The Lingo

Must Know Trader Lingo

The trading lingo every trader needs to know!

Trading Terminology Every Trader MUST Understand

Let’s start with basic trading lingo every day & swing trader MUST understand. The first step to being a consistently profitable trader is being able to speak and understand the trader’s lingo. The trading terms that we have listed below might look familiar for most traders but we have also entered more advanced terms that you might have questions about.

Just a heads up, to quickly find a term you’re looking for you can search through the page by using the Control + F button. Keep in mind, we go more into depth on these terms and more in our Trading Courses, where I go over each term individually and show you how they can used daily in your trading career.

The Fundamentals

Stock

A stock is a type of security that signifies ownership of a company.

Shares

Units of measurement for ownership interest in a stock.


Equity

Common and preferred stocks, which represents shares in the ownership of a company.

Position

The total amount one holds in a specific security.


Authorized Shares

The maximum number of shares a company is legally allowed to issue.

Outstanding Shares

The total number of shares held by all a company’s shareholders. This includes free trading shares in the float along with restricted shares held by insiders and share blocks held by institutions.


Market Capitalization

The total value of all a company's outstanding shares. It is calculated by multiplying the total number of outstanding shares by the current market price of one share. It determines the company's size in terms of its wealth.

Securities

A transferable certificate of ownership of investment in products such as stocks, bonds, future contracts and options, which an individual holds.

Bull Market Vs. Bear Market

Bull Market

A market in which a group of securities’ stock prices are consistently rising or expected to rise.

Bullish

Believing the price of a security is going to rise.


Bear Market

A market in which stock prices are falling consistently.

Bearish

Believing the price of a security is going to fall.

Basic Day Trader’s Lingo

Trading session

The period of time from 9:30AM EST to 4:00PM EST is open for trading for both sellers and buyers.

After-market or After-hours

The time from 4:00pm EST to 8:00pm EST when trading can take place after the market officially closes. Specialty brokerage accounts are required to participate in after-market trading.

Ask/Offer

The lowest price an owner is willing to sell the stocks.

Bid

It is the highest price a buyer is willing to pay for a stock. It is opposite of ask/offer.

Resistance

A price area or level where sellers have historically outweighed buyers. A price level that a security has not been able to rise above.

Support

A price area where buyers have historically outweighed sellers. A price level that security has not been able to fall below.

Level 2

A window providing traders with price depth. Level 2 displays all available orders and price quotes from market makers including price, order size (share amount), and the time in which the order was placed.

Float

The total number of free trading shares of stock available to the public. The float is calculated by subtracting all restricted stock and insider shares held by officers and directors of the company from the total number of outstanding shares.

Limit Order

An order to buy or sell a security at a specified price. The order will be executed only at the specified limit price or better. A limit order sets a minimum price the seller is willing to accept and maximum price the buyer is willing to pay. Limit orders do not guarantee execution.

Market Order

An order to buy or sell a security at the best available price. Market orders will execute immediately and guarantee execution.

Gap Up

When a stock opens for trade above the closing price of the previous day.

Gap Down

When a stock opens for trade below the closing price of the previous day.

Technical Analysis Essentials

Technical Analysis

Financial analysis that uses patterns in market data to identify trends and make predictions.

Moving Average

A technical analysis indicator that averages previous closing prices. Moving averages remove random price fluctuations to show a clearer trend. However, it is a lagging indicator because it averages past prices.

Relative Strength Index (RSI)

A technical analysis indicator used to measure momentum and determine if a stock is overbought or oversold.

Golden Cross

A bullish technical analysis term used to describe when a short-term moving average breaks above a long-term moving average.

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