Trading Terminology
Sometimes we hate it. Often, it confuses people. We always know we should avoid it.
But it comes out anyway.
Jargon. Lingo. Acronyms.
I'm certainly guilty of typing it here. So, how about some definitions?
This is not an exhaustive list, but it will cover the most commonly used terms.
Bullish an opinion that the price of a stock or security will rise
Bearish an opinion that the price of a stock or security will fall
Long you own the stock - a bullish opinion
Short you've sold stock that you don't own - a bearish opinion
SMA Simple Moving Average
EMA Exponential Moving Average
ATH All-time high
HOD High of the day
LOD Low of the day
MACD Moving Average Convergence Divergence
RSI Relative Strength Index
Bid The price at which a buyer is willing to pay
Ask The price at which a seller is willing to sell
Spread The difference between the bid and the offer
Scalp a very quick trade, usually lasting only minutes
Day Trade a trade that is opened and closed on the same trading day
Swing Trade a trade that is planned to last a few days to a few weeks
Position Trade a trade that is held as a position in a larger portfolio, generally for a longer period
Investment a position based on the fundamentals of a company and intended to be held for the long term
Fundamental analysis Study of the business data of a company, including earnings per share, book value, debt ratios, and the management team
Technical analysis Study of the price action and supply and demand relationship of a security
Float the total number of shares available for trading on the open market
Short Interest the number of shares or percentage of the float that is sold short. An indication of bearish sentiment
Stock split Shares are divided, and the price is adjusted proportionately. 1 share priced $100 -> 2/1 split -> 2 shares priced $50
Market order an order to buy at the market offer or sell at the market bid
Limit order an order to buy or sell only at a specified bid or offer price
Stop order an order that triggers at a set price. Often used as a protective stop loss to sell a position that moves against the trade
Trim and Trail Trim - Selling part of a position as it moves into profitable territory
Trail - moving the protective stop loss up with the stock to reduce risk and/or secure more profit
The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
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Terminology section, very helpful, thanks!