Glossary of terms of stock trading, trading patterns, technical analysis, and the stock market

glossary of terms of stock trading trading patterns technical analysis and the stock market Trading lessons

Terms used in Stock Trading, Trading Patterns, Technical Analysis, and the Stock Market

Use this glossary to understand some of the terms you will come across at this site, or other sites about stock trading and technical analysis.

If there is a related word that you can’t find a definition for at this site, drop me an email and I will add it to the glossary. Just use the contact page.

Choose a letter

Ask – the price you can expect to buy at when using a market order

At-the-money – an option those strike price matches the underlying current price

Bar chart – stock chart that shows a vertical line representing the price range, typically includes ticks to represent the open and close

Bear market – a market characterized by prices that generally fall

Bid – the price you expect to sell at when using a market order

Breakeven – when the price is equal to a level that covers the expense of entering and exiting a trade

Breakout – when a stock trades above or below a significant high or low price

Broker – an agent who executes buy or sell orders for customers

Bull market – a market characterized by prices that generally rise

Buy stop order – an order to buy that is contingent on prices rising above a certain price before being executed

Call option – the right, but not the obligation, to buy a stock at a certain price sometime in the future

Candlestick chart – Japanese stock chart that represents price action with a real body for the open and close and wicks, or tails, for the high and low

Chart – graphical representation of price action

Close – last trading price for the market session

Day order – order that either is filled or expires by the end of the day trading session

Day trading – trading that typically involves opening and closing a position within one trading day

DIA – ticker symbol for the AMEX Diamonds

Divergence – a difference in indicators

Downtrend – a series of lower lows and lower highs

Elliott Wave – method of analyzing the stock market in waves of threes and twos

Exchange – an association that participate in the business of buying and selling stocks

Fibonacci – for the stock market, a method of measuring potential support and resistance levels

Fill or Kill – an order that is filled almost immediately or canceled if not filled immediately

Floor trader – exchange members who trade on the floor, typically for themselves or as a member of a financial institution

Gap – a skip or jump in a trading range.

Good-Till-Cancel – an order that is open until either a certain price is reached or canceled

Hedge – a transfer of risk that typically involves offsetting a position with either the purchase or sale of options

High – highest price that occurs for a trading period

Index – a specialized average that represents a group of stocks

Interest rate – rate at which funds are usually borrowed or lended

Level II – in depth representation of bids and offers

Leverage – the ability to control a larger amount of money with a smaller amount

Limit order – an order that is only filled a specified price, or better

Line chart – stock chart that plots a line from closing price to closing price

Liquidity – a market that allows for easy entry and exit of a position due to the large amount of volume

Low – lowest price that occurs for a trading period

Margin – effectively borrowed money

Margin call – when a broker requires that you put up more money for the open positions that you have in your account

Market order – an order to enter or exit a position at the current price

Money management – controlling the amount of money at risk

Moving average – a lagging indicator of price action that replaces the oldest price with the most recent price

Offer – price at which you can expect to pay for taking a long position

Online trading – trading through a broker, typically on the internet, that requires no interaction with a human broker

Open – first price of the trading period

Point and figure chart – stock chart that represents price with X’s and O’s, does not account for time like a typical bar chart does

Position – what stocks you are either long or short in your account

Pullback – when stocks prices temporarily give back recent gains or losses

QQQ – AMEX tracking stock for the Nasdaq 100 index

Rally – when prices rise

Range – difference between the high and low price of a trading period

Resistance – a price level where rising prices can be expected to stop or turn back down

Retracement – when a stock gives back recent gains before rising again or when just the opposite when falling

Short – selling a stock that you don’t own

SPY – AMEX tracking stock that represents the S&P 500

Stochastic – oscillator indicator typically associated with George Lane as the inventor

Stop order – order to buy or sell that is executed once a certain price is exceeded

Support – a price level where falling prices can be expected to stop or turn back up

Swing trading – trading that typically looks to enter at the first sign of a change in direction

Trading range – when a stock stays within a smaller than normal price area

Trading software – software designed specifically to help traders either by providing quotes, charts or the ability to place orders

Trading times – when the markets are open and closed

Technical analysis – uses charts to examine changes in price patterns with the anticipation that price action leads fundamentals

Trendlines – straight line that connects signficant highs or lows

Volatility – increase in price activity

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