Glossary
The vocabulary, defined plainly
45 terms a swing trader actually meets, each answering three questions: what it is, how it is measured, and why it matters. Where a term feeds one of the six factors behind the Tapeline score, the page says which. Where it does not — and several widely-known indicators do not — the page says that too.
Every definition here is descriptive. Nothing on these pages tells you what to do with a security, and nothing on them is a forecast.
Trend & momentum
Moving average
A moving average is the average closing price of a security over a fixed number of recent sessions, recalculated each session so the window rolls forward.
DMA stack
A DMA stack describes a chart where several day-moving averages of different lengths sit in order — the shortest above the next-shortest, and so on down to the longest.
Golden cross
A golden cross describes the session on which a shorter-window moving average crosses above a longer-window one.
MACD
MACD is an indicator built from the difference between two exponential moving averages of price.
RSI
RSI is an oscillator that compares the average size of a security's up sessions to the average size of its down sessions over a recent window, expressed on a 0-100 scale.
Rate of change
Rate of change is the percentage difference between the current price and the price a fixed number of sessions ago.
Momentum
Momentum describes the speed and persistence of a security's recent price movement.
Trend
A trend describes the direction price has generally travelled over an extended window, and how consistently it has travelled that way.
Breakout
A breakout describes price moving beyond a level that had previously contained it — a prior high, a prior low, or the boundary of a range price had been oscillating inside.
Relative performance
Relative strength
Relative strength is a difference, not a standalone reading: a security's price change over a period, minus a benchmark's price change over exactly the same period.
Alpha
Alpha is how much better or worse something did than the market over the same stretch of time.
Beta
Beta measures how much a security's price has historically moved for a given move in its benchmark.
Relative volume
Relative volume compares the volume traded in a session to that same security's own average volume over a recent window, expressed as a multiple.
Sector rotation
Sector rotation describes a shift in which parts of the market are moving most, as capital concentrates in some sectors and thins out of others over weeks or months.
Fundamentals
Piotroski F-Score
The Piotroski F-Score is a nine-point checklist of accounting tests, each scored one point if the company passes and zero if it does not.
Price-to-earnings ratio
The price-to-earnings ratio is a company's share price divided by its earnings per share.
Return on equity
Return on equity is net income divided by shareholders' equity, expressed as a rate.
Profit margin
Profit margin is profit expressed as a share of revenue.
EPS growth
Earnings per share is net income divided by the number of shares outstanding, and EPS growth is the change in that figure between two reported periods.
Revenue growth
Revenue growth is the change in a company's reported sales between two periods, expressed as a rate.
Free cash flow
Free cash flow is the cash a business generated from operations after subtracting the capital spending needed to maintain and grow its asset base.
Earnings surprise
An earnings surprise is the difference between a company's reported result and the consensus analyst estimate for that period.
Market structure
Float
Float is the number of a company's shares that are actually available to trade in the open market.
Short interest
Short interest is the number of a security's shares that have been sold short and not yet bought back.
Days to cover
Days to cover is short interest divided by average daily trading volume.
Short squeeze
A short squeeze describes a sequence in which a rising price forces holders of short positions to close them, and closing a short position requires buying — which adds to the buying pressure that is already pushing the price up.
Volume
Volume is the number of shares that changed hands over a period.
Average dollar volume
Average dollar volume is the value traded in a typical session — shares traded multiplied by price — averaged over a recent window.
Bid-ask spread
The bid-ask spread is the difference between the highest price a buyer is currently willing to pay and the lowest price a seller is currently willing to accept.
Market capitalisation
Market capitalisation is a company's share price multiplied by its total shares outstanding.
Gap
A gap is a discontinuity between one session's closing price and the next session's opening price, where the market reopens at a level with no trading in between.
Disclosure & flow
SEC Form 4
Form 4 is the filing corporate insiders submit to the SEC to report transactions in their own company's securities.
13F filing
A 13F is a quarterly report that institutional investment managers exceeding a size threshold must file with the SEC, listing their US-listed equity positions as of the quarter end.
Congressional trade disclosure
US members of Congress and certain senior staff are required to disclose transactions in securities under the STOCK Act.
Accumulation / distribution
Accumulation describes building a position gradually over many sessions to avoid moving the price; distribution describes unwinding one the same way.
Risk
Drawdown
Drawdown is the decline from a peak value to the lowest point reached before a new peak, expressed as a share of that peak.
Volatility
Volatility measures how much a security's price varies around its own average over a period.
Average true range
Average true range is the average size of a security's daily trading range over a recent window, where the range is defined to include any overnight gap.
Position sizing
Position sizing is the decision of how much capital to commit to any single holding.
Stop-loss order
A stop-loss is a resting instruction to a broker that becomes active when price reaches a specified trigger level.
Macro & regime
VIX
The VIX is an index of the volatility expected over the next 30 days in the S&P 500, derived from the prices of that index's options.
Market breadth
Market breadth measures how widely a market move is shared across the securities in it, rather than how far the index itself has travelled.
Market regime
A market regime is a broad classification of prevailing market conditions into a small set of named states — risk-on and risk-off being the most common pair, sometimes with a neutral state between them.
Yield curve
The yield curve plots the yields on government bonds of the same issuer against their time to maturity.
Next
From vocabulary to the actual measurements
The glossary defines the concepts. How it works explains what the Tapeline score means, and limitations lists what the product does not model at all.
To see the six factors applied to real tickers, browse the full scored universe.
General information about market vocabulary. Not investment advice — see the risk disclosure.