Glossary
The TFG Trading Matrix Glossary is a constantly evolving collection of terms that may be heard on our live hedge fund broadcasts. Some of the entries on this list are financial world colloquialisms and acronyms, and others have been borne out of our unique culture and communication style. Whether common or unusual, these words, acronyms, and phrases help us to communicate effectively with each other and maximize our collective intelligence.
| Glossary of Terms | Definition |
| "A" Trade | A trade where all signals confirm each other |
| "B" Trade | A trade is entered despite conflicting signals |
| ABA | American Bank Association |
| Absolute Return Basis | The return of an asset over a certain length of time (expressed relative to invested capital) |
| ADR | American Depository Receipt |
| ADV | Average Daily Volume |
| ARPU | Average Revenue Per Subscriber |
| ASP | Average sale price per unit |
| At the Money | Option strike price and market price are the same. |
| Backwardation | In the futures market when the price is below the expected future spot price and so the price will rise to the spot price before delivery date |
| Beta Hedge | A position that offsets the risk of another position based on the volatilitiy of a stock relative to an index or the market |
| Binary Event | An occurrence or piece of news that will yield only two distinct outcomes (i.e., drive the stock price higher or lower) |
| Blind | Don't have visibility on my screen |
| Blue Dog Democrat | A fiscally conservative Democrat |
| Boondoggle | Work that is done merely to look busy, not to actually improve anything |
| Buy Side | Institutions that invest large amounts of money in securities, usually money management companies |
| Can | Cancelling an order |
| Capitulation | Giving up any prior gains in stock price as market sells off (panic selling) |
| Carry Trade | Borrowing currencies with lower interest rates and using the funds to purchase currencies with higher interest rates (in attempts to captures the spread) |
| Collateral Debt Obligation (CDO) | Structured security backed by collection of loans. Split into tranches with differing maturity and risk. |
| Contango | In the futures market when the price is above the expected future spot price and so the price will drop to the spot price before delivery date |
| Correction | A temporary decline in a stock's trading price during an uptrend |
| Credit Default Swap (CDS) | A contract in which the seller of protection receives coupon payments from the buyer of protection who in return receives a payoff if the underlying entity goes into default. Means of hedging against risk of default. |
| Cyclical Market | A short term trend that appears as a retracement move within a longer term (secular) trend |
| D.K. | Don’t Know |
| Day Trader's Paradise | A volatile and liquid stock that allows for good intra day long/short opportunities |
| Dead Cat Bounce | Market bounces back up after being on its lows and then continues to fall back down |
| Deluge | A flood |
| DIP Financing | Debtor-In-Possession Financing is used by a company while under bankruptcy and usually has priority over existing debt. |
| Directional Misprint | A false print of a stock price |
| Doji | In a candlestick chart, a candle that has little or no body, meaning the opening price and closing price of the period are the same or nearly the same |
| Dollar/Yen | A cross for the currencies of the U.S. and Japan that indicates how many yen (quote currency) are required to buy one dollar (base currency) |
| Durable Goods | Products that do not wear out quickly and can be used over a period of time |
| DWAP | Dean's Woe-Filled Average Price. Always followed by Dean lamenting that he should have bought more or less. |
| Easter Shift | The rise in retail sales created by Easter, which can fall in March or April, depending on the year |
| EBIT | Earnings before interest and taxes |
| EBITDA | Earnings before interest, taxes, depreciation, and amortization |
| Equity Tranche | The lowest risk class of a CDO that bears the risk of payment delays and credit losses as it receives the remaining cash flows after debt tranche claims are fulfilled |
| Euro/Dollar | A cross for the currencies of the EU and U.S. that indicates how many dollars (quote currency) are required to buy one euro (base currency) |
| Execution Trader | Someone who executes trades on someone else's behalf, at the best levels possible |
| Execution Trader | A person who buys and sells securities upon receiving verbal orders from portfolio managers |
| Exogenous Event | An outside shock/occurrence that impacts the market |
| Exponential Increase | If costs stay the same and revenues increase, the increase in profitability increases exponentially compared to the growth in revenue. |
| Fair Value | The equilibrium price for a futures contract and refers to the relationship between the value of the futures contract on an index and the actual value of the index |
| Feeler Trade | The initiation of a trade through use of a small percentage of your maximum position size for the sole purpose of confirming your entry signals, typically less than 20% of max position |
| FFX Trend | A trend that lasts for a number of years |
| Fibonacci Retracement | Technical trading tool created by taking the distance between two extreme points and dividing it by the key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 100%) |
| Fill or Kill | Fill the order or it’s cancelled |
| Fund | Investors' money is pooled, and a fund manager chooses investments, as opposed to the investor. There is less transparency and control than with a managed account. |
| Fund of Funds | A fund that invests in other hedge funds, as opposed to specific securities |
| GAAP | Generally Accepted Accounting Principles |
| Gamble | Calculated investment |
| Game Theory | A mathematical concept that assesses behavior in strategic situations where an individual's success in making choices is dependent on another individual's choices |
| Gap Up/Down | Sharp stock price move up/down with no trading occurring in between |
| Good 'Til Canceled (GTC) | An order to buy/sell stock at a predetermined price that remains open until filled or canceled |
| Greenshoe | Underwriter has the right to sell more shares than originally planned to investors, effectively increasing supply and smoothing out price fluctuations. |
| Haia | A term that is only used to explain that the stock GAIA is going higher |
| Hammer Shlacked | A stock that is driven down hard |
| Handle | Whole dollar price of a quote |
| Hedgecast | TFG's term for the live broadcast of our real hedge fund |
| Hump Day | Wednesday |
| Humphrey-Hawkins | Legislation that required the FOMC to report the economy and monetary policy to Congress twice a year (still colloquially called the Humphrey-Hawkins reports) |
| Iceberg Order | One large order split into smaller lots to hide actual quantity from the market ("below the surface") |
| Ichthyology | The study of fish |
| IMHO | In my humble opinion |
| Immediately Accretive | When, during an acquisition, the acquiring company's earnings don't take a hit after they take over the acquired company |
| In the Money | Option is worth money so you can exercise it for a profit. For a call, the strike price must be below market price. For a put, the strike price must be above market price. |
| Independent Research | Research that is sold for a fixed price, not for a commission |
| Inside Day | A stock trades within its previous day's high and low all day. |
| Intellectual Turrets | Inability to control one's intellectual articulation. It is the difference between Senator Levin who can't stop saying "shitty" and Klein who goes on five minutes of excessive intellectualization. |
| Invincible Complex | Possessing excessive convinction due to a profitable streak in trading |
| Jobless Claims | A weekly report on the number of newly filed unemployment benefit claims and can be used as a gauge for the nonfarm payroll release |
| Kleinocologist | One who thinks and acts like Jeremy Klein |
| Kuleana | Responsibility |
| Large Vanilla Buyers | Institutional buyers |
| LBO | Leveraged buyout |
| Limit Up/Down | The maximum amount that a futures contract price is allowed to increase/decrease in one day |
| Liquidity | A security's ability to be bought or sold in the market without affecting its price. A stock's average daily volume is often positively correlated with its liquidity. |
| Liquidity Hedge | A position that offsets the risk that a stock cannot be traded quickly enough in the market in order to exit that position |
| Low Risk Buy | Buying a stock on an R4 buy signal just above R3 or buying a stock on an S3 buy signal just above S4. |
| Low Risk Sell | Selling a stock on an S4 sell signal just below S3 or selling a stock on an R3 sell signal just below R4. |
| Managed Account | The investor chooses the investments. There is less credit risk in a managed account than there is in a fund. |
| Management Fee | A fee charged by the manger of an investment fund to compensate the firm for managing investors' money, typically a specific percentage of assets under management |
| Market on Close | Market order executed as close to the end of the trading session as possible. |
| N.O.L. | Net Operating Loss |
| Not Held | A trader is asked to make a trade, and is not held accountable for the price at which he makes the trade |
| Observationalist | One who studies the nature of reality |
| Ohm | A unit of resistance |
| Om/Aum | A way of deepening the mind's concentration and is chanted while practicing yoga (or while under stress or after a poor trade) |
| Option Series | A set of calls or puts on the same underlying security with the same strike and maturity |
| Orange Line | In Bloomberg, indicates previous settlement |
| Ords | Ordinaries |
| Out of the Money | Option is worthless if it expired today. For a call, the strike price must be higher than market price. For a put, the strike price must be below the market price. |
| Outside Day | A stock reaches above its previous day's high or below its previous day's low. |
| Outside Reversal Day | A stock goes lower than its previous day's low and then goes all the way up above its previous day's high (vice versa) |
| Over the Counter | Trading that occurs directly between buyers and sellers instead of through an exchange |
| P.B.M.P. (Post Beat/Miss Pivot) Trade | In the event that a company surprised to the up/downside with earnings this name will be traded by the desk for 3-4 days afterward |
| Pack Trading | One firm holding multiple positions across different traders' accounts in the same stock |
| Painting the Tape | Traders buy and sell a specific security among themselves, creating an illusion of high trading volume to entice investors to buy the stock, which will enable them to profit from it. Painting the tape is illegal. |
| Pairs Trade | When a long position in one stock is offset by a short position in another stock of the same sector |
| Performance Allocation | A percentage of fund profits to which the fund manager is entitled in periods of positive returns |
| Piker | A trader who trades small and speculatively so that growth potential as a trader becomes limited |
| Pinning/Pegging | A stock's per share price will trend toward the strike price of a heavily traded option contract as option expiration approaches |
| Posting | Painting a clear picture of the stock's chart so that the trader does not need to view the chart in order to receive information on how the stock is trading. A post consists of the symbol, pivot signal, and one or more pieces of color. |
| Priced to Perfection | Stock price has been bid up so much that only if earnings are perfect will the price go up. |
| Prime Brokerage | Services provided by financial services firms to hedge funds and other investors seeking to borrow securities and cash |
| Probability Analysis | The process of assessing and drawing conclusions on the mathematical likelihood of events occurring |
| Proprietary Firm | A firm that keeps their research and information in-house |
| Proprietary Trading Desk | A firm that trades with the firm's own capital as opposed to that of the investors to gain direct profit for itself |
| R3 Reversal Sell Pivot | Stock moves up through R3 and then back down through R3 |
| RASM | Revenue per available seat mile - an important airline metric |
| Red Rooter | One who roots for market/name to go red on the day |
| Regulation Fair Disclosure (Reg FD) | A rule passed by the SEC to ensure public companies disclose all information to all investors simultaneously, thus preventing them from selectively disclosing information to individual investors |
| Revenues First | Phrase used before interrupting a principal when what you have to say is revenue related. |
| Rip and Roll | When the chart for a stock has a steep incline, a rounded top, and a slow decline, eventually breaking |
| Roundtrip | Stock breaches R4 (S4), then breaches S4 (R4) and then comes back to R4 (S4) |
| S1 | A form that must be filled out for an IPO offering |
| S3 Reversal Buy Pivot | Stock moves down through S3 and then back up through S3 |
| Same Store Sales/Comp Sales | Sales revenue generated by a retail store (that has been open for at least one year) |
| Scaling | Process of entering/exiting a position in increments |
| Scalp Trade | Looks to make several quick profits off small price changes. |
| Schizo Market | Uncertainty in the market creating frequent directional changes |
| Secular Market | A long term prevailing trend that tends to last 5-25 years and can be classified as bullish or bearish |
| Sell Side | A broker/dealer selling their research to buy-side firms for a commission |
| Sell-In | A sale at wholesale to a retailer |
| Sell-Through | A sale at retail |
| Shakeout | An industry consolidation where stronger names take over weaker names |
| Shitty | Senator Levin's description of the Goldman Sachs Abacus deal |
| Shlob | A combination of a shmo and a slob |
| Sizing | Setting dollar value of and number of shares in position |
| Softee/Mr. Softee | Microsoft (ticker MSFT) |
| SPYaddict | One who is addicted to trading SPYs |
| Systemic Event | An occurrence from within the financial system that impacts the market |
| Targeted Amortization Class (TAC) | Credit derivative that protects investor from a rise in prepayment rate or fall in interest rates. |
| Texas Hedge | A trade that looked like a hedge, but actually turned out to increase risk exposure |
| The Box | NASDAQ market maker box |
| Thesis/Story Trade | A trading strategy based on a well thought out fundamental belief about a name or industry that will affect the price of a stock (tends not to be market movers) |
| Trigger Puller | Someone who makes substantial decisions |
| Unch'd | Unchanged stock price |
| Under the Offer | Offer below market price |
| Up-Fronts | Bulk sales by television industry of advertising time to advertisers |
| VIX | The implied volatility of S&P 500 index options |
| VWAP | Volume Weighted Average Price. Calculated by taking the sum of the price paid for each share of a specific stock during one day (number of shares x price per share) and dividing that number by the total number of shares bought on that day. It is basically the average price of each share bought on a specific day. |
| VWAP Trade | When a share of stock can be bought for a price below its VWAP, it is considered a good trade, and vice versa. The expectation is that the price will usually move back to the stock's VWAP level. |
| Weasel Type | Sophisticated day trading strategy |
| Whipsaw | When a stock moves in one direction, but then quickly moves in the other direction |
| Whoosh | A large and quick move up or down in the market |
| Window Dressing | Fund managers trading during the last few days of the month and/or quarter to make their reporting holdings to the fund shareholders more attractive |
| Working Orders | Open trade orders |
| Yard | $1B notional value |
| Yield to Worst (YTW) | The lowest potential bond yield without the issuer actually defaulting |
The TFG Glossy-ry
| Bad Mood | Jeremy Klein |
| Foreigner | Dean Machado |
| Trafficking | Shine |
| Zen | Mark Moskowitz |