Glossary

137 terms

200-day line

The average of the closing prices of the last 200 trading days. If the price is above it, the longer-term trend counts as up. The current rule does not require this – the page shows the bigger trend for information only via the weekly chart. Example: Close 105, 200-day line 98 → price above the line. Lesson 200-day line

78.6% level

The level lies 78.6% of the rise below the high, measured from the high, and forms the bottom of the buy zone; the setup is only over with a close below the start of wave 1. Example: Low 100, high 120 → 78.6% level at 104.28, setup over with a close below 100. Lesson stop and risk

Alternation

According to the Elliott guideline, waves 2 and 4 of the same degree do not show the same pattern: if wave 2 is a sharp zigzag, wave 4 is more likely a flat, triangle or combination. Our rule only uses this as a plausibility point. Example: Wave 2 zigzag, 70% deep → wave 4 more likely shallow and sideways. Lesson corrective patterns

ATR (Average True Range)

The average range per trading day over the last 14 days. It makes distances comparable, whether a stock costs 10 or 1,000. Example: ATR 2.50 at a price of 100: 0.4 ATR is 1.00, i.e. 1%. Lesson ATR

Avg. trade

The average result per closed trade in percent, after costs (0.10% fee plus slippage per entry and exit). Above zero means: on average the gains outweighed the losses. Example: +4%, −2%, +1% → avg. trade +1%. Lesson backtesting

Backtest

The rule is applied to past prices: what would have happened if you had followed it back then? Past results are no guarantee of future results. Example: Rule applied to the prices of the S&P 500 symbols since 10/2021 → share of winners, avg. trade, portfolio. Lesson backtesting

Bandwidth (Bollinger)

The distance between the Bollinger Bands in percent of the middle: (upper − lower) ÷ middle × 100. It makes the volatility of symbols with different prices comparable. Example: Upper 104, lower 96, middle 100 → bandwidth 8%. Lesson bandwidth and squeeze

Blockchain

A shared ledger of blocks that many computers keep at the same time. Each block carries the fingerprint of the one before, which is why a later change stands out. Example: Amount in block 2 changed → block 2 no longer fits; recalculated, the copy differs from all others from block 2 on. Lesson cryptocurrency and blockchain

Bollinger Bands

Two lines around a moving average (usually SMA 20): middle plus and minus two standard deviations. With strong swings the bands get wider, when it is calm narrower. Example: Middle 50, standard deviation 1.5 → bands at 47 and 53. Lesson Bollinger Bands

Breakeven

After the first target, the stop of the rest usually moves straight up to the wave 1 high. If the Target 1 candle still closes below it, the stop first sits at the entry price – after costs that is slightly negative. Example: Entry 106, wave 1 high at 120, Target 1 candle closes at 125 → stop of the rest right at 120. Lesson trade management

Breakout

The price closes above resistance or below support. If it then quickly runs back into the old zone, it is called a false breakout. Example: Resistance 119.40–120.30, close at 122 → breakout to the upside. Lesson support and resistance

Buy and hold

The honest comparison: simply holding the same symbols over the same period, without entries and exits. A rule has to measure up to this simple approach. Example: Rule +20%, buy and hold +60% → holding would have brought more, with larger declines along the way. Lesson backtesting

Candle

Shows the open, high, low and close of a period, for example a trading day. Example: Open 100, high 104, low 99, close 103 → green daily candle. Lesson reading candles

Candle body

The wide part of the candle between open and close. Green if the close is above the open, red if it is below. Example: Open 100, close 96 → red body, 4 in size. Lesson reading candles

Closing-price principle

A level only counts as broken when a candle closes beyond it; a wick is not enough. Our rule uses this for the invalidation level (start of wave 1) and its trigger; zone touch, high above wave 1 and the stop already count with the wick. Example: Level 100, low 98, close 102 → not broken. Lesson wave degrees

Combination (W-X-Y)

A correction of several three-part patterns linked by wave X: W-X-Y or W-X-Y-X-Z. Wave X retraces at most 88.7% of W. Example: W falls 23, X rises 14.2 (61.8%), Y falls 23 again (100% of W). Lesson corrective patterns

Confirmation bias

The tendency to mainly look for and believe information that supports your own opinion. Warning signs are easily overlooked. Example: After the entry, only reading posts that predict further rises. Lesson FOMO and confirmation bias

Costs

Fees and slippage on entry and exit. Our tests use 0.10% fee plus slippage per side; the Academy’s simulators simplify to 0.3% per trade. Example: Entry and exit 0.15% each → about 0.3% less result per trade. Lesson backtesting

Cryptocurrencies

For cryptocurrencies our Elliott rule calculates on 4-hour candles, i.e. six candles per day around the clock; entries only between 7 am and 11 pm (German time). Cryptocurrencies swing much more than stocks. Example: BTC in the buy zone on 4-hour candles → a zone to watch, stop and targets as for stocks. Lesson backtesting

Cryptocurrency

Digital money whose transfers are recorded in a blockchain instead of at a bank. Behind many coins there is no company with revenue; the price comes from supply and demand. Example: Bitcoin was the first cryptocurrency and started in 2009. Lesson cryptocurrency and blockchain

Cyclical company

A company whose profit swings strongly with the economy, for example in chemicals, steel or car making. At the profit peak its P/E often looks low, in the trough high. Example: Profit €8 at a price of €72 → P/E 9; profit €1 at a price of €30 → P/E 30. Lesson putting the P/E in context

Debt-to-equity ratio

Financial debt (loans, bonds) divided by equity. A high value amplifies good and bad years alike. The key figures bar in the chart only uses long-term financial debt. Example: Financial debt €300m, equity €500m → 0.6. Lesson debt, dividends and growth

Diagonal (leading, ending)

A five-part pattern in the shape of a wedge, in which wave 4 has to run into the territory of wave 1. Leading diagonals appear in wave 1, ending ones in wave 5 or C. Example: Wave 1 up to 130, wave 4 falls to 127 → overlap, a diagonal is possible. Lesson diagonals

Divergence

Price and indicator move apart, such as a higher price high with a lower RSI high (bearish). Only visible once the second high is confirmed, and only valid after a confirmation in price. Example: Highs 120 → 125, RSI 76 → 68 → bearish divergence; only a close below the swing low confirms it. Lesson divergence

Dividend and dividend yield

The dividend is the part of the profit that a company pays out to its shareholders. The dividend yield puts it in relation to the price. Example: Dividend €1, price €40 → dividend yield 2.5%. Lesson debt, dividends and growth

Drawdown

The decline of the portfolio value from its previous peak to the low point. Example: Portfolio fell from 12,000 to 9,000 → drawdown 25%. Lesson position size

Earnings per share

A year’s profit divided by the number of shares. It is the basis for the P/E ratio. Example: Profit €60m, 20m shares → €3.00 per share. Lesson revenue, profit and margin

Earnings yield

The inverse of the P/E: earnings per share divided by the price, in percent. Usually only part of it is paid out. Example: P/E 15 → earnings yield 1 ÷ 15 = 6.67%. Lesson P/E and P/S

Elliott buy zone

Buy zone based on Elliott wave rules: the area the price has to pull back into after a rise (wave 1) before the rule checks an entry. It lies between 61.8% and 78.6% of the rise, measured from the high. Not advice from us, but a help for your own review. Example: Rise from 100 to 120 → buy zone 104.28–107.64. Lesson buy zone and Fibonacci

EMA (exponential moving average)

A moving average that weights new prices more: EMA today = close × k + EMA yesterday × (1 − k), with k = 2 ÷ (n + 1). It reacts earlier than the SMA, but lags as well. Example: n = 3, so k = 0.5: EMA yesterday 11, close 15 → EMA 13. Lesson SMA and EMA

Entry

The price at which a position is opened. With our rule it is the open of the trading day after the signal. Example: Signal on Monday evening → entry at the open on Tuesday. Lesson trade management

Exemption limit (Germany)

Private sale gains stay tax-free if together they are below €1,000 in a year. From €1,000 the whole amount is taxable, not just the part above it. German tax rules as of Oct 9, 2026, not tax advice. Example: €999 → tax-free; €1,000 → €1,000 taxable. Lesson taxes on crypto gains

Fear & Greed

A mood gauge from 0 (extreme fear) to 100 (extreme greed). Stocks: our average of five parts – share of stocks above the 50- and 200-day lines, stocks near the 52-week high versus near the low, the S&P 500’s distance from its 200-day line and its volatility. Crypto: alternative.me. Example: Many stocks above their moving averages, more near the high than the low, a calm market → e.g. a value around 70 (greed).

Fibonacci expansion (over three points)

The length of one wave (point 1 to point 2), placed at a third point. This is how wave 3 is measured, for example: length of wave 1, placed at the end of wave 2. Example: Wave 1 from 100 to 150, wave 2 ends at 114 → 161.8% = 114 + 80.90 = 194.90. Lesson Fibonacci targets per wave

Fibonacci extension

Price levels beyond the end of a move. Our rule measures 161.8% and 685.4% of the length of wave 1 from the end of wave 2. Example: Low 100, high 120, wave 2 ends at 105 → 161.8% = 137.36. Lesson Fibonacci to try out

Fibonacci levels of the Elliott rule

Fibonacci levels split a price move into fixed ratios. The rule uses 61.8% and 78.6% for the Elliott buy zone and 161.8% and 685.4% of the length of wave 1 for the targets, measured from the end of wave 2. Example: Low 100, high 120 → 61.8% = 107.64, 78.6% = 104.28; wave 2 ends at 105 → 161.8% = 137.36, 685.4% = 242.08. Lesson buy zone and Fibonacci

Fibonacci retracement

Pullback levels within a move, for example 38.2%, 50% and 61.8%, measured from the high. Example: Low 100, high 120 → 38.2% = 112.36. Lesson Fibonacci to try out

Fingerprint (hash)

A short checksum calculated from data; if one character changes, a completely different fingerprint results. Real blockchains use methods where the data cannot be worked out from the fingerprint. The exercise uses a simple model checksum. Example: Model chain: block 2 has the fingerprint 6b829d22; with 1.6 instead of 1.5 in the first entry it becomes fe387aff. Lesson cryptocurrency and blockchain

Flat (correction 3-3-5)

A more sideways correction: A and B consist of three parts, C of five. B retraces at least 88.7% of A. If B rises above the start of A, it is an expanded flat; if C then ends before the end of A, it is a running flat. Example: A falls 20, B rises 27.6 (138.2%) above the start of A → expanded. Lesson corrective patterns

Flat-rate withholding tax (Germany)

German tax on capital income such as gains from stocks, dividends and interest: 25% plus a 5.5% solidarity surcharge on it, and church tax if applicable. German tax rules as of Oct 9, 2026, not tax advice. Example: €1,000 taxable → €250 tax plus €13.75 solidarity surcharge. Lesson taxes on stock gains

FOMO

Short for “fear of missing out”: the fear of missing a rise. It often leads to late entries without a plan. Example: Symbol +35% in three days → entry without a stop, “before it is too late”. Lesson FOMO and confirmation bias

Fundamentals traffic lights in the screener

Three lights from the fundamental analysis: growth (revenue per year), net margin and debt, each compared with the sector. Green = at least the sector median, yellow = below, red = weak, gray = no data. Only stocks with SEC data. Example: Revenue +12% per year, sector +8% → growth green. Lesson revenue, profit and margin

Golden cross and death cross

Golden cross: a fast moving average (often SMA 50) rises above a slow one (often SMA 200); death cross: it falls below. Both come late and often cross back and forth in sideways phases. Example: SMA 50 rises from 98 to 101, SMA 200 is at 100 → golden cross. Lesson 50/200 lines and crossovers

Growth per year (CAGR)

The average annual growth rate over several years, as if the value had grown equally strongly every year. Individual good or bad years even out in it. Example: Revenue €100m → €161m in 5 years → (161 ÷ 100) to the power of 1/5 − 1 = 10% per year. Lesson debt, dividends and growth

Guidelines (strength of the count)

Guidelines are typical features of a count, such as usual Fibonacci lengths or a change in the form of correction. Strong means: at least three quarters met, medium: at least half, otherwise weak. Even a strong count can flip. Example: 3 of 3 guidelines → strong; 2 of 4 → medium; 1 of 3 → weak. Lesson wave degrees

Harmony of the waves

Waves of the same degree look similar in duration and length. Our rule requires wave 2 to last between 0.25 and 4 times as long as wave 1 and to be between 0.2 and 5 times as long in price. Example: Wave 1 lasts 14 candles, wave 2 so far 16 → factor 1.14, fits. Lesson wave degrees

Higher highs and higher lows

Every new high is above the previous one, and so is every new low – that is what an uptrend looks like. Lower highs and lower lows form a downtrend. Example: Highs 110, 116, 121 and lows 102, 107, 111 → uptrend. Lesson trend and market structure

Impulse (Elliott)

A move of five waves in the direction of the trend: waves 1, 3 and 5 drive, waves 2 and 4 correct. Wave 3 is never the shortest, wave 4 stays outside the territory of wave 1. Example: Up 100 → 150 → 114 → 200 → 170 → 220: five waves. Lesson Elliott waves

Insider transactions

Executives, directors and major shareholders (over 10%) of US companies report their own transactions in their company’s stock to the SEC within two business days (Form 4). Purchases in the market count as more meaningful than sales (often taxes, estate planning). Example: Three executives acquire stock worth a total of 2 million USD within two weeks → “purchases by several insiders”.

Invalidation level

The price at which a count can no longer be right. For wave 2 it is the start of wave 1: a daily close below it ends the setup. Example: Start of wave 1 at 100: wick down to 99.50 and close 101 → still valid; close 99 → invalid. Lesson wave degrees

Key fractal

The largest correction since the data began. Deep and short points more to wave 2, shallow or long more to wave 4. Our rule measures from the start of the price series (stocks from 2011, not from the IPO) and assumes wave 2 at over 50% depth and at most 52 weeks. Example: Largest correction 62% in 30 weeks → hypothesis wave 2. Lesson wave degrees

Left the zone

The price touched the buy zone and is closing above it again. The screener shows how many trading days ago the last day in the zone was (daily low at most at the top). The setup stays valid until a daily close below the start of wave 1. Example: Daily low in the zone 2 trading days ago, closes above since then → “2 trading days ago”. Lesson buy zone and Fibonacci

Limit order

A buy limit sets the highest fill price, a sell limit the lowest. It is only filled if the market reaches the limit. Example: Buy limit 98, open 100, low of the day 97 → filled at 98. Lesson order types

Loss aversion

Losses feel stronger than gains of the same size. This tempts you to hold losers too long and close winners too early. Example: Stop moved from €48 to €44 “so that it is not hit” → with an entry at €50, 1 R becomes 3 R. Lesson loss aversion

Loss pot (Germany)

Losses from selling stocks are only offset against gains from selling stocks. What remains is carried forward to the next year. German tax rules as of Oct 9, 2026, not tax advice. Example: Stock loss €2,000, dividends €2,000 → no offsetting, the loss is carried forward. Lesson taxes on stock gains

MACD

Moving Average Convergence Divergence: the EMA 12 minus the EMA 26 of the closes. Above zero, the fast EMA is above the slow one. Example: EMA 12 = 105.40, EMA 26 = 103.90 → MACD line 1.50. Lesson MACD

MACD histogram

The distance between the MACD line and the signal line as bars. Positive means: the MACD line is above its signal line. Example: MACD line 1.50 − signal line 1.20 → histogram 0.30. Lesson MACD

Main and alternative scenario

Often several counts fit: the main scenario ranks first, the alternative behind it – each with its own invalidation level. Per timeframe, the detection picks the count with the largest share of guidelines met, in a tie the simpler or clearer one. This is not a probability. Example: Main: waves 1–2 complete, wave 3 expected, 2 of 3 guidelines; alternative: five waves, wave 5 possibly truncated, 3 of 6. Lesson wave degrees

Market breadth

The share of our stocks (240 symbols) that rose today. Above 50% means more symbols rose than fell. Example: 144 of 240 symbols up → market breadth 60%.

Market breadth

Shows how many stocks carry a market move – the key number is the share above the 200-day line, plus the share above the 50-day line, advancers versus decliners and new 52-week highs versus lows. If the index rises while the share falls, only a few large stocks are pulling the market. Example: 170 of 240 stocks above their 200-day line → 71%, broad participation. Only 60 of 240 → 25%, very narrow.

Market capitalization

The stock market value of a company: share price times the number of shares. On the chart page we use the diluted share count averaged over the last fiscal year. Example: Price €50, 200m shares → €10bn. Lesson P/E and P/S

Market order

An order that is filled right away at the next available price. It is almost always filled, but the exact price is not fixed in advance. Example: Last close 100, next open 100.20 → filled at 100.20. Lesson order types

MiCA

An EU regulation on crypto assets that governs providers such as crypto exchanges, custodians and stablecoin issuers – for example keeping customer assets separate. MiCA does not protect against price losses. Example: Exchange licensed under MiCA → customer assets kept separate from company assets. Lesson cryptocurrency and blockchain

Near the Elliott buy zone

The price is still above the buy zone based on Elliott wave rules, but at most 1 ATR from its top. This is an observation, not a signal – whether the price reaches the zone is open. Example: Top 110, close 111, ATR 2.50 → 0.4 ATR away. Lesson buy zone and Fibonacci

Network fee

A fee for a transfer on the blockchain, for example when withdrawing to your own wallet. Its size usually depends on how busy the network is, not on the amount. Example: €5 fee on a €50 withdrawal → 10%, on €500 → 1%. Lesson risks and costs with crypto

Out-of-sample

Data that was not used while developing a rule and only serves for checking. Example: Rule tuned up to 09/2021, only checked from 10/2021. Lesson backtesting

Overbought and oversold

Common names for an RSI above 70 or below 30. This describes the most recent move, not the end of the trend: in strong trends the RSI often stays above 70 for a long time. Example: RSI 78 after ten days of gains → overbought; the trend can still continue. Lesson reading the RSI

Overfitting

A rule is fitted so closely to old data that it fails on new data. Example: 500 settings tested, the best one chosen → clearly worse on new prices. Lesson backtesting

Overtrading

Trading more than your own rules allow – for example out of boredom or anger. Every extra trade costs fees and slippage. Example: 100 instead of 20 trades at 0.3% costs each → 30% instead of 6% of the stake per trade. Lesson overtrading, rules and journal

P/E (price-to-earnings ratio)

Share price divided by earnings per share. With a loss it gives no meaningful value. Example: Price €45, earnings per share €3 → P/E 15. Lesson P/E and P/S

P/S (price-to-sales ratio)

Share price divided by revenue per share. It can be calculated even with a loss, but says nothing about profit. Example: Price €45, revenue per share €25 → P/S 1.8. Lesson P/E and P/S

Partial exit

Part of the position is closed at the first target, the rest keeps running. Our rule plans a quarter at TP1. Example: Position of 8 shares, 2 are closed at TP1, 6 keep running. Lesson trade management

Payout ratio

The share of profit that a company pays out as a dividend. Above 100% it pays out more than it earns. Example: Dividend €1, earnings per share €2.50 → payout ratio 40%. Lesson debt, dividends and growth

Portfolio gain

How a model portfolio that took part in all of the rule’s trades after costs would have developed in the backtest. It is a look back, not a statement about the future. Example: Portfolio +35% → 10,000 would have become 13,500 in the test. Lesson backtesting

Portfolio with a fixed number of stocks

Model portfolio in the backtest with at most 20 stocks at the same time: each position gets a twentieth of the portfolio value; if all slots are taken, a new entry is skipped. After the partial exit at Target 1 the proceeds go to cash, the rest does not count. Shown is the median of 100 orders. Example: Portfolio 100,000, 20 stocks → 5,000 per position; Target 1 reached, a quarter closed → the proceeds are ready for the next entry. Lesson backtesting

Position size

The number of shares in a position – chosen so that a stop only costs a fixed part of the capital. Example: Risk 100, distance to the stop 4 per share → 25 shares. Lesson position size

Precious metal

Gold, silver, platinum and palladium are called precious metals because they hardly rust or tarnish. They trade almost around the clock on weekdays, usually in US dollars per troy ounce (31.1 grams). Example: Gold in the buy zone on 4-hour candles → a zone to watch, stop and targets as for stocks.

Price gap

The price opens clearly above or below the previous day’s close. A stop is then filled at a worse price. Example: Stop 95, open 92 → filled at 92, not at 95. Lesson trade management

Price in the buy zone (zone touched)

Since the wave 1 high, the daily low has reached or passed through the buy zone. With our rule that alone is not a trigger yet; the trigger is a candle close above the last swing high. Whether and when you trade is your decision. Example: Buy zone 104.28–107.64, daily low 107.00 (or lower) → touched. Lesson buy zone and Fibonacci

Private key and seed phrase

The secret key that lets you move cryptos. The seed phrase of 12 or 24 words restores it – whoever knows it has access. Example: Seed phrase lost and device broken → the coins can no longer be reached. Lesson custody

Private sale transaction (Germany)

For example selling cryptos within one year of buying them. The gain is taxed at your personal income tax rate; after more than one year it is tax-free. German tax rules as of Oct 9, 2026, not tax advice. Example: Bought in March, sold at a gain in October of the same year → taxable. Lesson taxes on crypto gains

Profit factor

The sum of all gains divided by the sum of all losses. Above 1 means: the gains were larger. Example: Gains 3,000, losses 2,000 → profit factor 1.5. Lesson backtesting

Profit margin

The share of revenue that is left as profit after all costs. Example: Profit €60m on €500m revenue → margin 12%. Lesson revenue, profit and margin

Profitable years

How many of the last fiscal years ended with a profit rather than a loss on the bottom line. The figure shows how consistently a company earns. Example: Profit in 9 of 10 years → one loss year. Lesson revenue, profit and margin

R (R multiple)

Result in units of the initial risk. −1 R means: exactly the planned loss occurred. Example: Risk 5 per share, gain 10 per share → +2 R. Lesson trade management

R/R (reward-to-risk ratio)

The possible gain up to the target divided by the possible loss down to the stop. Example: Entry 100, stop 95, target 110 → R/R 10 ÷ 5 = 2. Lesson trade management

Resistance

A price area where rises have stopped several times. Here too a zone helps more than an exact line. Example: Highs at 119.40, 120.30 and 119.80 → resistance zone of about 119.40–120.30. Lesson support and resistance

Revenue

Everything a company takes in over a period with its products and services – before costs are deducted. Example: Revenue €500m, costs €440m → profit €60m. Lesson revenue, profit and margin

Reversal candle (confirmation on the daily candle, 1D)

A daily candle that closes above the previous day’s high after the price touched the buy zone. The earlier rule (until Oct 9, 2026) entered after it; with the current rule the trigger is a close above the last swing high. Example: High yesterday 109.20, close today 109.80 → reversal confirmed. Lesson buy zone and Fibonacci

Reward/risk

How large the possible gain up to the target is compared with the possible loss down to the stop, without costs. Measured from the top of the buy zone (61.8%) it looks larger than from the actual entry price, which is usually higher. Not a probability. Example: Top 107.64: gain to Target 1 (137.36) 29.72, loss to stop (99.00) 8.64 → about 3.4 times as large; entry at 112.00: 25.36 to 13.00 → about 2.0 times. Lesson trade management

Risk per trade

The share of capital that is lost if the stop is hit, for example 1%. Example: Capital 10,000, risk 1% → at most 100 loss down to the stop (without a price gap). Lesson position size

Role reversal

After a breakout, an old resistance zone can act as support – or the other way round. This is an observation, not a fixed rule. Example: Resistance around 120 broken, pullback to 120, then rising again → role reversal. Lesson support and resistance

RSI (Relative Strength Index)

Compares smoothed gains and losses, mainly of the last roughly 14 candles, and converts the ratio to 0 to 100. Above 70 counts as overbought, below 30 as oversold. Example: Avg. gain 0.60, avg. loss 0.20 → RS 3 → RSI 75. Lesson reading the RSI

Saver’s allowance (Germany)

Up to this amount, capital income stays tax-free each year: €1,000 for single people, €2,000 for married couples filing jointly. German tax rules as of Oct 9, 2026, not tax advice. Example: Capital income €1,800 → €800 taxable. Lesson taxes on stock gains

SEC filing (10-K, 10-Q)

Required reports of listed companies to the US Securities and Exchange Commission (SEC): 10-K is the annual report, 10-Q the quarterly report, 20-F the annual report of foreign companies. We show the figures of the first filing. Example: 10-K for the fiscal year ending Sep 27, 2025, filed on Oct 31, 2025. Lesson revenue, profit and margin

Sector median

The middle value of all companies in a sector: half are above it, half below. Unlike the average, single outliers hardly distort it. Example: Margins 4%, 8%, 10%, 12%, 60% → median 10%, average 18.8%. Lesson putting the P/E in context

Share of winners

The share of closed trades that ended with a gain. On its own it says nothing about how large the gains and losses were. Example: 60 of 100 trades in profit → share of winners 60%. Lesson backtesting

Sideways phase

The price swings between an upper and a lower limit, without clearly higher or lower highs and lows. There is no trend then. Example: Highs around 110, lows around 100 over several weeks → sideways. Lesson trend and market structure

Signal line (MACD)

An EMA 9 of the MACD line. When the MACD line crosses it, the histogram changes sign. Example: MACD line 1.50, signal line 1.20 → the MACD line is above it. Lesson MACD

Slippage

The difference between the planned and the actual fill price. For stocks our tests use 0.05% per side (entry and exit). Example: Planned 100.00, filled 100.05 → 0.05% slippage. Lesson backtesting

SMA (simple moving average)

The average of the last n closes; each day the oldest drops out and the newest comes in. It smooths prices and lags behind them. Example: Closes 10, 12, 11 → SMA 3 = 33 ÷ 3 = 11. Lesson SMA and EMA

Spot price

The price for immediate delivery – unlike a futures contract, which is delivered later and often has a different price. For precious metals we show the spot price against the US dollar. Example: XAU/USD = price of one troy ounce of gold in US dollars for immediate delivery.

Spread

The gap between the ask and the bid price. If you get in and out again right away, you lose the whole spread. Example: Ask 100.00, bid 99.90 → spread 0.10. Lesson fee, spread and slippage

Squeeze

The bandwidth of the Bollinger Bands is as small as it has not been for a long time, say the lowest of the last 60 candles. Calm phases often end with a bigger move; the squeeze does not show the direction. Example: Bandwidth 1.1%, lowest value of the last 60 candles → squeeze. Lesson bandwidth and squeeze

Stablecoin

A crypto whose price is tied to a currency such as the US dollar, usually backed by the issuer’s holdings. The peg only holds as long as the backing is sufficient and investors trust it. Example: Goal: 1 stablecoin = 1 US dollar; if trust fades, the price can slip below that. Lesson cryptocurrency and blockchain

Standard deviation

A measure of how far values typically deviate from their average: the square root of the average of the squared distances. Bollinger Bands divide by the count n. Example: 2, 4, 4, 4, 5, 5, 7, 9: average 5, squares together 32, 32 ÷ 8 = 4, square root 2. Lesson Bollinger Bands

Stock split

A company divides each share into several new ones; the value of the company stays the same. We convert per-share values from before the split to today’s scale. Example: Split 4 : 1, earnings per share before $11.89 → comparable today $2.97. Lesson revenue, profit and margin

Stop (stop-loss)

The price at which a position is closed to limit the loss. Here it lies below the start of wave 1, with a buffer of half an ATR. Example: Start of wave 1 at 100, ATR 2 → stop at 99. Lesson stop and risk

Stop order

Only becomes active when the price reaches a level, and is then filled like a market order. With a price gap, that can be well past the level. Example: Sell stop 97, open 94 → filled at about 94. Lesson order types

Stop, provisional (stop*)

As long as there is no signal yet, the stop depends on today’s ATR and therefore shifts slightly. It is only fixed with the signal candle. Example: Today 99.00 – after a few calmer days perhaps 99.10. Lesson stop and risk

Stop-limit order

Becomes active at the stop level, but as a limit order. The price is capped; if the market jumps past the limit, the order stays unfilled. Example: Buy stop 102 with limit 102.50, open 104, low 103.50 → not filled. Lesson order types

Support

A price area where declines have stopped several times. Better thought of as a zone than as an exact line. Example: Lows at 99.60, 100.20 and 99.90 → support zone of about 99.60–100.20. Lesson support and resistance

Survivorship bias

Tests use today’s members of the S&P 500. Companies that dropped out of the index earlier are missing – this can make backtests look too good. Example: A stock that left the index in 2022 does not appear in the test at all. Lesson backtesting

Swing

A clear move from a low to a high or the other way round. On its 4-hour candles our rule only recognizes a high once the price has then pulled back by at least 3 ATR. Example: High at 120, ATR 2 → confirmed as soon as a low at 114 or below follows. Lesson buy zone and Fibonacci

Swing high (the rule’s trigger)

The last minor high after the price touched the buy zone – confirmed once the price then pulls back by 1 ATR. A daily close above it is the rule’s trigger; its entry would be at the next open. Example: Zone touched, recovery to 108.50, pullback to 106.80 (ATR 1.50) → swing high 108.50; close 108.90 → the rule’s trigger is met. Lesson buy zone and Fibonacci

Take profit (TP1, TP2)

Price targets set in advance at which a position is closed fully or partly to take a gain. Example: Entry 100, TP1 110: if the price reaches 110, the position is (partly) closed. Lesson trade management

Target 1 and Target 2 (TP1, TP2)

The targets (take profit, TP) are at 161.8% (TP1) and 685.4% (TP2) of the length of wave 1, measured from the end of wave 2. At TP1 the rule plans a partial exit (a quarter); the rest runs to TP2, to its trailing stop or to the time exit. Example: Low 100, high 120, wave 2 ends at 105 → TP1 137.36, TP2 242.08. Lesson trade management

The rule’s criteria

Yes: no price rose above the wave 1 high, no daily close was below its start, duration and length of wave 2 fit wave 1. Not included: whether the price reaches the zone and closes above a swing high. The duration counts up to today – if wave 2 lasts too long, “yes” turns into “no”. Example: Wave 1 lasted 20 trading days, wave 2 has been running for 30 → “yes”; if it runs longer than 80 → “no – wave 2 lasts too long relative to wave 1”. Lesson buy zone and Fibonacci

Time exit

Exit after a fixed holding period, regardless of price. Our rule calculates on 4-hour candles and closes stocks after 1,512 candles (two per trading day) at the next open, i.e. after about 3 years; crypto (six candles a day, around the clock) after 4,536 candles, about 2 years. Example: Entry in January 2023 → after 1,512 stock candles (about 3 years) exit at the next open. Lesson trade management

Tradable by the rule

The rule’s criteria for this zone are met; the trigger would be a candle close above the last swing high: the rule holds no position in the symbol, duration and length of wave 2 fit, close below the wave 1 high. Blocked rows give the reason. Example: Wave 2 is still too short relative to wave 1 → “blocked”, no entry by the rule from this zone. Lesson buy zone and Fibonacci

Trade plan

The ladder shows the rule’s levels: the targets in green at the top, the buy zone in the middle, the stop in red at the bottom. The percentages are measured from the top of the buy zone (61.8%). Example: Buy zone 104.28–107.64 (top 107.64), Target 1 137.36 → +27.6%, stop 99.00 → −8.0%. Lesson trade management

Trading hours

The times when an exchange is open for trading. Stock exchanges have fixed hours on weekdays, crypto exchanges trade around the clock, including weekends. Example: Model exchange 9:00–17:30, Monday to Friday → 42.5 of 168 hours per week. Lesson crypto exchanges and trading hours

Trading journal

A record of all your own trades with reason, entry, stop, exit and result. It makes rule breaks and patterns visible. Example: After 30 entries: the biggest losses came from trades without a signal. Lesson overtrading, rules and journal

Trailing stop

A stop that follows rising prices and never goes back. After TP1 our rule trails the stop of the rest once: to the wave 1 high, as soon as a daily close is above it. Example: Wave 1 high at 120, close 123 → stop of the rest at 120. Lesson trade management

Trend

The basic direction of prices over a period: rising, falling or sideways. Example: Higher highs and higher lows over months → uptrend. Lesson trend and market structure

Triangle (correction A–E)

Five three-part waves A to E. In a contracting triangle each is at least 23.6% and usually at most 88.7% of the one before, in the rare expanding one 100–261.8% each. It appears in wave 4, B or X, rarely in Y or Z, never in wave 2. Example: A 15, B 11.5, C 8.5, D 6, E 4 – each wave smaller than the one before. Lesson corrective patterns

User sentiment

Share of bullish, neutral and bearish views in the posts of the last 30 days. Each user only counts with their latest view; this is an opinion poll, not a signal of the rule. Example: 3 users bullish, 1 neutral → 75% bullish, 25% neutral.

Volatility

How much a price swings, often measured as the typical daily move in percent. More volatility usually means deeper declines along the way. Example: Model stock 1.2% per day, model crypto 3.5% per day → largest decline 15.1% versus 38.5%. Lesson volatility

Walk-forward

A test that learns in one time window and tests in the following window – moving on step by step. Example: Learn 2015–2019, test 2020; learn 2016–2020, test 2021 … Lesson backtesting

Wallet

An app or device that manages the keys to your cryptos. In your own wallet you hold the key yourself; on an exchange, the exchange keeps it. Example: Hardware wallet, secured with a seed phrase of 24 words. Lesson custody

Wave degree

The size order of a wave. Each wave consists of smaller waves of a lower degree; that is why the analysis starts with the big picture and works its way down. Example: Wave 3 in the weekly chart consists of five smaller waves in the daily chart. Lesson wave degrees

Waves 1, 2 and 3

In Elliott’s idea an uptrend moves in waves: wave 1 is a strong rise, wave 2 a pullback, wave 3 the next rise. The rule tries to enter at the end of wave 2 – nobody knows in advance whether wave 3 comes. Example: Wave 1: 100 → 120, wave 2: back to 105, then wave 3 would be next. Lesson Elliott waves

Weekly chart (weekly context)

The rule also counts the waves on weekly candles. Verdict: supportive if the main scenario expects rising prices and the alternative does too – or is invalidated before the stop is reached (level at or above the stop; the reading is still being checked). This is for information only. Example: Main scenario wave 3 up, alternative also up → the weekly chart is supportive. Lesson Elliott waves

Wick (shadow)

The thin lines above and below the body reach up to the high and down to the low of the period. Example: Open 100, close 103, high 106 → upper wick 3. Lesson reading candles

Wilder smoothing

A moving average that J. Welles Wilder used for the RSI and ATR: new value = (old value × (n − 1) + today’s value) ÷ n. This corresponds to an EMA with k = 1 ÷ n. Example: n = 14: (0.28 × 13 + 0.70) ÷ 14 = 0.31. Lesson calculating the RSI

Zigzag (correction 5-3-5)

A sharp correction of three waves: A consists of five parts, B of three, C of five again. B usually retraces 38.2–78.6% of A, C is often as long as A. Example: A falls 24, B rises 14.8 (61.8%), C falls 24 again (100% of A). Lesson corrective patterns

Zone history

The zone history shows since when a buy zone has applied, when it was adjusted and when the price touched or left it. Recording began on Oct 12, 2026, only runs forward and fills nothing in – older zones are marked “known at start of recording” or “already existing when added”. Example: New buy zone on Oct 14, no adjustment since → “zone valid since Oct 14, 2026 · unchanged since”. Lesson buy zone and Fibonacci