List of Financial Market Terms

When applying Technical Analysis to your trading, it is important to note the difference between Geometric and Functional Indicators.

Geometric Indicators are comprised of price action and volume. This includes all geometric patterns such as Head & Shoulders, Bull Flag, Ascending Channel, Descending Channel, Descending Triangle, and the likes.  Volume is included in this category of indicators because of the important role it plays in confirming the price patterns.

Functional Indicators include everything else.  All momentum indicators, trend indicators, etc.  Some examples include RSI, Fibonacci Retracements, MACD, Exponential Moving Averages, Simple Moving Averages, PPO.

Geometric Indicators are far more important than Functional Indicators.  Traders should never place a trade solely on a functional indicator.  They should find reasoning to enter a trade based on a geometric indicator and use the functional indicator to help strengthen their analysis.

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