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Technical Analysis > Beginner Terms > Flashcards

Beginner Terms Flashcards

1
Q

Bullish

A

Definition: Expecting prices to rise.

Example: Traders became bullish on the cryptocurrency, anticipating a significant price increase.

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2
Q

Bearish

A

Definition: Expecting prices to fall.

Example: Investors turned bearish as negative news affected the market sentiment.

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3
Q

Long Position

A

Definition: Buying an asset with the expectation that its price will rise.

Example: She took a long position in the stock, believing it would perform well in the coming weeks.

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4
Q

Short Position

A

Definition: Selling an asset with the expectation that its price will fall.

Example: Hedge funds often take a short position in stocks they expect to decline in value.

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5
Q

Bid Price

A

Definition: The price at which buyers are willing to purchase an asset.

Example: Traders placed bids at various prices, hoping to get a good deal on the cryptocurrency.

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6
Q

Ask Price

A

Definition: The price at which sellers are willing to sell an asset.

Example: The ask price for the stock was higher than anticipated, leading to negotiations between buyers and sellers.

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7
Q

Spread

A

Definition: The difference between the bid and ask prices.

Example: A narrow spread indicates high liquidity, while a wide spread may suggest lower market activity.

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8
Q

Volatility

A

Definition: The degree of variation in the price of an asset.

Example: Cryptocurrency markets are known for their high volatility, with prices often experiencing rapid and unpredictable changes.

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9
Q

Liquidity

A

Definition: The ease with which an asset can be bought or sold without affecting its price.

Example: Blue-chip stocks typically have high liquidity, making them easy to trade in the market.

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10
Q

Order Book

A

Definition: A real-time list of buy and sell orders for a particular asset.

Example: Traders closely monitored the order book to gauge market sentiment and potential price movements.

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11
Q

Market Order

A

Definition: An order to buy or sell an asset at the current market price.

Example: He placed a market order for the cryptocurrency, executing the trade at the prevailing market price.

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12
Q

Limit Order

A

Definition: An order to buy or sell an asset at a specific price or better.

Example: She set a limit order to buy shares of the stock if the price dropped to a certain level.

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13
Q

Stop Order

A

Definition: An order to buy or sell an asset once it reaches a specific price.

Example: Traders use stop orders to limit potential losses or to secure profits at predetermined levels.

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14
Q

Market Capitalization (Market Cap)

A

Definition: The total value of a cryptocurrency, calculated by multiplying the current price by the circulating supply.

Example: Bitcoin’s market capitalization surpassed one trillion dollars, making it the most valuable cryptocurrency.

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15
Q

Candlestick Chart

A

Definition: A type of financial chart that displays open, high, low, and close prices for a specific time period.

Example: Analysts studied the candlestick chart to identify patterns and make predictions about future price movements.

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16
Q

Support and Resistance

A

Definition: Price levels where a cryptocurrency tends to stop falling (support) or rising (resistance).

Example: The support level held firm, preventing the price from dropping further.

17
Q

Trendline

A

Definition: A line drawn on a price chart that connects successive highs or lows, helping to identify trends.

Example: Drawing a trendline revealed a clear uptrend in the stock’s price over the past month.

18
Q

Chart Patterns

A

Definition: Recognizable patterns on a price chart that can indicate potential trend reversals or continuations (e.g., head and shoulders, triangles, flags).

Example: Traders spotted a double bottom chart pattern, suggesting a possible trend reversal.

19
Q

Moving Average (MA)

A

Definition: A calculated average of prices over a specific period, smoothing out price data and helping identify trends.

Example: The 50-day moving average provided a clear indication of the stock’s overall trend.

20
Q

Relative Strength Index (RSI)

A

Definition: A momentum oscillator that measures the speed and change of price movements, indicating overbought or oversold conditions.

Example: The RSI showed that the cryptocurrency was in an oversold condition, potentially signaling a buying opportunity.

21
Q

Moving Average Convergence Divergence (MACD)

A

Definition: A trend-following momentum indicator that shows the relationship between two moving averages.

Example: Traders used the MACD to confirm the strength of the prevailing trend in the market.

22
Q

Bollinger Bands

A

Definition: Volatility bands placed above and below a moving average to indicate potential overbought or oversold conditions.

Example: The price crossing above the upper Bollinger Band suggested that the asset might be overextended.

23
Q

Volume

A

Definition: The amount of a cryptocurrency traded over a specific period, providing insights into the strength of a price movement.

Example: Increasing volume during an uptrend confirmed strong buying interest in the market.

24
Q

Fibonacci Retracement

A

Definition: A tool used to identify potential support and resistance levels based on the Fibonacci sequence.

Example: Traders applied Fibonacci retracement levels to determine potential entry and exit points for their trades.

25
Q

Head and Shoulders

A

Definition: A reversal pattern characterized by three peaks, indicating a potential change in trend.

Example: The head and shoulders pattern suggested that the stock might be entering a bearish phase.

26
Q

Double Top and Double Bottom

A

Definition: Reversal patterns characterized by two peaks (double top) or two troughs (double bottom), signaling potential trend changes.

Example: The formation of a double bottom indicated a potential upward reversal in the price.

27
Q

Ichimoku Cloud

A

Definition: An indicator providing information about support and resistance levels, trend direction, and momentum.

Example: Traders used the Ichimoku Cloud to assess the overall health of the market and identify potential entry points.

28
Q

Cup and Handle

A

Definition: A bullish continuation pattern that signals a potential upward trend continuation.

Example: The cup and handle pattern suggested that the cryptocurrency might experience a bullish breakout.

29
Q

Wyckoff Method

A

Definition: A methodology for chart analysis emphasizing the role of institutional traders in market movements.

Example: Wyckoff analysis helped traders understand the intentions of large institutional investors in the market.

30
Q

Bearish and Bullish Divergence

A

Definition: Divergence occurs when the price moves in the opposite direction of a technical indicator, signaling potential reversals.

Example: Bearish divergence on the RSI warned of a potential trend reversal to the downside.

31
Q

Rounding Bottom (Saucer)

A

Definition: A reversal pattern indicating a potential shift from a downtrend to an uptrend.

Example: The rounding bottom pattern suggested that the cryptocurrency might be bottoming out.

31
Q

Pivot Points

A

Definition: Price levels calculated based on the high, low, and closing prices of the previous trading day, serving as potential support or resistance.

Example: Traders used pivot points to identify key levels where the price might change direction.

31
Q

Consolidation

A

Definition: A period when an asset’s price moves within a narrow range, often after a significant price movement.

Example: The cryptocurrency entered a consolidation phase, with the price trading within a tight range.

32
Q

Breakout

A

Definition: A price movement that surpasses a predefined support or resistance level.

Example: The breakout above the resistance level triggered a surge in buying activity.

33
Q

Downtrend

A

Definition: A prevailing downward direction in the price of an asset.

Example: The stock was in a clear downtrend, with lower highs and lower lows.

34
Q

Uptrend

A

Definition: A prevailing upward direction in the price of an asset.

Example: Investors identified an uptrend in the cryptocurrency, characterized by higher highs and higher lows.

35
Q

Reversal Pattern

A

Definition: A chart pattern indicating a potential change in the current trend.

Example: The double top pattern signaled a potential reversal from an uptrend to a downtrend.

36
Q

Rally

A

Definition: A rapid increase in the price of an asset.

Example: After positive earnings were announced, the stock experienced a strong rally in the market.

Technical Analysis (1 decks)

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