Overheard a conversation and have no idea what ‘abandoned baby’ means in trading terms? You’re not alone.
Whether you’re new to trading or a little more experienced, trading is a whole world of phrases, terms and abbreviations you may not be familiar with.
It’s easy to get lost in decoding what different words refer to - so we’re here to help you out.
From the dark cloud cover to whipsaw, test your trading knowledge with our glossary of terms below (and then test your friends!)
10 Trading Terms You Might Not Know
#1: Abandoned baby
Everyone’s favourite. Abandoned baby is a reversal pattern: a gap followed by a Doji candlestick pattern, which is then followed by another gap.
In order for an abandoned baby to be formed on the chart, the shadows on the Doji must completely gap below or above the shadows of the first and third candle.
#2: Stick sandwich
Delicious with soup. A stick sandwich is a bullish reversal pattern with two black candles surrounding a white candle.
The closing prices of the two black candles must be equal. A support price is apparent and the opportunity for prices to reverse is quite good.
Some trading slang for you: whipsaw is a term used to describe a market that is extremely volatile, and is characterised by sharp price movements followed by sharp reversals. Ouch.
#4: Triple witching
Hint: it’s not the witches from Macbeth. Triple witching is when contracts for stock options, stock index futures, and stock index options expire.
It happens once a quarter on the third Friday of March, June, September, and December.
#5: Risk appetite
This one is what it sounds like. It is a measure of how ‘risk-hungry’ traders are. For example, if risk sentiment is up, risk appetite picks up and traders are more willing to invest in higher-yielding and/or potentially more volatile trades.
#6: Sell wall
The sell wall is a huge sell order that prevents the market price from going up until the entire sell volume is complete.
Not from the sea. Whale is a term borrowed from casino gamblers, and is a trader with a significant amount of capital on the price of a specific cryptocurrency.
These traders are usually bullish, and so are also referred to as ‘bullish whales’.
#8: Dark cloud cover
A storm is brewing! This is a bearish reversal pattern. The uptrend is continued with a long white candle. The following candle opens a new high, and closes below the midpoint of the first candle’s body.
The pattern is more significant if the second candle’s body is below the center of the previous body. You get the idea: it’s called a dark cloud because it casts a shadow over the bullish trend before it.
Confirmation of the dark cloud can be found when another, smaller black candle forms after the second one.
#9: Old Lady
Did you know this one? It’s slang for the Bank of England.
#10: Wash trading
Not a shower or a bath. Wash trading involves buying or selling a good, asset, or stock from yourself. Sound strange?
If you’re wondering why you would do this, the idea is to trade with yourself so that you create the illusion of demand and market activity. Put simply, it’s to stir things up.