Glossary and Definition | TradeOrInvest.com

Glossary

1. CPO

Abbreviation for Crude Palm Oil. Crude palm oil is the crude form of palm oil which is an edible vegetable oil from oil palm tree. It can also be used to create biodiesel. Malaysia and Indonesia are the two largest exporters of palm oil in the world. Its main competition comes from soybean oil.

2. Elliott Wave

Developed by Ralph Nelson Elliott in late 1920s. R.N. Elliott discovered that stock market is not random as it seems to be. In fact the stock market moves in repetitive cycles or waves and each wave itself is a fractal version of its bigger wave. One of the discoveries is that the financial market always moves in five (5) waves of the prevailing trend called impulse waves and three (3) corrective waves that counter the prevailing trend. The waves count itself is a Fibonacci sequence of numbers. Elliott Wave Theory was made popular by Robert R. Prechter, Jr. in one of his bestseller book "'Elliott Wave Principle: Key to Market Behavior."

3. FCPO

FCPO is the futures contract for Crude Palm Oil (CPO). One of the largest market exchange that trade FCPO is Bursa Malaysia in Malaysia. Each futures contract is an agreement to buy or sell 25 metric tons of CPO at a specific time in the future at a pre-determined price specified at the time of contract. FCPO minimum price fluctuation is RM 1 per metric ton.

4. Fibonacci

Fibonacci numbers are a sequence of numbers discovered by Leonardo of Pisa where the sequence begins with 0 and 1 and each subsequent number is equal to the sum of the previous two numbers of the sequence such as 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,... This sequence of numbers has certain properties such as the division of any number with its successor will yield to an approximation of 0.618. Fibonacci numbers are found in the nature such as branching in trees, the curve of waves, the spirals of shells, and also the breeding of rabbits. It has amazing effects on stock markets.

5. Fundamental Analysis

A method of valuing a security by examining qualitative and quantitative information that will affect the business activity such as financial strength, management team, earnings potential, competitive advantages, macro economy factors and etc.

6. Gann

William Delbert Gann (June 6, 1878 - June 14, 1955), known as W.D. Gann, was famous for his ability to predict accurately the stock market movement. For example, he forecasted that United States Steel will run up to 58 but won't touch 59 and then will break 16 points. At that moment the steel was selling around 50. It went up to the highest of 58 and then declined to 41 which is about 17 points. At another time, he forecasted wheat May option would be selling at $1.35. It rose from $0.89 and touched exactly $1.35. One of the most astonishing calculations made by WD Gann was during 1909 when he predicted that Sept wheat would be selling at $1.20. That would means that it must touch $1.20 before the end of Sept month. At 12 o'clock of Sept 30th, the option was selling at $1.08 and it looked as though Gann's prediction would fail. Gann said "If it does not touch $1.20 by the close of the market it will prove that there is something wrong with my whole method of calculation. I do not care what the price is now, it must go there." It surprised the whole country when Sept wheat option closed at $1.20 at the very last trading hour. Unfortunately, WD Gann took his secret into his grave and his methodologies remained a mystery to many.

7. HSI

Abbreviation for Hang Seng Index. Hang Seng Index is the main stock market index in Hong Kong consisting of 40 companies which represent about 65% of the total market capitalization of the Hong Kong Stock Exchange.