two-sided markets in a particular security, providing bids and offers (known as asks) along with the market size of each. Market makers provide liquidity and depth to markets and profit from the difference in the bid-ask spread. They may also make trades for their own accounts, which are known as principal trades. A market maker is an individual participant or member firm of an exchange that buys and sells securities for its own account. Market makers provide the market with liquidity and depth while profiting from the difference in the bid-ask spread. Brokerage houses are the most common types of market makers, providing purchase and sale solutions for investors. Market makers are compensated for the risk of holding assets because a security's value may decline between its purchase and sale to another buyer. While brokers compete against one another, specialists post bids and asks and ensure they are reported accurately.

A market order is an order to buy or sell a security at the going market price. It is the simplest and most common type of order used in financial markets because it’s the quickest to be fulfilled, usually at a price close to what investors expected.

Market manipulation is when someone artificially affects the supply or demand for a security (for example, causing stock prices to rise or to fall dramatically). Also known as price manipulation or stock manipulation, it involves the literal manipulation of a financial market for personal gain. Market manipulation may involve techniques including: Spreading false or misleading information about a company; Engaging in a series of transactions to make a security appear more actively traded; and Rigging quotes, prices, or trades to make it look like there is more or less demand for a security than is the case. The Wash Method In this form of market manipulation, an unscrupulous investor, or group of investors acting in tandem, buy and sell the same stock repeatedly over a period of a few days or even a few hours. By and large, an “active” trading period of a stock is considered a sign of that security’s increase in value, and the stock may swing upward as more investors notice the stock is being actively and even aggressively traded. This scheme, also known as “painting the tape” or “matched orders” enables a few investors to team up, actively buy and sell a security to paint a picture of a stock drawing interest in the market, and sell the stock for a profit as other investors jump aboard and drive the stock’s price upward. Listen Jim Cramer discuss the subject:

Max pain, or the max pain price, is the strike price with the most open options contracts (i.e., puts and calls), and it is the price at which the stock would cause financial losses for the largest number of option holders at expiration. The term max pain stems from the maximum pain theory, which states that most traders who buy and hold options contracts until expiration will lose money. The maximum pain theory is controversial as it would indicate that markets can in fact be manipulated. Does the tendency of the stock price to gravitate toward the maximum pain strike price happen by chance or is it a case of market manipulation? Example of Max Pain For example, suppose options of stock ABC are trading at a strike price on $48. However, there is significant open interest on ABC options at strike prices of $51 and $52. Then the max pain price will settle at either one of these two values because they will cause the maximum number of ABC's options to expire worthless. For example, let's use the ticker in the chart below. The stock's max-pain price would be where the bars for both the calls and the puts are shortest. The max-pain point is calculated by scanning call and put contracts and cross-referencing them against each possible strike price at close. The graph shows the cumulative value of each type of contract (call or put) at each strike price. As the strike price at expiration drops, it would increase the cumulative value of in-the-money PUTs at each strike, and as strike price at expiration goes higher, it would increase the cumulative value of in-the-money CALLs at each strike. Thus, the max pain will be where the sum of values for PUTs and CALLs will be the smallest. In this example, we can see that the max pain strike is at 9000 for the stock.

One of the defining features of the futures markets is daily mark-to-market (MTM) prices on all contracts. The final daily settlement price for futures is the same for everyone. MTM was a distinctive difference between futures and forwards until the regulatory reform enacted after the financial crises of 2007-2008. Prior to those reforms most OTC forwards and swaps did not have an official daily settlement price so clients never knew their daily variation except as described by a theoretical pricing model. Futures markets have an official daily settlement price set by the exchange. While contracts may have slightly different closing and daily settlement formulas established by the exchange, the methodology is fully disclosed in the contract specifications and the exchange rulebook. Once a futures contract’s final daily settlement price is established the back-office functions of trade reporting, daily profit/loss, and, if required, margin adjustment is made. In the futures markets, losers pay winners every day. This means no account losses are carried forward but must be cleared up every day. The dollar difference from the previous day’s settlement price to today’s settlement price determines the profit or loss. If my daily loss results in my net equity falling below exchange established margin levels I will be required to provide additional financial resources to replenish the amount back to required levels or risk liquidation of my position. Mark-to-market enforces the daily discipline of exchanges profit and loss between open futures positions eliminating any loss or profit carry forwards that might endanger the clearinghouse. Having one final daily settlement for all means every open position is treated equally. By publishing these daily settlement values the exchange provides a great service to commercial and speculative users of the futures markets and the underlying markets they derive their price from. (CME Group )

Ultimately, there came a point when fewer and fewer people could afford to trade traditional index futures. The CME Group, one of the world’s largest contracts exchanges, solved this issue by introducing new types of contracts called mini and micro futures. Trade smaller-sized contracts to manage crude oil price exposure with greater precision. At 1/10 the size of benchmark WTI Crude Oil contracts, Micro WTI Crude Oil futures and options offer the same robust trading transparency and price discovery with smaller margin requirements. FOR MORE INFORMATION VISIT Micro CME Futures

Min Tick is the minimum movement that is captured for a given instrument. For instance, if the Tick is 0.01 this means the minimum price movement that will be recorded is 0.01. For example, CL (the futures contract for oil) is trading today at 67.01 and the minimum change in price that will be recorded is from 67.01 to 67.02 or from 67.01 to 67.00 this is the definition of Min Tick being 0.01

Mirror trading is the act of simply copying or ‘mirroring’ a different person’s trades.The idea is that one should be able to simply copy the action of a successful trader, and then reap the same rate of success.

Momentum investing seeks to take advantage of market volatility by taking short-term positions in stocks going up and selling them as soon as they show signs of going down. The investor then moves the capital to new positions. In this case, the market volatility is like waves in the ocean, and a momentum investor is sailing up the crest of one, only to jump to the next wave before the first wave crashes down again. A momentum investor looks to take advantage of investor herding by leading the pack in and being the first one to take the money and run. Richard Driehaus took the practice and made it into the strategy he used to run his funds. His philosophy was that more money could be made by "buying high and selling higher" than by buying under priced stocks and waiting for the market to re-evaluate them. When an asset reaches a higher price, it usually attracts more attention from traders and investors, which pushes the market price even higher. This continues until a large number of sellers enter the market. Once they are enough sellers in the market, the momentum changes direction and will lower the asset’s price. In essence, momentum is the speed at which market values are changing in an asset. Momentum readings can be further classified into two distinct categories: Absolute Momentum and Relative Momentum.

The NASDAQ is a U.S.-based stock market exchange and the second-largest stock exchange by market cap globally. NASDAQ stands for National Association of Security Dealers Automated Quotations and is owned and operated by NASDAQ Inc. NASDAQ Inc. is the parent organization to the NASDAQ stock exchange. NASDAQ Inc. also operates exchanges throughout Europe and owns several business lines, including SMART (market surveillance technology services) and GlobeNewswire (press release distribution).

Negative correlation is a relationship between two variables in which one variable increases as the other decreases, and vice versa. In statistics, a perfect negative correlation is represented by the value -1.0, while a 0 indicates no correlation, and +1.0 indicates a perfect positive correlation. A perfect negative correlation means the relationship that exists between two variables is exactly opposite all of the time. Key Takeaways Negative or inverse correlation describes when two variables tend to move in opposite sizes and directions from one another, such that when one increases the other variable decreases, and vice-versa. Negative correlation is put to use when constructing diversified portfolios so that investors can benefit from price increases in certain assets when others fall. Correlation between two variables can vary widely over time as correlation changes due to many conditions. Stocks and bonds generally have a negative correlation; therefore, traditional portfolio theory calls for investors to hold both. Investing in assets that are negatively correlated may reduce portfolio risk, but it also may minimize potential gains as negatively correlated assets hedge certain types of risk.

The term oversold refers to a condition where an asset has traded lower in price and has the potential for a price bounce. An oversold condition can last for a long time, and therefore being oversold doesn't mean a price rally will come soon, or at all. Many technical indicators identify oversold and overbought levels. These indicators base their assessment on where the price is currently trading relative to prior prices. Fundamentals can also be used to assess whether an asset is potentially oversold and has deviated from its typical value metrics.

Overbought refers to market scenarios where stock is traded considerably higher than its fair value. Overvaluation is caused by market sentiments when there is positive news about the company or its potential growth. Trending stocks are bought aggressively. For sellers, it is a profitable opportunity. However, it is a short-term price hike; soon, the market corrects itself, and prices fall back to their intrinsic values. An overbought stock is considered overpriced in the stock market. By comparing market price and actual worth of securities, overpriced stocks can be spotted easily. This information can be obtained from companies’ financial statements. An oversold market is the polar opposite; stocks are under-priced and about to rise.

Painting the tape is a form of market manipulation whereby market players attempt to influence the price of a security by buying and selling it among themselves to create the appearance of substantial trading activity. The goal of painting the tape is to create the illusion of an increased interest in a stock to trick investors into buying shares, which would drive the price higher. Painting the tape is a type of market manipulation whereby market players attempt to influence the price of a security at the expense of investors. Painting the tape increases volume and attracts investors, who then may push a price higher. The market manipulators will then sell their holdings to investors unaware of the manipulation. Painting the tape is an illegal activity and prohibited by the SEC because it creates an artificial price.

A paper trade is a simulated trade that allows an investor to practice buying and selling without risking real money. The term dates back to a time when (before the proliferation of online trading platforms) aspiring traders would practice on paper before risking money in live markets. While learning, a paper trader records all trades by hand to keep track of hypothetical trading positions, portfolios, and profits or losses. Today, most practice trading involves the use of an electronic stock market simulator, which looks and feels like an actual trading platform. To get the most benefits from paper trading, an investment decision and the placing of trades should follow real trading practices and objectives. The paper investor should consider the same risk-return objectives, investment constraints, and trading horizon as they would use with a live account. For example, it would make little sense for a risk-averse long-term investor to practice numerous short-term trades like a day trader.

A parabolic move in price on a chart and comes from the mathematical term parabola. During a parabolic move, price goes up in a steep upward incline on a chart as buying increases dramatically bidding up a price higher and higher with little if any short term pullbacks. Price action moves nearly straight up and looks like a parabola pattern .A parabolic move in a stock is defined by a speed up in price appreciation, relative to prior price action. A parabolic move on a chart is one of the most powerful types of chart patterns showing extreme fear of missing out and chasing price higher and higher until it depletes all possible buyers. Let’s stay a $30 stock increased $1 in value every day for 5 days. On the 6th day, it rose $7 in value on that day alone. This would be considered as a parabolic move because we have a speed up in price increase relative to prior price action. Parabolic moves will often be followed by a sharp decline in price value. As the price action speeds up, owners of the stock become more likely to take profits and short sellers become more likely to enter the market because both know a sharp decrease in price action is coming.

Physical delivery is a term in an options or futures contract which requires the actual underlying asset to be delivered upon the specified delivery date, rather than being traded out with offsetting contracts. Understanding Physical Delivery Derivatives contracts are either cash-settled or physically delivered on the expiry date of the contract. When a contract is cash-settled, the net cash position of the contract on the expiry date is transferred between the buyer and the seller. For example, assume two parties enter into an E-mini S&P 500 futures contract to be settled in six months for $2,770 (the futures price). If the value of the index on the day the contract expires is higher than the futures price, the buyer gains; otherwise, the seller profits. The difference between the spot price of the contract as of the settlement date and the futures price agreed on will be credited or debited from the accounts of both parties. Say, the closing value of the index six months from now is $2,900, the long futures holder’s account will be credited ($2,900 - $2,770) x $50 = 130 x 50 = $6,500. This amount will be debited from the account of the party shorting the position. [Note that $50 x S&P 500 index represents 1 contract unit for E-mini S&P 500 futures contract].

Price Impact is the change in token price directly caused by your trade. Price Impact is reflected as the difference between the current market price and how your trade impacts the total liquidity in a pool. The price impact you experience depends on the size of the liquidity pool. When the pool has high liquidity, your trade may have a smaller price impact. When the pool has low liquidity, your trade may have a larger price impact. Therefore, the larger the price impact, the worse overall price you may receive. It’s important to remember that the price impact rate changes constantly, because the total value of a liquidity pool changes based on the supply and demand of each token.

Price action is the movement of a security's price plotted over time. Price action forms the basis for all technical analyses of a stock, commodity or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions. Technical analysis as a practice is a derivative of price action since it uses past prices in calculations that can then be used to inform trading decisions. Price action is the movement of a security's price plotted over time. Price action forms the basis for all technical analyses of a stock, commodity or other asset charts. Many short-term traders rely exclusively on price action and the formations and trends extrapolated from it to make trading decisions. Technical analysis as a practice is a derivative of price action since it uses past prices in calculations that can then be used to inform trading decisions.

Pump-and-dump is a manipulative scheme that attempts to boost the price of a stock or security through fake recommendations. These recommendations are based on false, misleading, or greatly exaggerated statements. The perpetrators of a pump-and-dump scheme already have an established position in the company's stock and will sell their positions after the hype has led to a higher share price. This practice is illegal based on securities law and can lead to heavy fines. The burgeoning popularity of cryptocurrencies has resulted in the proliferation of pump-and-dump schemes within the industry. Pump-and-dump is an illegal scheme to boost a stock's or security's price based on false, misleading, or greatly exaggerated statements. Pump-and-dump schemes usually target micro- and small-cap stocks. People found guilty of running pump-and-dump schemes are subject to heavy fines. Pump-and-dump schemes are increasingly found in the cryptocurrency industry. Popular movies like Boiler Room and The Wolf Of Wall Street have portrayed the Long Island brokerage firms from the 1990s that became famous for orchestrating pump and dumps, with naive affluent clients as their victims. See the clip below from The Wolf of Wall Street where Jordan Belfort joins a small Long Island brokerage firm and sells shares of a “high-technology” firm that is actually just two brothers that are maybe making something in their garage:

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The term quadruple witching refers to the simultaneous expiration four times a year of stock options, index futures, and index futures options derivatives contracts. The fourth type of contract involved in quadruple witching, single-stock futures, hasn't traded in the U.S. since 2020 and was never a major contributor to equity trading volumes.12 What is now effectively "triple witching" occurs on the third Friday of March, June, September, and December. Equity trading volume tends to rise on these days and is typically heaviest during the last hour of trading as traders adjust their portfolios. Key Takeaways Quadruple witching refers to the simultaneous expiration of stock index futures, stock index options, stock options, and single stock futures derivatives contracts four times a year. Quadruple witching has given way to triple witching since single stock futures stopped trading in the U.S. in 2020. This event occurs once every quarter, on the third Friday of March, June, September, and December. Trading volume typically surges on triple witching days as traders adjust portfolios and roll some contracts. Triple witching does not usually cause increased market volatility.

Quantitative trading (also called quant trading) involves the use of computer algorithms and programs—based on simple or complex mathematical models—to identify and capitalize on available trading opportunities. At the back end, quant trading also involves research work on historical data with an aim to identify profit opportunities. Quant trading is widely used at individual and institutional levels for high frequency, algorithmic, arbitrage, and automated trading. Traders involved in such quantitative analysis and related trading activities are commonly referred to as "quants" or "quant traders."

What Is Quantamentals? Quantamentals is the combination of fundamental analysis, technical analysis, and quantitative analysis. This is why some of the largest and most sophisticated hedge funds in the world are using this combination to manage portfolios.

The difference between the high and low price of a commodity, futures, or option contracts during a given period.

The term Regular Trading Hours (RTH) is generally used to refer to the primary trading session for a particular exchange or region. For example, in the case of US equity markets, the RTH are from 09:30 to 16:00 ET. This designation is relevant as many exchanges offer pre- and post-market trading sessions which are referred to as extended trading hours or trading outside of RTH.

A retracement refers to the temporary reversal of an overarching trend in a stock's price. Distinct from a reversal, retracements are short-term periods of movement against a trend, followed by a return to the previous trend. It is essential to determine the difference between a reversal and a short-term retracement. A retracement is not easy to identify because it can easily be mistaken for a reversal. Even worse is if a reversal is mistaken for a retracement.

A reversal is a change in the price direction of an asset. A reversal can occur to the upside or downside. Following an uptrend, a reversal would be to the downside. Following a downtrend, a reversal would be to the upside. Reversals are based on overall price direction and are not typically based on one or two periods/bars on a chart. A reversal is when the direction of a price trend has changed, from going up to going down, or vice-versa. Traders try to get out of positions that are aligned with the trend prior to a reversal, or they will get out once they see the reversal underway. Reversals typically refer to large price changes, where the trend changes direction. Small counter-moves against the trend are called pullbacks or consolidations. When it starts to occur, a reversal isn't distinguishable from a pullback. A reversal keeps going and forms a new trend, while a pullback ends and then the price starts moving back in the trending direction.

The S&P 500 is a stock market index that tracks the stocks of 500 large-cap U.S. companies. It represents the stock market's performance by reporting the risks and returns of the biggest companies. Investors use it as the benchmark of the overall market, to which all other investments are compared. S&P stands for Standard and Poor, the names of the two founding financial companies. It was officially introduced on March 4, 1957 by Standard & Poor. McGraw-Hill acquired it in 1966. The S&P Dow Jones Indices owns it as of 2022 and that's a joint venture between S&P Global (formerly) McGraw Hill Financial, CME Group, and News Corp, the owner of Dow Jones A committee selects each of the index's 500 corporations based on their liquidity, size, and industry. It rebalances the index quarterly, in March, June, September, and December.

A shakeout is a situation in which many investors exit their positions in a stock or market segment at the same time, often at a loss. A shakeout is usually caused by uncertainty or recent bad news circulating around a particular security or industry. Shakeouts can be quite variable in duration, but they are usually sharp in terms of the amount lost from recent highs. A shakeout can also refer to stronger companies in an industry using their capital reserves to acquire or eliminate weaker competitors that have overextended themselves.

A short, or a short position, is created when a trader sells a security first with the intention of repurchasing it or covering it later at a lower price. A trader may decide to short a security when she believes that the price of that security is likely to decrease in the near future.

With regard to futures contracts as well as other financial instruments, slippage is the difference between where the computer signaled the entry and exit for a trade and where actual clients, with actual money, entered and exited the market using the computer’s signals.[1] Market impact, liquidity, and frictional costs may also contribute. Algorithmic trading is often used to reduce slippage, and algorithms can be backtested on past data to see the effects of slippage, but it is impossible to eliminate entirely.

A specialist firm is a company that hires specialists to represent stocks listed on the New York Stock Exchange (NYSE). Specialists on the NYSE are the market makers who facilitate trade of a certain stock by buying and selling to and from investors and holding shares of that stock when necessary. Companies listed on the NYSE will interview employees of the specialist firms, seeking out suitable people to represent them by holding inventories of the companies' stocks. Specialists no longer exist in their traditional sense. They are now called Designated Market Makers (DMM). The switch occurred as trading became more electronic. Specialists would personally handle many of the orders coming into a stock. With DMMs, nearly all transactions are automated. Specialist and Designated Market Maker A specialist is a person who operates on the floor of the New York Stock Exchange (NYSE) to buy, sell, or hold a specific stock. A specialist is a type of market maker that is physically present on the trading floor. The specialist must display their best bid and ask prices to allow for trades, and also step in with their own capital to buy, sell or hold stocks as market conditions demand. Their entire function is to keep the market for their stock as liquid as possible. A specialist allows for the trading of a specific stock by serving four roles: auctioneer of stocks to investors, agent for investors in stock trades, catalyst to instigate trades from interested parties, and principal who buys, holds, and sells shares of stock with their own capital when necessary. These days, DMMs have similar tasks, but most of their job is now automated through the use of algorithms and hand-held electronic devices that match orders. DMMs may still intervene in the market in certain situations. According to the NYSE, DMMs are core liquidity providers, reduce volatility, improve price discovery at the open and close, reduce trading costs for investors, and have much higher obligations than traditional market makers.3 Example of What a Specialist Did In today's market, due to regulation NMS, investors receive the best bid or offer available when making a trade. In the day of the specialist, that wasn't always the case. That order could be matched where the specialist deemed the impact would be least. For example, a big sell order may be matched with several buy orders below the posted bid price. If the specialist allowed the big sell order to hit the bid price it would have certainly dropped the price anyway, and so the specialist filled the sell with other buy orders or with his own capital, not affecting the current bid. It worked both ways. Sometimes investors got a better price than expected, sometimes a worse price, and most of the time they got the price expected. In today's market that doesn't happen. Orders are processed by going through the best bid (if selling) and offer (if buying) first. An order cannot trade at a price worse than the best bid or offer at the time of execution. Although, due to technical glitches this may sometimes still happen. Also, when there was a lot of frantic buying or selling the specialist could freeze the book, preventing NYSE order flow, allowing a moment for calmer heads to prevail. During this time the specialist could match buy and sell orders without adjusting the bid or offer price. Through doing these things, the specialist's goal was to maintain an orderly market. At the market open, specialists would also look at all the buy and sell orders, and find the price that allowed for the most liquidity/orders to be matched.

A speculator utilizes strategies and typically a shorter time frame in an attempt to outperform traditional longer-term investors. Speculators take on risk, especially with respect to anticipating future price movements, in the hope of making gains that are large enough to offset the risk. Traders who take a view on the future prices of a security of commodities and enter into it looking to profit. A trader who thinks the S&P 500 is going up, would buy a futures contract, looking to lock in today’s price. He will profit if the S&P 500 is higher on the expiration date of the future.

A statistical measure of price fluctuation. One use of the standard deviation is to measure how stock price movements are distributed about the mean. The larger this dispersion or variability is, the higher the standard deviation. The smaller this dispersion or variability is, the lower the standard deviation. Chartists can use the standard deviation to measure expected risk and determine the significance of certain price movements. Measuring Expectations The current value of the standard deviation can be used to estimate the importance of a move or set expectations. This assumes that price changes are normally distributed with a classic bell curve. Even though price changes for securities are not always normally distributed, chartists can still use normal distribution guidelines to gauge the significance of a price movement. In a normal distribution, 68% of the observations fall within one standard deviation, while 95% fall within two and 99.7% fall within three. Using these guidelines, traders can estimate the significance of a price movement. A move greater than one standard deviation would show above average strength or weakness, depending on the direction of the move. A normal bell curve distribution showing standard deviation parameters: • 1 SD = 34.1% + 34.1% = 68.2% • 2 SD = 34.1% + 34.1% + 13.6% + 13.6% = 95.4% • 3 SD = 34.1% + 34.1% + 13.6% + 13.6% + 2.1% + 2.1% = 99.6%

An instruction to submit a buy or sell market order if and when a user-specified stop trigger price is attained or penetrated. A Sell Stop order is always placed below the current market price and is typically used to limit a loss or protect a profit on a long stock position. A Buy Stop order is always placed above the current market price. It is typically used to limit a loss or help protect a profit on a short sale.

Stopped out is a term used in reference to the execution of a stop-loss order. Often times, the term stopped out is used when a trade creates a loss by reaching a user-defined trigger point where a market order is executed to protect the trader's capital. This exit trade may be triggered automatically or manually. The phrase may also be used to describe what happens to a trader who sets a trailing stop loss so as to capture profits from long-running trend trades. In this case the trade may actually be profitable, but the exit keeps those profits from evaporating.

Swing trading is a style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move. Swing trading exposes a trader to overnight and weekend risk, where the price could gap and open the following session at a substantially different price. Swing traders can take profits utilizing an established risk/reward ratio based on a stop loss and profit target, or they can take profits or losses based on a technical indicator or price action movements.

Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. Unlike fundamental analysis, which attempts to evaluate a security's value based on business results such as sales and earnings, technical analysis focuses on the study of price and volume. Technical analysis is a trading discipline employed to evaluate investments and identify trading opportunities in price trends and patterns seen on charts. Technical analysts believe past trading activity and price changes of a security can be valuable indicators of the security's future price movements. Technical analysis may be contrasted with fundamental analysis, which focuses on a company's financials rather than historical price patterns or stock trends. Technical analysts use bar charts—or other chart types such as candlestick or line charts—to monitor price action, which aids in trading decisions. Bar charts allow traders to analyze trends, spot potential trend reversals, and monitor volatility and price movements.

Technical indicators are pattern-based signals produced by the price, volume, and/or open interest of a security or contract used by traders who follow technical analysis. By analyzing historical data, technical analysts use indicators to predict future price movements. Examples of common technical indicators include the Relative Strength Index (RSI), Money Flow Index (MFI), stochastics, moving average convergence divergence (MACD), and Bollinger Bands®.

This means how much each tick movement is worth. For example, assume we are talking about the futures contract for oil which is denoted as CL. The definition of the oil contract size is for 1000 barrels. Thus since the “Tick” is 0.01 the tick value is equal to the contract size multiplied by minimum tick, in our oil contract example 0.01*1000 =$10. In summary; Tick Value = Tick*Contract Size.

Time and sales, or T&S, show volume, price, direction, date, and time data for each trade that is executed on an exchange. Time and sales information is often provided as a real-time data feed of trade orders for a security. Time and sales log the time-stamped transaction details for all trading activity in a listed security. Time and sales data is usually public information, with real-time data services providing feeds to traders and investors. Time and sales data is often scrutinized by traders practicing technical analysis.

Underlying - the security upon which the option is based

VIX = Symbol for CBOE Volatility Index. The best known volatility index, which measures the level of volatility that the options market expects over the next 30 days for the S&P500 stock index. Popularly often referred to as the "fear index", as it often increases when stock market falls.

In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period of time, it is called a "volatile" market. An asset's volatility is a key factor when pricing options contracts. Volatility often refers to the amount of uncertainty or risk related to the size of changes in a security's value. A higher volatility means that a security's value can potentially be spread out over a larger range of values. This means that the price of the security can change dramatically over a short time period in either direction. A lower volatility means that a security's value does not fluctuate dramatically, and tends to be more steady.

"volatility crush" refers to a sudden, sharp drop in implied volatility that triggers a similarly steep decline in an option's value. A volatility crush often occurs after a scheduled event takes place; for example, a quarterly earnings report, new product launch, or regulatory decision.

Volatility Index = Index that measures expected volatility of an asset (such as a stock index, individual stock or ETF) that is implied in prices of options on that asset. Best know volatility index is the VIX (CBOE Volatility Index), whose underlying asset is the S&P500 stock index, but there are many other volatility indices on other underlying assets.

The volume-weighted average price (VWAP) is a technical analysis indicator used on intraday charts that resets at the start of every new trading session. It's a trading benchmark that represents the average price a security has traded at throughout the day, based on both volume and price. VWAP is important because it provides traders with pricing insight into both the trend and value of a security.

Wall Street, located in lower Manhattan, has become synonymous with the U.S. financial markets. Wall Street itself is a road that runs for six blocks near the southern tip of Manhattan. The New York Stock Exchange is located on this road, along with several banks. Yet the history of the street goes back much further than the New York Stock Exchange (NYSE). Wall Street is a direct reference to a wall that was erected by Dutch settlers on the southern tip of Manhattan Island in the 17th century. The Dutch, located at the southernmost part of the island, erected a defensive wall between 9 and 12 feet high and 2,300 feet long around their settlement. It ran approximately along the area we know as Wall Street today, with gates approximately at the modern intersections of Wall Street and Pearl Street, and Wall Street and Broadway. Although this wall was never used for its intended purpose, years after its removal it left a legacy behind with the street being named after it. This area didn't become famous for being America's financial center until 1792 when 24 of the United States' first and most prominent brokers signed the Buttonwood Agreement named for the sycamore (or “buttonwood”) tree on Wall Street under which New York’s traders often met. Some of the first securities trades were war bonds, as well as some banking stocks such as First Bank of the United States, Bank of New York, and Bank of North America. The Buttonwood Agreement helped begin the modern practice of limiting securities trading to registered brokers. Under this deal, no member would trade securities with someone who was not an approved broker under the agreement. Not long after, the Buttonwood traders built the New York Stock and Exchange Board, modeling it after the successful Philadelphia Merchants Exchange.

A warehouse receipt is a type of documentation used in the futures markets to guarantee the quantity and quality of a particular commodity being stored within an approved facility. Warehouse receipts are important because they serve as proof that the commodity is in the warehouse and that the proper documentation has been verified.1 Commodities need to meet specific quality standards in order to be traded as a futures contract, and the warehouse receipts play a role in verifying that the necessary requirements have been met. Understanding a Warehouse Receipt Warehouse receipts are a part of the operational business processing involved with futures contracts for physical delivery.1 A futures contract is an obligation to buy or sell a commodity or security at a predetermined price at a date in the future. Futures are derivatives because they derive their value from the price of the underlying security or commodity. There are many types of commodity futures, including corn, wheat, oil, gold, and silver. Futures contracts are standardized, meaning they have a set quantity and are deliverable by certain dates throughout the year.2 However, futures also have quality standards that must be met and warehouse receipts play a role in the inventory and delivery process of the underlying commodity for the contract. For a commodity to be delivered, to satisfy a futures contract, there must be a warehouse receipt for the goods.2 Sometimes, instead of the physical delivery of the actual commodities backing a contract, warehouse receipts can be used to settle futures contracts. For precious metals, warehouse receipts may also be referred to as vault receipts.