Trading Glossary - 300+ Terms & Definitions
Complete trading dictionary with 300+ terms, market concepts, and financial jargon. Searchable glossary with examples and practical applications for traders of all levels. Essential reference for understanding market terminology.
When large volume hits the market at a key level but price doesn't move significantly, indicating strong opposing interest.
Heavy selling into support at $100 with high volume but price only drops to $99.95 shows absorption by buyers.
An arrangement with a broker that allows you to deposit funds and trade financial instruments.
Opening a trading account with $10,000 to start buying and selling stocks.
A phase where institutional investors and smart money gradually build positions in a security, often during sideways price movement.
Bitcoin showed accumulation between $15,000-$20,000 for months before breaking out to new highs.
Average Directional Index - a technical indicator that measures the strength of a trend, ranging from 0 to 100.
An ADX reading above 25 indicates a strong trend, while below 20 suggests a weak or sideways trend.
Trading that occurs outside regular market hours, typically with lower volume and wider spreads.
After hours trading on US stocks occurs from 4:00 PM to 8:00 PM ET, allowing reaction to earnings announcements.
Market participants willing to pay the spread immediately by hitting bids (sellers) or lifting offers (buyers), showing urgency in their trading.
An aggressive buyer lifting the ask at $50.25 instead of waiting for their $50.00 bid shows strong bullish conviction.
Traders willing to pay market prices immediately, crossing the spread by hitting bids or lifting offers.
Aggressive buyers lifting the ask at $150.25 instead of waiting for their $150.00 bid to be filled.
Free distribution of cryptocurrency tokens to holders of a particular blockchain or to promote a new project.
Uniswap airdropped 400 UNI tokens to every user who had used the platform before September 2020.
Trading that uses computer programs to execute trades automatically based on pre-set instructions, often at high speeds and volumes.
An algorithm programmed to buy Apple stock when its 50-day moving average crosses above the 200-day moving average.
An order to buy or sell a security that must be executed in its entirety, or not executed at all.
An AON order for 1,000 shares will only execute if all 1,000 shares can be filled at the specified price or better.
The highest price level that a security has ever reached in its trading history.
Bitcoin reached its ATH of approximately $69,000 in November 2021.
The lowest price level that a security has ever reached in its trading history.
Many altcoins hit their ATL during the crypto winter of 2018-2019.
A measure of an investment's performance relative to a benchmark index, indicating the excess return generated.
A portfolio with an alpha of 2% has outperformed its benchmark by 2% annually after adjusting for risk.
Any cryptocurrency other than Bitcoin, short for 'alternative coin'.
Ethereum, Cardano, and Solana are popular altcoins with different use cases than Bitcoin.
Electronic trading venues that match buy and sell orders but are not registered as national securities exchanges.
Dark pools are a type of ATS that allows institutional investors to trade large blocks without revealing their intentions.
An option contract that can be exercised by the holder at any time on or before its expiration date.
Most stock options in the US are American-style, giving holders flexibility to exercise early if profitable.
The practice of buying and selling identical or similar financial instruments on different markets to profit from price differences.
Buying Bitcoin on one exchange for $30,000 and simultaneously selling it on another for $30,100 to capture the $100 price difference.
The lowest price a seller is willing to accept for a security. Also known as the 'offer price'.
If a stock's ask price is $50.25, that's the lowest price any seller is currently willing to sell at.
The obligation received by an option writer requiring them to fulfill the terms of the contract if exercised by the buyer.
If you write a call option and it's exercised, you're assigned to sell 100 shares at the strike price.
An option whose strike price is equal or very close to the current market price of the underlying asset.
If Apple stock is trading at $150, a $150 call or put option would be considered at-the-money.
A technical indicator that measures market volatility by calculating the average range between high and low prices over a specified period.
An ATR of 2.5 on a daily chart means the average daily range is 2.5 points, helping traders set appropriate stop losses.
A framework viewing markets as two-way auctions where price discovery occurs through the interaction of buyers and sellers, with price moving from balance to imbalance areas.
Using auction market theory, traders identify value areas where 70% of volume occurs and trade breakouts from these balanced zones.
A type of decentralized exchange protocol that relies on mathematical formulas to price assets instead of order books.
Uniswap uses an AMM model where users trade against liquidity pools rather than other users directly.
A strategy of buying more shares of a stock as its price falls to lower the average cost per share of the total position.
If you bought 100 shares at $50 and the price drops to $40, buying another 100 shares brings your average cost to $45.
Adding to a winning position by buying more shares as the price rises, increasing the average cost but riding the momentum.
Buying 100 shares at $50, then adding 100 more at $60 as the stock shows strength, averaging up to $55.
Testing a trading strategy using historical data to evaluate how it would have performed in the past.
A backtest of a moving average crossover strategy on SPY from 2010-2020 showed a 12% annual return.
A market situation where futures prices for distant delivery months are lower than prices for nearer delivery months.
Oil markets may show backwardation when current supply is tight, making immediate delivery more valuable.
An investor left holding shares of a stock that has declined significantly in value, often from buying at the peak.
Investors who bought GameStop at $400 during the 2021 squeeze became bag holders when it fell back to $40.
The total amount of money in your trading account, including cash and the value of any positions.
An account balance of $25,000 might include $10,000 cash and $15,000 in stock positions.
A period of sideways price consolidation that often precedes a significant price movement, forming a foundation for the next move.
A stock building a base between $45-50 for several weeks before breaking out to $60.
The first currency in a forex pair, representing the currency being bought or sold.
In EUR/USD, the Euro (EUR) is the base currency and USD is the quote currency.
One hundredth of one percent (0.01%), commonly used to describe interest rate changes or fee differences.
The Federal Reserve raising rates by 25 basis points means increasing rates by 0.25%.
The risk that an investment's hedge will not move in perfect correlation with the asset being hedged.
Hedging a stock portfolio with index futures may have basis risk if the portfolio doesn't track the index perfectly.
A prolonged period of declining prices, typically defined as a 20% or greater decline from recent highs.
The 2022 crypto bear market saw Bitcoin fall from $69,000 to below $16,000.
Having a negative outlook on the market or a specific security, expecting prices to fall.
A trader might be bearish on tech stocks if they believe interest rate hikes will hurt growth companies.
The fiduciary duty of brokers to execute trades at the most favorable terms reasonably available to the customer.
Best execution considers price, speed, likelihood of execution, and costs, not just the lowest price.
A measure of a security's volatility in relation to the overall market, typically using the S&P 500 as a benchmark.
A stock with a beta of 1.5 tends to move 50% more than the market - if the market rises 10%, the stock typically rises 15%.
The highest price a buyer is willing to pay for a security at a given time.
If a stock's bid price is $49.95, that's the highest price any buyer is currently willing to pay.
A mathematical model used to determine the theoretical fair price of European-style options.
The Black-Scholes model considers factors like stock price, strike price, time to expiration, volatility, and interest rates.
A large transaction of securities, typically 10,000 shares or more, often executed away from the public market.
A block trade of 500,000 Apple shares might be negotiated privately between institutions to avoid market impact.
A distributed ledger technology that maintains a continuously growing list of records, linked and secured using cryptography.
Bitcoin's blockchain records every transaction ever made, creating an immutable and transparent ledger.
Large, well-established companies with a history of reliable performance, stable earnings, and often dividend payments.
Companies like Apple, Microsoft, and Johnson & Johnson are considered blue chip stocks.
Large, well-established companies with a history of reliable performance, stable earnings, and often dividend payments.
Companies like Apple, Microsoft, and Johnson & Johnson are considered blue chip stocks.
A technical indicator consisting of a moving average and two standard deviation bands above and below it, used to measure volatility.
When price touches the upper Bollinger Band, it may indicate overbought conditions and potential reversal.
The net worth of a company according to its balance sheet, calculated as total assets minus total liabilities.
If a company has $100 million in assets and $40 million in liabilities, its book value is $60 million.
A three-part order consisting of an entry order, a profit target, and a stop loss, all placed simultaneously.
A bracket order to buy at $100, take profit at $110, and stop loss at $95, managing the entire trade setup at once.
A price action pattern where the market breaks a previous high (in an uptrend) or low (in a downtrend), confirming trend continuation or reversal.
Price breaking below the previous low at $98 creates a bearish BOS, signaling potential trend change.
When a security's price moves outside a defined support or resistance level with increased volume.
A stock trading between $45-50 for months that suddenly jumps to $52 with high volume is experiencing a breakout.
A person or firm that executes buy and sell orders for investors and charges a commission for this service.
Online brokers like TD Ameritrade and E*TRADE allow individual investors to trade stocks and options.
A prolonged period of rising prices and investor optimism, typically characterized by 20% or greater gains from recent lows.
The 2020-2021 crypto bull market saw Bitcoin rise from $4,000 to over $69,000.
Having a positive outlook on the market or a specific security, expecting prices to rise.
Investors are bullish on renewable energy stocks due to increasing government support and adoption.
To purchase a security with the expectation that its value will increase over time.
Buying 100 shares of Apple stock at $150 means you're purchasing ownership in the company.
The amount of money available in a trading account to purchase securities, including cash and margin availability.
With $10,000 cash and 2:1 margin, your buying power would be $20,000.
Trader slang for the GBP/USD currency pair, named after the transatlantic cable that carried exchange rates.
A trader might say 'Cable is trading at 1.2500' referring to the GBP/USD exchange rate.
A type of price chart that displays the high, low, open, and closing prices of a security for a specific period.
A green candlestick shows the closing price was higher than the opening price for that time period.
Money or assets available for trading or investment purposes.
Starting with $50,000 in trading capital to build a diversified portfolio.
A period of panic selling where investors give up hope and sell their positions at significant losses, often marking market bottoms.
The March 2020 COVID crash saw capitulation as the S&P 500 fell 35% in just weeks.
A strategy where an investor borrows in a low-interest-rate currency and invests in a higher-interest-rate currency.
Borrowing Japanese Yen at 0.1% interest and investing in Australian Dollars at 2.5% interest to capture the 2.4% difference.
A brokerage account where all transactions must be paid in full with available cash, no borrowing allowed.
In a cash account, if you have $5,000, you can only buy $5,000 worth of securities.
A national institution that manages a country's currency, money supply, and interest rates.
The Federal Reserve (Fed) is the central bank of the United States, setting interest rates and monetary policy.
Commodity Futures Trading Commission - the US federal agency that regulates commodity futures and options markets.
The CFTC publishes weekly Commitment of Traders (COT) reports showing institutional positions in futures markets.
A market structure shift where price action changes from making higher highs/lows to lower highs/lows or vice versa, indicating potential trend reversal.
After making higher highs, the market creates a lower low at $95, showing a bearish change of character.
A trading range where price moves between two parallel trendlines, creating support and resistance levels.
A stock trading in an ascending channel bounces between a rising support line at $90-95 and resistance line at $105-110.
The risky practice of buying a stock after it has already made a significant move up, often driven by FOMO.
Chasing a stock that jumped from $20 to $30 in minutes, buying at $29 just before it pulls back to $25.
Erratic price movement with no clear direction, making it difficult to trade profitably.
The market chopping between $100 and $102 all day with no clear trend.
A regulatory mechanism that temporarily halts trading when a security or market index moves by a predetermined percentage.
US stock markets have circuit breakers that halt trading for 15 minutes if the S&P 500 falls 7% in a day.
To exit a trading position by executing an offsetting transaction, or the final price of a trading session.
Closing a long position by selling the shares you bought, or the market close at 4:00 PM ET.
A method of storing cryptocurrency offline to protect it from unauthorized access and cyber threats.
Hardware wallets and paper wallets are forms of cold storage, keeping private keys away from internet-connected devices.
A fee charged by a broker for executing a trade on your behalf.
Paying a $5 commission to your broker for each stock trade you make.
A period where a security's price moves sideways within a defined range, often after a strong move.
After rallying from $100 to $150, a stock might consolidate between $145-155 for several weeks.
A measure of inflation that tracks the average change in prices paid by consumers for goods and services.
A CPI reading of 3.2% means consumer prices increased 3.2% compared to the same month last year.
A market situation where futures prices for distant delivery months are higher than prices for nearer delivery months.
Oil markets typically show contango when storage costs and interest rates cause longer-dated contracts to trade at a premium.
A decline of 10% to 20% in a security or market from its recent peak, considered a normal part of market cycles.
The S&P 500 experienced a 15% correction in early 2022 due to inflation concerns.
A statistical measure that indicates how two securities move in relation to each other, ranging from -1 to +1.
Gold and the US Dollar often have negative correlation - when the dollar weakens, gold prices typically rise.
The risk that the other party in a financial transaction will default on their contractual obligation.
In OTC derivatives, there's counterparty risk that the other party won't fulfill their side of the contract.
To close out a short position by buying back the shares that were borrowed and sold.
After shorting 100 shares at $50, covering at $45 locks in a $500 profit.
An options strategy where an investor owns shares and sells call options on those same shares to generate income.
Owning 100 shares of Apple at $150 and selling a $155 call option to collect premium income.
A currency pair that doesn't include the US Dollar, such as EUR/GBP or AUD/JPY.
EUR/GBP is a cross currency pair representing the exchange rate between Euros and British Pounds.
The ability to transfer assets or data between different blockchain networks.
Cross-chain bridges allow users to move tokens from Ethereum to Binance Smart Chain.
Digital or virtual currency secured by cryptography, typically decentralized and based on blockchain technology.
Bitcoin is the first and most well-known cryptocurrency, created in 2009 by an anonymous person or group known as Satoshi Nakamoto.
A bullish chart pattern that resembles a tea cup, consisting of a rounded bottom followed by a small consolidation.
A stock forms a cup between $50-80, consolidates near $78 (the handle), then breaks out above $80.
The quotation of two different currencies, showing the exchange rate between them.
EUR/USD = 1.1000 means 1 Euro equals 1.10 US Dollars.
Private electronic trading platforms where institutional investors can trade large blocks of securities anonymously.
A pension fund might use a dark pool to buy 1 million shares of Apple without revealing their intentions to the market.
An order that expires at the end of the trading day if not executed.
A day order to buy at $50 will be cancelled at market close if the price never reaches $50.
A trading strategy where positions are opened and closed within the same trading day.
A day trader might buy Apple at $150 in the morning and sell it at $152 in the afternoon, never holding overnight.
A temporary recovery in a declining stock or market before resuming the downtrend.
After falling 50%, a stock might rally 15% before continuing to decline - this brief rally is a dead cat bounce.
A financial ratio comparing a company's total debt to shareholders' equity, measuring financial leverage.
A company with $50 million in debt and $100 million in equity has a debt-to-equity ratio of 0.5 or 50%.
Decentralized Finance - financial services built on blockchain technology that operate without traditional intermediaries like banks.
Uniswap is a DeFi platform that allows users to trade cryptocurrencies directly with each other without a centralized exchange.
The difference between buying and selling volume at each price level, indicating whether buyers or sellers are more aggressive.
A positive delta of +500 contracts means 500 more contracts were bought at the ask than sold at the bid.
A term describing investors who hold their positions through significant volatility without selling.
Investors with diamond hands held Bitcoin through the 2022 bear market despite 75% losses.
The reduction in existing shareholders' ownership percentage when a company issues new shares.
If a company with 1 million shares issues 500,000 new shares, existing shareholders' ownership is diluted by 33%.
A phase where institutional investors and smart money gradually sell their positions, often during sideways movement.
During distribution, a stock might trade sideways while volume increases as institutions quietly exit.
When price moves in one direction while a technical indicator moves in the opposite direction, often signaling a reversal.
Price making new highs while RSI makes lower highs shows bearish divergence.
A risk management strategy that mixes a wide variety of investments within a portfolio to minimize exposure to any single asset.
Investing in stocks, bonds, real estate, and commodities rather than putting all money in just technology stocks.
A payment made by corporations to shareholders, usually as a distribution of profits.
Apple pays a quarterly dividend of about $0.23 per share, providing income to shareholders.
A candlestick pattern where the opening and closing prices are nearly equal, indicating market indecision.
A doji forming at a key resistance level often signals uncertainty and potential reversal.
An investment strategy where you invest a fixed amount regularly regardless of price, reducing the impact of volatility.
Investing $500 in Bitcoin every month for a year, buying more when prices are low and less when high.
A real-time display showing the order book with multiple price levels of pending buy and sell orders, revealing supply and demand at various prices.
The DOM shows 5,000 contracts bid at $4,950 and 3,000 offered at $4,951 on ES futures.
A bullish chart pattern showing two distinct lows at approximately the same level, suggesting a potential reversal.
A stock hits $50 twice with a rally to $60 in between, forming a 'W' shape before breaking higher.
A bearish chart pattern showing two distinct highs at approximately the same level, suggesting a potential reversal.
A stock hits $100 twice with a decline to $90 in between, forming an 'M' shape before breaking lower.
The peak-to-trough decline during a specific period for an investment or fund, typically expressed as a percentage.
If a portfolio value drops from $100,000 to $80,000, it has experienced a 20% drawdown.
Earnings Before Interest, Taxes, Depreciation, and Amortization - a measure of operating performance.
A company with $50 million revenue and $30 million EBITDA has a 60% EBITDA margin.
A technical analysis theory that market prices move in predictable waves based on investor psychology and crowd behavior.
According to Elliott Wave theory, a five-wave pattern typically represents the main trend direction.
A trading order that is set to be executed at the closing price of the trading day.
An end-of-day order ensures your trade reflects the final settlement price, useful for portfolio rebalancing.
A candlestick pattern where one candle completely engulfs the body of the previous candle, signaling potential reversal.
A bullish engulfing pattern forms when a large green candle completely engulfs the previous red candle.
The value of ownership interest in a company (stocks) or the net value in your trading account.
Account equity of $50,000 represents your total account value including all positions.
Exchange-Traded Fund - a type of investment fund that trades on stock exchanges like individual stocks but holds a diversified portfolio.
The SPDR S&P 500 ETF (SPY) tracks the S&P 500 index and allows investors to buy exposure to 500 large US companies in one trade.
An option contract that can be exercised by the holder only on its expiration date, not before.
Most index options are European-style, meaning they can only be exercised at expiration.
The date on which a stock begins trading without the dividend; buyers after this date won't receive the upcoming dividend.
If the ex-dividend date is Monday, you must own the stock by Friday's close to receive the dividend.
A marketplace where securities, commodities, derivatives, and other financial instruments are traded between buyers and sellers.
The New York Stock Exchange (NYSE) and NASDAQ are major exchanges where US stocks are traded.
The act by which the holder of an option enforces their right to buy (call) or sell (put) the underlying asset.
Exercising a $50 call option when the stock is at $55 allows you to buy shares at $50.
The date when an options contract expires and becomes worthless if not exercised.
A call option expiring on January 20th must be exercised or sold before market close on that date.
Trading that occurs outside regular market hours, including pre-market and after-hours sessions.
Trading AAPL from 4:00 AM to 8:00 PM ET instead of just the regular 9:30 AM to 4:00 PM session.
A price area on a chart where there's an imbalance between buyers and sellers, creating a gap that price often returns to fill.
A fair value gap forms when price moves from $100 to $105 in one candle, leaving the $102-$104 area untested.
When price briefly moves beyond a support or resistance level but quickly reverses back into the original range.
A stock breaks above $100 resistance, reaches $102, but then falls back to $98 within hours.
A sentiment indicator that measures emotions driving the market, ranging from extreme fear to extreme greed.
When the Fear and Greed Index shows 'extreme fear,' it often presents buying opportunities for contrarian investors.
The central banking system of the United States, responsible for monetary policy and regulating the banking system.
When the Fed raises interest rates, it typically strengthens the dollar and can impact stock market valuations.
A technical analysis tool that uses horizontal lines to indicate areas of support or resistance at key Fibonacci levels.
If a stock rises from $50 to $100, the 61.8% Fibonacci retracement level would be around $69, often acting as support.
An order type that must be executed in its entirety immediately or be cancelled completely.
A FOK order for 1,000 shares will only execute if all 1,000 shares can be filled immediately at the specified price.
A short-term consolidation pattern that slopes against the prevailing trend, resembling a flag on a pole.
After a strong rally (the pole), a stock consolidates in a slight downward channel (the flag) before continuing higher.
The number of shares available for public trading, excluding restricted shares held by insiders.
A company with 10 million outstanding shares but only 7 million float has 3 million restricted shares.
Federal Open Market Committee - the branch of the Federal Reserve that makes key decisions about interest rates and monetary policy.
FOMC meetings occur 8 times per year, and their interest rate decisions can significantly impact financial markets.
Fear Of Missing Out - the emotional fear that leads investors to make impulsive buying decisions based on seeing others profit.
Many investors bought GameStop stock at high prices during the 2021 meme stock rally due to FOMO.
An advanced charting method that displays volume, delta, and order flow data within each price bar, showing the battle between buyers and sellers.
The footprint chart reveals 2,000 contracts traded at $50.25 with a +300 delta, showing buyers were more aggressive at that level.
A change to a blockchain's protocol rules, either soft (backward compatible) or hard (not backward compatible).
Bitcoin Cash was created through a hard fork of Bitcoin in 2017 to increase block size.
Recurring patterns in price charts that appear similar at different time scales, suggesting self-similarity in market behavior.
A pattern visible on a daily chart might also appear on hourly and weekly charts, demonstrating fractal behavior.
The cash generated by a company's operations minus capital expenditures, available for debt repayment, dividends, or reinvestment.
A company with $100 million operating cash flow and $30 million capex has $70 million in free cash flow.
The illegal practice of trading ahead of a large order to profit from the expected price movement.
A broker buying shares for themselves before executing a client's large buy order.
Fear, Uncertainty, and Doubt - negative sentiment often spread to influence market prices downward.
Regulatory FUD about cryptocurrency bans often causes temporary price drops in crypto markets.
An options Greek that measures the rate of change of delta relative to changes in the underlying asset's price.
High gamma means an option's delta will change rapidly as the stock price moves, increasing profit potential but also risk.
A break between prices on a chart where no trading occurred, typically between closing and opening prices.
If a stock closes at $50 and opens the next day at $55 due to overnight news, there's a $5 gap up.
Transaction fees paid to miners on the Ethereum blockchain to process and validate transactions.
During network congestion, gas fees for a simple Ethereum transaction can range from $5 to over $100.
Gross Domestic Product - the total value of all goods and services produced in a country, a key economic indicator.
US GDP growing at 2.5% annually indicates a healthy, expanding economy.
Taking a bullish position by buying a security with the expectation that its price will rise.
Going long 100 shares of Tesla at $200, hoping to sell at $250.
Taking a bearish position by borrowing and selling a security with the expectation of buying it back at a lower price.
Going short 100 shares of XYZ at $50, hoping to cover at $40 for a $1,000 profit.
An order type that remains active until it is either filled or manually cancelled by the trader.
A GTC limit order to buy Apple at $140 will remain active for days or weeks until the stock reaches that price.
Risk measures in options trading that show how sensitive an option's price is to various factors.
The main Greeks are Delta (price sensitivity), Gamma (delta sensitivity), Theta (time decay), and Vega (volatility sensitivity).
A temporary suspension of trading in a security, often due to pending news or excessive volatility.
Trading halted in ABC stock pending announcement of merger news.
A bullish reversal candlestick pattern with a small body and long lower wick, suggesting buying pressure.
A hammer forming at support after a downtrend often signals a potential bullish reversal.
The whole number part of a price quote, or a price level that acts as psychological support or resistance.
When a stock is trading at $152.75, the handle is $152.
A bearish reversal candlestick pattern with a small body and long lower wick, appearing after an uptrend.
A hanging man at resistance after a rally suggests potential selling pressure and trend reversal.
The computational power used to mine and process transactions on a proof-of-work blockchain like Bitcoin.
Bitcoin's hash rate of over 400 EH/s indicates the massive computational power securing the network.
A reversal chart pattern with three peaks, where the middle peak is higher than the other two.
A stock peaks at $80 (left shoulder), $100 (head), and $85 (right shoulder) before declining below $70 (neckline).
A risk management strategy used to offset potential losses in investments by taking opposite positions in related assets.
An airline might hedge against rising fuel costs by buying oil futures contracts.
A form of algorithmic trading that uses powerful computers to transact a large number of orders at very fast speeds.
HFT firms can execute thousands of trades per second, profiting from tiny price differences that exist for milliseconds.
Originally a misspelling of 'hold,' now an acronym for 'Hold On for Dear Life' - a long-term investment strategy.
Bitcoin HODLers who bought in 2017 and held through multiple bear markets saw significant gains by 2021.
A cryptocurrency wallet connected to the internet, offering convenience for trading but with higher security risks.
Mobile wallets and exchange wallets are hot wallets, convenient for frequent trading but vulnerable to hacks.
A large order divided into smaller visible portions to hide the full size from other market participants.
An iceberg order for 100,000 shares might only show 1,000 shares at a time to avoid revealing the full size.
A comprehensive technical indicator that shows support/resistance, trend direction, and momentum all in one chart.
When price is above the Ichimoku cloud, it indicates an uptrend; below the cloud suggests a downtrend.
Initial Coin Offering - a fundraising method where new cryptocurrency projects sell tokens to early investors.
Ethereum raised $18 million through its ICO in 2014, selling ETH tokens at about $0.30 each.
A significant difference between buy and sell orders at a price level, often leading to rapid price movement through that area.
An imbalance showing 5,000 buy orders vs 500 sell orders at $100 suggests strong upward pressure.
An order type that executes whatever portion is possible immediately and cancels the remainder.
An IOC order for 1,000 shares might fill 600 shares immediately and cancel the remaining 400 shares.
The temporary loss experienced by liquidity providers in DeFi when token prices diverge from when they were deposited.
Providing ETH-USDC liquidity when ETH is $2,000, then ETH rises to $3,000, results in impermanent loss compared to just holding ETH.
The market's expectation of future volatility of an underlying asset, derived from option prices.
High implied volatility before earnings announcements reflects market expectations of significant price movement.
An option that has intrinsic value - calls when stock price is above strike price, puts when below.
A $50 call option is in-the-money when the stock is trading at $55, with $5 of intrinsic value.
A statistical measure that tracks the performance of a group of assets, used as a benchmark for market or sector performance.
The S&P 500 index tracks 500 large US companies and is widely used as a benchmark for the overall US stock market.
A mathematical calculation based on price and/or volume data used to help predict future price movements.
The RSI (Relative Strength Index) is a momentum indicator that measures the speed and change of price movements.
The rate at which the general level of prices for goods and services rises, eroding purchasing power.
If inflation is 3% annually, something that costs $100 today would cost $103 next year.
The price range established during the first hour of regular trading, serving as a reference for the day's potential range.
If the initial balance is $100-$102, traders watch for breakouts above $102 or below $100 for directional moves.
The cost of borrowing money or the return on lending money, typically expressed as an annual percentage.
When the Federal Reserve raises interest rates from 2% to 2.5%, it affects borrowing costs throughout the economy.
Occurring within a single trading day, from market open to close.
An intraday high of $55 means the stock reached $55 at some point during today's session.
The difference between an option's strike price and the underlying asset's current price, if favorable to the option holder.
A $50 call option has $5 intrinsic value when the stock is at $55 (only for in-the-money options).
A candlestick pattern with a small body and long upper wick that can signal reversal depending on context.
An inverted hammer at support after a downtrend may indicate buying pressure despite the long upper wick.
The act of allocating money with the expectation of generating income or profit over time.
Making a long-term investment in index funds for retirement savings.
A period after an IPO during which insiders and early investors are restricted from selling their shares.
A 180-day lockup period prevents company executives from selling shares immediately after the IPO.
An options strategy involving four different strikes, designed to profit from low volatility in the underlying asset.
Selling calls at $105 and $110 while selling puts at $95 and $90, profiting if the stock stays between $95-$105.
Institute for Supply Management - produces the PMI manufacturing index, a key economic indicator of manufacturing activity.
An ISM PMI reading above 50 indicates expanding manufacturing activity, while below 50 suggests contraction.
A charting technique that originated in Japan, showing price movements through candlestick patterns that indicate market sentiment.
A 'doji' candlestick, where open and close prices are nearly equal, suggests market indecision.
A mathematical formula used to determine the optimal position size for a trade based on win rate and average win/loss.
With a 60% win rate and 2:1 reward ratio, the Kelly Criterion suggests risking 20% of capital per trade.
The time delay between when a trading signal is generated and when the order reaches the market.
High-frequency trading firms spend millions to reduce latency from milliseconds to microseconds for competitive advantage.
Secondary blockchain protocols built on top of main blockchains to improve scalability and reduce transaction costs.
Polygon is a Layer 2 solution for Ethereum that offers faster and cheaper transactions.
Market data showing the full order book with multiple price levels of bids and asks, not just the best bid/ask.
Level 2 shows 500 shares bid at $49.95, 300 at $49.94, and 1000 at $49.93.
The use of borrowed capital to increase potential returns of an investment, which also increases potential losses.
Using 2:1 leverage means controlling $20,000 worth of stock with only $10,000 of your own money.
The maximum amount a commodity or stock can decline in one trading session before trading is halted.
If a stock hits limit down at -20%, trading is halted for the rest of the day.
An order to buy or sell a security at a specific price or better, providing price control but no guarantee of execution.
A limit buy order for Apple at $145 will only execute if the stock price falls to $145 or lower.
The maximum amount a commodity or stock can rise in one trading session before trading is halted.
A commodity hitting limit up at +10% triggers a trading halt.
The ease with which an asset can be bought or sold in the market without affecting its price significantly.
Apple stock has high liquidity - you can easily buy or sell millions of dollars worth without moving the price much.
A price movement designed to trigger stop losses or pending orders before reversing, allowing large players to fill orders at better prices.
Price spikes above resistance to $102 triggering buy stops, then immediately reverses to $98 - a classic liquidity grab.
A collection of funds locked in a smart contract to facilitate decentralized trading and lending in DeFi protocols.
Users provide ETH and USDC to a Uniswap liquidity pool and earn fees from traders who swap between these tokens.
A price area with little to no trading activity where price can move quickly due to lack of orders.
Price dropped rapidly through the $95-$93 liquidity void as no buyers were present to provide support.
Buying a security with the expectation that its price will rise, allowing you to sell it later at a profit.
Going long on Tesla stock means buying shares because you believe the price will increase.
Trader slang for the Canadian Dollar (CAD), named after the loon bird on the Canadian one-dollar coin.
The Loonie strengthened against the USD after positive Canadian employment data.
The negative difference between the purchase price and selling price of an investment, or when an investment's value decreases.
Buying a stock at $100 and selling at $80 results in a $20 loss per share.
Moving Average Convergence Divergence - a trend-following momentum indicator that shows relationships between two moving averages.
When the MACD line crosses above the signal line, it often indicates a bullish trend change.
The minimum amount of equity that must be maintained in a margin account after a purchase has been made.
If maintenance margin is 25% and your $10,000 position falls to $8,000, you need at least $2,000 equity to avoid a margin call.
The most heavily traded currency pairs in forex, all including the US Dollar as either base or quote currency.
The major pairs include EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, and NZD/USD.
Borrowed money from a broker to purchase securities, or the required equity an investor must deposit with their broker.
With 50% margin requirement, you can buy $10,000 worth of stock with only $5,000 of your own money.
A demand from a broker for additional funds when the value of securities in a margin account falls below the maintenance requirement.
If your $10,000 margin position falls to $6,000, you might receive a margin call requiring additional funds.
A venue or system where buyers and sellers come together to trade financial instruments.
The stock market is where shares of publicly traded companies are bought and sold.
The total value of a company's shares in the stock market, calculated by multiplying share price by number of outstanding shares.
If a company has 100 million shares at $50 each, its market cap is $5 billion.
The standard trading hours when the stock market is officially open for regular trading.
US market hours are 9:30 AM to 4:00 PM Eastern Time, Monday through Friday.
The effect that a market participant has on the price of a security when they buy or sell it.
A large institutional order to buy 1 million shares might push the stock price up due to market impact.
A firm or individual that provides liquidity by continuously quoting both buy and sell prices for securities.
Market makers profit from the bid-ask spread while providing liquidity that allows other traders to execute orders quickly.
An order to buy or sell a security immediately at the best available current price.
A market buy order for 100 shares of Apple will execute immediately at the current ask price.
A charting technique organizing price and time data to show where the market has spent the most time, revealing value areas and market structure.
The market profile shows a bell curve with 70% of time spent between $98-$102, indicating the day's value area.
The overall attitude of investors toward a particular market or security, often described as bullish or bearish.
Bearish market sentiment during a recession leads to widespread selling.
The organization and characteristics of a market, including how orders are processed, price discovery mechanisms, and participant types.
Understanding market structure helps traders know when markets are trending (HH, HL) or ranging (equal highs and lows).
A trader who removes liquidity from the market by accepting existing bid or ask prices.
Using market orders makes you a market taker, as you're taking the prices offered by market makers.
The largest peak-to-trough decline in portfolio value over a specific period.
A portfolio that fell from $100,000 to $70,000 during its worst period experienced a maximum drawdown of 30%.
The process of validating transactions and adding them to a blockchain, typically rewarded with cryptocurrency.
Bitcoin miners use computational power to solve complex mathematical puzzles to earn Bitcoin rewards for securing the network.
When price returns to fill or test an order block or imbalanced price zone before continuing its move, often seen as smart money covering tracks.
After a bullish move from $100, price returns to 'mitigate' the order block at $100-$102 before continuing higher.
The rate of acceleration of a security's price or volume, indicating the strength of a trend.
A stock gaining 10% on increasing volume shows strong upward momentum.
A technical indicator that smooths price data by creating a constantly updated average price over a specific time period.
A 50-day moving average adds up the closing prices of the last 50 days and divides by 50.
Short selling without first borrowing the shares or ensuring they can be borrowed, which is illegal in most markets.
Selling 1000 shares short without locating them first is naked short selling.
A regulatory requirement that brokers must execute customer trades at the best available prices across all exchanges.
If one exchange shows $50.00 bid and another shows $50.01, the NBBO ensures you get the better $50.01 price.
A support or resistance level in chart patterns like head and shoulders that, when broken, confirms the pattern.
In a head and shoulders pattern, breaking below the neckline at $95 confirms the bearish reversal signal.
The difference between the current price and the previous day's closing price.
If a stock closed at $50 yesterday and is now $52, the net change is +$2 or +4%.
Non-Fungible Token - a unique digital asset that represents ownership of a specific item or piece of content on a blockchain.
The Bored Ape Yacht Club NFTs sold for hundreds of thousands of dollars during the 2021 NFT boom.
A key US economic indicator released monthly that measures the change in employment excluding farm workers, government employees, and non-profit organizations.
A stronger than expected NFP report showing 300,000 new jobs often strengthens the US dollar and impacts interest rate expectations.
Open, High, Low, Close - the four main price points used to describe price action during a specific time period.
A daily OHLC might be: Open $100, High $105, Low $99, Close $103.
A pair of orders where if one order executes, the other is automatically cancelled.
Setting a take profit at $110 and stop loss at $90 as an OCO order - if one fills, the other cancels automatically.
To initiate a new trading position, or the first price of a trading session.
Opening a position by buying 100 shares, or the market open at 9:30 AM ET.
The total number of outstanding derivative contracts that have not been settled.
High open interest of 50,000 contracts at the $100 strike suggests significant interest at that level.
Financial contracts that give the holder the right, but not obligation, to buy or sell an asset at a specific price within a certain timeframe.
A call option on Apple stock with a $150 strike price gives you the right to buy Apple shares at $150, regardless of current market price.
A service that provides external data to blockchain networks and smart contracts, bridging real-world information with decentralized systems.
Chainlink oracles provide price feeds to DeFi protocols, enabling them to know real-time asset prices for lending and trading.
An instruction to buy or sell a financial instrument, specifying the quantity, price conditions, and timing.
A limit order to buy 100 shares of Tesla at $200 will only execute if the stock price reaches $200 or lower.
A price zone where large institutional orders were placed, creating areas of supply or demand that often act as future support or resistance.
The bearish order block at $150-$152 where banks sold heavily often rejects price on retests.
A real-time list of buy and sell orders for a security, organized by price level.
The order book shows 500 shares bid at $99.50 and 300 shares offered at $100.00.
The real-time analysis of buy and sell orders as they enter the market, revealing the intentions and aggression of market participants.
Order flow analysis shows large sell orders hitting the bid at $50, indicating institutional distribution.
An option that has no intrinsic value - calls when stock price is below strike price, puts when above.
A $55 call option is out-of-the-money when the stock is trading at $50, having only time value.
A condition where a security's price has risen more than fundamental analysis suggests it should, indicating a potential price decline.
When RSI reaches above 70, many traders consider a stock overbought and expect a price pullback.
A condition where a security's price has fallen more than fundamental analysis suggests it should, indicating a potential price recovery.
When RSI falls below 30, many traders consider a stock oversold and expect a price bounce.
Price-to-Book ratio - compares a company's market value to its book value, indicating if a stock is overvalued or undervalued.
A stock trading at $50 with book value of $25 per share has a P/B ratio of 2.0.
Price-to-Earnings ratio - a valuation metric comparing a company's stock price to its earnings per share.
A stock trading at $100 with $5 earnings per share has a P/E ratio of 20.
A statement showing the total profits or losses from trading activities over a specific period.
Your daily P&L shows +$500, meaning you made $500 profit from today's trades.
A term describing investors who sell their positions quickly at the first sign of volatility or loss.
Paper hands sold their Bitcoin during the March 2020 crash, missing the subsequent rally to all-time highs.
Simulated trading using virtual money to practice strategies without real financial risk.
Using a paper trading account to test a new strategy with $100,000 in virtual funds.
A technical indicator that provides potential reversal points and trailing stop levels, appearing as dots above or below price.
When Parabolic SAR dots flip from below to above price, it suggests a potential trend change from bullish to bearish.
A limit order placed in the order book waiting to be filled, providing liquidity rather than taking it.
A passive buy order at $49.95 waits for sellers to hit it rather than paying $50.00 immediately.
A regulatory designation for traders who execute four or more day trades within five business days in a margin account.
Being flagged as a PDT requires maintaining at least $25,000 in your account.
Personal Consumption Expenditures - the Federal Reserve's preferred measure of inflation, tracking consumer spending patterns.
The Fed targets 2% PCE inflation, and readings above this level may trigger interest rate increases.
Price/Earnings to Growth ratio - compares a stock's P/E ratio to its expected earnings growth rate.
A stock with P/E of 20 and 20% growth rate has a PEG ratio of 1.0, considered fairly valued.
A small symmetrical triangle pattern that typically occurs after a strong price move, indicating a brief consolidation.
After a 20% rally, a stock forms a small triangular pennant for a few days before continuing higher.
Low-priced stocks typically trading below $5 per share, often with high volatility and risk.
A biotech penny stock trading at $0.50 might jump to $2.00 on FDA approval news.
Low-priced stocks typically trading below $5 per share, often with high volatility and risk.
A biotech penny stock trading at $0.50 might jump to $2.00 on FDA approval news.
The smallest price move in a currency exchange rate, typically the fourth decimal place in most currency pairs.
If EUR/USD moves from 1.1234 to 1.1235, that's a movement of 1 pip.
Purchasing Managers' Index - an economic indicator measuring manufacturing and services sector activity based on surveys.
A PMI reading above 50 indicates expansion, while below 50 suggests contraction in economic activity.
The price level with the highest volume or time spent during a specific period, representing the fairest price where most trading occurred.
Today's POC at $150 acts as a magnet, with price returning to this level multiple times.
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents held by an individual or institution.
A balanced portfolio might include 60% stocks, 30% bonds, and 10% alternative investments like REITs.
The amount of a security owned (long position) or owed (short position) by a trader or investor.
Having a position of 500 shares of Microsoft means you own 500 shares.
Determining how much capital to allocate to a specific trade based on risk tolerance and account size.
Risking 1% of a $100,000 account means position sizing to lose no more than $1,000 on any single trade.
Trading that occurs before regular market hours, typically with lower volume and wider spreads.
Pre-market trading on US stocks occurs from 4:00 AM to 9:30 AM ET, allowing reaction to overnight news.
The current value at which a security can be bought or sold in the market.
If Apple stock has a price of $150, that's what you'll pay to buy one share right now.
A bundled group of services that investment banks provide to hedge funds and other large investment clients.
Prime brokerage services include securities lending, leveraged trade execution, and cash management for hedge funds.
The positive difference between the selling price and purchase price of an investment, representing financial gain.
Buying a stock at $50 and selling at $75 results in a $25 profit per share.
A consensus mechanism where validators are chosen to create new blocks based on their stake in the network.
Ethereum 2.0 uses Proof of Stake, where validators must stake 32 ETH to participate in network consensus.
A consensus mechanism requiring computational work to validate transactions and create new blocks.
Bitcoin uses Proof of Work, where miners compete to solve complex mathematical puzzles to earn rewards.
A temporary reversal in the direction of a security's price trend, typically smaller than a correction.
During a bull market, a stock might experience a 5% pullback before continuing its upward trend.
An illegal scheme where fraudsters artificially inflate a stock's price through false promotion, then sell their shares.
Penny stock scammers promote worthless companies on social media, driving up prices before dumping their shares.
A contract giving the holder the right to sell an asset at a specific price within a certain timeframe.
Buying a $95 put on a $100 stock gives you the right to sell at $95, profiting if the stock falls below $95.
A monetary policy where central banks purchase government securities or other securities from the market to increase money supply and encourage lending.
The Federal Reserve used QE during the 2008 financial crisis and COVID-19 pandemic to inject liquidity into the economy.
The current bid and ask prices for a security, showing the best available buying and selling prices.
A stock quote showing 'Bid: $49.95, Ask: $50.05' means buyers will pay up to $49.95 and sellers want at least $50.05.
The second currency in a forex pair, representing the currency the base currency is quoted in.
In EUR/USD, the US Dollar (USD) is the quote currency, showing how many dollars one Euro is worth.
A sustained increase in the price of a market or security, often following a period of decline.
The market rallied 15% from its March lows in just two weeks.
A trading strategy that attempts to profit from securities moving between consistent support and resistance levels.
If a stock consistently bounces between $50 support and $55 resistance, range traders buy at $50 and sell at $55.
Profits or losses from positions that have been closed, as opposed to paper gains/losses on open positions.
Selling stock bought at $50 for $70 creates a realized gain of $20 per share.
When price is unable to break through a level and reverses sharply, often shown by long wicks on candlesticks.
Price rejection at $105 resistance shown by a long upper wick indicates strong selling pressure.
A price level where a security tends to stop rising due to selling pressure, often marked by previous highs.
If a stock repeatedly fails to break above $100, that level becomes resistance.
Individual investors who buy and sell securities for their personal accounts, not for an institution.
Retail investors drove much of the GameStop rally in 2021 through coordinated buying.
When price returns to test a previously broken support or resistance level to confirm the breakout is valid.
After breaking above $100 resistance, price pulls back to retest $100 which now acts as support.
A temporary reversal in price direction within a larger trend, typically measured using Fibonacci levels.
After rising from $50 to $100, a stock might retrace 38.2% back to $81 before resuming the uptrend.
The gain or loss on an investment over a specific period, usually expressed as a percentage.
A 10% annual return means your $10,000 investment grew to $11,000 in one year.
A measure of financial performance calculated by dividing net income by shareholders' equity.
A company with $50 million net income and $250 million equity has an ROE of 20%.
An options Greek that measures the sensitivity of an option's price to changes in interest rates.
An option with rho of 0.05 will increase in value by $5 for every 1% increase in interest rates.
The possibility of losing money on an investment or trade due to market movements.
Higher potential returns usually come with higher risk of losses.
A calculation comparing the potential profit of a trade to its potential loss, used to evaluate trade quality.
A trade risking $100 to potentially make $300 has a 1:3 risk-reward ratio.
In forex, the interest rate differential between two currencies that is either paid or earned for holding a position overnight.
Holding a high-yielding currency against a low-yielding one may earn positive swap payments daily.
Relative Strength Index - a momentum oscillator that measures the speed and change of price movements, ranging from 0 to 100.
RSI above 70 typically indicates overbought conditions, while below 30 suggests oversold conditions.
A cryptocurrency scam where developers abandon a project suddenly, often after draining liquidity or selling their tokens.
The SQUID token experienced a rug pull in 2021, dropping 99% in minutes after developers sold their holdings.
A DeFi exploit where an attacker places transactions before and after a victim's transaction to profit from price manipulation.
An attacker sees a large buy order, front-runs it to push the price up, then sells after the victim's order executes.
Gradually building a position by making multiple purchases over time rather than buying all at once.
Scaling into a position by buying 100 shares at $50, 100 at $48, and 100 at $46.
Gradually exiting a position by selling in increments rather than all at once.
Scaling out by selling 1/3 at $60, 1/3 at $65, and the final 1/3 at $70.
A trading strategy involving very short-term trades to profit from small price movements.
A scalper might buy a stock at $100.00 and sell at $100.05, making small profits on many quick trades.
Securities and Exchange Commission - the US federal agency that regulates the securities markets and protects investors.
The SEC investigates insider trading and ensures companies provide accurate financial disclosures.
A group of companies that operate in the same industry or have similar business activities, often moving together in the market.
The technology sector includes companies like Apple, Microsoft, and Google, which often rise and fall together based on tech trends.
A tradable financial asset such as stocks, bonds, or options.
Stocks and bonds are common types of securities traded in financial markets.
To dispose of a security in exchange for cash, either to realize profits, cut losses, or exit a position.
Selling 100 shares of Tesla at $250 converts your stock ownership back into cash.
A rapid selling of securities that leads to a sharp decline in prices.
The tech sell-off in 2022 saw the NASDAQ drop over 30% from its highs.
A trading period during which the market is open, typically referring to a single trading day.
During today's session, the S&P 500 gained 1.5%.
The process of finalizing a trade, where the buyer receives the purchased asset and the seller receives payment.
Most stock trades settle T+2, meaning the actual exchange of securities and cash occurs two business days after the trade date.
A measure of risk-adjusted return, calculated by dividing excess return by standard deviation of returns.
A portfolio with 12% return, 8% risk-free rate, and 15% volatility has a Sharpe ratio of 0.27.
A bearish reversal candlestick pattern with a small body and long upper wick, appearing after an uptrend.
A shooting star at resistance after a rally suggests selling pressure and potential trend reversal.
The total number of shares of a security that have been sold short but not yet covered.
GameStop had short interest exceeding 100% of its float before the 2021 squeeze.
Selling a security you don't own with the expectation of buying it back at a lower price to profit from price decline.
Shorting Tesla stock means borrowing shares to sell now, hoping to buy them back cheaper later.
A situation where heavily shorted stock rises rapidly, forcing short sellers to buy back shares to limit losses.
GameStop's 2021 short squeeze saw the stock rise from $20 to over $400 as short sellers covered positions.
In Market Profile, price levels where only one time period traded, indicating fast movement and potential support/resistance.
Single prints from $105 to $107 show price moved quickly through this area with little acceptance.
The difference between the expected price of a trade and the actual price at which the trade is executed.
Placing a market order for a thinly traded stock at $50 but getting filled at $50.10 represents $0.10 slippage.
Self-executing contracts with terms directly written into code, automatically enforcing agreement conditions.
A DeFi lending smart contract automatically liquidates collateral if the loan-to-value ratio exceeds set limits.
Large institutional investors like banks, hedge funds, and market makers whose trading activity often moves markets and can be tracked through price action.
Smart money accumulation is visible when price repeatedly bounces from a level despite retail selling pressure.
A risk-adjusted return measure that only considers downside volatility, focusing on harmful volatility.
Unlike Sharpe ratio, Sortino ratio doesn't penalize upside volatility, providing a clearer picture of risk-adjusted performance.
The current market price for a commodity or currency that is available for immediate delivery.
The spot price of gold is $1,950 per ounce for immediate delivery, while futures contracts may trade at different prices.
The difference between the bid price and ask price of a security, representing the cost of trading.
If a stock has a bid of $49.95 and ask of $50.05, the spread is $0.10.
A strategy involving simultaneous purchase and sale of related securities to profit from price differences.
Buying gold futures while selling silver futures to profit from the gold/silver ratio.
Locking up cryptocurrency to support network operations in proof-of-stake blockchains, earning rewards.
Staking 32 ETH in Ethereum 2.0 allows you to become a validator and earn approximately 4-6% annual rewards.
A momentum indicator comparing a security's closing price to its price range over a specific period.
When stochastic oscillator is above 80, it suggests the security may be overbought and due for a decline.
A security that represents ownership in a corporation and a claim on part of the company's assets and earnings.
Apple stock (AAPL) represents partial ownership in Apple Inc.
When a company divides its existing shares into multiple shares, reducing the price per share proportionally.
In a 2-for-1 split, 100 shares at $100 become 200 shares at $50.
A market manipulation where price is pushed to trigger stop-loss orders before reversing, allowing larger players to enter at better prices.
Price spiked to $101 to trigger stops above $100 resistance, then immediately reversed to $98.
An order to sell a security when it reaches a certain price, designed to limit losses on a position.
Setting a stop loss at $45 on a stock bought at $50 limits maximum loss to $5 per share.
An order that combines features of stop and limit orders, triggering a limit order when the stop price is reached.
A stop-limit order with stop at $95 and limit at $94 will trigger a limit sell order at $94 if price hits $95.
An options strategy involving buying both a call and put option with the same strike price and expiration.
Buying both a $100 call and $100 put before earnings, profiting from large price moves in either direction.
An options strategy involving buying a call and put option with different strike prices but same expiration.
Buying a $105 call and $95 put, profiting if the stock moves significantly above $105 or below $95.
The predetermined price at which an options contract can be exercised.
A call option with a $150 strike price gives you the right to buy the stock at $150, regardless of market price.
Price areas where significant buying (demand) or selling (supply) occurred, creating imbalances that often cause price reactions when revisited.
A demand zone at $95-$97 where buyers absorbed all selling pressure acts as support on future tests.
A price level where a security tends to find buying interest and stop declining, often marked by previous lows.
If a stock repeatedly bounces off $80, that level becomes support.
In forex, the interest rate differential between two currencies that is either paid or earned for holding a position overnight.
Holding a high-yielding currency against a low-yielding one may earn positive swap payments daily.
When price briefly moves beyond a key level to trigger stop losses or pending orders before reversing, 'sweeping' the liquidity.
Price sweeps below the $95 low triggering sell stops, then immediately reverses higher - liquidity has been swept.
A trading strategy that attempts to capture gains over several days to weeks by identifying price swings.
A swing trader might buy a stock at $90 support and sell at $110 resistance over a 2-week period.
An order to sell a security when it reaches a certain price level to lock in gains.
Setting a take profit at $60 on a stock bought at $50 automatically sells when the target is reached.
Analyzing the time and sales data to gauge market sentiment and identify large orders or unusual activity.
Tape reading shows large blocks of 10,000 shares being bought at the ask, indicating institutional accumulation.
A method of evaluating securities by analyzing statistical trends from trading activity, such as price movement and volume.
Using chart patterns, indicators, and price action to predict future price movements rather than company fundamentals.
An options Greek that measures the rate of decline in an option's value due to the passage of time.
An option with theta of -0.05 loses $5 in value per day as expiration approaches, all else being equal.
A market with low trading volume and few participants, leading to wider spreads and higher volatility.
Small-cap stocks often have thin markets with $0.10+ spreads between bid and ask.
The minimum price increment at which a security can trade, set by the exchange.
Most US stocks have a tick size of $0.01, meaning they can only trade in penny increments.
A unique series of letters assigned to a security for trading purposes.
AAPL is the ticker symbol for Apple Inc. on the NASDAQ.
A real-time data feed showing every trade executed, including price, size, and time.
Time and sales showing 5,000 shares traded at $50.25 at 10:32:15 AM.
The erosion of an option's value as it approaches its expiration date, accelerating in the final weeks.
An option worth $2.00 with one month until expiration might be worth only $0.50 with one week left.
The portion of an option's premium that exceeds its intrinsic value, representing the value of time remaining until expiration.
If a $50 call option trades for $3 when the stock is at $52, it has $2 intrinsic value and $1 time value.
A digital asset built on an existing blockchain, often representing utility, governance rights, or ownership.
UNI tokens give holders voting rights in Uniswap protocol governance decisions.
The total amount of assets deposited in a DeFi protocol, indicating its size and adoption.
Uniswap's TVL of $5 billion means users have deposited $5 billion worth of cryptocurrency in its liquidity pools.
In Market Profile, a letter representing a 30-minute period showing where price traded, building the profile's structure.
The 'A' period TPOs from 9:30-10:00 AM show price traded between $100-$102.
The act of buying or selling a financial instrument, or the transaction itself.
Executing a trade to buy 50 shares of Amazon at market price.
An individual who buys and sells financial instruments, either for themselves or on behalf of others.
A day trader might execute dozens of trades per day, while a swing trader holds positions for days or weeks.
The activity of buying and selling financial instruments to profit from price movements.
Trading stocks involves analyzing markets, placing orders, and managing positions.
The difference between the high and low prices over a specific period.
A stock with a daily trading range of $48-$52 has a $4 range.
A dynamic stop-loss order that adjusts automatically as the price moves in a favorable direction.
A trailing stop set 5% below market price will move up with the stock but trigger a sale if price falls 5%.
A completed trade or exchange of a financial instrument between a buyer and seller.
Each buy or sell order that gets executed becomes a transaction.
A straight line connecting two or more price points that extends into the future to act as a line of support or resistance.
Drawing a trendline connecting the lows of an uptrend helps identify potential support levels.
A chart pattern where price converges between two trendlines, often preceding a significant breakout.
An ascending triangle forms with horizontal resistance at $100 and rising support, suggesting upward breakout potential.
A trading benchmark that calculates the average price of a security over a specific time period.
An institution might execute a large order over 4 hours and compare their average price to the 4-hour TWAP.
Paper profits or losses on positions that are still open and haven't been closed.
Holding stock bought at $50 now worth $70 shows an unrealized gain of $20 per share.
A transaction executed at a price higher than the previous transaction.
After trading at $50.00, a trade at $50.01 is an uptick.
The monetary worth of an asset or security, determined by market forces or fundamental analysis.
The market value of your portfolio is the current price of all your holdings.
The upper and lower boundaries of the value area where 70% of volume or time-based activity occurred.
Price rejected at yesterday's VAH of $155, confirming it as resistance.
A statistical measure that estimates the maximum potential loss in a portfolio over a specific time period and confidence level.
A daily VaR of $10,000 at 95% confidence means there's a 5% chance of losing more than $10,000 in one day.
An options Greek that measures sensitivity to changes in the underlying asset's implied volatility.
An option with vega of 0.15 will increase in value by $15 for each 1% increase in implied volatility.
The CBOE Volatility Index, often called the 'fear gauge,' measures expected volatility in the S&P 500 over the next 30 days.
A VIX reading above 30 typically indicates high market fear and uncertainty.
The degree of variation in a security's price over time, measuring how much and how quickly prices change.
A stock that moves 5% daily has higher volatility than one that moves 1% daily.
The number of shares traded in a security during a given period, indicating the level of investor interest and activity.
High volume during a price breakout often confirms the validity of the move.
A charting tool that shows trading activity at different price levels over a specified time period.
Volume profile showing 70% of trading occurred between $95-$100, indicating a strong value area.
An unusually large increase in trading volume compared to the average.
A stock averaging 1 million shares daily suddenly trading 10 million shares shows a volume spike.
Volume Point of Control - the price level with the highest traded volume during a specific period, indicating maximum acceptance.
If most trading occurred at $150 during the day, $150 becomes the VPOC and often acts as important support or resistance.
A methodology analyzing the relationship between volume, price spread, and closing price to determine market direction and strength.
High volume with a narrow spread and close near the high suggests accumulation by smart money.
Volume Weighted Average Price - a trading benchmark that calculates the average price weighted by volume.
If a stock trades above VWAP, it suggests bullish sentiment, while trading below VWAP indicates bearish sentiment.
Selling a security at a loss and buying the same or substantially identical security within 30 days, disallowing the tax loss.
Selling Apple at a loss on December 15 and buying it back on January 10 triggers the wash sale rule.
An individual or entity that holds a large amount of cryptocurrency, capable of influencing market prices through their trades.
When a Bitcoin whale moves 1,000 BTC to an exchange, it often signals potential selling pressure.
A sharp price movement in one direction followed immediately by a sharp movement in the opposite direction.
Getting stopped out at $48 only to see the stock immediately reverse and rally to $55.
The thin lines above and below the body of a candlestick that show the highest and lowest prices during a trading period.
A long upper wick on a daily candle shows that prices reached much higher levels but were rejected.
A momentum oscillator that measures overbought and oversold levels, similar to the stochastic oscillator.
Williams %R above -20 indicates overbought conditions, while below -80 suggests oversold conditions.
A technical analysis approach studying supply and demand through price action and volume to identify accumulation and distribution phases.
The Wyckoff spring pattern shows a false breakdown below support before a strong rally, indicating accumulation.
Trader slang for one billion units of currency, commonly used in institutional forex trading.
The central bank intervention involved selling 2 yards of USD (2 billion dollars).
The income return on an investment, typically expressed as an annual percentage based on the investment's cost or current market value.
A stock paying $2 annual dividend with a $50 share price has a 4% dividend yield.
A graph showing the relationship between bond yields and their time to maturity, indicating economic expectations.
An inverted yield curve, where short-term rates exceed long-term rates, often predicts economic recession.
A DeFi practice where users provide liquidity to protocols in exchange for rewards, often in the form of additional tokens.
Providing ETH-USDC liquidity to Uniswap and earning UNI tokens as rewards is a form of yield farming.
A situation where one participant's gain equals another participant's loss, common in derivatives and futures trading.
In options trading, if a call buyer makes $1000 profit, the call seller loses approximately $1000.
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