Before continuing, there are some terms that should be defined.
Bear Market - Falling prices.
Bull Market - Rising prices.
Closing - On a "closing" basis. The final price of the trading day or period.
Contract - The total size and value of one trading unit of a single commodity. The value of a contract varies with each commodity.
Intraday - During the day. Intraday prices are those occurring during a daily trading session; see "Closing."
LI - A 63-degree line drawn from P2.
L2 - A 45-degree line drawn from P2.
L3 A 45-degree line drawn from P3.
Liquidate - Buy or sell a current position for cash.
Long - "Going long" the market.
During a bull market, buying a contract in anticipation of selling it later at a higher price.
Margin Market Order Minor High
The amount of capital required to be put "at risk" to buy or sell a contract.
An order which instructs your broker to buy, or sell, at the commodity's current market price.
A high prior to prices entering the Retracement Zone, from which S5 is drawn, and which:
1) Has higher highs before it,
2) Has lower highs after it, and
3) Is used in bear markets.
A low prior to prices entering the Retracement Zone, from which S5 is drawn, and which:
1) Has lower lows before it,
2) Has higher lows after it, and
3) Is used in bull markets.
The total number of contracts that, during a specific time period, have not been liquidated by delivery or transaction.
A significant high, or low, from which prices will be moving. This point will be the basis for determining the 50% Retracement Zone.
In a bull-to-bear market, PI will have lower highs before and after it.
In a bear-to-bull market, PI will have higher lows before and after it.
NOTE: PI of one range may become P2 of the next price range.
A significant high or low to which prices have moved from PI, and from which prices will move into the Retracement Zone.
In a bull-to-bear market, from the prior PI, P2 will have higher lows before and after it.
In a bear-to-bull market, from the prior PI, P2 will have lower highs before and after it.
NOTE: P2 of one range may become PI of the next price range.
P3 - A point on the horizontal price level of PI and on the vertical level of P2.
Position - The total number of contracts held by a trader.
RZH - Retracement Zone High.
The upper limit of the Retracement Zone. The RZH is the price level at which:
LI intersects L3 in a bull trend, L2 intersects L3 in a bear trend.
RZL - Retracement Zone Low.
The lower limit of the Retracement Zone. The RZL is the price level at which:
L2 intersects L3 in a bull trend, LI intersects L3 in a bear trend.
S4 - A 26-degree line drawn from P3.
(With gaps or a fast market, S4 could be 45-degrees.)
An initial "stop-loss" line used when prices EXIT the Retracement Zone.
A 45-, 63-, 75-, or 82-degree "stop-loss" line, drawn from a minor low or high, and used to liquidate a current position, after prices have ENTERED the Retracement Zone.
"Shorting the Market."
In a bear market, "borrowing" one contract to sell, in anticipation of buying it back later, at a lower price.
A high which:
1) has lower highs immediately before and after it, and
2) towards which prices had been rising, and
3) from which prices are now falling.
Significant Low - A low which:
1) has higher lows immediately before and after, and
2) towards which prices had been falling, and
3) from which prices are now rising.
Stop-loss Order - An order which becomes a market order only if a specific price (the "stop") is reached.
Buy stop - used in bear markets; the "stop" is placed above the entry price. Sell stop - used in bull markets; the "stop" is placed below the entry price.
Volume - The number of transactions made in one commodity during a specific time period.
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