Forex Trading Glossary N-O

Currency Trading Dictionary: Forex Trading Glossary N-O

Narrow Range Bar
A trading bar with a smaller price range relative to the previous bar’s price range or a smaller price range as compared to an average of a period of previous bars.

Neckline
During the development of a reversal or consolidation pattern, a trend line may be drawn along the support or resistance that are implied by the troughs or peaks around the head and from where the shoulders have developed. Eventual break of the neckline confirms completion of the pattern.

Normalized
The adjustment of an indicator to have readings between 0 and 100 or -100 and +100.

Numbered Phase
(Elliott Wave)

Some analysts refer to the “numbered phase”. This refers to the section of the wave structure that forms the main direction of the trend. This is the five-wave moves including the two corrective waves, 2 and 4.

O.C.O. (One Order Cancels The Other)
An order that, if executed, automatically cancels another order.

Offer (Ask)
The price at which a Forex brokerage firm or trader is willing to sell a currency; also the price at which a trader can buy a currency.

Open Orders (Trader’s Orders)
The section of a trading screen that shows unfilled trades left by a trader.

Open Trades (Open Positions)
Any current position that has not been liquidated and thus on which the trader is still at risk. Also that section of a trading screen that shows a trader’s currency positions and their values.

Opening Range
The range of prices occurring during the first trading of the day. The actual time period is determined by the rules of the exchange.

Optimization
A process of improving the performance of a trading system by testing for optimal input values.

Oscillator
An oscillator is a technical indicator for which the value ranges between zero to 100, -100 to 100, or vacillates around a central zero line. They are most often used to identify overbought and oversold price regions, but can assist in identifying the direction and strength of trends.

OTC (Over-the-Counter)
Trades made between counter-parties via the telephone or through an electronic network, rather than on an exchange floor. FX is an Over-The-Counter market.

Out-of-Sample Data
Price series used for testing the parameters of an indicator that has not been used for determining the parameters (in-sample data). This is most often used in Walk Forward testing of a mechanized system to ensure that the results generated from in-sample data also provide adequate results over other areas of the price history.

Outside Bars and Inside Bars

Inside bars and outside bars are single bar patterns that are often identified as having important qualities and break of the bar’s extremes imply a continuation of the underlying direction.

An “Inside Bar” occurs when the current bars high and low are within the range of the previous bar. This is often interpreted as market price pausing and being uncertain of the underlying direction of the market.

An “Outside Bar” occurs when the current bars high and low exceed the extremes of the previous bar. This is often interpreted as the market having two conflicting views, the market has both buyers and sellers entering the market and thus break of the extremes (high or low) may provoke a further move in one direction.
Often, market players will look at the underlying volume to provide additional evidence of a potential move.

Outside Reversal Bar
When the bar trading range, high to low, exceeds the previous bar’s high to low range and closes opposite the previous period’s close. When employed during a trend, they often occur at trend reversal.

Overbought
When market prices have reached a point an exhaustion of buyers exists. Momentum indicators are employed to identify overbought conditions but are generally only accurate in consolidating markets. Note: Overbought conditions within a downtrend can alert traders to selling opportunities.

Overbought/Oversold Indicator
An momentum indicator that defines when prices may have reached a potential point for a reversal due to a lack of buyers or sellers. The use of momentum indicators as overbought/oversold signals is generally only accurate in consolidating markets.

Overfitting
Using the highest profit point for the selection of parameters of a trading system over a specific time period without determining the likelihood that the parameters will retain their profitability over other periods of price data. Also known as “Curve Fitting”.

Oversold
Market prices that have declined to a point that there is a lack of any new sellers. Momentum indicators are employed to identify oversold conditions but are generally only accurate in consolidating markets. Note: Oversold conditions within an uptrend can alert traders to buying opportunities.

Over-the-Counter (OTC)
Trades made between counter-parties via the telephone or through an electronic network, rather than on an exchange floor. FX is an over-the-counter market.

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