CMT Level 1 Chart School Glossary; Questions and Answers 100% Solved

CMT Level 1 Chart School Glossary ; Questions and Answers 100% Solved Abandoned Baby Correct answer A rare reversal pattern characterized by a gap followed by a Doji, which is then followed by another gap in the opposite direction. The shadows on the Doji must completely gap below or above the shadows of the first and third day. Above the Market Correct answer A limit order to buy or sell a security for a specified price that is higher than the current market price. If the market does not reach the specified price, the order will go unfilled. Absolute Breadth Index Correct answer Developed by Norman Fosback, the ABI is equal to the absolute value of the difference between the advancing issues and the declining issues. It shows how much activity and volatility is taking place on the New York Stock Exchange while total ly ignoring the price direction. Absolute Price Oscillator (APO) Correct answer An indicator based on the difference between two exponential moving averages, and is expressed in absolute terms. Also known as the MACD indicator, the APO is calculated by subtracting the longer EMA from the shorter EMA. See ChartSchool arti cle on Price Oscillators. Accredited Investor Correct answer Term used by SEC in Regulation D of private placements. Concept: although 35 is the upper limit of persons who may purchase a private placement, accredited investors are not included in this number. General definition of accredited investors : institutional type accounts and persons of wealth (persons with a net worth of $1 Million or more, persons with annual income of $200,000 or more, persons who purchase $150,000 or more of the offering and this does not represent more than 20% of their net worth). Accrued Interest Correct answer The amount of interest that has been earned since the last interest payment date. When a bond trades, the buyer pays the seller the accrued interest - a pro rata portion of the next interest payment, which will be paid to the buyer of the bo nd. Accumulation Correct answer The act of buying more shares of a security without causing the price to increase significantly. After a decline, a stock may start to base and trade CMT Level 1 Chart School Glossary ; Questions and Answers 100% Solved sideways for an extended period. While this base builds, well -informed traders and investors may seek to establish or increase existing long positions. In that case, the stock is said to have come under accumulation. Accumulation Distribution Line Correct answer A momentum indicator that relates price changes with volume. It relates the closing price to the range of prices (H - L). The closer the close is to the high, the more volume is added to the cumulative total. See ChartSchool article on Accum ulation Distribution Line. Advance Decline Line Correct answer One of the most widely used indicators to measure the breadth of a stock market advance or decline. The AD line tracks the net difference between advancing and declining issues. It is usually compared to a market average where divergence from that average would be an early indication of a possible trend reversal. See ChartSchool article on the Advance -Decline Line. AKA AD Line. Advance Decline Ratio Correct answer The ratio of advancing issues over declining issues. Taking the moving average of the AD ratio will smooth it so it can be used as an overbought and oversold indicator. Advancing Correct answer A market stage of a stock that is characterized by an uptrend with subsequently higher highs and higher lows. Advancing Declining Issues Correct answer A market momentum indicator using the advancing issues and the declining issues. It subtracts the declining issues from the advancing ones and is usually smoothed to make it a good overbought oversold indicator. Adverse Excursion Correct answer The loss attributable to price movement against the position in any single trade. ADX Correct answer See Average Directional Index