All glossary definitions
20 MA: 20 SMA
The simple moving average of the last 20 closing prices on the chart you are reading. James uses it to read the trend and judge the timing of a correction. Sami confirms that his 20 and 200 averages are both simple moving averages.
20 means 20 candles, not always 20 days. On a 5 minute chart it averages 20 five-minute closes. A rising average with price above it supports an uptrend read; a falling average with price below it supports a downtrend read.
Extended pattern: Overbought / oversold pattern
Price has moved a long way from its recent reference, often the 20 SMA. Far above the average describes an overbought move; far below it describes an oversold move. This is a visual reading of the chart in these lessons.
Extended does not mean price must reverse now. A large opening gap alone does not prove exhaustion, and this use of overbought or oversold does not require an RSI reading.
200 MA: 200 SMA
The simple moving average of the last 200 closing prices on the active chart. It adds a longer view of the trend and can be a reference when discussing support or resistance.
A 200 SMA on the hourly chart and a 200 SMA on the daily chart cover different periods. Touching an average does not guarantee that it will hold.
Price action: What the price is doing
The movement and structure of price itself: rallies, declines, pauses, candles and reactions around chart levels. James and Sami use this to read the stock’s behavior in context.
The location and sequence of the candles matter. One attractive candle shape does not explain the whole chart.
Candle / bar: One period of price movement
One chart element summarizing the open, high, low and close during a chosen interval. A 2 minute candle covers two minutes; a daily candle covers one trading session.
A candle’s full range includes its tails. Its body only spans the open and close.
Timeframe: The interval represented by each candle
The chart interval used to group prices, such as 1 minute, 5 minutes, hourly or daily. The same stock can show a pullback on one chart and an uptrend on another.
An hourly pattern has a different context and time horizon from a one-minute pattern. State the timeframe when naming a setup.
Timeframe alignment: Several charts agree on direction
The relevant charts support the same trade direction. James looks for the 1, 2, 5 and 15 minute charts to agree for day trades, and the hourly, daily, weekly and monthly charts for swing trades.
A clean buy setup can still face a downtrend on the chart underneath it. Agreement adds context, but does not guarantee the trade will work.
Uptrend: An established upward direction
A chart structure progressing upward. In James’s quick moving-average read, price trades above a rising 20 SMA.
A single upward candle or a brief cross above the average is not enough to establish a sustained uptrend.
Downtrend: An established downward direction
A chart structure progressing downward. In James’s quick moving-average read, price trades below a declining 20 SMA.
A bounce can occur inside a downtrend. It does not automatically change the larger direction.
Transition: A trend is changing
Price starts to stop following its previous trend and begins developing a different structure. James describes the lower chart ending its downtrend as price holds above an average that starts to curl upward.
Transition describes a developing change. It is not the same as a fully established new trend.
Support: An area where buying may interrupt a decline
A chart area where price previously found buying or held a low. Prior pivots, bases and moving averages can provide support references in these lessons.
Support is an area to assess, not a floor that cannot break. A short idea has less room if nearby support remains below it.
Resistance: An area where selling may interrupt a rally
A chart area where price previously met selling or stalled at a high. James and Sami check whether a gap opens above a relevant resistance area or directly into it.
Clearing the most recent relevant resistance does not mean clearing every historical high on the chart.
Pivot: A local turning point on the chart
A local high or low where price changes direction. In James’s buy-setup explanation, the bounce is confirmed when a following candle takes out the reversal bar’s high.
The relevant pivot depends on the setup and timeframe. It is not necessarily a calculated pivot-point indicator.
Lower high: A candle’s high is below the preceding high
The top of a candle or swing is lower than the preceding one. James wants a consecutive lower-high candle sequence during the buy-setup pullback.
Compare the full highs, including tails. A red candle does not necessarily have a lower high.
Pullback: A temporary move against the current advance
Price retreats after an advance. James’s buy setup looks for a structured pullback toward the rising 20 SMA before a possible continuation.
A retreat can become a failed move. Its depth, structure and location help distinguish a correction from a larger change.
Retracement: How much of the preceding move is given back
The portion of a preceding move that price reverses during a correction. Giving back half an advance is roughly a 50% retracement; giving back all of it is roughly 100%.
James describes an ideal near-half pullback and treats very deep pullbacks more cautiously. These descriptions are not promises of a bounce at an exact percentage.
Corrects through price: Price pulls back before another attempt
Price adjusts by moving back against its prior direction. James uses this to introduce the buy setup: an advance, a pullback and a possible bounce.
The correction is visible as a change in price, rather than only a sideways pause.
Corrects through time: Price rests in a base
Price adjusts by pausing or trading sideways rather than giving back much of the move. James uses this to explain a base before a breakout.
The 20 SMA can catch up while price rests. A pause is not automatically long enough to support a breakout.
Base: A sideways pause within a price range
A group of candles trading within a relatively contained range. A base can develop near the high after a rally or near the low after selling.
The high and low of the base provide references for a later breakout or breakdown. A sideways base by itself does not select a direction.
Chop: Messy, overlapping price action
Price repeatedly moves back and forth without clean continuation. James describes conflicting timeframes as a tug of war that can make a trade struggle.
A neat-looking setup on one chart can hide choppiness on a lower chart.
Momentum: The force and persistence of a move
How strongly price is moving and continuing in one direction. James links alignment to momentum; Sami looks for gapping stocks that have a reason to move.
An accelerating move can eventually become exhausted. Strong movement and a good entry location are separate considerations.
Volume: How many shares traded
The number of shares exchanged over a period. James looks at activity when screening stocks and at increasing volume together with accelerating price in climactic setups.
Volume is activity, not a vote that proves the next direction. A large volume bar needs price and chart context.
Follow through: The move continues after the trigger
Price keeps moving in the intended direction after a setup triggers, instead of stalling or reversing immediately.
A trade can trigger correctly and still fail to follow through. The entry and the later outcome are different events.
Wide range bar: A noticeably large candle
A candle whose high-to-low range stands out relative to nearby candles. Sami uses a gap above a wide red daily bar as an example of trapping prior sellers.
A large bar near the start of a move can ignite it. A large bar after an extended run can signal exhaustion instead.
Inside bar: A candle contained within the preceding range
A candle with a high no higher than the preceding candle’s high and a low no lower than its low. It shows a contained range.
An inside bar is not automatically a valid resting bar for The 123. James also checks where the preceding move started.
Doji: A candle with a very small body
A candle whose open and close are close together compared with its full range. James shows one as a possible reversal bar in a climactic example.
A doji can appear in many places on a chart. Its location, volume and the following response matter.
Bottoming tail: A long lower wick showing a recovery from the low
The lower tail of a candle stands out because price traded lower and then recovered before the candle closed. James points to a bottoming tail in a buy-setup example.
A recovery inside one candle does not guarantee a lasting bottom. Check the surrounding pattern and confirmation.
Topping tail: A long upper wick showing a retreat from the high
The upper tail of a candle stands out because price traded higher and then retreated before closing. James uses it as part of the recent selling context when reviewing gaps.
The tail describes the candle’s response. It does not guarantee the next candle will fall.
Buy setup: A pullback within an uptrend
James’s trend-following setup after price corrects through price: an established uptrend, a structured lower-high pullback toward the rising 20 SMA and a reversal that can confirm a bounce.
It is an entry pattern within the wider strategy. The gap context, alignment and risk still need to make sense.
Sell setup: A rally within a downtrend
The short-side counterpart to the buy setup: price rallies against an established decline, toward a falling moving average, before a possible downward continuation.
Sell setup names a bearish entry pattern here. It does not simply mean any decision to sell shares already owned.
Breakout: Price moves above a base or resistance
A move above a relevant range or resistance area. In James’s continuation pattern, price rallies, rests in a base and then attempts another move above the base high.
He uses the rising 20 SMA to judge whether the base has rested enough. An early breakout can trigger and still fail.
Breakdown: Price moves below a base or support
A move below a relevant range or support area. It is the downward counterpart to a breakout, often discussed after a stock sells off and builds a lower base.
Breaking the level is the trigger; continuing lower is the follow through. They are separate observations.
The 123: Ignition, rest, continuation
A three-candle sequence: an igniting bar starts the move, a smaller resting bar pauses it, and a third bar attempts continuation. James often uses it as a secondary entry after missing the initial move.
A large candle followed by a small candle is not enough. The first candle must ignite a new move rather than exhaust an existing one.
Igniting bar: The candle that starts the move
A noticeably strong candle launching a fresh move, such as a candle breaking out of a base. It is the first candle in James’s 123 pattern.
Judge where it comes from. A large candle after an uninterrupted rally may be an exhaustion bar instead.
Resting bar: A small pause after ignition
The smaller second candle in The 123, showing a pause after the igniting candle. James wants it to be clearly smaller, roughly no more than a third of the first bar in his overview.
Small size alone does not validate the pattern. The location of the ignition still matters.
Exhaustion bar: A large candle late in an extended move
A strong-looking candle appearing after price has already run a long way. James contrasts it with an igniting bar: the position in the move changes its meaning.
A large late candle is not proof that all buying or selling has ended. Climactic analysis also considers acceleration, volume and reversal confirmation.
Reversal bar: A candle suggesting a change in the immediate move
A candle showing a response against the preceding move, such as a bounce after a pullback. James uses its high and low as entry and stop references in several setup explanations.
The candle suggests a turn. A following break of its high or low supplies the setup’s confirmation.
Climactic buy setup: A reversal attempt after accelerating selling
A countertrend pattern aimed at catching a correction after selling accelerates far below the 20 SMA, with growing candles and increasing volume, followed by a reversal bar.
Being down a lot is not sufficient. James looks for acceleration and volume as evidence of exhaustion, with a first objective of returning toward the 20 SMA.
Climactic sell setup: A reversal attempt after accelerating buying
The short-side counterpart to a climactic buy setup: an accelerating rally stretches far above the moving average, followed by a possible bearish reversal.
The sell-side study mirrors the buy-side logic. Extension alone does not establish a finished top.
Countertrend: Trading against the current direction
An idea aiming to catch a move opposite to the prevailing trend. James describes climactic setups as playing the correction itself rather than entering after a correction.
A countertrend bounce does not have to become a lasting trend reversal.
Secondary entry: A later setup after the first opportunity
A later opportunity to enter after the initial trigger was missed or deliberately passed. James uses it after deep pullbacks or while waiting for lower timeframes to align.
A second opportunity may never appear. Secondary describes the sequence, not a guaranteed safer or winning trade.
Gap: A different open from the previous close
The difference between the previous regular-session closing price and the next regular-session opening price. Before the open, the gap list shows indications based on pre-market prices.
An opening gap does not always leave empty space between the two candles’ full ranges. Those ranges can overlap.
Gap up: The next open is above the previous close
The next regular-session open is higher than the preceding regular-session close. James scans the pre-market for stocks indicating a higher open.
A higher open is not automatically bullish for the rest of the day. It may clear resistance or open directly into it.
Gap down: The next open is below the previous close
The next regular-session open is lower than the preceding regular-session close. James keeps these stocks on a separate side of his gap list.
A lower open is not automatically bearish for the rest of the day. The preceding pattern and opening response matter.
Professional gap: A gap that can ignite a new move
In Sami’s framework, a gap that opposes recent price action and can trap traders on the wrong side. A bullish example clears relevant resistance after recent selling; the bearish counterpart clears support after recent buying.
Recent direction, the larger trend, the cleared level and relative strength all matter. The name is a pattern classification, not a statement about who placed the orders.
Novice gap: A gap that may exhaust an existing move
A gap in the direction of the recent move, with potential exhaustion context. Sami’s bullish-side warning example gaps up after buying, from an extended daily trend and into resistance.
A novice-like gap can still continue. The label is not an automatic short entry or proof that a reversal has already happened.
Shock value: A gap catches recent traders on the wrong side
The opening price contradicts what recent buyers or sellers expected. For example, a gap above a strong red bar can leave prior shorts facing losses and looking to cover.
The relationship to recent price action creates the shock. Gap percentage alone does not describe it.
Relative strength: The stock is stronger than the market
The stock holds up or moves higher compared with the broader market over the period being examined. Sami checks whether the stock’s gap has independent strength rather than merely following the market.
This comparison is not the Relative Strength Index, or RSI. Match the stock and market over the same period.
Relative weakness: The stock is weaker than the market
The stock falls more, rallies less or fails to hold up compared with the broader market over the period being examined. It is the downward counterpart to relative strength.
A stock can rise and still be relatively weak if the market rises more. The comparison is about relative behavior.
Void: Room between price references
Empty space or room on the chart before the next relevant price reference. James describes a breakdown with void below; in gap geometry, a void can also mean empty space between complete candle ranges.
Check which meaning is intended. A gap from close to open can exist even when the full candle ranges overlap.
Gap fill: Price trades back to the preceding close
Price returns through the opening difference to the previous regular-session close. This describes an outcome after the open.
There is no rule that every gap must fill that day. The prior close and the boundaries of a full-range void are different references.
Tier 1 gap: A top-rated gap in Sami’s framework
A gap meeting Sami’s strongest context criteria. He emphasizes clearing recent resistance or support by an appropriate amount, reversing recent price action, and considering the larger trend and market comparison.
Tier 1 is a qualitative rating within the method. It does not state a verified win rate or guarantee the next move.
Mega gap: A gap far beyond the chart’s useful references
Sami calls an extreme gap beyond the chart’s reference points a mega gap. He also distinguishes less extreme excessive gaps that clear nearby resistance by much more than needed.
Large percentage change alone does not identify this context. The distance beyond usable chart references matters.
Gap that bullies: A bearish gap fails, recovers and bases
Sami’s failure pattern where a professional gap down does not continue lower. It gets bought, holds the recovered ground and forms a base for a possible breakout.
The recovery and base supply the later setup. A stock simply opening lower has not formed a bully pattern.
Gap that buries: A bullish gap fails, sells off and bases
Sami’s counterpart to the bully: a professional gap up gets sold, then forms a lower base for a possible breakdown.
The failed bullish expectation and the later base matter. A red candle after any gap up does not establish the whole pattern.
Island reversal: Opposing gaps isolate a candle or a base
A gap separates price from the preceding range, and a later gap in the opposite direction separates it again, leaving a candle or group of candles isolated between two empty spaces.
The second separation completes the island. Sami discusses both single-candle islands and bases, with different day-trading and swing-trading preferences.
Quasi: Resembling, but not a clear textbook example
Sami uses quasi-novice and quasi-professional when a gap resembles that directional behavior but the preceding structure is less clear, such as a short move within a daily consolidation.
Quasi qualifies the reading. It is not a separate signal that removes the need to examine the chart.
Long: A position intended to benefit from a rise
Owning shares with the expectation that a higher price will benefit the position. Going long is the direction of a buy-side trade.
Long describes position direction, not how many days it will be held.
Short: A position intended to benefit from a decline
Selling borrowed shares with the intention of buying them back later. A lower repurchase price benefits the position before costs.
Buying back a short closes it. It is different from selling shares that you already own.
Cover: Buy back shares to close a short
The purchase that reduces or closes a short position. Sami explains that trapped shorts may need to cover after a stock gaps above them.
Covering is buying, so short exits can contribute to an upward move.
Entry: The price or event used to open a position
The planned or actual opening of a trade. James describes entries relative to a reversal bar, a base or the continuation candle in The 123.
An entry belongs with a stop and a risk budget. An attractive pattern alone does not define the full trade.
Trigger: The planned entry condition occurs
Price reaches or breaks the level specified by the setup. James says a buy setup triggers when price takes out the reversal bar’s high.
A trigger is not the same as a confirmed fill. An order can be triggered without all intended shares being executed.
Stop: The planned exit if the trade fails
The price reference for limiting a trade’s loss if it moves against the plan. James places the stop relative to the setup’s pivot, base or resting bar.
Stop distance is the difference between entry and stop. Actual loss can differ from planned risk because of execution, gaps and slippage.
Stopped out: The trade exits at its protective stop
The protective exit condition is reached and the position is closed. James uses this to describe a setup that failed to hold.
Being stopped out is an outcome of the trade. It does not erase whether the original setup and risk plan were followed.
Trail / trailing stop: Move the protective exit as the trade develops
Adjust the protective stop as new price structure develops, often to reduce open risk or protect part of a favorable move. James describes getting trailed out on the remaining portion of a position.
A tighter stop can close a trade before a later continuation. Trailing changes the trade’s room to move.
Target: A planned price objective
A chart reference used as an objective for the trade. James gives the prior high for a buy setup, resistance for a breakout and the 20 SMA for a climactic correction as examples.
A target is a plan, not a promise that price will reach it.
Risk: The planned amount that can be lost
The loss budget assigned to a trade before entry. It connects the distance from entry to stop with the number of shares carried.
Dollar risk is different from the total value of the position. Execution can make the realized loss larger than planned.
Share / position sizing: Choose the number of shares from the risk
The share count used for a trade. With a fixed risk budget, a wider entry-to-stop distance requires fewer shares and a narrower distance permits more shares.
Planned shares = dollar risk divided by stop distance, rounded down to a whole share. This calculation does not account for slippage or guarantee an exit price.
Scalp: A short-lived trade for a smaller move
A trade seeking a relatively small, short-lived move rather than a larger sustained trend. James separates scalp watches from his preferred gap-pattern watches.
A small objective does not automatically mean small risk. Spread, liquidity and execution still matter.
Level 2: The displayed order-book quotes
A view of quoted bids, offers and displayed sizes at different prices. James prepares Level 2 windows alongside order-entry boxes and refers to them when discussing scalps and fills.
Displayed quotes can change or disappear. They are not a promise that every share will fill at the price shown.
Bid: A quoted price to buy
A price at which a buyer is quoting interest to buy shares. The best bid is the highest displayed bid at that moment.
A quote has a size as well as a price. A larger order may trade across several prices.
Ask / offer: A quoted price to sell
A price at which a seller is quoting interest to sell shares. The best ask is the lowest displayed offer at that moment.
An offer can change before an order reaches it. The displayed price alone does not guarantee a fill.
Spread: The distance between the best bid and ask
The difference between the highest quoted buying price and the lowest quoted selling price. James describes a trade where the spread widened and later tightened.
A wider spread increases the price difference involved in immediately buying and selling. It can make a small scalp harder to execute.
Liquidity: How readily shares can be traded
How readily an order can be executed without a large price impact. Volume, quoted sizes and the spread help explain whether a stock is practical to trade.
Thin trading, low volume and wide spreads can make orders harder to execute. High average volume does not guarantee good liquidity at every moment.
Fill: An order is executed
Shares in an order actually trade. A partial fill means only some of the requested shares are executed; the rest may remain pending or be canceled.
One trading idea can require several orders and fills. An order count is not the same as a count of completed trade ideas.
Market order: An order seeking immediate execution at available prices
An order that seeks execution at the prices available when it reaches the market. James discusses delayed market-order exits and the difference between the expected and actual fill.
A market order does not lock in the price seen on the screen. Execution can span multiple prices or take time.
Slippage: The fill differs from the expected price
The difference between the price expected when placing or triggering an order and the price actually received. James mentions it when discussing exits split into smaller orders.
Planned stop distance does not include every execution outcome. Slippage can increase the actual loss.
Buying power: The account capacity available for positions
The account’s displayed capacity to open positions under the broker’s rules. James distinguishes it from his reported profit and loss when showing an account with no cash left in it.
Buying power is different from cash, realized profit and the risk budget for one trade.
P&L: Profit and loss
The money gained or lost over a trade or reporting period. James records his daily results; Sami identifies some account figures specifically as gross P&L.
Gross results are before applicable trading costs. A reported account result is not a forecast of another trader’s income.
Commission: A broker’s charge for executing a trade
An execution charge paid to the broker. James refers to commission when discussing broker access and the costs of his trading activity.
Broker commissions are one part of costs. Other charges and slippage can also affect net results.
Uptick: A trade at a higher price than the preceding trade
An upward change between successive trade prices. James uses the term when describing how he tries to get short orders filled in gapping stocks.
His account of order execution does not establish a universal broker rule. Short-sale restrictions and order handling depend on the situation.
Pre-market: Trading before the regular session opens
Trading activity before the regular stock-market session. James uses pre-market prices to build a provisional list of stocks indicating gaps and rechecks favorites closer to the open.
A pre-market indication can change. The regular-session opening price establishes the actual opening gap.
Intraday / day trade: A trade or chart within one trading day
Intraday describes price movement inside the trading day. A day trade opens and closes within the same day, rather than being carried overnight.
The chart timeframe and the holding period are different concepts. An hourly chart can still inform an intraday decision.
Swing trade: A trade held across trading sessions
A trade aiming to capture a larger move across sessions rather than only the current day. James discusses alignment across the hourly, daily, weekly and monthly charts for this horizon.
Holding overnight introduces a different context from an intraday scalp, including possible gaps between sessions.
Stock universe: The full list eligible for the scan
The pool of symbols a trader is willing to consider. James filters a larger list by price and average volume, then scans that universe for the day’s gaps.
The universe is the starting pool. The gap list and the final favorites are smaller selections made from it.
Scanner: A filter that finds matching stocks
A tool or process that narrows a list of stocks according to conditions. James’s gap workflow sorts a stock universe by pre-market percentage change and then reviews the charts.
A scan finds candidates. It does not confirm the chart context or supply a trade entry.
Mark % change: A platform’s percentage-change quote
The thinkorswim column James sorts to see pre-market and post-market price changes in his scanner workflow. The exact quote calculation and label depend on the platform.
Treat it as a screening indication and verify the chart. James’s scan threshold is a preference, not the definition of a professional gap.
Gap list: The day’s stocks indicating opening gaps
The morning shortlist of symbols gapping up or down. James combines scanner lists, reviews the daily charts and separates favorites from less urgent watches.
The gap list changes from day to day. James’s later heavy scan also looks beyond the morning list.
Watchlist: Stocks kept under observation
A list of symbols to monitor. James reviews candidates, prioritizes favorites and keeps chart thumbnails visible while waiting for a setup.
Being on the watchlist is preparation, not a signal to enter immediately.
Thumbnail charts: Small charts used to watch many stocks
Compact chart views that let James monitor many candidates at once. When a setup looks interesting, he brings up the stock on larger charts with multiple timeframes.
A thumbnail is for spotting a candidate. The fuller chart view supplies the detailed context.
Order entry: The workspace used to place and manage orders
The platform controls for selecting a symbol, quantity and order settings, then submitting or managing an order. James prepares order-entry boxes for favored stocks before the open.
Charting, scanning and order execution can happen in different platforms. Preparing an order window does not mean a trade has been taken.
Average volume: The typical share activity over a lookback
The average number of shares traded over the platform’s chosen lookback. James uses it when filtering the stock universe, separately from the current day’s pre-market activity.
Average volume and today’s volume answer different questions. The lookback depends on the data source.
Penny stock: A low-priced stock in James’s examples
James uses this label for low-priced shares, particularly the sub-dollar stocks he discusses as scalp watches. It is an informal label in these videos.
His conversational use is not a complete regulatory definition. Small price does not establish liquidity or low risk.
ADR: American Depositary Receipt
A US-traded receipt representing shares in a foreign company. James notes that its opening move can reflect trading already taking place in another market.
An ADR can show a price gap on the US chart. His point is that its cause and shock context may differ from a primarily US-traded stock.
ETF: Exchange-traded fund
A fund whose shares trade on an exchange, often providing exposure to a basket of assets. James removes ETFs from the universe in his gap-scanner demonstration.
That removal is his stated preference for the demonstrated scan. It does not mean ETFs cannot be traded.
Earnings / earnings season: Company results and the period when many report
Company financial results and the recurring reporting periods when many companies release them. James expects reporting activity to bring more gap candidates and updates his universe between earnings seasons.
A favorable-sounding report does not establish a bullish opening setup. The price response and chart location still need to be read.
Secondary offering: An additional share offering after the IPO
A later offering of shares by a listed company or existing holders. James checks news to identify these gap candidates and separates them from his preferred opening watches.
The offering details vary. In the routine video he still keeps some secondaries on charts for later observation.
Ex-dividend: The stock trades without the upcoming dividend entitlement
The point from which a new buyer no longer receives the announced dividend. The price can adjust for that distribution, so James checks for it when explaining an apparent gap.
A dividend-related adjustment has a different cause from the shock-value gap context he is looking for.
Buyout: An agreement or proposal to acquire the company
A company acquisition that can reset the share price toward the proposed deal value. James checks for buyouts when filtering the morning gaps.
A stock repricing around a deal can behave differently from a gap expected to create fresh intraday momentum.
Trading in the Zone: Trading psychology by Mark Douglas
Mark Douglas’s book about the psychology of trading, including consistency, risk and thinking in probabilities. In My 10 Essentials for Day Trading, James calls it his favorite day trading book and says he reads it at least once a year. He explains that emotions and a failure to follow the trading plan can undermine a trader’s knowledge of strategies and setups.
James treats this as a mindset book, rather than a guide to chart setups. He says rereading it becomes more meaningful as he gains experience. Use the ideas to review your decisions and discipline; a book or annual reread does not guarantee profitable trading.
Trading journal: A written record of preparation and trades
The record used to prepare watches and review trading. James prints a daily journal before the open, records results and later revisits what the morning gap candidates did.
Preparing the journal, logging P&L and reviewing gap outcomes are separate parts of his routine.
Trading plan: The rules for what and how to trade
The written framework for selecting opportunities, setting risk, managing trades and reviewing results. James describes refining it as part of his earlier end-of-day study.
The four chart patterns are components of a strategy. Knowing their shapes does not supply a complete plan.
Market bias: The working view of the broader market’s direction
A directional view of the broader market used when evaluating an individual stock. Bullish describes an upward expectation; bearish describes a downward expectation.
The stock can behave differently from the market. Check relative strength or weakness instead of assuming every stock follows the index.
8 MA: 8 SMA
The simple moving average of the last eight closes on the active chart. Sami uses this faster average on intraday charts when the slower 20 SMA has not yet caught up after an opening gap.
It reacts sooner because it uses fewer candles. A touch of the average still needs a tradable pattern and context.
Flat 200: A relatively level 200 SMA
A 200 SMA with little slope. Sami treats its location above or below price as a longer reference for support and resistance, and discusses gaps and bases around it.
Flat describes the moving average, not necessarily the stock’s current candles. It is a reference level rather than an automatic entry.
The halt: Price begins to respect the moving average
Sami’s chart-reading phrase for price stopping its repeated crosses through the 20 SMA and beginning to hold on one side as the average curls. He uses it as a clue that a sideways trend may be transitioning.
Here halt describes price behavior around the average. An exchange trading halt is a different event.
45 degree trend: A steady, sustained slope in the trend
Sami’s visual shorthand for a moving average rising or falling at a steady pace, between a weak, nearly flat trend and a steep accelerating move.
The visible angle changes with chart zoom and axis scale. It is a description of pace, not a universal numerical signal.
Higher low: A pullback bottoms above the previous low
A new swing low forms at a higher price than the preceding swing low. It helps describe an uptrend or an emerging upward transition.
Compare meaningful swings on the same timeframe. A higher low by itself does not confirm that resistance will break.
Higher high: A rally reaches above the previous high
A new swing high forms above the preceding swing high. Higher highs paired with higher lows describe upward progression.
One new high does not settle the larger context. Read the accompanying lows and the chart above it.
Minor support: A nearby prior high can support a pullback
In Sami’s uptrend example, the prior pivot high becomes a nearby support reference after price has broken above it and pulls back.
Minor describes the local chart structure. A previously broken level can still fail on the retest.
Minor resistance: A nearby prior turning point can cap a rally
A local resistance reference rather than a more distant or larger chart level. Sami uses the term when explaining how a prior resistance level can become support after a breakout.
Its importance depends on the timeframe and nearby price structure.
Price divergence: Price accelerates away from its average
In this moving-average lesson, price speeds away while the average continues at a slower pace. Sami uses that separation to discuss an extended move and a possible correction.
Divergence can mean other things in technical analysis. This passage compares price with its moving average, not an oscillator.
Stage 1: A sideways base before an upward transition
A sideways phase in the stage model. Sami describes the 20 SMA going through price, then beginning to curl as the stock prepares for an upward transition.
A base is not proof of a future rally. Wait for the actual transition and the trading pattern.
Stage 2: The advancing, upward-trending phase
The upward-trending phase of the stage model. Price progresses higher and the rising 20 SMA helps Sami read the trend and its pullbacks.
Stages apply to the chart being examined. A stock can be advancing on one timeframe while declining on another.
Stage 4: The declining, downward-trending phase
The downward-trending phase of the stage model, with price progressing lower and a falling moving average providing a trend reference.
Bounces can occur inside this phase. They do not automatically establish an upward transition.
Money Bar: A failed breakout that traps buyers in one candle
In Sami’s bearish example, a green candle pushes above a base in a downtrend, then reverses within that same candle into a topping tail. A later break below it shows the failed breakout continuing lower.
Its location on a base matters. A topping tail anywhere on a chart is not automatically a Money Bar.
Bleed pattern: A small bounce, then a slow drift back to the average
Sami describes a pullback followed by a small pop, then a gradual drift into the rising 20 SMA before a breakout. He calls that slow part of the correction the bleed.
This names the sequence of the correction. The drift alone is not the breakout trigger.
Pinch play: Price is squeezed between the rising 20 and flat 200
Sami’s example has a rising 20 SMA below price and a relatively flat 200 SMA overhead. Price compresses between the two as the 20 catches up, setting the context for a possible breakout.
The compression is the setup context. A breakout and its risk still need to be evaluated.
Breakout failure: The move above resistance does not hold
Price breaks above a base or resistance, then loses that breakout instead of continuing higher. James reviews a losing breakout; Sami uses a rapid failure to explain the Money Bar.
Failure can supply new information, but reversing the trade still needs its own entry and risk plan.
Shakeout: A brief move removes traders before reversing
A move through a nearby level triggers exits or attracts entries, then reverses. James describes being stopped out before a later move; Sami describes buyers trapped in a failed breakout.
It is easy to name a shakeout after the reversal. Do not assume every stopped-out trade is about to turn back.
Fade / gap fade: Trade against the initial gap direction
A trade looking for movement against the initial gap, such as a long after a gap down begins reversing higher. James mentions playing a breakout to fade a gap down.
A fade does not require the entire gap to close. A large gap alone is not a reason to take the opposite side.
R / risk unit: One unit of the trade’s initial planned risk
A way to express gains and losses relative to the initial risk budget. If a trade starts with $100 of planned risk, a $200 gain is +2R and a $100 loss is -1R.
Keep the original risk as the reference when comparing results. Moving a stop later does not redefine that trade’s initial R.
Stop size: The price distance from entry to the protective stop
The absolute difference between the planned entry and stop prices, measured in dollars or cents per share. James divides his dollar risk by this distance to calculate share size.
A tighter stop means more shares for the same planned risk. It also gives price less room to move.
Reward to risk: Potential gain compared with the planned loss
The distance from entry to the target divided by the distance from entry to the stop. A 2:1 reward-to-risk plan offers twice the planned loss if the target is reached.
This is a planned ratio for a setup. Actual average wins and losses can differ because of management, costs and execution.
Win rate / batting average: The share of trades that finish as winners
Winning trades divided by the number of trades being measured. James uses batting average as shorthand: winning five of ten trades gives a 50% win rate.
Win rate alone does not determine profitability. The sizes of the wins and losses, plus costs, also matter.
Sharpe ratio, in James’s income example: Average win / average loss ratio
In the income video, James uses this label for average winning trade dollars divided by average losing trade dollars. Average wins of $200 and average losses of $100 give a 2.0 win/loss ratio.
The standard Sharpe ratio is different: it compares average excess returns with their variability. Use win/loss ratio for the calculation shown in this video.
Break even: No net gain or loss
A result around zero, or an exit planned around the entry price. James uses it when comparing a set of equal-sized wins and losses.
An exit at the entry price can still leave a net loss after trading costs. A break-even stop does not guarantee a zero-cost exit.
Hotkeys: Keyboard shortcuts for trading actions
Shortcuts used to carry out a configured platform action quickly, such as preparing or sending an order. James uses a dedicated X-Keys keypad for trade execution. In the essentials video he explains that blocking unused keys lets him find the working buttons by touch, while keeping trading actions separate from everyday typing.
The key’s behavior depends on the platform configuration, order type and current share size. A photo of a keypad does not reveal the order assigned to each button.
Overtrading: Taking more trades than the opportunities justify
Continuing to trade when the setup quality, market conditions or execution no longer justify it. James uses the term in his loss recap when little was following through.
Trade count by itself does not define overtrading. The issue is whether each trade still fits the plan and conditions.
Tuition: Losses incurred while learning to trade
An informal name for trading losses during the learning process. James stresses that calling a loss tuition only makes sense when it leads to learning and improvement.
A loss does not automatically teach anything. Review the decision, execution and outcome in the trading journal.