Stochastic A stochastic oscillator is a momentum indicator comparing a particular closing price of a security to a range of its prices over a certain period of time. It is used to generate overbought and oversold trading signals, using a 0–100 bounded range of values. RSI The relative strength index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of a stock or other asset.  MACD Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA. The result of that calculation is the MACD line. A nine-day EMA of the MACD called the "signal line," is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals. Traders may buy the security when the MACD crosses above its signal line and sell—or short—the security when the MACD crosses below the signal line. Momentum Indicators Momentum indicators are technical analysis tools used to determine the strength or weakness of a stock's price. Momentum measures the rate of the rise or fall of stock prices. Momentum Momentum is the rate of acceleration of a security's price—that is, the speed at which the price is changing. Momentum Trading Momentum trading is a strategy that seeks to take advantage of momentum to enter a trend as it is picking up steam. Security The term "security" refers to an interchangeable asset, a negotiable financial instrument that holds some type of monetary value.Next: Option Terminology Prev: Other Symbols Contents: PowerX Analyzer User Guide

Options Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold—the underlying asset.     Call options allow the holder to buy the asset at a stated price within a specific timeframe.     Put options allow the holder to sell the asset at a stated price within a specific timeframe. Each option contract will have a specific expiration date by which the holder must exercise their option. The stated price on an option is known as the strike price. Derivative A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets. Expiration Date An expiration date is the last day that an option contract is valid.  Strike Price A strike price is the set price at which a derivative contract can be bought or sold when it is exercised. For call options, the strike price is where the security can be bought by the option holder; for put options, the strike price is the price at which the security can be sold. Time decay Time decay is a measure of the rate of decline in the value of an options contract due to the passage of time. Time decay accelerates as an option's time to expiration draws closer since there's less time to realize a profit from the trade. At The Money (ATM) An at the money (ATM) option is an option with a strike price that is closest to the current market price of the underlying security. In the Money (ITM) An in the money (ITM) option is an option with a strike price that is BELOW the current stock price. ITM options have "intrinsic value" (defined below). Intrinsic Value Intrinsic value is a measure of the difference between the strike price of the option and the current price of the underlying asset.Next: GlossaryPrev: Technical IndicatorsContents: PowerX Analyzer User Guide   

Ask price The Ask price is the price a seller is willing to accept for a security. Backtesting Backtesting is a key component of effective trading system development. It is accomplished by reconstructing, with historical data, trades that would have occurred in the past using rules defined by a given strategy. The result offers statistics to gauge the effectiveness of the strategy. 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. Bid price The Bid price is the price a buyer is willing to pay for a security. Bracketed Sell Order / One-Cancels-the-Other Order - (OCO) A Bracketed Sell Order is a pair of conditional orders stipulating that if one order executes, then the other order is automatically canceled. A Bracketed Sell Order combines a stop order with a limit order on an automated trading platform. When either the stop or limit price is reached and the order executed, the other order automatically gets canceled. Equity curve An equity curve is a graphical representation of the change in the value of a trading account over a time period. An equity curve with a consistently positive slope typically indicates that the trading strategies of the account are profitable, while a negative slope shows that they are generating a negative return. ETF An ETF is a basket of securities, shares of which are sold on an exchange. They combine features and potential benefits similar to those of stocks, mutual funds, or bonds. Mid-price The Mid-price is the mid-point between the quoted Bid price and Ask price for a security. Security A security is a tradable financial asset. The term commonly refers to any form of financial instrument, in this guide the term refers to stocks and Exchange Trading Funds (ETFs). Short Position 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 they believe that the price of that security is likely to decrease in the near future. Signal Price The signal price is the high of the first signal bar + $0.01. Swing trading 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. Trending Market   A price series that continues to continually close either higher or lower (on average over a defined number of periods) is said to be trending. An upward trending market is one that may fluctuate up and down but on average tends to close periodically higher. A downward trending market ends periodically lower regardless of interim moves.Next: Frequently Asked Questions Prev: Option Terminology Contents: PowerX Analyzer User Guide

Q. Why are we using "Quick Trades" in the scanner instead of "M&M Favorite" a.k.a. "Mark & Markus Favorite”? The current algorithms are optimised for "Quick Trades" as the current recommendation is to continue using the "Black Bar" exits. Sometime in the future we may move to "M&M Favorite" and stop using the black bar exits, in this case we would only use the profit target and stop loss exits.  Q. Why are Rockwell suggesting only taking long trades? Because Mark and Markus have back tested over seven hundred thousand trades across 4 markets using 2 years of data, and found that long trades far outperformed short trades, that's why they are recommending only taking long positions. Q. Why is the Profit & Loss Chart now more important than the Trendability & Gappiness? Greater emphasis should be placed on the profit & loss chart as this is a better indicator of profitability, the chart should ideally be climbing smoothly from the lower left to the upper right for most of the last 2 years. So less emphasis should now be placed on Trendability and Gappiness, as stocks that are not trending well and have gaps will typically have a poor profit & loss chart. Q. Do I need to watch the market all day? You really shouldn't need to be spending your day watching trades, if you're buying stocks all you have to do is set two bracket orders (Putting half the shares in one, and half the shares in the other) to exit on the lower and upper Profit Targets and the same Stop Loss. Then all you have to do is check once a day before the market opens to see if you have a black bar, and if you do then exit at the beginning of the next session. If you're trading options all you have to do once you've bought the option is to set 3 alerts either in your brokerage platform or with Tradingview, one for the stop loss, one for the lower Profit Target, and one for the upper Profit Target. If one of the alerts is crossed then you should either close half the trade or all of the trade, and the same rule applies for the black bars. Either way you only need to take action in the morning before the market opens, there is no need to watch it all day. Q. Why are there two Profit & Loss Charts under the Stock Chart? There are two profit and loss charts so that you can compare the two strategies side-by-side, to see which has been more profitable over the last two years. Q. Isn't the Profit & Loss chart strongly dependent on a stock's trendability?  Yes, for the most part a solid profit and loss chart is dependent on good trendability, however spikes in the trends can lead to profits, these spikes are typically not repeatable, so the profits they generate should be discounted. Q. How is the Average Daily Range (ADR) calculated? Add the difference between the high and low for the last seven days and divide it by seven. Q. Should I be concerned if one of the scanner results is a 2X or 3X leveraged ETF? Although this might be an issue for other strategies, it is not a concern with the PowerX Strategy as we are using a stop loss, and will typically only be in a trade for 1 to 3 weeks. Q. Does the PowerX strategy have a special rule about trading into or through earnings? There isn't a strict rule when trading PowerX into earnings, if the stock doesn't usually react to earnings then it is fine to hold onto a position through earnings. If you wish to be more conservative you can close the trade the day before earnings, so it's up to you. Q. How long should a stock be trading above $5 (Penny stock range) to be considered worthy of more research? With PowerX we really want the stock to be trading above $5 for at least 18 months.Next: Reading & WatchingPrev: GlossaryContents: PowerX Analyzer User Guide