Divergence
Technical analysisWhen price makes a new extreme but an indicator does not confirm it.
In plain terms
A warning to tighten risk, not a trigger to reverse. It can persist for weeks.
1678 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Divergence risk
Technical analysisIn a pairs trade, the risk that the spread keeps widening because the relationship between the two legs has genuinely changed.
In plain terms
The failure mode that erases many winners: you lose on both legs at once, and the short leg's loss is theoretically unbounded.
MACD
Technical analysisMoving Average Convergence Divergence — the gap between a fast and a slow EMA, plus a signal line and histogram.
In plain terms
Two averages arguing. The histogram turns first and is the most useful part.
Arbitrage fund
Market basicsA scheme holding domestic listed equity against an offsetting short position in futures, so the return comes from the gap between the two rather than from the direction of the market.
In plain terms
Money-market behaviour with equity classification for tax, because the test asks what is held and not what the holding is hedged with. The international equity fund is the same divergence running the other way.
Momentum
Technical analysisThe rate at which price is changing, as distinct from its direction.
In plain terms
Price can still rise while momentum fades — that gap is what divergence measures.
Operating cash flow
AccountingCash generated by the core business, after working-capital movements.
In plain terms
Compare five years of this against five years of net profit. Divergence is the red flag.
Polled spot price
DerivativesAlso called: Spot polling
A spot price computed by surveying physical market participants at a designated delivery centre under a published methodology, rather than from an order book.
In plain terms
It is a survey taken once or twice a day, not a continuously traded series. Reading a divergence between it and the futures as though both were live prices misreads what one of the two numbers is.