Glossary

I use a lot of abbreviations and terminology so I'll keep a running post of some of them.  Most (all?) of these have been gleaned from Michael Huddleston's (aka Inner Circle Trader or ICT) great thread on babypips.com.

A/D Divergence - Accumulation/Distrubtion divergence.  Price makes a higher high but A/D indicator fails to and vice versa for shorts.

ADR - Average Daily Range

Aussie (Ozzie) - AUD/USD pair.  Australian Dollar/United States Dollar exchange rate.

Cable - GBP/USD pair.  Great Britain Pound/United States Dollar exchange rate.

CPP - Central pivot point

Fiber - EUR/USD pair.  Euro/United States Dollar exchange rate.

Figure, the - price ending in 00.  Psychological levels that banks often time use to send price to before a reversal.

HTF - Higher Time Frame.  Monthly, weekly, daily, and 4 hour time frames.

Institutional Levels - price ending in 00, 20, 50, and 80.  Psychological levels that a lot of pro (i.e. banks) use to send price to.

Judas - a false move in price used to lure retail in to trading in the wrong direction.

Kill Zone - Specific time periods where the banks move price the most and the best trades set up.  London Open, New York Open, and London Close are the best periods for banks sponsored price moves.

Kiwi - NZD/USD pair.  New Zealand Dollar/United States Dollar exchange rate.

LO - London Open.  7AM - 9AM London time.  (1-3AM my time).


NYO - New York Open.  7AM - 9AM New York time (6-8AM my time).  You can wait until 7:30 to avoid news driven spikes or drops.  I also sometime extend this kill zone a little past 9AM.

OTE - Optimal Trade Entry.  The sweet spot between the 62 and 79 fib levels (70.5).  An almost uncanny price point where the banks retrace price to before continuing a trend.

Reflection - The reflection pattern is an entry pattern that looks like an OTE in a mirror.  Price will run up or down to resistance or support and stop just short.  Will retrace and by dropping the OTE level on where price stopped you can project where price will reverse by using the 100% retracement level.

SMT - Smart Money Tool.  Overlaying price of two highly correlated pairs and looking for failure swings.  For example: plot the cable and fiber.  If both are making higher highs and get near resistance and one of the pairs fails to make a higher high that is a good indication that banks are starting to distribute and you can short.  This is the number one condition I look for before entering a trade and is a must have before I will enter.

TP - Take profit.  Price levels where I either scale a portion of my trade off or close the position.

Type I Divergence - reversal divergence where price makes a higher high or lower low but the stochastic indicator (or whatever sentiment indicator you want to use, I use 10,3,3 stochastic) fails to go high or lower.

Type II Divergence - trend following.  In a bearish market look at the highs.  If a lower high is made and the stochastic makes a higher high.  Vice versa for longs.

USDx Divergence - a break in correlation between the USDx and major pair.  For example:  USDx making higher highs but fiber not making lower lows shows bullishness on the fiber.  Along with SMT divergence another must have before I will enter a trade.