Indicators & Oscillators — 60 Terms Defined

Accumulation/Distribution Line Indicators & Oscillators shares A running total of volume weighted by where each period's close sat within its own range. Money Flow Multiplier = ((Close - Low) - (High - Close)) / (High - Low); A/D = Previous A/D + Multiplier x Volume

Advance-Decline Line Indicators & Oscillators ratio (x, times) A running total of the number of advancing securities minus the number of declining securities each period. A/D Line = Previous Value + (Number of Advancing Securities - Number of Declining Securities)

Anchored VWAP Indicators & Oscillators ₹ A volume-weighted average price calculated from a chosen starting point rather than from the beginning of the session. Anchored VWAP = Sum of (Price x Volume) from the anchor date / Sum of Volume from the anchor date

Aroon Indicator Indicators & Oscillators % A pair of lines measuring how recently the highest high and lowest low occurred within a lookback window. Aroon Up = ((n - periods since n-period High) / n) x 100; Aroon Down = ((n - periods since n-period Low) / n) x 100

Average Directional Index Indicators & Oscillators ratio (x, times) An indicator measuring the strength of a directional move on a scale of 0 to 100, without indicating its direction. ADX = smoothed average of |+DI - -DI| / (+DI + -DI) x 100

Average True Range Indicators & Oscillators ₹ The average of the true range over n periods, measuring how much a security typically moves in a period. True Range = the greatest of (High - Low), |High - Previous Close| and |Low - Previous Close|; ATR = smoothed average of True Range over n periods

Backtesting Indicators & Oscillators qualitative Applying a set of trading rules to historical data to see how they would have performed. Test: rules are fully specified in advance, applied without hindsight, and results are net of realistic transaction costs and slippage

Bearish Divergence Indicators & Oscillators qualitative A condition in which price makes a higher high while an oscillator makes a lower high. Test: current price high > previous price high, while current indicator high < previous indicator high

Bollinger Band Width Indicators & Oscillators % The distance between the upper and lower Bollinger Bands, expressed relative to the middle band. Band Width = (Upper Band - Lower Band) / Middle Band x 100

Bollinger Bands Indicators & Oscillators ₹ A moving average with bands plotted a set number of standard deviations above and below it. Middle Band = 20-period SMA; Upper Band = Middle + 2 x Standard Deviation; Lower Band = Middle - 2 x Standard Deviation

Bullish Divergence Indicators & Oscillators qualitative A condition in which price makes a lower low while an oscillator makes a higher low. Test: current price low < previous price low, while current indicator low > previous indicator low

Chaikin Money Flow Indicators & Oscillators ratio (x, times) The sum of volume weighted by close position over n periods, divided by total volume over the same periods. CMF = Sum of (Money Flow Multiplier x Volume) over n / Sum of Volume over n

Chandelier Exit Indicators & Oscillators ₹ A trailing stop placed a multiple of average true range below the highest high since entry. Long Exit = Highest High over n periods - Multiplier x ATR; Short Exit = Lowest Low over n periods + Multiplier x ATR

Commodity Channel Index Indicators & Oscillators ratio (x, times) An unbounded oscillator measuring how far the typical price sits from its moving average, scaled by mean deviation. CCI = (Typical Price - SMA of Typical Price) / (0.015 x Mean Deviation), where Typical Price = (High + Low + Close) / 3

Curve Fitting Indicators & Oscillators qualitative Tuning a strategy's parameters until it fits historical data closely, producing results that do not repeat on new data. Test: performance degrades sharply when parameters are perturbed slightly or when the rules are applied to unseen data

Death Cross Indicators & Oscillators qualitative The crossing of a shorter moving average below a longer one, conventionally the 50-day below the 200-day. Test: 50-period Moving Average crosses from above to below the 200-period Moving Average

Directional Movement Index Indicators & Oscillators ratio (x, times) A pair of lines measuring upward and downward directional movement separately, from which the ADX is derived. +DM = Current High - Previous High when positive and larger than -DM; -DM = Previous Low - Current Low when positive and larger than +DM; each is smoothed and divided by ATR to give +DI and -DI

Divergence Indicators & Oscillators qualitative A condition in which price and an indicator derived from it move in opposite directions. Test: price makes a new extreme while the indicator fails to confirm it with a corresponding new extreme

Donchian Channel Indicators & Oscillators ₹ Bands drawn at the highest high and lowest low of the last n periods, with a midline between them. Upper Channel = Highest High over n periods; Lower Channel = Lowest Low over n periods; Middle = average of the two

Envelope Channel Indicators & Oscillators % Bands drawn a fixed percentage above and below a moving average. Upper Envelope = Moving Average x (1 + Percentage); Lower Envelope = Moving Average x (1 - Percentage)

Exponential Moving Average Indicators & Oscillators ₹ A moving average that weights recent periods more heavily, with weights decaying geometrically into the past. EMA = Price x k + Previous EMA x (1 - k), where k = 2 / (n + 1)

Golden Cross Indicators & Oscillators qualitative The crossing of a shorter moving average above a longer one, conventionally the 50-day above the 200-day. Test: 50-period Moving Average crosses from below to above the 200-period Moving Average

Ichimoku Cloud Indicators & Oscillators ₹ A multi-line system plotting conversion and base lines, a shaded cloud projected forward, and a lagging span behind price. Conversion Line = (9-period High + Low) / 2; Base Line = (26-period High + Low) / 2; Leading Span A = average of those two, plotted 26 periods ahead; Leading Span B = (52-period High + Low) / 2, plotted 26 periods ahead

Indicator Lag Indicators & Oscillators days The delay between a change in price and the corresponding change in an indicator derived from it. Approximate lag of a simple moving average = (n - 1) / 2 periods, where n is the lookback