A
Absorption
The ability of a price level to sustain significant volume without moving further. High absorption indicates trapped traders or structural support/resistance.
Aggressive Buying
Market participants buying at the ask price — pulling liquidity and pushing price higher. Visible in volume profile as buy-side aggression and positive delta accumulation.
Aggressive Selling
Market participants selling at the bid price — pushing price down and increasing volume at lower levels. Signals distribution and potential reversal zones.
Ask Price
The price at which sellers are willing to sell. Buying at the ask is considered aggressive; selling below the ask is passive.
B
B-Shape Profile
A volume profile shape where the market develops two distinct value areas (peaks) with a valley between them; indicates two separate supply/demand cycles in the session.
Bid Price
The price at which buyers are willing to buy. Selling at the bid is considered aggressive; buying above the bid is passive.
Bid/Ask Imbalance
Significant difference between buy-side and sell-side volume at a price level. Extreme imbalances often precede quick directional moves.
Bracket Order
Three-part order: entry + profit target + stop loss. Used for precise risk management in futures trading.
Breakout
Price moving above resistance or below support with volume confirmation. True breakouts have follow-through volume; fakes trap traders quickly.
C
Chartbook (Sierra Chart)
A collection or project file in Sierra Chart that groups multiple charts, studies, and analysis tools for a specific trading session or instrument.
Climactic Volume
Extreme spike in volume during a price extension; can signal either capitulation (true reversal) or institutional absorption, requiring delta confirmation.
Color Bar Study (Sierra Chart)
A type of Sierra Chart study that colors bars based on custom conditions (delta values, volume ratios, price action patterns) to highlight setups visually.
Consolidation
Price action trading in a narrow range without clear directional intent. Often precedes a breakout or breakdown.
Contract Specification
Official parameters of a futures contract: tick size, point value, contract multiplier, session hours, margin requirements.
Cumulative Delta
Running total of buy volume minus sell volume across a session or timeframe. Rising cumulative delta suggests accumulation; falling suggests distribution.
D
Day Trading Buying Power
Buying power available for day traders — typically 4x account equity in US stocks, but varies by broker and commodity rules.
Delta
Difference between aggressive buy volume and aggressive sell volume at a price level or across a bar. Positive delta = more buying pressure; negative delta = more selling pressure.
Delta Trap
A reversal setup where cumulative delta reaches an extreme and reverses sharply before price does, signaling participation failure and imminent reversal.
Developing Value
Price in the early stages of establishing a new value area, with volume profile still forming. Traders watch for rejection or acceptance.
Distribution
Phase where smart money sells accumulated positions into demand. Characterized by buying pressure that fails to hold; price drifts lower on lower volume.
Double Bottom
Price makes two equal lows without breaking below the first low, then rallies. Technical confirmation of a potential reversal or support level.
D-Shape Profile
A volume profile where value concentrates heavily at one extreme (high or low) with a single extended tail; indicates strong directional bias and weak two-way trading.
Double Top
Price makes two equal highs without breaking above the first high, then declines. Signals potential rejection and downside reversal.
Drawdown
Peak-to-trough decline in account value during a losing streak. Risk management focuses on controlling max drawdown percentage.
E
E-mini
Electronically traded stock index futures contracts with lower notional values than standard contracts (ES = 1/10 of S&P 500, NQ = 1/20 of Nasdaq-100).
ETH (Electronic Trading Hours)
Sessions outside RTH (9:30 AM - 4 PM ET for index futures). Includes pre-market, after-hours, and overnight sessions with different volume and volatility profiles.
Excess
A Market Profile term describing price movement outside the established value area with low volume; signals weak structural trading and often precedes mean reversion.
Exhaustion
Unsustainable price movement where the bid/ask imbalance reverses without follow-through. Often precedes whipsaws and reversals.
Extreme Position
When price extends significantly beyond key structural levels (2+ standard deviations from VWAP, above VAH, below VAL); sets up high-probability reversal zones.
G
Gap
Price discontinuity between sessions — opens above/below previous close without trading in between. Often filled within the session or the next day.
Gapping Up
Opening significantly above the prior close. Bullish but often leads to gap fills as overnight buyers take profits.
Gapping Down
Opening significantly below the prior close. Bearish but frequently leads to short covering and reversals into the gap.
Good Till Cancelled (GTC)
Order that remains active until filled or manually cancelled, across multiple sessions. Useful for limit orders at key levels.
I
Iceberg Orders
Large institutional orders hidden in the order book, revealed in small visible tranches as previous orders fill; used to mask true buying or selling intention.
IB Extension
Price movement beyond the Initial Balance high or low with volume confirmation; one of the most reliable intraday setups when aligned with delta and location.
Initial Balance (IB)
First one or two hours of RTH session. Sets the tone for the day; directional breaks of IB range often lead to larger moves.
Institutional Order
Large block order typically broken into smaller pieces to minimize market impact. Creates unusual volume spikes without proportional price movement.
Intrabar
Within a single candle or bar. Intrabar analysis reveals volume profile and delta within each bar period.
ITM (In The Money)
Option position with intrinsic value — call above strike, put below strike. Increases in value with directional moves.
L
Level 2 (Market Depth)
Real-time display of bid/ask orders at multiple price levels; shows institutional accumulation, iceberg order activity, and liquidity distribution.
Limit Order
Order to buy at or below a specified price, or sell at or above. Fills only at the limit price or better; never fills at a worse price.
Liquidity
Ability to buy or sell without significantly affecting price. Highly liquid markets allow large orders to fill without slippage.
Liquidity Void
Price zone with notably lower volume or open interest. Breakouts often accelerate through voids; reversals may stall in voids.
Long
Position where trader owns the contract and profits if price rises. Exposure to upside; loss if price falls.
Low Volume Node (LVN)
Price level with notably lower volume than surrounding zones. Often skipped over during trending moves; gaps can form here.
M
Margin
Capital required to hold a futures position. Futures use leverage; margin is typically 5-20% of contract notional value.
Market Depth
Order book showing buy/sell orders at multiple price levels. Reveals where support and resistance exist in real-time.
Market If Touched (MIT)
Order that becomes a market order when price touches a specified trigger level. Used for automatic entries when price reaches key zones.
Market Order
Immediate execution at the best available price. Guarantees fill but may slip if liquidity is thin.
Market-on-Close (MOC)
An order type that executes at the close; used by large traders to accumulate or distribute at fixed closing prices without intraday slippage.
Market Structure
Macro organization of price: support levels, resistance, trend direction, and key zones. Reading structure guides entry/exit zones.
Mark-to-Market
Daily settlement of futures position at closing price. P&L is realized daily; losing positions can trigger margin calls immediately.
Micro Contracts
Ultra-small equity index futures (MNQ = 1/100 of Nasdaq, MES = 1/50 of S&P 500); designed for retail traders with lower margin and risk per contract.
O
Open Interest
Total number of open (unfilled) contracts at end of day. Rising OI suggests new money entering; falling OI suggests positions closing.
Opening Drive
The initial directional momentum after the market open (first 30-60 minutes); sets the tone for the session and often creates trapped traders at the reversal point.
Opening Range (OR)
High and low of the first 5-15 minutes of the session. Breakouts above or below the OR often trigger secondary moves.
OTM (Out Of The Money)
Option with no intrinsic value — call below strike, put above strike. Loses value as expiration approaches if price doesn't move favorably.
Overnight Sessions
Trading outside standard 9:30 AM - 4 PM ET. Includes after-hours (until 8 PM ET) and pre-market (from 4 AM ET). Lower volume, wider spreads.
Over-Extended
Price has moved so far and so fast that reversal is due. Technical overbought/oversold; measured by RSI, stochastic, or time/price extension.
P
Pace of Tape
The speed and rhythm of transactions visible in the order book; accelerating pace signals increasing aggression; decelerating pace signals exhaustion.
Partial Fill
When a limit order fills only a portion of the intended quantity; common with large institutional orders and iceberg orders, indicating strong resistance or support.
Partition
Price level where order flow analysis identifies a shift in buyer/seller dominance. Key zone for confirmation of trends.
Point of Control (POC)
Price level with the highest volume (longest TPO profile) in a session or session type. Often acts as key support/resistance and magnetic price target.
Poor High
A session high formed on low volume without clean rejection; structurally weak and likely to be retested and broken on the next attempt.
Poor Low
A session low formed on low volume without clean rejection; structurally weak and likely to be retested and broken on the next attempt.
Position Sizing
Number of contracts or shares traded based on account size and risk tolerance. Professional traders use fixed fractional sizing (e.g., 2% risk per trade).
Power of the Close
If price closes near session highs, bulls are in control. If closes near lows, bears dominate. Closing mechanics drive next-day direction.
Price Action
Trading methodology focused on reading naked charts — support, resistance, reversals, breakouts — without indicators. Core to order flow trading.
Price Projection
Forward-looking structural level calculated from prior session highs, lows, and VWAP; used as daily target and risk/reward anchor for intraday trades.
P-Shape Profile
A volume profile heavily skewed to one side of the value area with a long single-print tail; indicates rejection of price extension and often precedes mean reversion.
Pullback
Minor retracement against the primary trend. Strong pullbacks are bought in uptrends and sold in downtrends.
Push
Strong directional movement off a key level with aggressive volume. Pushes up are buying rallies; pushes down are selling pressure.
R
Range-Bound
Price consolidating between support and resistance without breaking either. Traders fade moves into extremes or wait for breakout confirmation.
Range Extension
Price movement beyond the established session range (IB high/low or value area extremes) on volume; can signal breakout, trap, or exhaustion depending on delta.
Resistance
Price level where sellers are concentrated. Previous highs, order clusters, or technical levels where price stalls and reverses.
Risk/Reward Ratio (R/R)
Ratio of potential loss to potential gain on a trade. Professional traders demand at least 1:2 R/R (risk $1 to make $2).
RTH (Regular Trading Hours)
9:30 AM - 4 PM ET for index futures (NQ, ES). Primary session with highest volume, tightest spreads, and most reliable order flow data.
Run
Powerful directional move with strong volume, typically off a key level. Breakout runs often generate the largest intraday moves.
S
Scalp
Trade held for seconds to minutes, targeting 1-10 points. Scalpers focus on order flow and tick-by-tick movement.
Scaling In/Out
Entering or exiting a position in multiple tranches rather than all at once; reduces slippage and allows tighter risk management by averaging into levels.
Seller Exhaustion
Collapse in sell volume after sustained selling. Indicates sellers have pushed price too far; bounce or reversal often follows.
Session Delta
Cumulative delta for the entire session or specific session type (RTH, ETH). Positive overall delta favors bulls; negative favors bears.
Session Opening Gap (SOG)
Gap between prior close and current open. Large SOGs often fade 50-100% during the session.
Setup
Confluence of technical conditions that meet your trading criteria. High-probability setups have multiple confirmations (price, volume, structure).
Shakeout
Quick whipsaw that triggers stops and panics traders out of good positions. Often followed by reversal in the original direction.
Short
Position where trader is short the contract and profits if price falls. Exposure to downside; loss if price rises.
Short Covering
Buying to close short positions. Often creates powerful rallies as shorts flee; visible as aggressive buying into weakness.
Sierra Chart
Professional-grade charting software widely used by discretionary day traders for order flow, footprint, and volume profile analysis; native support for market depth and tape data.
Single Prints
Price levels traded only once during a session in a volume profile; indicate zones of low acceptance and often act as breakout or support levels.
Slippage
Difference between expected fill price and actual fill price. Worse in illiquid markets; limit orders prevent slippage but may not fill.
Smart Money
Professional traders with deep pockets and inside information. They accumulate quietly, distribute openly. Order flow reveals their positioning.
Spike
Quick price move with unusual volume that reverses sharply. Often traps retail traders; order flow analysis reads spikes as traps before they reverse.
Spoofing
Illegal practice of placing large orders with no intent to fill, designed to create false price pressure and induce retail traders to chase; appears as spikes in Level 2 that instantly disappear.
Spreadsheet Study (Sierra Chart)
A Sierra Chart feature allowing custom calculations and analysis using spreadsheet-like formulas; enables creation of proprietary indicators and alerts without coding.
Stacked Orders
Multiple orders at the same price level, creating visible support or resistance. If cleared, often triggers follow-through in that direction.
Stacked Imbalances
Multiple consecutive price levels showing extreme bid/ask imbalances in the same direction; signals sustained institutional pressure and often precedes directional continuation.
Stop Loss
Order placed to exit a position if price moves against you. Protects capital; professional traders never trade without one.
Stop Hunt
Price movement that triggers stops, then reverses. Smart money clears retail stops above/below key levels before moving in the intended direction.
Study (Sierra Chart)
Any analysis tool or indicator in Sierra Chart (oscillators, volume profiles, delta trackers, price projections); the building blocks of the trading toolkit.
Support
Price level where buyers are concentrated. Previous lows, order clusters, or technical levels where price bounces higher.
Swing
Trade held from hours to days, capturing multi-point moves. Uses larger timeframes; profits from structure and trend direction.
Swing Low
Recent price low where price bounces higher. Repeated bounces at the same low confirm strong support.
Swing High
Recent price high where price rolls over. Repeated rejections at the same high confirm strong resistance.
T
TDPO (Time Delta Profile Overlay)
Advanced volume profile that tracks time spent at each price. Reveals where price was absorbed or rejected over specific timeframes.
Test
Price returning to a previous high or low without breaking it. Failed tests confirm strength of support/resistance; breaks signal new direction.
Theta Decay
Loss of option value as expiration approaches. Impacts option traders; short sellers benefit, long buyers lose.
Tick
Smallest price increment for a contract. NQ tick = $5 per tick; ES tick = $12.50 per tick. Determines minimum profit/loss per trade.
Tick Value
Dollar value of one tick move. ES: $50 per point = $12.50 per tick; NQ: $20 per point = $5 per tick.
Timeframe Confluence
Key levels that align across multiple timeframes (5-min, 15-min, hourly, daily). Higher confluence = higher probability reversal or breakout.
TPO (Time Price Opportunity)
Number of time periods (usually 30-min bars) price spends at each price level. High TPO = longer time spent = potential support/resistance.
Trap
False breakout that reverses after triggering stops. Order flow reveals traps through volume divergence and delta exhaustion.
Trend
Sustained directional movement — series of higher highs and higher lows (uptrend) or lower lows and lower highs (downtrend).
Trend Confirmation
Price breaking above a key resistance level on increasing volume with positive delta. Signals continuation, not reversal.
Trend Exhaustion
Price extending but with waning volume and delta. Signals trend may be ending; watch for reversal candles and absorption.
Trend Following
Trading strategy that enters in direction of established trend and exits on reversal signals. Lower win rate but larger winners.
Trending Market
Price in clear uptrend or downtrend with follow-through volume. Best environment for swing traders; worst for range traders.
Trigger Level
Price point that activates a setup or signal. Properly identified trigger levels minimize false entries.
Tripwire
Tight stop-loss level placed just above resistance or below support. Used to quickly exit if the setup fails immediately.
V
Value Area
Price range where 68% of session volume traded. Typically 1-2 standard deviations from POC; acts as fair value and reversion target.
Value Area High (VAH)
Top of the value area. Price respects VAH as soft resistance; breaks above VAH signal shift to higher prices.
Value Area Low (VAL)
Bottom of the value area. Price respects VAL as soft support; breaks below VAL signal shift to lower prices.
Volume
Total number of contracts traded in a period. High volume confirms trends and breakouts; low volume suggests lack of interest or indecision.
Volume Climax
Unsustainable spike in volume — often 2-3x average. Signals capitulation, climactic reversal, or panic buying/selling into extremes.
Volume Confirmation
Significant increase in volume accompanying price movement. Confirms trend strength; lack of volume confirmation flags weak moves.
Volume Divergence
Price making new highs while volume declines (bearish) or new lows with declining volume (bullish). Signals weakening trend.
Volume Node
Cluster of TPO at a specific price. High volume nodes = key levels; used to project support/resistance in developing markets.
Volume Profile
Visualization of total volume traded at each price over a specified period. Reveals where price found support/resistance and fair value zones.
Volume Trap
High volume at a price without corresponding price movement. Reveals absorption — either support holding or resistance rejecting.
VWAP Bands
Volume-weighted average price plus/minus standard deviation bands; when price extends 2+ standard deviations from VWAP, it signals extreme positioning and high reversal probability.
W
Wave Counting
Identifying price wave structure (often 5-wave patterns in trends, 3-wave in corrections). Guides entry into final waves of moves.
Weak Hands
Retail or nervous traders who exit on minor reversals. Visible in order flow as stops being hit; exits often precede strong moves.
Whipsaw
Quick reversal that triggers both long and short stops. Causes fast losses for traders on both sides; order flow reads whipsaws before they hit.
Wick
Extended price movement beyond opening or closing price on a candle, then reversal back. Long wicks at resistance/support signal rejection.
Winning Trade
Trade closed at a profit. Trader goal is to maximize average winners while minimizing losses; a 40% win rate is acceptable if winners are larger.
Witness Volume
High volume confirming a price level. Witness volume at a key level signals that level was institutional or trapped volume worth remembering.