Paper Trade: A “pretend” trade that does not involve any real monetary transactions. Though no real in the markets, trading softwares and brokers have options for paper trading that will track your paper trades like a real account. This gives you the real feel of an account, with gains and losses on each trade, but without any of the risk. Paper trading is a great way to learn the ropes of trading.
Parabolic SAR: Also referred to as the “stop-and-reversal indicator”, the Parabolic SAR is popularly used for setting stops for longs or shorts. A buy signal is created when the indicator pivots below the price, while a sell signal is created when the indicator moves above the price. Read more about parabolic SAR.
Pennant: A continuation chart pattern that is similar to the flag, except that it is more horizontal and resembles a small symmetrical triangle.
Penny Stock: A stock that typically would sell for less than $1 per share, though the price may rise because of significant promotion. Penny stocks are very speculative and risky due to their lack of available information and poor liquidity. The majority are scams that will eventually find their way to zero.
Percentage Price Oscillator (PPO): An indicator based on the difference between two moving averages expressed as a percentage. The PPO is found by subtracting the longer moving average from the shorter moving average and then dividing the difference by the longer moving average.
Percentage Volume Oscillator (PVO): The percentage difference between two moving averages of volume expressed as a percentage. The PVO is found by subtracting the longer volume moving average from the shorter volume moving average and then dividing the difference by the longer moving average.
Piercing Line: A bullish two day reversal pattern. The first day, in a downtrend, is a long black day. The next day opens at a new low, then closes above the midpoint of the body of the first day.
PHLX: The Philadelphia Stock Exchange. Even though the PHLX was taken over by the Nasdaq, the Nasdaq website still shows a separate listing for the PHLX with over 2600 index, equity and sector-index options traded every day.
Pivot Point: The point at which resistance deminish and the price begins to move past the prior resistance level. This point can be considered the optimal time to buy as the bulls are gaining strength.
Position Trading: A style of trading characterized by holding open positions for an extended period of time. Contrast this with day trading, where a trader buys, then sells out of a position before the market closes that day.
Positive Reversal: Occurs when the RSI forms a lower low and the stock forms a higher low.
PPO: See Percentage Price Oscillator.
Precious Metals Commodities Index ($GPX): The Precious Metals Commodities Index. Gold, silver, and platinum are the listed metals.
Presidential Cycle: A four year cycle that shows the last two years of a President’s term outperform the first two years.
Price By Volume: A horizontal histogram that overlays a price chart. The histogram bars stretch from left to right starting at the left side of the chart. The length of each bar is determined by the cumulative total of all volume bars for the periods during which the closing price fell within the vertical range of the histogram bar.
Price Channels: Similar to Bollinger Bands, price channels form boundaries above and below the price line and can be used as indicators of volatility. Price channels are created by specifying a number of periods that will chart an n-period high or low around the price line.
Price Momentum Oscillator (PMO): Created by Carl Swenlin and featured on his website. DecisionPoint.com has more information on the PMO.
Price Oscillator (PO): An indicator based on the difference between two moving averages shown in either a percentage, or in absolute. The abbreviation PPO refers to the Percentage Price Oscillator, while APO refers to the Absolute Price Oscillator.
Price Patterns: Patterns that appear on price charts possessing predictive values. Patterns are divided into reversal and continuation patterns.
Price/Earnings Ratio: Also referred to as a “multiple,” the P/E ratio is found by dividing the price by the earnings per share. For example, a stock selling at $100, with earnings at $10 per share for the previous year, has a P/E ratio of 10 (100/10 = 10).
Put: The right to sell a stock or commodity future at a given price before a given date. The owner of the put option is speculating that the price of the stock will go down and is therefore bearish.
Put/Call Ratio: The Put/Call Ratio is the total number of puts divided by the total number of calls. When more puts are traded than calls, the ratio exceeds 1. As an indicator, the Put/Call Ratio is used to measure overall market sentiment. When the ratio gets too low, it indicates that call volume is high relative to put volume and the market may be overly bullish. When the ratio gets too high, it indicates that put volume is high relative to call volume and the market may be overly bearish or in panic.