Trading Jargon – Investing, Trading, Finance And What Not?


C

Cup-&-Handle
The Cup with Handle pattern was developed and popularized by William O’Neil, who introduced it in his seminal 1988 book, The How to Make Money in Stocks Complete Investing System: Your Ultimate Guide to Winning in Good Times and Bad. This is a bullish continuation pattern that follows a continuation period and is followed by a breakout.


E

(Full) Employment
Here is John C. Williams, President and CEO, Federal Reserve Bank of San Francisco, in a 2012 speech about full employment.

“In considering what maximum employment is, economists look at the unemployment rate. We tend to think of maximum employment as the level of unemployment that pushes inflation neither up nor down. This is the so-called natural rate of unemployment. It is a moving target that depends on how efficient the labor market is at matching workers with jobs. Although we can’t know exactly what the natural rate of unemployment is at any point in time, a reasonable estimate is that it is currently a little over 6 percent. In other words, right now, an unemployment rate of about 6 percent would be consistent with the Fed’s goal of maximum employment.”


G

Gross Domestic Product (GDP)
The gross domestic product (GDP) is the value of all goods and services produced within a region during a specific time period. Though GDP is usually calculated on an annual basis. It includes all private, public and government consumptions and expenditures.

GDP = C + G + I + NX

where:
“C” = all private or consumer spending
“G” = all government spending
“I” = all businesses spending on capital
“NX” = total net exports – calculation as exports minus imports

The nominal GDP is the value of goods and services produced expressed in current prices. The nominal growth rate is the change in the nominal GDP from the previous period. The real GDP is nominal GDP adjusted for inflation.

(Real) GDP Growth Rate
The real GDP growth rate is a the actual increase or decrease in the value of goods and services produced by a nation (or region) as comapred to previous period. It is adjusted for inflation. Gross national product (GNP) can also be used if the economy is heavily dependent on foreign earnings.

Following is from Investopedia:

The real economic growth rate builds onto the economic growth rate by taking  into account the effect that inflation has on the economy. The real  economic growth rate is a “constant dollar” and is therefore a more  accurate look at the rate of economic growth because it is  not distorted by the effects of extreme inflation or deflation.


O

Outside Day
The high of the day is above the previous day’s high and the low is below the previous day’s low


P

PowerPoint
A word about PowerPoint. PowerPoint was released by Microsoft in 1990 as a way to euthanize cattle using a method less cruel than hitting them over the head with iron mallets. After PETA successfully argued in court that PowerPoint actually was more cruel than iron mallets, the program was adopted by corporations for slide show presentations.

Conducting a PowerPoint presentation is a lot like smoking a cigar. Only the person doing it likes it. The people around him want to hit him with a chair.

Note: If you really believed this then it may be time for you to stop trading your own money. Trading someone else’s money (if you can get them to give it to you) is a different ball game.


Q

Quantitative Easing
Quantitative Easing (QE) has been shaping the global economy for quite some time. Willem Buiter, Chief Economist of Citigroup (formerly Professor of European Political Economy, London School of Economics) proposed some terminology for QE.

“Quantitative easing is an increase in the size of the balance sheet of the central bank through an increase it is monetary liabilities (base money), holding constant the composition of its assets. Asset composition can be defined as the proportional shares of the different financial instruments held by the central bank in the total value of its assets. An almost equivalent definition would be that quantitative easing is an increase in the size of the balance sheet of the central bank through an increase in its monetary liabilities that holds constant the (average) liquidity and riskiness of its asset portfolio.”


T

Triple Witching Day
On the third Friday of the quarter ending month – March, June, September and December – multiple contracts expire. This day, when the contracts for stock index futures, stock index options and stock options expire, is called Triple Witching days. Triple witching hour is the last hour of the trading session (3:00-4:00 P.M., New York Time).


W

Witching Hour
Time of day and night when creatures such as witches, demons, and ghosts are thought to appear and to be at their most powerful and black magic to be most effective.

Okay! Okay! That is for the real world (and from wikipedia). For the trading world the , witching hour is the last hour of stock market trading session (3:00-4:00 PM New York time) on the third Friday of a month. This is the day when options expire and hence the last hour has more concentrated trading increasing the volatility and volume. There are four types of expiring securities – index futures, index options, stock options and the latest entrant, single-stock futures.

The witching-hour in March, June, September, and December is called Quadruple Witching Hour as all of the above mentioned options & futures expire in those months. It was called triple witching hour before the introduction of single-stock futures.


Z

ZIRP
Under Zero Interest-Rate Policy (ZIRP) a central bank maintains nominal interest rate to zero or very near zero. Associated with slow economic growth.

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