The Complete Dictionary of Day Trading Terms
Welcome to the most comprehensive dictionary of trading terms on the web. The market has its own language, and fluency is non-negotiable for success. Our team of professional traders built this resource to define over 500 essential day trading terms, from beginner basics to the professional jargon and modern lingo you’ll hear on Wall Street.
🛠️ How to Use this Dictionary
Use the search box to instantly find a specific term, or use the category filter to explore topics like Core Concepts, Technical Analysis & Chart Patterns, Market Mechanics & Order Flow, Trader Slang & Modern Lingo and many more.
| Term | Simple Definition | What it Means for Traders | Category |
|---|---|---|---|
| 0 DTE (Zero Days to Expiration) | An options trading strategy that involves trading contracts on the day they are set to expire. | This is a high-risk, high-reward strategy that deals with extremely rapid time decay (theta) and price acceleration (gamma). Traders aim for quick profits from small intraday moves, but the options can become worthless in a matter of minutes. | Options & Derivatives |
| Absorption | A situation in order flow analysis where a large volume of market orders is absorbed by passive limit orders at a specific price level, preventing the price from moving further. | Spotting absorption on the tape or Level 2 can signal a strong hidden support or resistance level. For example, if heavy selling is being absorbed without the price dropping, it indicates large buyers are defending that price. | Market Mechanics & Order Flow |
| Accumulation | A phase in the market cycle where informed investors (smart money) are quietly buying an asset, often characterized by sideways price action on a chart. | In Wyckoff theory, identifying an accumulation phase allows traders to position themselves alongside institutional players before a significant markup or uptrend begins. | Technical Analysis & Chart Patterns |
| Account Value | The total market value of all cash and securities in a trading account. | This is the top-line number that represents your account's size, which is used to calculate buying power and track overall performance. | Core Concepts |
| ADX (Average Directional Index) | A technical indicator used to measure the overall strength of a trend, but not its direction. | An ADX reading above 25 typically indicates a strong trend (either up or down), suggesting trend-following strategies are appropriate. A reading below 20 signifies a weak or non-trending market, where range-trading strategies may be more effective. | Technical Analysis & Chart Patterns |
| After-Hours Trading | The buying and selling of stocks after the major stock exchanges close at 4:00 PM EST. | This session is characterized by low liquidity and high volatility, making it riskier than trading during regular market hours. It's often driven by late-day news or earnings releases. | Core Concepts |
| Airdrop (Crypto) | A marketing stunt that involves sending free coins or tokens to wallet addresses to promote awareness of a new virtual currency. | For crypto traders, airdrops can be a source of free assets, but they also signal promotional activity that can lead to high volatility in a specific new coin. | Market-Specific Jargon |
| Algorithm (Algo) | A computer program that automatically executes trades based on a pre-defined set of rules, such as price, volume, or timing. | Much of the market's volume is driven by algorithms. Retail traders must understand they are often competing against Algos that are faster and unemotional, making a rule-based approach essential. | Market Mechanics & Order Flow |
| Alligator Indicator | A technical indicator consisting of three moving averages, designed to identify trends and their direction. | The "Alligator" is "sleeping" when the lines are intertwined, signaling a range-bound market. When the lines separate and move in parallel ("mouth opens"), it signals the start of a new trend, providing potential entry points. | Technical Analysis & Chart Patterns |
| Alpha | A measure of an investment's performance on a risk-adjusted basis compared to a benchmark index. | A positive alpha indicates that a strategy has "beaten the market." For traders, developing a strategy with a consistent alpha is the ultimate goal. | Core Concepts |
| Altcoin (Crypto) | Any cryptocurrency other than Bitcoin (BTC). | The altcoin market is vast and includes everything from large-cap coins like Ethereum to highly speculative, small-cap projects. Altcoin prices are often highly correlated with the price of Bitcoin. | Market-Specific Jargon |
| Alternative Trading System (ATS) | A non-exchange trading venue, such as a dark pool or an ECN, where securities can be bought and sold. | ATSs account for a significant portion of total trading volume. The activity on these venues is often less transparent than on public exchanges, which is a key reason for analyzing consolidated tape data. | Market Mechanics & Order Flow |
| American Style Option | An option that can be exercised by its owner at any time on or before its expiration date. | Most equity options are American style. This gives the options buyer flexibility but also means the options seller can be assigned at any time, a risk they must manage. | Options & Derivatives |
| Andrew's Pitchfork | A technical tool drawn using three points (a pivot high or low) to create parallel trendlines that are thought to identify potential support and resistance levels. | Traders use the pitchfork to frame a trend. The median line represents the primary trend path, while the outer lines act as dynamic support and resistance, providing potential areas to enter or exit trades. | Technical Analysis & Chart Patterns |
| Apeing In | Slang for buying into a stock or cryptocurrency with little to no research, often driven by social media hype or FOMO. | This describes reckless, impulsive trading. It's the opposite of a well-defined trading plan and is a surefire way to lose money over the long term. | Trader Slang & Modern Lingo |
| Arbitrage | The practice of simultaneously buying and selling an asset in different markets to profit from a tiny difference in its price. | While difficult for retail traders to execute, arbitrage is a key activity for high-frequency trading firms that helps keep prices efficient across different exchanges. | Core Concepts |
| Aroon Indicator | A technical indicator that measures the strength of a trend and the likelihood that it will continue, using "Aroon Up" and "Aroon Down" lines. | When the Aroon Up line is above the Aroon Down line, it indicates bullish price behavior, and vice versa. Crossovers between the two lines can signal a potential change in the trend's direction. | Technical Analysis & Chart Patterns |
| Ascending Channel | A chart pattern where price action is contained between two upward-sloping parallel trendlines. | This pattern clearly defines an uptrend. Traders look to buy when the price pulls back to the lower trendline (support) and take profits near the upper trendline (resistance). | Technical Analysis & Chart Patterns |
| Ascending Triangle | A bullish chart pattern characterized by a rising lower trendline and a flat upper trendline, indicating that buyers are more aggressive than sellers. | This pattern signals a coiling of energy before a potential breakout to the upside. Traders often place a buy order on a high-volume break above the flat horizontal resistance. | Technical Analysis & Chart Patterns |
| Ask Price | The lowest price a seller is willing to accept for a stock at a specific moment. | This is the price you pay *immediately* when you buy a stock using a market order. It's always slightly higher than the bid price, and the difference is a key component of your trading costs. | Core Concepts |
| Assignment | The process by which an options seller (writer) is notified that their short option has been exercised by a buyer, obligating them to fulfill the terms of the contract (sell shares for a short call, buy shares for a short put). | Assignment is the primary risk for an options seller. Understanding when and why it might happen (e.g., for a dividend payment) is a crucial part of managing short option positions. | Options & Derivatives |
| Asset | Any resource with economic value, such as stocks, bonds, or commodities, that can be owned and traded. | For a day trader, the assets you choose to trade (e.g., large-cap stocks vs. volatile penny stocks) will define your strategy and risk profile. | Core Concepts |
| At-the-Money (ATM) | An option whose strike price is currently the same as the market price of the underlying stock. | ATM options are the most sensitive to changes in the stock price (Delta is near 0.50) and have the highest amount of time value (extrinsic value), making them popular for traders speculating on the direction of a near-term move. | Options & Derivatives |
| ATH (All-Time High) | The highest price a security has ever reached. | Breaking an ATH is a significant bullish event as there is no overhead resistance. However, buying at the ATH can also be risky as the asset is, by definition, at its most expensive point ever. | Trader Slang & Modern Lingo |
| ATR (Average True Range) | An indicator that measures market volatility by calculating the average range between high and low prices over a set period. | ATR is not a directional indicator but is crucial for risk management. Traders use it to set a volatility-adjusted stop-loss, placing their stop at a multiple of the ATR below their entry to avoid being stopped out by normal market noise. | Technical Analysis & Chart Patterns |
| Auction Market | A market model, like a stock exchange, where prices are determined through the interaction of competing bids and offers from many buyers and sellers. | The stock market is a continuous two-way auction. Understanding this concept helps traders to see price movements as a constant search for equilibrium between supply (sellers) and demand (buyers). | Market Mechanics & Order Flow |
| Awesome Oscillator (AO) | A momentum indicator that calculates the difference between a 34-period and a 5-period simple moving average. | Traders use the AO to confirm trends and anticipate reversals. A "saucer" signal suggests a potential entry in the direction of the trend, while a "twin peaks" divergence can signal that the trend is losing momentum. | Technical Analysis & Chart Patterns |
| Averaging Down | The practice of buying more of a stock as its price decreases, lowering the average price at which you purchased the shares. | While it can seem logical, this is an extremely dangerous practice for traders as it involves adding to a losing position, which can lead to catastrophic losses if the stock continues to fall. | Core Concepts |
| Backwardation (Futures) | A situation where the futures price of a commodity is lower than the expected spot price at the contract's maturity. | Backwardation signals that the market is tight and demand is high right now. For traders, this can be a bullish sign for the underlying commodity and can provide a "positive roll yield" for long-term investors holding futures contracts. | Options & Derivatives |
| Bagholder | A trader who is left holding a stock that has significantly dropped in value, often with little hope of recovery, resulting in a large unrealized loss. | This term describes the negative outcome of refusing to cut a loss. Becoming a bagholder is what happens when a trade turns into an unwilling long-term investment because a stop-loss was not used. | Trader Slang & Modern Lingo |
| Bar Chart | A type of chart that displays price movements, with each bar representing the open, high, low, and close (OHLC) for a specific time period. | Bar charts provide the same four key pieces of price data as candlestick charts but in a simpler visual format, which some traders prefer for a less cluttered view of price action. | Technical Analysis & Chart Patterns |
| Base Currency (Forex) | The first currency listed in a currency pair (e.g., the EUR in EUR/USD). It is the currency against which the other is quoted. | The value of the base currency is always 1. A quote of EUR/USD = 1.10 means that 1 Euro is worth 1.10 US Dollars. | Market-Specific Jargon |
| Bat Pattern | A specific type of harmonic pattern with defined Fibonacci ratios that helps identify potential price reversal zones. | Traders use the Bat pattern to find high-probability entries at the end of a trend. The completion of the pattern at the Potential Reversal Zone (PRZ) is the signal to look for a trade. | Technical Analysis & Chart Patterns |
| Bear Call Spread | A credit spread strategy where a trader sells a call option and buys a further out-of-the-money call option, profiting if the stock stays below the short strike price. | This is a bearish to neutral, defined-risk strategy that profits from time decay and a drop in volatility. It allows a trader to bet against a stock's upside with limited risk. | Options & Derivatives |
| Bear Flag | A bearish continuation chart pattern that appears as a small, upward-slanting rectangular consolidation on low volume after a sharp, high-volume price decline. | This pattern signals a brief pause in a strong downtrend. Traders watch for a high-volume breakdown below the flag's lower trendline to enter a short position, anticipating a move of similar magnitude to the initial decline. | Technical Analysis & Chart Patterns |
| Bear Market | A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment to be self-sustaining. | In a bear market, traders shift their focus to short-selling strategies or trading bounces, as "buy and hold" strategies tend to perform poorly. | Core Concepts |
| Bear Put Spread | A debit spread strategy where a trader buys a put option and sells a further out-of-the-money put option, profiting if the stock price falls. | This is a bearish, defined-risk strategy that is cheaper than buying a put outright. The trade-off is that the potential profit is capped by the short put strike. | Options & Derivatives |
| Bearish Engulfing Pattern | A two-candlestick reversal pattern where a large red (down) candle completely "engulfs" the body of the previous, smaller green (up) candle. | This pattern appearing after an uptrend is a strong signal of a shift to selling pressure and a potential top. It shows that sellers have forcefully taken control from the buyers. | Technical Analysis & Chart Patterns |
| Bearwhale (Crypto) | A slang term for a large holder of a cryptocurrency (a "whale") who is selling off their position, putting significant downward pressure on the price. | The actions of bearwhales can cause sharp price drops. Crypto traders monitor blockchain data to spot large wallet movements that might indicate a bearwhale is about to sell. | Trader Slang & Modern Lingo |
| Best Execution | A regulatory requirement that brokers must execute their clients' orders at the most favorable terms reasonably available. | While brokers are mandated to provide best execution, the practice of PFOF can create conflicts of interest. Traders should still monitor their fill quality and the speed of their broker's executions. | Market Mechanics & Order Flow |
| Beta | A measure of a stock's volatility in relation to the overall market (usually the S&P 500). | A stock with a beta of 1.0 moves in line with the market. A beta above 1.0 is more volatile; below 1.0 is less volatile. Traders use beta to gauge a stock's expected movement and risk. | Core Concepts |
| Bid Price | The highest price a buyer is willing to pay for a stock at a specific moment. | This is the price you receive *immediately* when you sell a stock using a market order. Understanding the bid is crucial for calculating your exact exit price in a fast-moving market. | Core Concepts |
| Bid Size | The total number of shares that buyers are willing to purchase at a specific bid price, often displayed in lots of 100 shares on the Level 2 screen. | A very large bid size can indicate a potential support level, but traders must be wary of "spoofing," where the large order is not intended to be filled. | Market Mechanics & Order Flow |
| Bid-Ask Spread | The small price difference between what buyers are willing to pay (the bid) and what sellers are willing to accept (the ask). | This is the hidden, immediate cost of every trade you make, paid to the market makers. A tight spread indicates a liquid stock that's cheap to trade, while a wide spread signifies higher costs and potentially higher risk. | Core Concepts |
| Bleeding | A term used to describe a slow, steady, and consistent loss of money in a trading account or a specific position over a period of time. | A position that is "bleeding" is a drain on both capital and mental energy. It often describes the painful experience of holding a losing trade that is slowly grinding lower. | Trader Slang & Modern Lingo |
| Block Trade | A large trade of at least 10,000 shares or $200,000 in value, which is typically negotiated and executed off the public exchanges between institutional investors. | Block trades that are reported on the tape signal significant institutional activity. A large block trade near a key technical level can add validity to that level's importance. | Market Mechanics & Order Flow |
| Blockchain (Crypto) | A distributed, immutable digital ledger that records transactions in a chain of "blocks.",The blockchain is the foundational technology of cryptocurrencies. Its transparency allows traders to analyze transaction data | but its decentralized nature also means there is no central authority to reverse errors." | Market-Specific Jargon |
| Blowing Up Account | The act of losing all or a very significant portion of one's trading capital, rendering the account untradable. | This is the ultimate risk for any trader. It is almost always caused by a failure of risk management, such as using excessive leverage, not using stop-losses, or revenge trading. | Trader Slang & Modern Lingo |
| Blue-Chip Stock | A stock of a large, well-established, and financially sound company that has operated for many years. | While often seen as long-term investments, blue-chip stocks are also popular with day traders due to their high liquidity, tight spreads, and predictable behavior around news events. | Core Concepts |
| Bollinger Bands | A volatility indicator composed of a middle simple moving average (SMA) and two outer bands that are typically two standard deviations away from the SMA. | The bands expand and contract based on volatility. A "squeeze," where the bands tighten, often precedes an explosive price move. Price "walking the band" (repeatedly touching an outer band) indicates a very strong trend. | Technical Analysis & Chart Patterns |
| Bollinger Band Squeeze | A period of low volatility where the Bollinger Bands contract and move closer together. | This indicates that energy is coiling up. Traders anticipate a significant breakout and increase in volatility when the price eventually breaks out of the narrow bands. | Technical Analysis & Chart Patterns |
| Bond | A type of security where an investor loans money to a company or government for a set period, in return for regular interest payments. | While not typically day-traded, the bond market's performance (specifically interest rates and yields) has a huge influence on the stock market, affecting sector rotation and overall market sentiment. | Core Concepts |
| Book Map | A specialized trading platform that visualizes the entire limit order book (DOM) and order flow as a dynamic heatmap. | Bookmap allows traders to see the full depth of liquidity, watch for absorption, and spot large hidden orders (icebergs) in real-time, providing a high-definition view of order flow. | Market Mechanics & Order Flow |
| Box Spread | A complex, multi-leg options strategy that combines a bull call spread and a bear put spread, designed to lock in a risk-free profit based on pricing inefficiencies. | While often called a "risk-free" trade, box spreads are primarily used by market makers and are not practical for retail traders due to high commission costs and the risk of early assignment. | Options & Derivatives |
| Break of Structure (BOS) | A concept in price action trading where the price breaks through a previous swing high in an uptrend or a swing low in a downtrend. | A BOS in the direction of the trend confirms the trend's continuation. A break of structure against the trend (e.g., price making a lower low in an uptrend) is a major warning sign that the trend may be reversing. | Technical Analysis & Chart Patterns |
| Breakdown | A price movement below a defined level of support, often accompanied by an increase in volume. | For traders, a breakdown is a bearish signal that indicates sellers have taken control, often serving as an entry signal for a short position. | Core Concepts |
| Breakout | A price movement above a defined level of resistance, often accompanied by an increase in volume. | A breakout is a bullish signal that indicates buyers have overcome sellers. It is a primary entry signal for momentum traders looking to ride the start of a new upward move. | Core Concepts |
| Brent Crude (Commodities) | A major benchmark classification of crude oil that serves as a primary price reference for purchases of oil worldwide. | Brent Crude reflects the price of oil from the North Sea. It's a key global economic indicator, and its price movements impact inflation, shipping costs, and geopolitical sentiment. | Market-Specific Jargon |
| Broadening Formation (Megaphone) | A reversal or continuation pattern where price makes a series of higher highs and lower lows, creating an expanding range that resembles a megaphone. | This pattern indicates high volatility and disagreement between bulls and bears. It's notoriously difficult to trade, often signaling a period of uncertainty before a decisive move. | Technical Analysis & Chart Patterns |
| Broker | A firm that acts as an intermediary, executing buy and sell orders for traders in exchange for a commission or fee. | Choosing the right broker is one of the most critical decisions you'll make, as their platform reliability, data speed, and fee structure directly impact your ability to execute your strategy profitably. | Core Concepts |
| BTFD (Buy The F***ing Dip) | A popular, aggressive mantra encouraging traders to buy a security immediately after its price has dropped significantly, viewing the dip as a discount. | While buying dips can be a profitable strategy in a strong uptrend, blindly following this mantra without proper analysis or risk management can be a quick way to lose money if the "dip" turns into a sustained downtrend. | Trader Slang & Modern Lingo |
| Bull Call Spread | A debit spread strategy where a trader buys a call option and sells a further out-of-the-money call option, profiting if the stock price rises. | This is a bullish, defined-risk strategy that reduces the cost of being long a call option. The trade-off is that the potential profit is capped by the short call strike. | Options & Derivatives |
| Bull Flag | A bullish continuation chart pattern that appears as a small, rectangular consolidation on low volume after a sharp, high-volume price surge. | This pattern signals a brief pause in a strong uptrend before the next leg up. Traders watch for a high-volume breakout above the flag's upper trendline to enter a long position, anticipating a move of similar magnitude to the initial surge. | Technical Analysis & Chart Patterns |
| Bull Market | A market condition in which the prices of securities are rising or are expected to rise, and investor confidence is high. | In a bull market, traders favor long positions, pullback entries, and breakout strategies, as the overall market trend provides a tailwind for bullish setups. | Core Concepts |
| Bull Put Spread | A credit spread strategy where a trader sells a put option and buys a further out-of-the-money put option, profiting if the stock stays above the short strike price. | This is a bullish to neutral, defined-risk strategy that profits from time decay and a drop in volatility. It's a way to get paid to be bullish on a stock, with limited risk. | Options & Derivatives |
| Bullish Engulfing Pattern | A two-candlestick reversal pattern where a large green (up) candle completely "engulfs" the body of the previous, smaller red (down) candle. | This pattern appearing after a downtrend is a strong signal of a shift to buying pressure and a potential bottom. It shows that buyers have aggressively taken control from the sellers. | Technical Analysis & Chart Patterns |
| Bullrun | An extended period of time during which the prices of assets in a particular market, especially crypto, are consistently rising. | A bullrun is characterized by widespread optimism and high returns. While profitable, traders must be aware that these periods are cyclical and will eventually end. | Trader Slang & Modern Lingo |
| Bump and Run Reversal | A reversal pattern that occurs after a speculative advance, characterized by a lead-in trend, a sharp "bump" up, and then a steep decline that breaks the initial trendline. | This pattern is common in assets that have gone parabolic. The break of the lead-in trendline is the signal for traders to consider a short position, capitalizing on the speculative bubble bursting. | Technical Analysis & Chart Patterns |
| Butterfly Pattern | An advanced harmonic pattern used to identify the end of a price move and a potential reversal. | Similar to other harmonic patterns, traders use the Butterfly's specific Fibonacci measurements to pinpoint a high-probability reversal zone for placing trades against the prevailing trend. | Technical Analysis & Chart Patterns |
| Butterfly Spread | A neutral, defined-risk options strategy that involves three strike prices, designed to profit from a stock that is expected to experience very little price movement. | The butterfly has its maximum profit if the stock price is exactly at the middle strike price at expiration. It's a low-cost way to bet on a stock staying pinned to a specific price. | Options & Derivatives |
| Buying Power | The total amount of money available in a trading account to purchase securities, including both cash and available margin. | Understanding your buying power is essential for position sizing, but traders must be careful not to over-leverage and use all their available buying power on a single trade. | Core Concepts |
| Cable (Forex) | A slang term for the Great British Pound / US Dollar currency pair (GBP/USD). | The term originates from the transatlantic telegraph cable that used to transmit currency prices between London and New York. | Market-Specific Jargon |
| Calendar Spread (Horizontal Spread) | An options strategy that involves buying and selling two options of the same type and strike price, but with different expiration dates. | This strategy profits from the difference in the rate of time decay (theta) between the two options. A long calendar spread (selling a short-term option, buying a long-term one) profits if the stock stays near the strike price. | Options & Derivatives |
| Call Option | A contract that gives the buyer the right, but not the obligation, to buy a stock at a specified price (the strike price) on or before a certain date (the expiration date). | Traders buy call options when they are bullish on a stock. It allows them to control a large number of shares with a smaller amount of capital than buying the stock outright, offering leveraged upside potential with a defined maximum loss (the premium paid). | Options & Derivatives |
| Camarilla Pivots | A set of eight pivot point levels derived from the previous day's price data that are thought to identify key intraday support and resistance. | Traders use these levels, particularly the L3, L4, H3, and H4 levels, as targets for mean reversion trades or as triggers for breakout trades, believing price has a high tendency to react at these specific points. | Technical Analysis & Chart Patterns |
| Candlestick Chart | A type of financial chart that displays the high, low, open, and closing prices of a security for a specific period. | Candlestick charts are the preferred tool for technical analysts because they tell a rich, visual story of the battle between buyers and sellers, making it easier to spot patterns, trends, and potential reversals. | Technical Analysis & Chart Patterns |
| Capital | The money in your trading account used to buy and sell assets and cover any potential losses. | Your capital is your lifeblood; protecting it is your number one job. Every decision, from position sizing to setting stop-losses, must be made with the primary goal of preserving your trading capital. | Core Concepts |
| Capitulation | The point in a steep market decline where sellers panic and sell their holdings en masse, often marking the point of maximum pessimism and a potential market bottom. | Traders watch for signs of capitulation—such as a massive volume spike on a final, sharp price drop—as it can signal that the selling is exhausted and a reversal is imminent. | Trader Slang & Modern Lingo |
| Carry Trade (Forex) | A strategy that involves borrowing a currency with a low-interest rate to fund the purchase of a currency with a high-interest rate, with the goal of profiting from the interest rate differential. | While typically a longer-term strategy, the flows from carry trades can influence intraday trends, especially in currency pairs with large interest rate differences. | Market-Specific Jargon |
| Cash Account | A type of brokerage account where the trader must pay for all securities in full with available cash. | Cash accounts are simpler and safer than margin accounts as they don't involve leverage. However, they are subject to "settled funds" rules, which can restrict the frequency of day trades. | Core Concepts |
| Cash-Secured Put | An options strategy where a trader sells a put option while also setting aside the cash to buy the underlying stock if they are assigned. | This is a bullish strategy often used by investors who want to buy a stock at a lower price than it is currently trading. The trader either keeps the premium if the stock stays up, or buys the stock at a discount if it falls. | Options & Derivatives |
| Catalyst | An event or piece of news that causes a significant movement in a stock's price. | Day traders actively seek out stocks with a fresh catalyst (like earnings, FDA approval, or a product launch) because it creates the volatility and volume needed for profitable trading opportunities. | Core Concepts |
| CCI (Commodity Channel Index) | A momentum-based oscillator used to help determine when an investment vehicle is reaching a condition of being overbought or oversold. | Traders use the CCI to identify cyclical trends. Readings above +100 can signal an overbought condition, while readings below -100 can signal an oversold condition, often providing entry points for mean-reversion strategies. | Technical Analysis & Chart Patterns |
| CFTC (Commodity Futures Trading Commission) | The U.S. government agency that regulates the futures and options markets. | The CFTC's role is to prevent manipulation and protect market participants. Their weekly "Commitment of Traders" report is a key piece of data for futures traders. | Market-Specific Jargon |
| Chaikin Money Flow (CMF) | An indicator that measures the amount of Money Flow Volume over a set period, designed to gauge the underlying buying and selling pressure. | A CMF reading above zero suggests buying pressure (accumulation), while a reading below zero suggests selling pressure (distribution). It's used to confirm the strength of a trend. | Technical Analysis & Chart Patterns |
| Channel | A chart pattern where price action is contained between two parallel trendlines. | Channels clearly define a trend (ascending, descending, or horizontal). Traders use the channel boundaries as natural areas of support and resistance to initiate and close trades. | Technical Analysis & Chart Patterns |
| Charm | A second-order "Greek" that measures the rate of change of an option's Delta over time. | Charm shows how much an option's Delta will decay as it approaches expiration. It's an advanced metric used by market makers to manage their Delta exposure as time passes. | Options & Derivatives |
| Chart Pattern | A distinct formation on a price chart that creates a recognizable shape, which can be used to predict future price movements. | Recognizing chart patterns like triangles, flags, and head and shoulders is a core skill of technical analysis, as these patterns reflect the underlying psychology of the market and can signal a continuation or reversal of a trend. | Technical Analysis & Chart Patterns |
| Chikou Span (Lagging Span) | A component of the Ichimoku Cloud indicator, representing the current closing price plotted 26 periods in the past. | The Chikou Span helps traders visualize the relationship between current and prior price action. A cross above the price action of 26 periods ago is a bullish signal, and vice versa. | Technical Analysis & Chart Patterns |
| Chop | A market condition with no clear direction, characterized by choppy, sideways price action within a tight range. | Choppy markets are dangerous and frustrating for trend-following traders. The key to navigating chop is to reduce position size, wait for clear breaks of the range, or simply stay out and preserve capital. | Trader Slang & Modern Lingo |
| Circuit Breaker | An emergency regulatory measure that temporarily halts trading on an exchange to curb panic-selling during periods of extreme market volatility. | Circuit breakers are designed to give the market a "time-out" and restore order. For traders, they are a clear sign of extreme fear and volatility, requiring maximum caution. | Core Concepts |
| Clearing House | An organization that acts as an intermediary between a buyer and a seller, ensuring that the transaction is completed, thereby reducing counterparty risk. | The clearing house is a critical but invisible part of the market's plumbing that guarantees the settlement of all trades, providing the trust necessary for the market to function. | Market Mechanics & Order Flow |
| Close | The final price at which a security is traded on a given trading day. | The closing price is a critical piece of data, used as a reference point for the next day's open and for calculating many technical indicators like moving averages. | Core Concepts |
| Co-location | The practice of placing a firm's trading servers in the same physical data center as an exchange's servers to minimize latency. | Co-location is a key advantage for HFT firms, as it gives them a speed advantage of microseconds. This is a level of speed that retail traders cannot compete with. | Market Mechanics & Order Flow |
| Collar | A protective options strategy that involves holding shares of a stock, buying a protective put option, and selling a covered call option. | A collar is used to protect an existing long stock position from a large drop, while simultaneously generating income from the short call. The trade-off is that it also caps the upside profit potential of the stock. | Options & Derivatives |
| Commission | A service charge assessed by a broker for executing a trade. | While many brokers now offer "commission-free" trading, understanding the fee structure (which can include per-trade or per-share commissions) is vital for calculating the true cost of your trading activity. | Core Concepts |
| Commodities | Raw materials or primary agricultural products that can be bought and sold, such as gold, oil, and wheat. | Traders often trade commodities via futures contracts or ETFs to speculate on changes in global supply and demand, or as a hedge against inflation. | Core Concepts |
| Confirmation | The use of an additional indicator or tool to verify a trade signal suggested by another. | A trader might see a bullish candlestick pattern and then look for a high volume spike or a bullish MACD crossover as confirmation before entering the trade. This practice helps filter out false signals. | Technical Analysis & Chart Patterns |
| Confirmation Bias | The tendency to search for, interpret, and favor information that confirms one's pre-existing beliefs or trade thesis, while ignoring contradictory evidence. | This is a dangerous psychological trap. A successful trader must actively seek out evidence that contradicts their thesis to make objective decisions. | Trader Slang & Modern Lingo |
| Confluence | A situation where multiple, independent technical signals all point to the same conclusion, such as a Fibonacci level lining up with a key moving average and a support zone. | Confluence creates a high-probability trade setup. When different tools and indicators all give the same signal, it significantly increases a trader's confidence in the validity of the trade idea. | Technical Analysis & Chart Patterns |
| Consolidated Tape | The electronic system that continuously provides the last sale price and volume data for all securities traded on U.S. exchanges. | The consolidated tape (what traders refer to as "The Tape" or "Time & Sales") gives a complete picture of all trading activity, including trades that occur on dark pools and other alternative venues. | Market Mechanics & Order Flow |
| Consolidation | A period of sideways price movement on a chart, where a stock trades within a defined range, indicating a temporary pause in a trend. | Consolidation is a sign of equilibrium between buyers and sellers. Traders watch these periods closely as they often precede a significant breakout or breakdown. | Core Concepts |
| Continuation Pattern | A chart pattern that suggests a temporary pause in an existing trend, after which the trend is likely to resume. | Patterns like flags, pennants, and triangles are continuation patterns. They offer traders a lower-risk opportunity to join an established trend during a period of consolidation. | Technical Analysis & Chart Patterns |
| Contract Size | The standardized quantity of an underlying asset that is covered by a single derivative contract. | For most equity options, the contract size is 100 shares. For futures, it varies by product (e.g., one E-mini S&P 500 contract controls $50 times the index value). Understanding the contract size is essential for calculating the true value and risk of a position. | Options & Derivatives |
| Copium / Hopium | Slang terms for the irrational hope a trader feels when holding a losing position, hoping the market will reverse in their favor without any valid reason. | Relying on "hopium" is a sign of emotional trading and a lack of a defined trading plan. It's what keeps a trader in a losing trade long after their stop-loss should have been hit. | Trader Slang & Modern Lingo |
| Correction | A decline of at least 10% but less than 20% in the price of a security or major index from its most recent peak. | A correction is a normal part of a healthy market cycle. For traders, it can present opportunities to buy assets at a lower price, but it also signals a need for increased caution and risk management. | Core Concepts |
| Corrective Wave | In Elliott Wave theory, a three-wave price pattern that moves in the opposite direction of the main trend. | Identifying a corrective wave (often labeled A-B-C) helps traders understand that a move against the trend is likely temporary, providing opportunities to re-enter when the primary trend resumes. | Technical Analysis & Chart Patterns |
| Counterparty Risk | The risk that the other party in a trade or transaction will default on its obligation. | In exchange-traded markets, counterparty risk is virtually eliminated for retail traders because the clearing house guarantees the trade. | Market Mechanics & Order Flow |
| Coupon (Bonds) | The annual interest rate paid on a bond, expressed as a percentage of the face value. | The coupon is the fixed income that a bond investor receives. For traders, changes in the market's required yield relative to a bond's fixed coupon are what drive bond prices up or down. | Market-Specific Jargon |
| Covered Call | An income-generating options strategy where a trader who owns at least 100 shares of a stock sells a call option against those shares. | This is a neutral to slightly bullish strategy. The trader collects the premium from the sold call, but in exchange, they agree to sell their shares at the strike price, capping their potential upside profit. | Options & Derivatives |
| Crab Pattern | A precise harmonic reversal pattern that allows traders to enter trades at extreme price levels. | The defining feature of the Crab pattern is its long final leg, which projects well beyond the initial starting point. It's used to catch reversals in highly volatile or overextended markets. | Technical Analysis & Chart Patterns |
| Credit Spread | An options spread strategy where the trader receives a net credit (cash inflow) upon entering the position. | Credit spreads, such as a short put spread or a short call spread, are profitable if the spread expires worthless. These strategies benefit from time decay (theta). | Options & Derivatives |
| Cross (Opening/Closing) | A process where an exchange matches all buy and sell orders at a single price to open or close the market for a security. | The opening and closing crosses are periods of extremely high volume. Analyzing the order imbalances before the cross can provide clues about short-term market direction. | Market Mechanics & Order Flow |
| Cross-Currency Pair (Forex) | A currency pair that does not include the US Dollar, such as EUR/GBP or AUD/JPY. | Trading cross-currency pairs allows traders to take a view on the relative strength of two economies without having to factor in the movement of the US Dollar. | Market-Specific Jargon |
| Crude Oil Inventories (Commodities) | A weekly report from the Energy Information Administration (EIA) that measures the change in the number of barrels of crude oil held in inventory by commercial firms. | This is a major market-moving event for oil traders. A larger-than-expected build in inventories is typically bearish for oil prices, while a surprise draw is bullish. | Market-Specific Jargon |
| Cumulative Delta | An indicator that plots the cumulative difference between the volume of trades executed at the ask price and the volume executed at the bid price. | Cumulative Delta helps traders visualize the net buying or selling pressure over a period. A rising Cumulative Delta suggests aggressive buyers are in control, while a falling one suggests aggressive sellers are dominant. | Market Mechanics & Order Flow |
| Currency Pair (Forex) | The quotation of two different currencies, with the value of one currency being quoted against the other. | All Forex trading is done in pairs. The trader is simultaneously buying one currency while selling the other, betting on the relative strength between the two. | Market-Specific Jargon |
| Custodian | A financial institution that holds customers' securities for safekeeping to minimize the risk of their theft or loss. | The custodian is another essential background player that ensures the safety of your assets, separate from the broker who executes your trades. | Market Mechanics & Order Flow |
| Cycle Lines | A technical analysis tool that draws vertical lines at specified time intervals on a chart to identify potential patterns related to time. | Cycle lines are used to forecast when a significant price move or market turn might occur based on historical time cycles. | Technical Analysis & Chart Patterns |
| Dark Cloud Cover | A two-candlestick bearish reversal pattern where a down (red) candle opens above the previous day's high but closes well into the body of the previous up (green) candle. | This pattern is a significant bearish signal as it shows a decisive shift in momentum where sellers have overwhelmed buyers in a single session. | Technical Analysis & Chart Patterns |
| Dark Pools | Private financial forums or exchanges where large institutional investors can trade securities anonymously without the trade details being revealed to the public until after the trade is executed. | While you can't see into dark pools in real-time, large "dark pool prints" that appear on the tape can signal significant institutional activity. A massive print during a consolidation period might hint at accumulation before a big move. | Market Mechanics & Order Flow |
| Darvas Box | A trading strategy that involves drawing a "box" around a stock's recent high and low price range during a consolidation period. | Traders use the Darvas Box method to identify stocks in strong uptrends. A purchase is made when the stock price breaks out of the top of its box on high volume, signaling a continuation of the trend. | Technical Analysis & Chart Patterns |
| Day Trading | The practice of buying and selling a financial instrument within the same trading day, closing all positions before the market closes. | This is an active trading style that aims to profit from small, short-term price movements, avoiding the risks associated with holding positions overnight. | Core Concepts |
| DD (Due Diligence) | A term for the research and analysis a trader performs on a potential investment before entering a trade. | While often used humorously or ironically in online forums, performing proper DD is a critical part of any serious trading or investment process. | Trader Slang & Modern Lingo |
| Dealer | A person or firm that is ready to buy and sell securities for their own account, acting as a principal in a transaction. | A dealer is different from a broker (who acts as an agent). Market makers are a type of dealer who provides liquidity to the market. | Market Mechanics & Order Flow |
| Death Cross | A bearish chart pattern where a shorter-term moving average (typically the 50-day) crosses below a longer-term moving average (typically the 200-day). | The Death Cross is a widely watched signal of a major, long-term trend change from bullish to bearish. It is considered a significant warning sign for the broader market or an individual stock. | Technical Analysis & Chart Patterns |
| Debit Spread | An options spread strategy where the trader pays a net debit (cash outflow) to enter the position. | Debit spreads, such as a long call spread or a long put spread, are profitable if the spread increases in value. These are directional strategies used to reduce the cost of buying a single option. | Options & Derivatives |
| Decentralized Exchange (DEX) | A type of cryptocurrency exchange which allows for direct peer-to-peer cryptocurrency transactions to take place online securely and without the need for an intermediary. | DEXs are the crypto-native equivalent of a stock exchange but operate without a central authority, using smart contracts to facilitate trades. | Market Mechanics & Order Flow |
| DeFi (Decentralized Finance) (Crypto) | A blockchain-based form of finance that does not rely on central financial intermediaries such as brokerages, exchanges, or banks. | DeFi is a major sector within the crypto world. The performance of DeFi tokens can be seen as an indicator of risk appetite and innovation within the broader crypto market. | Market-Specific Jargon |
| Degen (Degenerate) | A slang term for a trader who engages in extremely high-risk, speculative trading, often with little to no research, for the thrill of it. | "Degen" trading is a form of gambling. While it can be a source of entertainment in online communities, it is not a sustainable approach to the markets. | Trader Slang & Modern Lingo |
| Delta | A measurement of how much an option's price is expected to move for every $1 change in the price of the underlying stock. | Delta essentially shows the probability of an option expiring in-the-money. A 0.50 delta call option will theoretically gain $0.50 in value for every $1 the stock goes up. It's the most important "Greek" for gauging an option's directional exposure. | Options & Derivatives |
| Delta (Order Flow) | In the context of order flow, Delta represents the net difference between buying and selling volume at a specific price level or within a single candle. | A positive delta in a candle means more aggressive buying occurred than selling. Analyzing the delta of each candle can provide a more granular view of the buying and selling pressure than price alone. | Market Mechanics & Order Flow |
| Delta Neutral | A portfolio position that has an overall delta of zero, meaning its value is not affected by small changes in the price of the underlying asset. | Market makers and advanced options traders aim for delta-neutral positions (like straddles or strangles) to profit from other factors like time decay (theta) or changes in volatility (vega) rather than direction. | Options & Derivatives |
| Depth of Market (DOM) | A trading tool that displays the number of open buy and sell orders for a security at different price levels. | The DOM is a real-time, dynamic view of the order book. Scalpers and futures traders use the DOM to see where liquidity is clustered and to place trades with precision relative to the current bid and ask. | Market Mechanics & Order Flow |
| Derivative | A financial contract whose value is derived from the performance of an underlying asset, such as a stock, index, or commodity. | Options and futures are the most common types of derivatives. They are used for both hedging (reducing risk) and speculation (taking on risk for potential profit). | Options & Derivatives |
| Descending Channel | A chart pattern where price action is contained between two downward-sloping parallel trendlines. | This pattern clearly defines a downtrend. Traders look to sell or short when the price rallies to the upper trendline (resistance) and take profits near the lower trendline (support). | Technical Analysis & Chart Patterns |
| Descending Triangle | A bearish chart pattern characterized by a flat lower trendline and a descending upper trendline, indicating that sellers are more aggressive than buyers. | This pattern signals a build-up of selling pressure before a potential breakdown. Traders often place a sell order on a high-volume break below the flat horizontal support. | Technical Analysis & Chart Patterns |
| Detrended Price Oscillator (DPO) | A technical indicator that strips the long-term trend from price, making it easier to identify short-term cycles and overbought/oversold levels. | The DPO helps traders focus on the cyclical nature of price movements without the "noise" of the primary trend. | Technical Analysis & Chart Patterns |
| Diagonal Spread | An options strategy similar to a calendar spread, but it involves buying and selling options with different strike prices in addition to different expiration dates. | Diagonal spreads are a more advanced strategy that allows a trader to create a position with a specific directional bias while still benefiting from differences in time decay. | Options & Derivatives |
| Diamond Hands | A slang term originating from social media, meaning to hold onto a stock or asset with extreme conviction, refusing to sell despite high volatility, risk, or losses. | This represents a mindset of high-risk tolerance and a refusal to be shaken out of a position. While celebrated in "meme stock" culture, from a professional risk management perspective, it's often a dangerous mentality that can lead to catastrophic losses. | Trader Slang & Modern Lingo |
| Diamond Top/Bottom | A complex reversal pattern that occurs at a market top or bottom, characterized by a four-sided, diamond-like shape. | This pattern signals a period of high volatility and uncertainty before a major trend reversal. It's considered a reliable but relatively rare pattern. | Technical Analysis & Chart Patterns |
| Dip | A temporary, short-term drop in the price of a stock or asset. | Traders in an uptrend often look for dips as an opportunity to enter a long position at a better price. | Trader Slang & Modern Lingo |
| Discipline | The ability to consistently follow a trading plan and its rules, regardless of emotional impulses like fear or greed. | Discipline is the single most important trait that separates consistently profitable traders from the rest. It's the skill of doing what you know you should do, even when it's emotionally difficult. | Core Concepts |
| Distribution | The phase in a market cycle where informed investors are systematically selling their positions to the uninformed public, often characterized by choppy, volatile sideways action after a strong uptrend. | In Wyckoff theory, identifying a distribution phase is critical for exiting long positions or initiating short positions before a significant markdown or downtrend begins. | Technical Analysis & Chart Patterns |
| Divergence | A situation where the price of an asset is moving in the opposite direction of a technical indicator, like the RSI or MACD. | Divergence is a powerful warning signal that the current trend's momentum is fading. A bearish divergence (higher price, lower indicator high) can foreshadow a top, while a bullish divergence (lower price, higher indicator low) can signal a potential bottom. | Technical Analysis & Chart Patterns |
| Dividend | A portion of a company's earnings paid out to its shareholders, typically on a quarterly basis. | While dividends are more important for long-term investors, a stock going "ex-dividend" can cause a predictable drop in its price on a specific day, a factor that day traders must be aware of. | Core Concepts |
| Doji Candlestick | A candlestick pattern where the open and close prices are virtually equal, resulting in a very small or non-existent body. | A Doji represents indecision in the market, as neither buyers nor sellers could gain control. Its appearance after a strong trend can be an early warning sign of a potential reversal or a pause in the trend. | Technical Analysis & Chart Patterns |
| Double Bottom | A bullish reversal pattern that looks like the letter "W," where the price drops to a support level twice and is unable to break through. | This pattern signals that selling pressure is exhausted and buyers are stepping in. A breakout above the resistance level (the middle peak of the "W") is the confirmation signal for a new uptrend. | Technical Analysis & Chart Patterns |
| Double Top | A bearish reversal pattern that looks like the letter "M," where the price rises to a resistance level twice and fails to break through. | This pattern indicates that buying pressure is waning and sellers are taking control. A breakdown below the support level (the middle trough of the "M") confirms the start of a new downtrend. | Technical Analysis & Chart Patterns |
| Dow Theory | A foundational theory of technical analysis that describes market trends based on the analysis of market highs and lows. | The core tenet is that an uptrend is defined by a series of higher highs and higher lows, while a downtrend is a series of lower highs and lower lows. This is the bedrock of all modern trend analysis. | Technical Analysis & Chart Patterns |
| Dragonfly Doji | A specific type of doji where the open, high, and close prices are the same, and there is a long lower wick. | When found at the bottom of a downtrend, this is a powerful bullish reversal signal. It indicates that sellers pushed the price down, but aggressive buyers stepped in and pushed it all the way back to the open. | Technical Analysis & Chart Patterns |
| Drawdown | The peak-to-trough decline in the value of a trading account during a specific period. | Drawdowns are an unavoidable part of trading. A key part of risk management is having rules in place (like a max daily loss) to keep normal drawdowns from turning into account-destroying disasters. | Core Concepts |
| Dump | A sudden and sharp sell-off in the price of an asset, often on high volume. | This is the second phase of a "pump and dump" scheme. It can also refer to any rapid price decline. | Trader Slang & Modern Lingo |
| E-mini | An electronically traded futures contract that is a fraction of the size of a standard futures contract. | E-mini contracts, like the E-mini S&P 500 (/ES), made futures markets accessible to retail traders by offering lower margin requirements and smaller contract sizes than the old, institution-sized contracts. | Market-Specific Jargon |
| Earnings Per Share (EPS) | A company's profit divided by the outstanding shares of its common stock, serving as an indicator of profitability. | EPS is one of the most closely watched numbers during earnings season. A company beating or missing its EPS estimates is a major catalyst that can cause a stock to gap up or down significantly. | Core Concepts |
| Economic Indicator | A piece of economic data, such as GDP, inflation (CPI), or the unemployment rate, that is used to interpret the health of an economy. | Major economic indicator releases can cause widespread market volatility. Traders must be aware of the economic calendar to avoid being caught off guard by these market-moving events. | Core Concepts |
| ECN (Electronic Communication Network) | A computerized system that automatically matches buy and sell orders for securities. | ECNs are a key component of the modern stock market, facilitating fast and efficient trading. Most retail brokers route orders through various ECNs. | Market Mechanics & Order Flow |
| EIA (Energy Information Administration) | The U.S. government agency responsible for collecting, analyzing, and disseminating energy information, including the weekly crude oil inventory report. | The EIA report is a critical data point for any trader involved in the energy markets, from crude oil futures to energy sector stocks. | Market-Specific Jargon |
| Elliott Wave Theory | A theory that states the market moves in predictable, repetitive patterns, or "waves." The primary pattern consists of five "impulse waves" in the direction of the main trend, followed by three "corrective waves.",Elliott Wave analysis is a complex method used to identify the market's position within a larger cycle | helping traders to forecast long-term price movements and market tops and bottoms." | Technical Analysis & Chart Patterns |
| EMA (Exponential Moving Average) | A type of moving average that places a greater weight and significance on the most recent data points. | EMAs react faster to recent price changes than Simple Moving Averages (SMAs). Traders often use shorter-term EMAs (like the 9 or 21) to identify short-term trend and as dynamic support or resistance. | Technical Analysis & Chart Patterns |
| Engulfing Candle | A two-candlestick pattern where a large candle completely "engulfs" the body of the previous, smaller candle. | A bullish engulfing pattern (a large green candle after a small red one) signals a powerful shift to buying pressure, while a bearish engulfing (a large red after a small green) signals a shift to selling pressure. Both are strong reversal signals. | Technical Analysis & Chart Patterns |
| ETF (Exchange-Traded Fund) | A type of security that tracks an index, sector, commodity, or other asset, but which can be bought and sold on a stock exchange like a regular stock. | ETFs like SPY (S&P 500) and QQQ (Nasdaq 100) are extremely popular with day traders because they offer high liquidity and allow for a way to trade the market as a whole rather than a single company. | Core Concepts |
| European Style Option | An option that can only be exercised by its owner on its expiration date, not before. | Index options (like SPX) are typically European style. This eliminates the risk of early assignment for options sellers, which is a key difference from equity options. | Options & Derivatives |
| Evening Star | A three-candle bearish reversal pattern that occurs at the top of an uptrend, consisting of a large bullish candle, a small-bodied candle, and then a large bearish candle. | This pattern signifies a stall in momentum and a transfer of control from buyers to sellers, often marking a significant top. | Technical Analysis & Chart Patterns |
| Exchange | A centralized marketplace, like the New York Stock Exchange (NYSE) or Nasdaq, where financial instruments are bought and sold. | The exchange provides the regulated, transparent environment necessary for fair and orderly trading, ensuring that prices are determined by the real-time forces of supply and demand. | Core Concepts |
| Exercise | The act by which the owner of an option enforces the right granted by the contract, either buying (for a call) or selling (for a put) the underlying security at the strike price. | Exercising an option is how a buyer takes advantage of a profitable, in-the-money position. It's the final step that turns the contractual right into an actual stock position. | Options & Derivatives |
| Exhaustion | A point in order flow where the buying or selling pressure dries up, often leading to a reversal. | Exhaustion can be spotted on the tape as a decrease in the size and frequency of trades after a strong price move, signaling that the move is running out of fuel. | Market Mechanics & Order Flow |
| Exotic Pair (Forex) | A currency pair that includes one major currency alongside the currency of a developing or emerging economy (e.g., USD/TRY - US Dollar vs. Turkish Lira). | Exotic pairs are characterized by low liquidity, wide spreads, and high volatility, making them significantly riskier to trade than major pairs. | Market-Specific Jargon |
| Expectancy | The average amount a trader can expect to win or lose per trade, calculated based on their win rate, average win size, and average loss size. | A trading system must have a positive expectancy to be profitable in the long run. This mathematical edge is the foundation of any professional trading career. | Core Concepts |
| Expiration Date | The date on which an options or futures contract is no longer valid and ceases to exist. | Expiration is a critical component of a derivative's value. As the expiration date approaches, the time value of an option decays at an accelerating rate. | Options & Derivatives |
| Extrinsic Value (Time Value) | The portion of an option's price (premium) that is attributable to factors other than its intrinsic value, primarily the amount of time remaining until expiration and the implied volatility. | Extrinsic value is the amount a trader is paying for the *possibility* that the option will become more profitable. At expiration, the extrinsic value of all options goes to zero. | Options & Derivatives |
| Falling Wedge | A bullish chart pattern that begins wide at the top and contracts as prices move lower, with price action contained within two downward-sloping, converging trendlines. | While the pattern slopes down, it's considered a bullish reversal or continuation signal. A breakout above the upper trendline signals that a new uptrend is likely beginning. | Technical Analysis & Chart Patterns |
| Federal Reserve (The Fed) | The central banking system of the United States, responsible for setting monetary policy, including interest rates. | The Fed's decisions and statements (especially during FOMC meetings) are among the most powerful market-moving events. All traders stop and pay attention when the Fed speaks. | Core Concepts |
| Fees | Costs charged by a broker for various services, which can include commissions, platform fees, data fees, and more. | Traders must be aware of all potential fees, as they directly reduce profitability. The total cost of trading is a critical factor when evaluating a broker. | Core Concepts |
| Fiat Currency | Government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it. | The US Dollar, Euro, and Japanese Yen are all fiat currencies. The entire Forex market is the trading of fiat currencies, and cryptocurrencies are often seen as an alternative to them. | Market-Specific Jargon |
| Fiber (Forex) | A slang term for the Euro / US Dollar currency pair (EUR/USD). | This nickname is thought to have originated from the use of fiber optic cables to transmit currency price data. | Market-Specific Jargon |
| Fibonacci Extension | A tool used by traders to project potential profit targets by extending Fibonacci ratios beyond the standard 100% level. | After a price breaks out, traders use Fibonacci extension levels (like 127.2%, 161.8%, and 261.8%) to identify logical areas where the price move might pause or reverse. | Technical Analysis & Chart Patterns |
| Fibonacci Retracement | A tool used by technical analysts to identify potential support and resistance levels by drawing key percentage levels between a high and a low point. | Traders use the Fibonacci levels (23.6%, 38.2%, 50%, 61.8%) to pinpoint areas where a price pullback might reverse and rejoin the primary trend. The 61.8% level is often considered a particularly significant "golden ratio" level. | Technical Analysis & Chart Patterns |
| Fill | The successful execution of a buy or sell order. | Getting a "good fill" means your order was executed at or near the price you expected. A "bad fill" is when you experience significant slippage. | Market Mechanics & Order Flow |
| FINRA (Financial Industry Regulatory Authority) | A private American corporation that acts as a self-regulatory organization for member brokerage firms and exchange markets. | FINRA creates and enforces the rules that govern broker-dealers in the U.S. Its regulations, like the Pattern Day Trader (PDT) rule, directly impact how retail traders can operate. | Core Concepts |
| Flag Pattern | A short-term continuation pattern that appears as a small rectangle sloping against the prevailing trend after a sharp price move. | Flags represent a brief pause for breath in a strong trend. Traders look for a high-volume breakout from the flag in the direction of the original trend to enter a trade. | Technical Analysis & Chart Patterns |
| Flash Crash | An event in electronic securities markets wherein the withdrawal of stock orders rapidly amplifies price declines, resulting in a swift and deep selloff. | A flash crash is a modern market phenomenon driven by algorithmic trading. It highlights the inherent risks of a highly automated and interconnected market system. | Market Mechanics & Order Flow |
| Flippening (Crypto) | A term used to describe the hypothetical future moment when Ethereum's market capitalization might surpass Bitcoin's market capitalization. | The concept of the "flippening" represents a major debate and narrative within the cryptocurrency community about which blockchain will ultimately be the most dominant. | Trader Slang & Modern Lingo |
| FOMO (Fear of Missing Out) | The emotional impulse to jump into a trade after a stock has already made a large upward move, driven by the fear of missing out on further gains. | FOMO is one of the most destructive emotions for a trader, as it almost always leads to buying at the worst possible price (chasing the top) with a poor risk/reward ratio. | Core Concepts |
| Footprint Chart | An advanced chart type that displays the volume of trades executed at the bid versus the ask price for each price level within a single candle. | Footprint charts give traders a detailed, x-ray view inside each candlestick, allowing them to spot imbalances, absorption, and other subtle order flow clues that are not visible on a standard chart. | Market Mechanics & Order Flow |
| Forex (Foreign Exchange) | The global marketplace for exchanging national currencies. | Forex is the largest and most liquid market in the world. Traders speculate on the changing values of currency pairs like the EUR/USD. | Core Concepts |
| Fork (Crypto) | A change in a blockchain's protocol. A "soft fork" is a backward-compatible upgrade, while a "hard fork" is a permanent divergence that creates a new, separate version of the blockchain. | Hard forks can result in the creation of a new cryptocurrency (e.g., Bitcoin Cash forking from Bitcoin). These events are often surrounded by high volatility and speculation. | Market-Specific Jargon |
| Forward Contract | A customized, private contract between two parties to buy or sell an asset at a specified price on a future date. It is not traded on a centralized exchange. | Forwards are a type of derivative often used by corporations to hedge commodity or currency risk. Unlike futures, they are not standardized and have counterparty risk. | Options & Derivatives |
| FUD (Fear, Uncertainty, and Doubt) | A term used to describe negative information or rumors spread intentionally to cause a security's price to drop. | Traders must learn to differentiate between legitimate bearish analysis and FUD, which is often baseless and designed to manipulate market sentiment. Reacting emotionally to FUD is a common way to get shaken out of a good position. | Trader Slang & Modern Lingo |
| FUDster | A person who is known for spreading Fear, Uncertainty, and Doubt (FUD) about a particular asset, often to manipulate the price downwards. | Identifying known FUDsters within a trading community can help traders filter out noise from credible information. | Trader Slang & Modern Lingo |
| Fundamental Analysis | A method of evaluating a security by attempting to measure its intrinsic value by examining related economic and financial factors. | While day traders primarily focus on technical analysis, understanding the fundamental reason *why* a stock is moving (e.g., strong earnings) provides crucial context. | Core Concepts |
| Funding Rate (Crypto) | A mechanism used by perpetual futures exchanges in crypto to keep the contract price in line with the spot price, involving regular payments between long and short traders. | A high positive funding rate means longs are paying shorts, indicating bullish sentiment is dominant. Extreme funding rates can signal an over-leveraged market and a potential for a sharp reversal. | Market-Specific Jargon |
| Futures Contract | A standardized legal agreement to buy or sell a particular commodity or financial instrument at a predetermined price at a specified time in the future. | Futures are derivatives traded on centralized exchanges. They are used by both commercial hedgers and speculators to trade everything from corn and oil to stock market indexes and interest rates. | Options & Derivatives |
| Gamma | A measurement of the rate of change of an option's Delta in response to a $1 move in the underlying stock price. | Gamma measures the acceleration of an option's price. High gamma means the option's Delta will change very quickly with stock price movement, making it highly responsive but also riskier. This effect is most pronounced for at-the-money options close to expiration. | Options & Derivatives |
| Gamma Squeeze | A market phenomenon where rapid buying of short-dated call options forces market makers to buy the underlying stock to hedge their own exposure, which in turn drives the stock price even higher, creating a powerful feedback loop. | This is an advanced concept that explains the explosive price action seen in some "meme stocks." It's a powerful but rare event driven by the mechanics of options hedging. | Trader Slang & Modern Lingo |
| Gann Fan | A technical analysis tool based on the idea that prices move in predictable angles from important highs or lows. | The Gann Fan consists of a series of angled lines (e.g., 1x1, 1x2, 2x1) that are believed to provide support and resistance as price moves through them over time. | Technical Analysis & Chart Patterns |
| Gap | A change in price between the close of one trading day and the open of the next, with no trading occurring in between. | Gaps are created by after-hours news or events. Trading gaps is a popular day trading strategy, focusing on whether the gap will continue in the same direction ("Gap and Go") or reverse to fill the empty space on the chart. | Core Concepts |
| Gartley Pattern | The most common harmonic pattern, which has specific Fibonacci ratios that define a five-point reversal structure. | Like all harmonic patterns, the Gartley pattern helps traders identify a Potential Reversal Zone (PRZ) where a trend is likely to reverse, offering a high-probability entry point. | Technical Analysis & Chart Patterns |
| Gas Fees (Crypto) | The transaction fees paid to miners on a blockchain network (like Ethereum) to have a transaction processed and included in a block. | For crypto traders, gas fees are a significant cost of doing business that can vary wildly depending on network congestion. High gas fees can make small trades unprofitable and must be factored into any strategy. | Market-Specific Jargon |
| GM (Good Morning) | A common greeting used in online trading and crypto communities, particularly on Twitter, to start the day and engage with the community. | This is a cultural term that signifies participation and a sense of community among traders online. | Trader Slang & Modern Lingo |
| Golden Cross | A bullish chart pattern where a shorter-term moving average (typically the 50-day) crosses above a longer-term moving average (typically the 200-day). | The Golden Cross is a widely followed long-term bullish signal for a stock or the market as a whole, often indicating the start of a major uptrend. | Technical Analysis & Chart Patterns |
| Good 'til Canceled (GTC) | A type of order that remains active until it is either executed or canceled by the trader. | GTC orders are typically used by swing or position traders for setting price targets or stop-losses that might not be hit in a single day. Day traders usually cancel all orders at the end of the day. | Core Concepts |
| Gravestone Doji | A specific type of doji where the open, low, and close prices are the same, and there is a long upper wick. | When found at the top of an uptrend, this is a powerful bearish reversal signal. It indicates that buyers pushed the price up, but sellers forcefully rejected that advance, pushing it all the way back down to the open. | Technical Analysis & Chart Patterns |
| Greed | The excessive desire for profits, which often leads to irrational trading decisions like holding a winning trade too long or taking on too much risk. | Greed, along with fear, is a primary emotional obstacle to trading success. A solid trading plan with pre-defined profit targets is the best defense against greed. | Core Concepts |
| Greeks | A set of calculations used in options trading to measure the sensitivity of an option's price to various factors. | The main Greeks (Delta, Gamma, Theta, Vega, Rho) are the essential tools that options traders use to quantify and manage the different risks associated with an options position. | Options & Derivatives |
| Halving (Crypto) | An event, most famously in Bitcoin's protocol, where the reward for mining new blocks is cut in half. This occurs approximately every four years. | The halving reduces the rate at which new coins are created, thus restricting supply. Historically, Bitcoin halvings have been followed by major bull runs, making them a critical long-term catalyst. | Market-Specific Jargon |
| Halt (Trading Halt) | A temporary suspension of trading for a particular security, often imposed pending the release of significant news. | A trading halt signals that a major, price-moving catalyst is imminent. Trading a stock immediately after it re-opens is extremely volatile and requires a specific strategy and strict risk control. | Core Concepts |
| Hammer Candlestick | A bullish reversal candlestick pattern that forms after a decline, characterized by a short body, little to no upper wick, and a long lower wick. | A Hammer shows that although sellers pushed the price down, strong buying pressure stepped in to close the price near its open. It's a signal of potential capitulation by sellers. | Technical Analysis & Chart Patterns |
| Hanging Man | A bearish reversal candlestick pattern that looks identical to a Hammer but appears at the top of an uptrend. | The Hanging Man signals that sellers are beginning to step in and test the resolve of the buyers. It's a warning sign that the uptrend's support is weakening and a reversal could be imminent. | Technical Analysis & Chart Patterns |
| Harami | A two-candlestick pattern where a small candle is completely contained within the body of the previous, larger candle. | The Harami (Japanese for "pregnant") signals a significant reduction in momentum and a period of indecision. A bearish Harami appears after an uptrend, and a bullish Harami appears after a downtrend. | Technical Analysis & Chart Patterns |
| Harmonic Patterns | Advanced chart patterns based on Fibonacci numbers and specific geometric structures that are used to predict price reversals. | Harmonic patterns like the Gartley, Bat, Butterfly, and Crab provide traders with highly specific and quantifiable trade setups at potential market turning points. | Technical Analysis & Chart Patterns |
| Head and Shoulders | A common reversal chart pattern that, after an uptrend, consists of three peaks, with the middle peak (the head) being the highest. | This pattern is a strong signal of a potential trend reversal from bullish to bearish. Traders often look to enter a short position when the price breaks below the "neckline," which is a support level connecting the two troughs. | Technical Analysis & Chart Patterns |
| Heikin Ashi | A type of candlestick chart that averages price data to create a smoother visual representation of the trend. | Heikin Ashi charts make it easier to identify the underlying trend by filtering out market noise. Long green candles with no lower wicks signal a strong uptrend, while long red candles with no upper wicks signal a strong downtrend. | Technical Analysis & Chart Patterns |
| HFT (High-Frequency Trading) | A type of algorithmic trading characterized by high speeds, high turnover rates, and high order-to-trade ratios that leverages complex computer programs to execute a large number of orders in fractions of a second. | HFT firms are a dominant force in the market, providing much of the liquidity but also creating split-second volatility. Retail traders cannot compete on speed and must instead focus on strategies that are not dependent on microsecond advantages. | Market Mechanics & Order Flow |
| Hidden Divergence | A type of divergence that signals a potential continuation of the current trend. | A hidden bullish divergence (higher price low, lower indicator low) suggests a good buying opportunity within an uptrend. A hidden bearish divergence (lower price high, higher indicator high) suggests a good selling opportunity in a downtrend. | Technical Analysis & Chart Patterns |
| Hidden Order | A large order that is not visible on the public order book (Level 2), often used by institutional investors to avoid influencing the market price. | The most common type of hidden order is an "iceberg order." Spotting the effects of these orders on the tape is a key skill in reading order flow. | Market Mechanics & Order Flow |
| High | The highest price a security reached during a specified trading period. | The high of the day is a key reference point that often acts as short-term resistance. A break of the previous day's high is a common bullish signal for traders. | Core Concepts |
| Higher High, Higher Low | The sequence of price action that defines an uptrend according to Dow Theory. | A stock is in a confirmed uptrend as long as each successive peak is higher than the last, and each successive trough is also higher than the last. This is the fundamental definition of a bullish market structure. | Technical Analysis & Chart Patterns |
| Historical Volatility (HV) | A statistical measure of the dispersion of returns for a given security over a past period, showing how volatile the stock has actually been. | Traders compare historical volatility to implied volatility to determine if options are currently "cheap" or "expensive." If IV is much higher than HV, options are considered expensive. | Options & Derivatives |
| HODL (Crypto) | A term originating from a misspelling of "hold," meaning to hold onto a cryptocurrency and not sell it, regardless of price fluctuations. | While it started as a meme, "HODL" represents a long-term, buy-and-hold investment philosophy in the crypto space, contrasting sharply with the short-term nature of day trading. | Market-Specific Jargon |
| Iceberg Order | A large single order that has been divided into smaller limit orders, usually by an algorithm, to hide the actual total quantity of the order. | Traders watch for signs of iceberg orders on Level 2 and the tape (e.g., a bid that absorbs huge selling volume without moving). Spotting an iceberg can reveal a large institutional buyer or seller who is trying to mask their intentions. | Market Mechanics & Order Flow |
| Ichimoku Cloud (Kumo) | A versatile, all-in-one technical indicator that provides information on trend direction, momentum, and support/resistance levels. | The "Cloud" itself represents a zone of support or resistance. When price is above the Cloud, the trend is bullish; below the Cloud, it's bearish. Crossovers of its other lines (Tenkan-sen and Kijun-sen) provide entry and exit signals. | Technical Analysis & Chart Patterns |
| Implied Volatility (IV) | The market's forecast of the likely movement in a security's price, which is a key component in determining the price (premium) of an option. | High IV makes options more expensive (good for sellers, bad for buyers) and reflects market uncertainty. Traders often look to buy options when IV is low and sell them when IV is high to take advantage of the "volatility crush" after an event like earnings. | Options & Derivatives |
| Impulse Wave | In Elliott Wave theory, a five-wave pattern that moves in the same direction as the larger trend. | Identifying the start of a new impulse wave is the primary goal for a trend-following Elliott Wave trader, as it represents the strongest part of a price move. | Technical Analysis & Chart Patterns |
| In-the-Money (ITM) | A state where an option has intrinsic value. A call option is ITM if the stock price is above the strike price. A put option is ITM if the stock price is below the strike price. | ITM options have a high Delta and move more like the underlying stock. They are more expensive than OTM options but have a higher probability of remaining profitable. | Options & Derivatives |
| Index | A statistical measure of the change in a securities market, such as the S&P 500 or the Dow Jones Industrial Average. | Indices provide a benchmark for the overall health and direction of the market. Traders use them to gauge broad market sentiment. | Core Concepts |
| Inflation | The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. | High inflation often leads the Federal Reserve to raise interest rates, which can negatively impact the stock market. Inflation data reports (like the CPI) are major market-moving events. | Core Concepts |
| Initial Public Offering (IPO) | The process by which a private company becomes a publicly traded company by issuing shares of stock to the public for the first time. | IPOs are often surrounded by hype and extreme volatility, creating both significant opportunity and risk for day traders who specialize in trading these new issues. | Core Concepts |
| Inside Bar | A two-bar pattern where the second bar's entire range (high and low) is contained within the range of the preceding bar. | An inside bar represents a temporary contraction in volatility and a pause for consolidation. Traders watch for a breakout above or below the first bar (the "mother bar") to signal the next directional move. | Technical Analysis & Chart Patterns |
| Institutional Trader | A professional who trades on behalf of a large institution, such as a mutual fund, hedge fund, or pension fund. | Institutional traders are the "whales" of the market. Their large orders are what create and sustain major trends. Retail traders often aim to identify and trade in the direction of institutional activity. | Market Mechanics & Order Flow |
| Interest Rate | The amount a lender charges a borrower, typically expressed as a percentage of the principal. The Federal Reserve sets the key benchmark interest rate. | Interest rate decisions have a profound impact on the entire economy and stock market. The prospect of rising rates is generally a headwind for stocks. | Core Concepts |
| Interbank Market (Forex) | The global network used by financial institutions to trade currencies with each other. It is the top level of the foreign exchange market. | The interbank market is where the "real" Forex price is determined. Retail Forex brokers provide access to this market, adding their own spread as a markup. | Market-Specific Jargon |
| Intermarket Analysis | The study of the relationships between different financial markets to forecast the direction of a specific market. | For example, a trader might analyze the bond market and the US Dollar to help forecast the stock market, as these markets are often interconnected. | Market Mechanics & Order Flow |
| Internalization | A practice where a broker fills a client's order from its own inventory rather than routing it to an exchange. | Internalization is another way brokers can profit from client orders. While it can result in faster fills, there is a potential conflict of interest if the price is not as favorable as what could be found on the open market. | Market Mechanics & Order Flow |
| Intrinsic Value | The amount by which an option is in-the-money. It is the real, tangible value of an options contract. | Intrinsic value is calculated as the difference between the stock price and the strike price. An option's premium is made up of its intrinsic value plus its extrinsic (time) value. Out-of-the-money options have zero intrinsic value. | Options & Derivatives |
| Inverse Head and Shoulders | A bullish reversal chart pattern that is the mirror image of a regular Head and Shoulders pattern, often forming at the end of a downtrend. | This pattern signals a potential market bottom. Traders look to enter a long position when the price breaks above the pattern's "neckline," anticipating the start of a new uptrend. | Technical Analysis & Chart Patterns |
| Inverted Hammer | A single-candle bullish reversal pattern that looks like an upside-down Hammer and appears at the bottom of a downtrend. | While it looks bearish, its appearance after a decline can signal that buyers are starting to test the sellers' resolve. It requires confirmation from the next candle to be a valid signal. | Technical Analysis & Chart Patterns |
| Iron Butterfly | A neutral, defined-risk options strategy that combines selling an at-the-money straddle and buying an out-of-the-money strangle, designed to profit from a stock with very low volatility. | An Iron Butterfly is similar to a regular Butterfly spread but is entered for a net credit. It has its maximum profit if the stock price is exactly at the middle strike at expiration. | Options & Derivatives |
| Iron Condor | An options strategy that involves selling a put spread and a call spread on the same underlying asset, designed to profit from a stock that is expected to stay within a specific price range. | This is a market-neutral, defined-risk strategy that profits from low volatility and time decay (theta). It's a popular choice for traders who believe a stock will trade sideways rather than making a large move in either direction. | Options & Derivatives |
| Island Reversal | A rare but powerful reversal pattern that is formed by a gap, followed by a period of trading, and then another gap in the opposite direction, isolating a "island" of price action. | The island represents a group of traders who are trapped in their positions by the second gap. This creates a strong emotional pressure that often fuels a sustained move in the new direction. | Technical Analysis & Chart Patterns |
| Jigged Out | A slang term for being stopped out of a trade on a volatile, random price move just before the stock moves in the intended direction. | Getting "jigged out" is a frustrating experience that is common in choppy markets. It can sometimes be avoided by using wider, volatility-based stop-losses. | Trader Slang & Modern Lingo |
| Junk Bond (Bonds) | A high-yield corporate bond that has a higher risk of default, as rated by a credit rating agency. | The performance of the junk bond market is often used as an indicator of risk appetite. A narrowing of spreads between junk bonds and safe-haven Treasury bonds signals a "risk-on" environment. | Market-Specific Jargon |
| Keltner Channels | A volatility-based indicator similar to Bollinger Bands, but it uses the Average True Range (ATR) to set the channel distance from a central moving average. | Keltner Channels are often used to identify trends. A close above the upper channel line can signal the start of a strong uptrend, while a close below the lower channel can signal a downtrend. | Technical Analysis & Chart Patterns |
| Kicker Pattern | A very strong two-candlestick reversal pattern characterized by a large gap between the first and second candle, with the candles moving in opposite directions. | A bullish kicker (a down candle followed by a gap up to an up candle) is an extremely powerful bullish signal, and vice versa for a bearish kicker. It shows a sudden, violent shift in market sentiment. | Technical Analysis & Chart Patterns |
| Kijun-sen (Base Line) | A key component of the Ichimoku Cloud indicator, representing the midpoint of the highest high and lowest low over the past 26 periods. | The Kijun-sen acts as a measure of medium-term momentum and often serves as a significant level of support or resistance. A flat Kijun-sen indicates a ranging market. | Technical Analysis & Chart Patterns |
| Kumo (Cloud) | The central feature of the Ichimoku Cloud indicator, representing the area between the Senkou Span A and Senkou Span B. | The Cloud is a dynamic zone of support and resistance. The thickness of the Cloud indicates the strength of that support or resistance. A "Kumo twist," where the spans cross, can signal a future trend change. | Technical Analysis & Chart Patterns |
| Lagging Indicator | A technical indicator that follows price action and provides a signal after the trend has already started. | Moving averages and MACD are examples of lagging indicators. They are useful for confirming a trend but are not effective at predicting future price movements. | Technical Analysis & Chart Patterns |
| Latency | The time delay between sending a trade order to the exchange and receiving a confirmation that it has been executed. | Low latency is critical for short-term and algorithmic trading strategies. HFT firms spend millions to achieve the lowest possible latency through co-location and fiber optics. | Market Mechanics & Order Flow |
| Leading Indicator | A technical indicator that is designed to anticipate future price movements before they occur. | Momentum oscillators like the RSI and Stochastic Oscillator are examples of leading indicators. They can provide early warning signals of a trend change but are also prone to giving false signals in strong trends. | Technical Analysis & Chart Patterns |
| LEAPS (Long-Term Equity Anticipation Securities) | Options contracts with expiration dates that are longer than one year, and can be as long as three years. | LEAPS allow investors to take a long-term, leveraged position on a stock with a defined risk. They have very slow time decay compared to short-dated options. | Options & Derivatives |
| Level 1 | The most basic level of stock market data, which displays the real-time best bid and ask price, along with the volume available at those prices. | Level 1 is the standard "quote" you see on most financial websites. It provides the essential information needed to see the current market price. | Market Mechanics & Order Flow |
| Level 2 | A service that provides real-time access to the order book for a particular stock, showing the full list of bid and ask prices from different market makers. | Level 2 gives traders a deeper look into the supply and demand for a stock. By watching the size of the orders at different price levels, traders can spot potential support/resistance areas and gauge short-term buying or selling pressure. | Market Mechanics & Order Flow |
| Leverage | The use of borrowed capital from a broker to increase the size of a trading position beyond what your own cash could cover. | Leverage is a double-edged sword; it can dramatically amplify your profits from small price moves, but it will just as quickly amplify your losses, making strict risk management absolutely essential. | Core Concepts |
| Limit Order | An order to buy or sell a stock at a specific price or better. | This is the order type you use for precision. A buy limit order will only execute at your limit price or lower, and a sell limit order will only execute at your limit price or higher, giving you complete control over your entry and exit prices. | Core Concepts |
| Limit Order Book | A real-time, electronic list of all outstanding buy (bid) and sell (limit) orders for a specific security. | The limit order book is the underlying data source for Level 2 and DOM displays. It represents the passive supply and demand waiting to be filled at various price levels. | Market Mechanics & Order Flow |
| Limit Up-Limit Down (LULD) | A regulatory mechanism designed to prevent extreme short-term volatility by pausing trading in a stock if its price moves by a certain percentage within a 5-minute period. | An LULD halt is a modern replacement for older circuit breaker rules on individual stocks. It gives the market a chance to cool off and absorb information during periods of extreme, rapid price movement. | Market Mechanics & Order Flow |
| Line Chart | The simplest type of chart, which is created by connecting a series of closing prices over a specific time period with a single line. | Line charts are useful for viewing the "big picture" trend over a long period, as they filter out the noise of intraday price swings. | Technical Analysis & Chart Patterns |
| Linear Scale | A standard chart scale where the distance between price levels is equal, regardless of the price. | A move from $10 to $20 looks the same size as a move from $100 to $110. Linear scales are best for viewing price movements over a short period. | Technical Analysis & Chart Patterns |
| Liquidity | The ease with which an asset can be bought or sold quickly without causing a significant change in its price. | High liquidity is critical for day traders because it means tight spreads and minimal slippage, allowing you to enter and exit large positions precisely and with low transaction costs. | Core Concepts |
| Liquidity Pool | A concentration of buy or sell orders at a specific price level, which is often visible on the Level 2 order book or a DOM display. | Traders watch for large liquidity pools as they can act as "magnets" for price and often become significant support or resistance levels. | Market Mechanics & Order Flow |
| Lit Market | A public stock exchange, like the NYSE or Nasdaq, where order book information is transparent and available to all participants. | Lit markets are the opposite of dark pools. They provide the price discovery and transparency that is essential for a fair and efficient market. | Market Mechanics & Order Flow |
| Logarithmic Scale | A chart scale where the distance between price levels is based on the percentage change, not the absolute dollar amount. | A move from $10 to $20 (a 100% gain) looks much larger than a move from $100 to $110 (a 10% gain). Log scales are essential for analyzing long-term trends where percentage growth is more important. | Technical Analysis & Chart Patterns |
| Long Position | The act of buying a stock with the expectation that its price will rise in the future. | This is the most common form of trading, where your goal is to "buy low and sell high." Your potential profit is theoretically unlimited, while your maximum loss is limited to the amount you invested. | Core Concepts |
| Long Straddle | A neutral options strategy where a trader buys both a call option and a put option with the same strike price and expiration date. | This is a bet on a large price move in either direction. The trader profits if the stock moves up or down enough to cover the cost of buying both options. It is a pure play on an increase in volatility. | Options & Derivatives |
| Long Strangle | A neutral options strategy similar to a straddle, where a trader buys an out-of-the-money call option and an out-of-the-money put option with the same expiration date. | A strangle is cheaper than a straddle but requires an even larger price move in either direction to become profitable. It is also a bet on a significant increase in future volatility. | Options & Derivatives |
| Long-Legged Doji | A type of doji that has very long upper and lower wicks, indicating a session of extreme volatility and significant indecision. | This candle shows that both buyers and sellers made powerful pushes during the session, but ultimately neither side won. It often signals a potential turning point. | Technical Analysis & Chart Patterns |
| Lot (Forex) | A standard unit of measurement for a currency pair transaction. A standard lot is 100,000 units of the base currency. | The lot size determines the value of each pip and, therefore, the overall risk and reward of a trade. Traders can also use mini-lots (10,000 units) and micro-lots (1,000 units) to fine-tune their position sizing and risk management. | Market-Specific Jargon |
| Low | The lowest price a security reached during a specified trading period. | The low of the day is a key reference point that often acts as short-term support. A break of the previous day's low is a common bearish signal for traders. | Core Concepts |
| Lower High, Lower Low | The sequence of price action that defines a downtrend according to Dow Theory. | A stock is in a confirmed downtrend as long as each successive peak is lower than the last, and each successive trough is also lower than the last. This is the fundamental definition of a bearish market structure. | Technical Analysis & Chart Patterns |
| MACD (Moving Average Convergence Divergence) | A trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. | Traders use the MACD to identify trend direction and momentum. A "crossover," where the MACD line crosses above the signal line, is a common bullish signal, while a cross below is bearish. | Technical Analysis & Chart Patterns |
| MACD Histogram | A component of the MACD indicator that plots the difference between the MACD line and the signal line. | The histogram gives a visual representation of the momentum behind a move. When the histogram is expanding, momentum is increasing. A divergence between the histogram and price is a powerful signal of slowing momentum. | Technical Analysis & Chart Patterns |
| Major Pair (Forex) | Any currency pair that includes the US Dollar (USD) and is one of the most frequently traded pairs in the world (e.g., EUR/USD, GBP/USD, USD/JPY). | Major pairs offer the highest liquidity and the tightest spreads, making them the most popular and generally least risky pairs for Forex traders. | Market-Specific Jargon |
| Margin | The money borrowed from a broker to purchase securities, which allows you to use leverage. | Trading on margin allows you to control larger positions than your cash balance would permit, but it comes with the risk of a "margin call," where your broker forces you to deposit more funds or sell positions if your account value drops too low. | Core Concepts |
| Margin (Futures) | The amount of money that a trader must deposit with their broker to initiate and maintain a futures position. | Futures margin is not a loan, but a good-faith deposit to ensure you can cover potential losses. Futures offer very high leverage, meaning the margin required is a small percentage of the contract's total value. | Options & Derivatives |
| Margin Account | A brokerage account that allows a trader to borrow money from the broker to purchase securities. | A margin account is required for using leverage and for short-selling stocks. It also subjects the trader to the Pattern Day Trader (PDT) rule if the account balance is below $25,000. | Core Concepts |
| Market Capitalization | The total market value of a company's outstanding shares, calculated by multiplying the share price by the number of shares. | Market cap is used to categorize company size (e.g., small-cap, mid-cap, large-cap). This is important for traders as stocks in different categories often exhibit different levels of volatility and liquidity. | Core Concepts |
| Market Data | Real-time or delayed price and trade information for financial instruments. | Access to fast, reliable market data is the lifeblood of a day trader. Delays or inaccuracies in data can lead to significant trading errors. | Market Mechanics & Order Flow |
| Market Hours | The official time period when an exchange is open for trading, which for U.S. stock markets is typically 9:30 AM to 4:00 PM Eastern Time. | This is the period of highest liquidity and volume, providing the best trading conditions. Trading outside these hours in the pre-market or after-hours sessions comes with higher risk due to lower volume and wider spreads. | Core Concepts |
| Market Maker | A firm that provides liquidity to the market by being ready to both buy and sell a particular stock at publicly quoted prices, profiting from the bid-ask spread. | Market makers are the essential "middlemen" of the market. Understanding their role is key to understanding liquidity and how the bid-ask spread is determined for different securities. | Market Mechanics & Order Flow |
| Market Microstructure | The study of how the underlying processes of a market, such as order submission and price discovery, affect trading outcomes like price, volume, and volatility. | This academic field is what underpins the practical study of order flow. It examines the "plumbing" of the market and how it impacts all participants. | Market Mechanics & Order Flow |
| Market Order | An order to buy or sell a stock immediately at the best available current price. | This order guarantees execution but not the price. It's used when speed is your top priority, but in volatile markets, the price you get (your "fill") can be significantly different from the last price you saw. | Core Concepts |
| Mark-to-Market | The process by which futures contracts are re-priced at the end of each trading day based on the closing price. The resulting profit or loss is then settled in cash in the trader's account. | This daily cash settlement is a unique feature of futures trading. It means profits and losses are realized every single day, which is different from stocks or options. | Options & Derivatives |
| Marubozu | A candlestick with no wicks, meaning the open and close prices are also the high and low prices for the session. | A white (green) Marubozu is extremely bullish, showing that buyers were in complete control from the open to the close. A black (red) Marubozu is extremely bearish, showing total control by sellers. | Technical Analysis & Chart Patterns |
| Maturity (Bonds) | The date on which the final payment for a bond is due and the principal amount of the loan is repaid to the investor. | A bond's maturity is a key factor in its price sensitivity to interest rate changes. Longer-maturity bonds are more sensitive to rate changes than shorter-maturity bonds. | Market-Specific Jargon |
| Max Loss | A pre-defined rule in a trading plan that specifies the maximum amount of money a trader is willing to lose in a single day or week. | A max loss rule is a critical defense mechanism that prevents a single bad day from turning into a catastrophic, account-ending event. It forces discipline and protects a trader's psychological capital. | Core Concepts |
| Max Pain | A theory in options trading that suggests the underlying stock price will tend to gravitate towards the strike price where the greatest number of options (both puts and calls) will expire worthless. | Some traders use the max pain price as a potential target for a stock's price on expiration day, although its predictive power is highly debated. | Trader Slang & Modern Lingo |
| Mean Reversion | A theory suggesting that asset prices and historical returns eventually revert to their long-run mean or average level. | Mean reversion traders look for statistically overextended stocks to "fade," betting that the price will snap back to a key moving average or VWAP. Indicators like Bollinger Bands and Keltner Channels are often used for this strategy. | Technical Analysis & Chart Patterns |
| Meme Stock | A stock that has gained a cult-like following through social media platforms, whose price movements are often driven by online sentiment and hype rather than fundamental value. | Trading meme stocks is extremely risky due to their massive volatility and detachment from traditional valuation metrics. | Trader Slang & Modern Lingo |
| Micro E-mini | A smaller version of an E-mini futures contract, which is 1/10th the size and financial commitment of the E-mini. | Micro E-minis (/MES for the S&P 500) have made futures trading accessible to even more retail traders with smaller accounts, allowing for very precise position sizing and risk management. | Options & Derivatives |
| Minor Pair (Forex) | A cross-currency pair that does not include the US Dollar but does include one of the other major currencies (e.g., EUR, GBP, JPY). | Minor pairs, such as EUR/GBP, are still highly liquid but may have slightly wider spreads than major pairs. | Market-Specific Jargon |
| Momentum | The rate of acceleration of a security's price or volume. | Momentum trading involves buying stocks that are showing strong upward price trends and selling those in strong downtrends. Momentum indicators help traders quantify this and determine if a trend is still strong or is losing steam. | Technical Analysis & Chart Patterns |
| Moneyness | A term used to describe the relationship between an option's strike price and the current price of the underlying asset (i.e., whether the option is in-the-money, at-the-money, or out-of-the-money). | Moneyness is a key determinant of an option's value, delta, and overall risk profile. | Options & Derivatives |
| Money Flow Index (MFI) | A momentum indicator that incorporates both price and volume data to measure buying and selling pressure. | Often called the "volume-weighted RSI," the MFI can provide earlier signals of a reversal than the RSI alone by detecting when money is flowing into or out of a stock, even if the price has not yet changed significantly. | Technical Analysis & Chart Patterns |
| Moonboy | A slang term for a cryptocurrency investor who is overly optimistic and believes their coin is destined to go "to the moon," often ignoring any bearish signs. | This term describes a person who is driven by hype and hopium rather than objective analysis. | Trader Slang & Modern Lingo |
| Mooning | A slang term used to describe a stock or cryptocurrency that is experiencing a rapid and dramatic price increase. | A stock that is "mooning" is in a parabolic uptrend, attracting a great deal of speculative interest. | Trader Slang & Modern Lingo |
| Morning Star | A three-candle bullish reversal pattern that occurs at the bottom of a downtrend, consisting of a large bearish candle, a small-bodied candle, and then a large bullish candle. | This pattern signals a stall in selling pressure and a decisive shift of control back to the buyers, often marking a significant bottom. | Technical Analysis & Chart Patterns |
| Moving Average | An indicator that smooths out price data by creating a constantly updated average price over a specific time period. | Moving averages help traders identify the direction of the trend. When the price is above a key moving average (like the 50-day or 200-day), the trend is generally considered up; when it's below, the trend is down. | Technical Analysis & Chart Patterns |
| Mutual Fund | A type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, and other assets. | Mutual funds are not day-traded. However, their large-scale buying and selling at the end of the day can influence market-on-close order imbalances and create "window dressing" patterns at the end of a quarter. | Core Concepts |
| Naked Call/Put | A short call or put option that is not protected by an opposing position in the underlying stock. | Selling naked options exposes a trader to undefined risk (theoretically infinite for a naked call) and is only suitable for very advanced, well-capitalized traders. | Options & Derivatives |
| NBBO (National Best Bid and Offer) | A regulation that requires brokers to execute customer trades at the best available ask price (when buying) and the best available bid price (when selling) across all U.S. exchanges. | The NBBO is what ensures that all investors get a "fair" price, regardless of which exchange their order is routed to. It is the basis for the Level 1 quote. | Market Mechanics & Order Flow |
| Neckline | A support or resistance line on a Head and Shoulders (or Inverse Head and Shoulders) pattern that connects the troughs (or peaks) of the pattern. | A break of the neckline is the key confirmation signal for the pattern. It's the point where a trader would typically enter a trade, as it validates that the old trend has failed and a new one is beginning. | Technical Analysis & Chart Patterns |
| NFT (Non-Fungible Token) (Crypto) | A unique digital asset that represents ownership of a specific item, such as art, music, or a collectible, recorded on a blockchain. | While not currencies themselves, the NFT market is a major sector of the crypto world. The boom and bust cycles of NFT prices can be an indicator of speculative sentiment in the broader crypto space. | Market-Specific Jargon |
| NFP (Non-Farm Payrolls) (Forex) | A key economic indicator released monthly in the United States that represents the total number of paid U.S. workers of any business, excluding farm employees. | The NFP report is arguably the most significant market-moving news event for the Forex market, often causing extreme volatility in all major currency pairs as it provides a snapshot of the health of the US economy. | Market-Specific Jargon |
| NGMI (Not Gonna Make It) | A slang acronym used to express the belief that someone (or a project) will fail due to poor decisions. | In a trading context, it's often used to criticize a bad trade or a flawed strategy. | Trader Slang & Modern Lingo |
| Noob | A slang term for a novice or beginner in trading. | A noob is someone who is still learning the basics of the market and is prone to making common beginner mistakes. | Trader Slang & Modern Lingo |
| Off-Exchange Trading | Any stock trade that is not executed on a public "lit" exchange. This includes trading in dark pools and internalization by brokers. | A surprisingly high percentage of total volume (often over 40%) is traded off-exchange. This makes it crucial for traders to use a consolidated tape that includes this data. | Market Mechanics & Order Flow |
| On-Balance Volume (OBV) | A momentum indicator that uses volume flow to predict changes in stock price. | OBV is a running total of volume, adding volume on up days and subtracting it on down days. If price is rising but OBV is flat or falling, it's a bearish divergence, suggesting a lack of conviction behind the move. | Technical Analysis & Chart Patterns |
| Open | The price at which a security first trades upon the opening of an exchange on a given trading day. | The opening price is a key intraday reference point. The price action around the open sets the initial tone for the trading session and is the basis for popular strategies like the Opening Range Breakout. | Core Concepts |
| Open Interest | The total number of outstanding options or futures contracts that have not yet been closed or delivered. | High open interest indicates a high level of market participant interest in a particular strike price or contract, which usually translates to better liquidity. | Options & Derivatives |
| Option | A financial derivative that represents a contract sold by one party (the option writer) to another party (the option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price during a certain period of time or on a specific date. | Options provide traders with leverage, flexibility, and the ability to construct trades with very specific risk and reward profiles. | Options & Derivatives |
| Option Chain | A table that displays all of the available options contracts for a given security, showing all strike prices, expiration dates, and their corresponding volume, open interest, and bid-ask prices. | The option chain is the primary tool traders use to analyze and select which specific options contract they want to trade. | Options & Derivatives |
| Order Block | A price action concept where a large number of orders are concentrated in a specific price zone, often visible as the last down candle before an up move, or the last up candle before a down move. | Traders use order blocks to identify zones where institutional "smart money" has likely entered the market. These zones often act as powerful support or resistance levels when the price returns to them in the future. | Technical Analysis & Chart Patterns |
| Order Book | A real-time, electronic list of all outstanding buy (bid) and sell (limit) orders for a specific security. | The order book is the underlying data source for Level 2 and DOM displays. It represents the passive supply and demand waiting to be filled at various price levels. | Market Mechanics & Order Flow |
| Order Flow | The real-time stream of buy and sell orders being executed in the market for a given security. | Order flow analysis is the art of "reading the tape" to understand the immediate battle between buyers and sellers. It's a very short-term analysis technique used by scalpers to anticipate price ticks based on the intensity of buying and selling. | Market Mechanics & Order Flow |
| Order Imbalance | A situation, typically before the market open or close, where there are significantly more buy orders than sell orders, or vice versa. | Analyzing the opening and closing order imbalances can give traders clues about the market's initial direction or closing sentiment. | Market Mechanics & Order Flow |
| Oscillator | A technical indicator that fluctuates above and below a centerline or between set levels, used to identify short-term overbought or oversold conditions. | Oscillators like the RSI and Stochastic are most effective in ranging, non-trending markets. They help traders identify potential turning points at the edges of a trading range. | Technical Analysis & Chart Patterns |
| Out-of-the-Money (OTM) | A state where an option has no intrinsic value. A call option is OTM if the stock price is below the strike price. A put option is OTM if the stock price is above the strike price. | OTM options are cheaper and consist entirely of extrinsic (time) value. They are used for lower-cost speculative bets but require a significant price move to become profitable. | Options & Derivatives |
| Overbought | A condition where a security has been subject to persistent upward pressure and is considered due for a corrective pullback. This is often indicated by an oscillator reaching an upper extreme (e.g., RSI above 70). | An overbought signal does not mean a stock will immediately reverse; a strong trend can remain overbought for a long time. It's a warning that the upward momentum may be unsustainable. | Technical Analysis & Chart Patterns |
| Oversold | A condition where a security has been subject to persistent selling pressure and is considered due for a relief rally. This is often indicated by an oscillator reaching a lower extreme (e.g., RSI below 30). | An oversold signal is not a guarantee of a bounce, as a strong downtrend can remain oversold. It's a signal that the selling pressure may be exhausted and a reversal could be near. | Technical Analysis & Chart Patterns |
| P/E Ratio (Price-to-Earnings) | A ratio for valuing a company that measures its current share price relative to its per-share earnings. | While a core metric for long-term investors, a very high P/E ratio can indicate a "story stock" with high expectations, which often leads to the kind of volatility that day traders seek out. | Core Concepts |
| Pain Trade | The direction of price movement that will cause the maximum amount of financial pain to the largest number of market participants. | Markets often move in the direction of the pain trade. For example, if everyone is bearish and short, a sharp rally would be the pain trade, forcing shorts to cover at a loss. | Trader Slang & Modern Lingo |
| Paper Hands | The opposite of "diamond hands." It's a slang term for a trader who sells a position at the first sign of trouble or for a small profit, lacking the conviction to hold through volatility. | Having "paper hands" means being easily scared out of a position. It often leads to selling at the bottom or missing out on a larger move. | Trader Slang & Modern Lingo |
| Par Value (Bonds) | The face value of a bond, which is the amount of money that the bond issuer agrees to repay to the investor at maturity. | A bond can trade at a premium (above par value) or a discount (below par value) depending on how its fixed coupon rate compares to current market interest rates. | Market-Specific Jargon |
| Parabolic SAR (Stop and Reverse) | A trend-following indicator that highlights the direction a security is moving and provides potential entry and exit points. | The indicator places dots below the price in an uptrend and above the price in a downtrend. When the dots "flip" to the other side of the price, it signals a potential trend change and is often used as a point to stop and reverse a position. | Technical Analysis & Chart Patterns |
| Partial Fill | The execution of a limit order where only a portion of the total number of shares is filled. | A partial fill can occur if there is not enough liquidity at your desired price. A trader must then decide whether to leave the rest of the order open, move it, or cancel it. | Market Mechanics & Order Flow |
| Pattern Day Trader (PDT) Rule | A FINRA rule that applies to traders who execute four or more "day trades" in five business days in a margin account. Such traders must maintain a minimum account balance of $25,000. | This is one of the most significant regulations affecting new traders. Failing to meet the $25,000 minimum can result in a 90-day restriction on trading, making it a critical rule to understand. | Core Concepts |
| Payment for Order Flow (PFOF) | The compensation that a brokerage firm receives for directing its clients' orders to a specific market maker or exchange. | This is a controversial practice because it can create a conflict of interest. For traders, it's important to understand that your "commission-free" broker is still profiting from your trades by selling your order flow to high-frequency trading firms. | Market Mechanics & Order Flow |
| Pennant Pattern | A short-term continuation pattern that looks like a small symmetrical triangle, formed after a sharp price movement. | Similar to a flag, a pennant represents a brief consolidation before the trend resumes. Traders watch for a high-volume breakout from the pennant in the direction of the original trend. | Technical Analysis & Chart Patterns |
| Penny Stock | A common stock that trades for less than $5 per share. | Penny stocks are known for extreme volatility and low liquidity, making them very high-risk. While they can offer explosive gains, they are also prone to manipulation and can result in significant losses. | Core Concepts |
| Perpetual Swap (Crypto) | A type of futures contract in the cryptocurrency market that does not have an expiration date, allowing traders to hold a leveraged position for as long as they want. | Perpetual swaps use a "funding rate" mechanism to stay pegged to the underlying spot price. They are the most popular way to trade crypto with leverage. | Market-Specific Jargon |
| P&L (Profit and Loss) | A statement that shows the total amount of money a trader has made or lost over a specific period. | Your P&L is the ultimate measure of your performance. Analyzing it helps you understand which strategies are working and which are not, but it's critical to avoid letting your real-time P&L dictate emotional trading decisions during the day. | Core Concepts |
| Piercing Line | A two-candlestick bullish reversal pattern where a down (red) day is followed by a strong up (green) day that opens lower but closes more than halfway up the body of the previous red candle. | This pattern shows a strong rejection of the lows by buyers and can often signal a bottom, especially if it occurs at a key support level. | Technical Analysis & Chart Patterns |
| Pin Bar | A candlestick with a long wick and a small body, where the price was sharply rejected from a certain level. | Pin bars (which include Hammers and Shooting Stars) are powerful reversal signals when they appear at key support or resistance levels. They visually represent a strong rejection of higher or lower prices. | Technical Analysis & Chart Patterns |
| Pin Risk | The risk faced by an options seller that the underlying stock price will be exactly at the strike price at expiration, creating uncertainty as to whether the option will be assigned or not. | Pin risk can lead to unwanted stock positions over the weekend. Many traders close their short option positions before the final hour of trading on expiration day to avoid this uncertainty. | Options & Derivatives |
| Pip (Forex) | Percentage in Point; the smallest standardized price move that a currency pair can make. For most pairs, it's the fourth decimal place (0.0001). | Pips are the fundamental unit of profit and loss in Forex trading. A trader's goal is to capture a certain number of pips, and the dollar value of each pip depends on the currency pair and the size of the trade (the lot size). | Market-Specific Jargon |
| Pipe Bottom/Top | A sharp, V-shaped reversal pattern characterized by a series of long candles in one direction immediately followed by a series of long candles in the opposite direction. | This pattern reflects a sudden and violent shift in market sentiment. It is difficult to trade due to its speed, but it signals a major, emotionally charged market turning point. | Technical Analysis & Chart Patterns |
| Pivot Points | Technical analysis indicators that represent significant support and resistance levels, calculated using the previous period's high, low, and close prices. | Day traders use pivot points to identify key intraday levels where the market is likely to react. The central pivot point is often seen as the day's primary balancing point. | Technical Analysis & Chart Patterns |
| Pleb | A slang term, often used in the crypto community, to refer to an ordinary, small-time retail investor or trader. | This term is used to differentiate the small retail crowd from the large "whales" or institutional players. | Trader Slang & Modern Lingo |
| Point and Figure Chart | A type of chart that focuses solely on price movements, without regard to time. It consists of columns of X's (representing rising prices) and O's (representing falling prices). | This charting method is used to identify clear support and resistance levels and filter out insignificant price noise, making it easier to spot long-term trends and breakouts. | Technical Analysis & Chart Patterns |
| Point of Control (POC) | In Volume Profile analysis, the single price level where the most volume was traded over a specific period. | The POC acts as a magnet for price and is considered the "fairest" price for that session. It often serves as a powerful level of support or resistance in future trading sessions. | Technical Analysis & Chart Patterns |
| Point Value (Futures) | The fixed dollar amount that a one-point move in a futures contract represents. | For the E-mini S&P 500 (/ES), the point value is $50. So, a 10-point move in the /ES index results in a $500 profit or loss per contract. Understanding the point value is essential for calculating futures P&L. | Market-Specific Jargon |
| Polarity Principle | The technical analysis concept that once a support level is broken, it will become resistance, and once a resistance level is broken, it will become support. | This "S/R Flip" is one of the most fundamental and reliable concepts in technical analysis. Traders look to buy the retest of a broken resistance level (now support) or short the retest of a broken support level (now resistance). | Technical Analysis & Chart Patterns |
| Position Sizing | The method of determining how many shares or contracts to trade based on the amount of money you are willing to risk on a single trade. | This is the most important skill for long-term survival. Proper position sizing ensures that no single loss can cripple your account, allowing you to withstand a string of losses and stay in the game. | Core Concepts |
| Pre-Market Trading | The period of trading activity that occurs before the regular market session, typically from 4:00 AM to 9:30 AM EST. | This session allows traders to react to overnight news and earnings. It has lower liquidity and wider spreads than the regular session, so it requires careful risk management. | Core Concepts |
| Precious Metals (Commodities) | Rare, naturally occurring metallic chemical elements of high economic value, such as gold, silver, platinum, and palladium. | Traders often view precious metals, particularly gold, as "safe-haven" assets that can perform well during times of economic uncertainty or high inflation. | Market-Specific Jargon |
| Premium | The current market price of an options contract, which the buyer pays to the seller. | The premium is the total of the option's intrinsic value (if any) and its extrinsic value (time value and implied volatility). For the buyer, it is the maximum amount they can lose. | Options & Derivatives |
| Price Action | The movement of a security's price over time, which forms the basis for all technical analysis. | Price action trading is a "pure" form of analysis where decisions are based on the movement of price itself (trends, support/resistance) rather than relying on lagging indicators. | Core Concepts |
| Proprietary Trading (Prop Firm) | A firm where traders use the company's own capital to trade stocks, futures, or other assets, and in return, share a percentage of the profits they generate. | Prop firms give traders access to more capital and professional tools than they might have on their own, but they typically require a rigorous evaluation period and adherence to strict risk rules. | Market Mechanics & Order Flow |
| Protective Put | A hedging strategy where a trader who owns shares of a stock buys a put option to protect against a drop in the stock's price. | This is like buying insurance on a stock portfolio. The put option gains value as the stock falls, offsetting the losses from the stock position. | Options & Derivatives |
| Pump and Dump | An illegal scheme to manipulate a stock's price by spreading false positive news to inflate ("pump") its value, and then selling ("dumping") the shares at the higher price to unsuspecting investors. | This is most common with illiquid penny stocks and cryptocurrencies. Traders must be highly skeptical of unsolicited tips and sudden, unexplained price spikes on low-quality assets. | Trader Slang & Modern Lingo |
| Put Option | A contract that gives the buyer the right, but not the obligation, to sell a stock at a specified price (the strike price) on or before a certain date (the expiration date). | Traders buy put options when they are bearish on a stock. It allows them to profit from a stock's decline with a defined maximum risk (the premium paid), and it's also commonly used to hedge or protect a long stock portfolio. | Options & Derivatives |
| Put-Call Ratio | A measurement of the total volume of put options traded relative to the total volume of call options traded. | This ratio is used as a contrary indicator of market sentiment. A very high put-call ratio can signal extreme fear and a potential market bottom, while a very low ratio can signal extreme greed and a potential top. | Options & Derivatives |
| Quote | The last traded price of a stock, along with the current best bid and best ask. | A real-time quote is the most basic piece of information a trader needs to assess the current market for a security. | Market Mechanics & Order Flow |
| Quote Currency (Forex) | The second currency listed in a currency pair (e.g., the USD in EUR/USD). It is the currency in which the first is valued. | The quote currency tells you how much of it is needed to buy one unit of the base currency. | Market-Specific Jargon |
| Quote Stuffing | A form of market manipulation used by high-frequency traders where they enter and quickly withdraw a massive number of orders, flooding the market with data to slow down competitors. | While illegal, this practice highlights the technological arms race in HFT. For retail traders, it can manifest as flickering or unreliable Level 2 data during certain periods. | Market Mechanics & Order Flow |
| R-Multiple | A term used to describe a trade's profit or loss in terms of a multiple of the initial risk taken. | If you risked $100 on a trade and made $300, you had a "3R" winner. This system allows traders to objectively measure and compare trade performance, regardless of the dollar amount. | Core Concepts |
| Rally | A period of sustained increases in the prices of stocks, bonds, or indexes. | A rally can occur within a bull market or as a temporary counter-trend move in a bear market (a "bear market rally"). Traders look to join rallies by buying pullbacks. | Core Concepts |
| Range | The difference between the high and low prices for a security during a specific period. | A stock that is "range-bound" is trading in a chop between clear support and resistance. Traders can either play the range by buying at support and selling at resistance, or wait for a breakout from the range. | Core Concepts |
| Rectangle Pattern | A continuation pattern formed when price consolidates between two parallel, horizontal support and resistance lines. | The rectangle represents a pause in the trend. Traders watch for a high-volume breakout above resistance or a breakdown below support to signal the continuation of the prior trend. | Technical Analysis & Chart Patterns |
| Reg NMS (National Market System) | An SEC regulation designed to create a fair and efficient national market system by ensuring that investors receive the best possible price for their trades, regardless of the exchange. | Reg NMS is the overarching rule that created the modern, interconnected electronic market. It mandates the NBBO and the protection of customer limit orders. | Market Mechanics & Order Flow |
| Rekt | A slang term derived from "wrecked," used to describe a trader who has suffered a catastrophic financial loss from a bad trade. | Getting "rekt" is a more extreme version of blowing up an account. It's the result of taking on massive, unmanaged risk. | Trader Slang & Modern Lingo |
| Relative Strength | A method of analysis that compares the price performance of a stock to that of the broader market (e.g., the S&P 500). | A stock showing high relative strength is outperforming the market, making it a potential candidate for a long position. This is not to be confused with the Relative Strength Index (RSI). | Technical Analysis & Chart Patterns |
| Resistance | A price level where an uptrend can be expected to pause due to a concentration of selling interest. | Traders view resistance levels as ceilings where a rally might stall or reverse. A decisive breakout above a key resistance level is a powerful bullish signal, suggesting the uptrend is likely to continue. | Core Concepts |
| Retail Trader | An individual, non-professional investor who buys and sells securities through a brokerage firm for their personal account. | Retail traders are the "public" participants in the market. The rise of commission-free brokers and powerful platforms has significantly empowered retail traders in recent years. | Market Mechanics & Order Flow |
| Revenge Trading | The act of placing an impulsive trade immediately after a losing trade, in an emotional attempt to win back the money that was just lost. | This is a destructive psychological trap that almost always leads to bigger losses. Having a rule to take a break after a significant loss is the best way to prevent it. | Core Concepts |
| Revenue | The total amount of income generated by the sale of goods or services related to the company's primary operations. | A company announcing revenue that is significantly higher or lower than analyst expectations is a major fundamental catalyst that can cause extreme volatility in its stock price. | Core Concepts |
| Rho | The "Greek" that measures an option's sensitivity to changes in interest rates. | Rho is the least significant Greek for most retail options traders, as its effect is usually very small unless dealing with very long-term options (LEAPS). | Options & Derivatives |
| Rip | A sharp, sudden, and significant upward move in the price of a stock. | Traders often look to "sell the rip" in a downtrend, meaning they use the sharp price increase as an opportunity to enter a short position. | Trader Slang & Modern Lingo |
| Risk | The potential for a trade to result in a loss of capital. | In trading, risk is not something to be avoided, but something to be managed. Professional traders are, first and foremost, risk managers. | Core Concepts |
| Risk-On / Risk-Off | Describes the overall sentiment and risk appetite in the financial markets. | In a "risk-on" environment, investors are confident and buy speculative assets like stocks and crypto. In a "risk-off" environment, fear dominates, and capital flows into "safe-haven" assets like gold, bonds, and the US Dollar. | Trader Slang & Modern Lingo |
| Risk/Reward Ratio | A calculation that compares the potential profit of a trade (the reward) to its potential loss (the risk). | This ratio is the foundation of a profitable trading system. By only taking trades with a favorable risk/reward ratio (e.g., risking $1 to make $2 or more), you can be profitable even if you lose on more than half of your trades. | Core Concepts |
| Rollover | The process of closing an existing options or futures position that is near expiration and opening a new, longer-dated position in the same underlying asset. | Traders use a rollover to extend the duration of their trade, "rolling" their position out to a later expiration date. | Options & Derivatives |
| Rounding Bottom (Saucer) | A long-term bullish reversal pattern that illustrates a slow and gradual shift in sentiment from bearish to bullish, forming a U-shape on the chart. | This pattern represents a slow accumulation phase. The breakout above the pattern's resistance is the signal that a new, long-term uptrend has begun. | Technical Analysis & Chart Patterns |
| Rounding Top (Saucer) | A long-term bearish reversal pattern that shows a slow, gradual shift in sentiment from bullish to bearish, creating an inverted U-shape. | This pattern reflects a slow distribution phase. The breakdown below the pattern's support confirms that a new, long-term downtrend is underway. | Technical Analysis & Chart Patterns |
| Routing | The process by which a broker sends a client's order to a specific exchange or market center for execution. | Traders can often choose their own order routing, which can be important for strategies that require the fastest possible execution or access to specific types of liquidity. | Market Mechanics & Order Flow |
| RSI (Relative Strength Index) | A momentum oscillator that measures the speed and change of price movements, fluctuating between 0 and 100. | While RSI is often used to identify "overbought" (above 70) or "oversold" (below 30) conditions, its real power lies in spotting divergence, where the RSI's movement contradicts the price's movement, often signaling an impending trend reversal. | Technical Analysis & Chart Patterns |
| Rug Pull (Crypto) | A type of scam where developers of a new cryptocurrency project abandon it after raising money from investors, who are then left with a worthless token. | This is a major risk in the unregulated parts of the crypto market. Performing due diligence on the development team is crucial before investing in a new project. | Trader Slang & Modern Lingo |
| S/R Flip | A common term for the Polarity Principle, where a broken support level becomes a new resistance level, or a broken resistance level becomes a new support level. | This is one of the most reliable price action patterns. Traders often wait for price to pull back and retest the "flip" level as confirmation before entering a trade. | Technical Analysis & Chart Patterns |
| Satoshi / Sats (Crypto) | The smallest divisible unit of a Bitcoin, where one Bitcoin is equal to 100 million satoshis. | "Stacking sats" is a common phrase in the Bitcoin community, referring to the practice of accumulating even small fractions of a Bitcoin over time. | Market-Specific Jargon |
| Scallop Pattern | A bullish continuation pattern that looks like a series of ascending "J" shapes, indicating a steady and orderly uptrend. | Each "scallop" consists of a gentle pullback followed by a new high. The pattern is characteristic of a stock in a healthy, sustainable uptrend. | Technical Analysis & Chart Patterns |
| SEC (Securities and Exchange Commission) | A U.S. government agency responsible for protecting investors, maintaining fair and orderly markets, and facilitating capital formation. | The SEC enforces the laws of the stock market. Filings made to the SEC (like a company's annual 10-K report) are primary sources of information for investors. | Core Concepts |
| Sector | A group of stocks that are in the same industry or have similar business models (e.g., the Technology Sector or the Energy Sector). | Understanding which sectors are currently strong or weak can give traders an edge. "Sector rotation" is a phenomenon where money flows from one sector to another based on the economic cycle. | Core Concepts |
| Senkou Span A & B | The two lines that form the boundaries of the "Cloud" (Kumo) in the Ichimoku Cloud indicator. | Senkou Span A is the faster moving line, and Senkou Span B is the slower line. The space between them creates the Cloud, and the color of the Cloud changes depending on which Span is on top. | Technical Analysis & Chart Patterns |
| Settlement | The final step in a derivatives trade, where the profit or loss is realized and any delivery of the underlying asset (if applicable) is made. | For futures, settlement happens daily via mark-to-market. For options, settlement occurs when the position is closed, exercised, or expires. | Market-Specific Jargon |
| Sharpe Ratio | A measure of a strategy's risk-adjusted return, indicating how much excess return is received for each additional unit of risk. | A higher Sharpe ratio indicates a better performance on a risk-adjusted basis. It's a professional metric used to evaluate and compare the quality of different trading strategies. | Core Concepts |
| Shilling | The act of enthusiastically and often disingenuously promoting a stock or cryptocurrency that you own, in order to generate hype and persuade others to buy it. | Traders should be highly suspicious of anyone who is aggressively shilling an asset, as their motives are often to pump the price so they can sell their own position at a profit. | Trader Slang & Modern Lingo |
| Shooting Star | A single-candle bearish reversal pattern that looks like an inverted Hammer and appears at the top of an uptrend. | A Shooting Star shows that buyers tried to push the price higher, but sellers forcefully rejected the advance. It's a clear signal of selling pressure emerging at a resistance level. | Technical Analysis & Chart Patterns |
| Short Position (Short Selling) | The act of selling a borrowed stock with the expectation that its price will fall, allowing you to buy it back later at a lower price for a profit. | This strategy allows you to profit from a stock that is losing value. However, it carries significant risk, as a stock's price can theoretically rise infinitely, making your potential loss unlimited. | Core Concepts |
| Short Sale Circuit Breaker (Rule 201) | A rule that is triggered when a stock's price falls by 10% or more in a single day, which then restricts short selling in that stock to prices above the current national best bid. | This rule is designed to prevent short sellers from exacerbating a stock's decline during a panic. When it's triggered, it can make it much harder to execute a short sale. | Market Mechanics & Order Flow |
| Short Squeeze | A situation in which a heavily shorted stock moves sharply higher, forcing short sellers to close out their positions by buying back the stock, which adds to the upward pressure on the price. | A short squeeze creates a violent, explosive price move that can be highly profitable for long traders but catastrophic for short sellers. Identifying the potential for a squeeze is an advanced trading strategy. | Core Concepts |
| Short Straddle | A neutral, undefined-risk options strategy where a trader sells both a call option and a put option with the same strike price and expiration date. | This is a bet on the stock price staying very close to the strike price. The trader profits from time decay (theta) but faces unlimited risk if the stock makes a large move in either direction. | Options & Derivatives |
| Short Strangle | A neutral, undefined-risk options strategy where a trader sells an out-of-the-money call option and an out-of-the-money put option with the same expiration date. | Similar to a short straddle, this is a bet on low volatility. It has a wider range of profitability than a straddle but still carries unlimited risk. | Options & Derivatives |
| Simple Moving Average (SMA) | A type of moving average that is calculated by adding up the closing prices for a certain number of periods and then dividing that sum by the number of periods. | SMAs give equal weight to all data points. Longer-term SMAs like the 50-day and 200-day are widely used to identify the major, long-term trend of a stock or market. | Technical Analysis & Chart Patterns |
| Slippage | The difference between the price at which you expected your trade to be executed and the actual price at which it was filled. | Slippage is a trading cost that often occurs in highly volatile or illiquid stocks when using market orders. It can turn a potentially winning trade into a loser before it even starts, highlighting the importance of using limit orders in choppy conditions. | Core Concepts |
| Smart Contract (Crypto) | A self-executing contract with the terms of the agreement directly written into lines of code, which are stored and run on a blockchain. | Smart contracts are the foundation of Decentralized Finance (DeFi) and NFTs. They allow for complex, automated transactions to occur without the need for a traditional intermediary. | Market-Specific Jargon |
| Smart Order Router | An automated system used by brokers that analyzes the market and sends a client's order to the venue that is most likely to provide the best execution (price and speed). | Most brokers use smart order routers to manage their order flow, aiming to fulfill their best execution requirements under Reg NMS. | Market Mechanics & Order Flow |
| Specialist | A former type of market maker on the floor of the New York Stock Exchange who was responsible for maintaining a fair and orderly market in a specific set of stocks. | While largely replaced by electronic systems, the concept of a specialist highlights the historical importance of having a designated party responsible for providing liquidity and managing the order book. | Market Mechanics & Order Flow |
| Speed (Gamma of Gamma) | A third-order "Greek" that measures the rate of change of an option's Gamma in relation to changes in the underlying price. | Speed is an advanced concept that helps traders understand how quickly their Gamma risk will change. It is most relevant for managing positions around expiration. | Options & Derivatives |
| Spinning Top | A candlestick pattern with a short body centered between long upper and lower wicks, indicating indecision in the market. | Similar to a Doji, a Spinning Top shows that there was a significant battle between buyers and sellers, but neither side could gain control. It can signal a potential reversal or pause in the current trend. | Technical Analysis & Chart Patterns |
| Spoofing | An illegal trading practice where a trader enters a large order with no intention of executing it, in order to manipulate the price and trick others into trading. | Spoofing creates a false sense of supply or demand on the Level 2 order book. Traders must be skeptical of unusually large bids or asks that appear and disappear suddenly, as they may be manipulative attempts to lure them into a bad trade. | Market Mechanics & Order Flow |
| Spot Price (Commodities) | The current market price at which an asset is bought or sold for immediate payment and delivery. | For traders, the spot price is the "right now" price of a commodity, which is contrasted with the futures price, which is the price for delivery at a later date. | Market-Specific Jargon |
| Spread | An options position that consists of buying and selling multiple options of the same type on the same underlying asset. | Spreads are the building blocks of most advanced options strategies. They are used to create positions with a defined risk, a specific directional bias, or to profit from time decay. | Options & Derivatives |
| Spring | A term from Wyckoff methodology that describes a false breakdown below a support level, which is quickly reversed. | A spring is a bullish sign designed to trap sellers. It shows that large operators have absorbed the selling pressure and are now ready to begin a markup phase. | Technical Analysis & Chart Patterns |
| Stablecoin (Crypto) | A type of cryptocurrency whose value is pegged to another asset, typically a fiat currency like the US Dollar, to maintain a stable price. | Stablecoins like USDT and USDC are the primary "cash" equivalent in the crypto trading world, allowing traders to move out of volatile assets without having to convert back to traditional fiat currency. | Market-Specific Jargon |
| Standard Deviation | A statistical measure of the amount of variation or dispersion of a set of values. In trading, it's used to measure volatility. | Bollinger Bands are a direct application of standard deviation. The wider the standard deviation, the higher the volatility, and the farther apart the Bollinger Bands will be. | Technical Analysis & Chart Patterns |
| Stochastic Oscillator | A momentum indicator that compares a particular closing price of a security to a range of its prices over a certain period of time, showing momentum and trend strength. | The Stochastic Oscillator is primarily used to identify overbought (above 80) and oversold (below 20) conditions in ranging markets. A crossover of its lines can provide entry and exit signals. | Technical Analysis & Chart Patterns |
| Stock | A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. | Also known as "shares" or "equity," stocks are the primary instrument that most day traders use to speculate on intraday price movements. | Core Concepts |
| Stonks | A deliberate and humorous misspelling of "stocks," often used in memes and social media to refer to the stock market in a playful, ironic, or self-deprecating way. | While a meme, the term "stonks" has become synonymous with the modern retail trading culture, particularly around highly speculative meme stocks. | Trader Slang & Modern Lingo |
| Stop Hunt | A market maneuver where price is intentionally driven to a level where a large number of stop-loss orders are known to be clustered, triggering them before reversing direction. | Traders must be aware of obvious support and resistance levels where stop hunts are likely to occur. Placing a stop-loss slightly beyond these obvious levels can help avoid being taken out by this manipulation. | Technical Analysis & Chart Patterns |
| Stop-Limit Order | A type of order that combines the features of a stop order and a limit order. It's an order to buy or sell a stock at a specified limit price, but only after the stock's price has reached a pre-set stop price. | This gives a trader precise control over where their order will be filled after a stop has been triggered, helping to avoid significant slippage on a stop-loss in a fast market. | Core Concepts |
| Stop-Loss Order | An order placed with a broker to automatically sell a stock when it reaches a certain predetermined price, designed to limit a trader's loss on a position. | This is your primary defense mechanism and the most essential tool for risk management. Trading without a stop-loss is like driving without brakes; it exposes your account to catastrophic, career-ending losses. | Core Concepts |
| Strike Price | The set price at which a derivative contract, such as an option, can be bought or sold. | The strike price is the core of an options contract, determining whether the option is "in-the-money," "at-the-money," or "out-of-the-money." A trader's choice of strike price reflects their specific price target for the underlying stock. | Options & Derivatives |
| Support | A price level where a downtrend can be expected to pause due to a concentration of demand or buying interest. | Traders see support levels as potential floors where prices are likely to bounce. A break below a key support level is a significant bearish signal, indicating that sellers have overwhelmed the buyers at that level. | Core Concepts |
| Swap | A derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments. | Swaps are complex, over-the-counter derivatives used by institutions to manage risk, such as interest rate risk or currency risk. They are not traded by retail investors. | Options & Derivatives |
| Swap (Forex) | An interest rate fee that is either paid or charged to a trader for holding a Forex position overnight. | The swap rate is based on the interest rate differential between the two currencies in a pair. It is the mechanism through which the "carry trade" profit is realized. | Market-Specific Jargon |
| Sweeping the Book | The act of placing a large market order that takes out all of the available liquidity at several consecutive price levels in the order book. | A large "sweep" on the tape is a sign of an extremely motivated buyer or seller who wants to get their position filled immediately, regardless of the price. It's a strong signal of aggression. | Market Mechanics & Order Flow |
| Swing High | A peak on a chart that is higher than the price points immediately surrounding it. | Swing highs are used to draw trendlines and identify resistance levels. A series of higher swing highs defines an uptrend. | Technical Analysis & Chart Patterns |
| Swing Low | A trough on a chart that is lower than the price points immediately surrounding it. | Swing lows are used to draw trendlines and identify support levels. A series of higher swing lows defines an uptrend. | Technical Analysis & Chart Patterns |
| Swissy (Forex) | A slang term for the Swiss Franc (CHF) currency. | A trader might say they are "long the Swissy" if they have bought the Swiss Franc. | Market-Specific Jargon |
| Symmetrical Triangle | A chart pattern characterized by two converging trendlines with a similar slope, indicating a period of indecision and contracting volatility. | This is a bilateral pattern, meaning it can break out in either direction. Traders typically wait for a decisive, high-volume breakout above resistance or a breakdown below support before entering a trade. | Technical Analysis & Chart Patterns |
| Synthetic Position | A way of creating the risk/reward profile of a stock position or an options position using a combination of other instruments. | For example, buying a call and selling a put at the same strike price creates a "synthetic long stock" position. Synthetics are used by advanced traders for arbitrage or to manage margin requirements. | Options & Derivatives |
| Tape Reading | The old-school term for analyzing the Time & Sales and Level 2 data to gauge the real-time buying and selling pressure. | Tape reading is the art of order flow analysis. It's a discretionary skill that allows a trader to "feel" the market's immediate intention by watching the flow of executed trades. | Market Mechanics & Order Flow |
| Technical Analysis | A trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume. | This is the practice of reading charts to forecast future price movements. It operates on the belief that all known information is already reflected in the price, and that historical price action can give clues to future behavior. | Technical Analysis & Chart Patterns |
| Tenkan-sen (Conversion Line) | The fastest moving line in the Ichimoku Cloud indicator, representing the midpoint of the highest high and lowest low over the past 9 periods. | The Tenkan-sen is used as a signal line and a measure of short-term momentum. A crossover of the Tenkan-sen and Kijun-sen is a primary trading signal in the Ichimoku system. | Technical Analysis & Chart Patterns |
| Tendies | A slang term for profits or gains made from a trade, originating from a meme about chicken tenders being a reward for successful trading. | This is a lighthearted, community-driven term for what professional traders would simply call P&L or profits. It reflects the unique culture that has grown around online retail trading communities. | Trader Slang & Modern Lingo |
| Theta | A measurement of an option's sensitivity to the passage of time, representing how much value an option loses each day as it approaches expiration. | Known as "time decay," theta is the enemy of the options buyer and the friend of the options seller. It's the reason why an option can lose value even if the underlying stock price doesn't move against you. | Options & Derivatives |
| Three Black Crows | A bearish reversal pattern consisting of three consecutive, long-bodied bearish candles that close progressively lower than the previous one. | This pattern is a strong indication that a market top has been established and that the sellers are firmly in control, often signaling the start of a new downtrend. | Technical Analysis & Chart Patterns |
| Three Drives Pattern | A harmonic-like reversal pattern consisting of three consecutive, symmetrical pushes or "drives" to a new high or low, with each drive being followed by a shallow correction. | The completion of the third drive often signals trend exhaustion. Traders watch for this pattern to enter a counter-trend trade, anticipating a significant reversal. | Technical Analysis & Chart Patterns |
| Three White Soldiers | A bullish reversal pattern consisting of three consecutive, long-bodied bullish candles that close progressively higher than the previous one. | This is a powerful signal that a market bottom has been established and that buyers are in full control, often marking the beginning of a new uptrend. | Technical Analysis & Chart Patterns |
| Tick | The smallest possible price movement for a security. | For most stocks, a tick is one cent ($0.01). Tick data is the most granular form of market data, showing every single price change. | Market Mechanics & Order Flow |
| Ticker Symbol | A unique series of letters assigned to a security for trading purposes (e.g., AAPL for Apple Inc.). | This is the universal language of the stock market. It's the unique identifier you use on any platform to look up a stock's chart, get data, and place orders. | Core Concepts |
| Time & Sales | A real-time stream of data that shows every single executed trade, including the price, size, and time. | Also known as "reading the tape," this tool allows traders to see the raw flow of orders as they happen. A surge of large green prints (trades at the ask price) can signal aggressive buying, while large red prints (trades at the bid) show aggressive selling. | Market Mechanics & Order Flow |
| Timeframe | The specific period of time that a trader chooses to view on a chart (e.g., a 1-minute, 5-minute, or daily chart). | A trader's choice of timeframe defines their trading style. Scalpers use very short timeframes (like 1-minute charts), while swing traders use longer timeframes (like daily or weekly charts). | Core Concepts |
| To the Moon | A slang phrase used to express the belief that a stock or cryptocurrency's price is going to experience a massive and rapid increase. | This is a rallying cry for extreme bullishness, often seen in highly speculative assets. While exciting, it's a sentiment-driven phrase, not a form of analysis, and can create unrealistic expectations for new traders. | Trader Slang & Modern Lingo |
| Trade Reporting Facility (TRF) | An entity that facilitates the reporting of off-exchange trades, such as those that occur in dark pools or are internalized by brokers. | The TRF is what allows data from dark pools and other ATSs to be added to the consolidated tape, giving traders a more complete picture of total market volume. | Market Mechanics & Order Flow |
| Trading Journal | A detailed log of a trader's trades and the reasoning behind them, used to analyze performance and identify patterns. | A trading journal is the single best tool for improvement. It allows a trader to learn from their mistakes, identify their strengths, and hold themselves accountable to their trading plan. | Core Concepts |
| Trading Plan | A written set of rules that specifies a trader's entry, exit, and money management criteria for every trade. | Trading without a plan is just gambling. A trading plan is a trader's business plan; it provides structure and objectivity, which are essential for navigating the emotional pressures of the market. | Core Concepts |
| Trailing Stop Order | A type of stop-loss order that is set at a percentage or dollar amount below the market price and automatically adjusts as the price moves in your favor. | This is a powerful tool for locking in profits on a winning trade while still giving it room to run. It helps automate the process of "letting winners run." | Core Concepts |
| Trapped Traders | A situation where a group of traders who entered a position are now in a losing trade after a sharp price reversal, forcing them to liquidate and fuel the move against them. | Identifying where traders are likely trapped (e.g., late buyers at the top of a breakout that fails) can provide high-probability trade setups, as their stop-loss orders will create predictable selling pressure. | Market Mechanics & Order Flow |
| Treasury Bills/Notes/Bonds (Bonds) | Debt securities issued by the U.S. Department of the Treasury to finance government spending. They are differentiated by their maturity dates. | Treasuries are considered one of the safest investments in the world. Their yield is the benchmark "risk-free" rate against which all other investments are measured. | Market-Specific Jargon |
| Trend | The general direction in which a security's price is moving. | The three types of trends are uptrends (higher highs and higher lows), downtrends (lower highs and lower lows), and sideways trends. The first rule of trading is often said to be "trade with the trend." | Core Concepts |
| Trendline | A line drawn on a chart that connects a series of swing lows (in an uptrend) or swing highs (in a downtrend) to define the current trend. | Trendlines act as dynamic support or resistance. A bounce off a trendline confirms the trend, while a decisive break of a trendline is a signal that the trend may be changing. | Technical Analysis & Chart Patterns |
| Triangle Pattern | A consolidation chart pattern created by drawing two converging trendlines. The main types are ascending, descending, and symmetrical. | Triangles represent a coiling of energy and contracting volatility. They are powerful patterns that often lead to an explosive breakout or breakdown. | Technical Analysis & Chart Patterns |
| Triple Bottom | A bullish reversal pattern similar to a double bottom, but with three distinct troughs at the same support level. | A triple bottom is a stronger indication of a bottom than a double bottom, as it shows that sellers have failed to break support on three separate occasions. A break of resistance confirms the reversal. | Technical Analysis & Chart Patterns |
| Triple Top | A bearish reversal pattern similar to a double top, but with three distinct peaks at the same resistance level. | A triple top is a very strong signal of a top, indicating that buyers have failed to break through resistance three times. A break of support confirms the reversal. | Technical Analysis & Chart Patterns |
| Tweezer Top/Bottom | A two-candlestick reversal pattern where two consecutive candles have matching highs (Tweezer Top) or matching lows (Tweezer Bottom). | This pattern signifies a strong rejection of a price level. A Tweezer Top at a resistance level is bearish, while a Tweezer Bottom at a support level is bullish. | Technical Analysis & Chart Patterns |
| Underlying Asset | The security (such as a stock, index, or commodity) that an options or futures contract is based on. | The price movement of the underlying asset is the primary driver of the derivative's value. | Options & Derivatives |
| Unfinished Auction | A concept in auction market theory where price moves away from a level without a final surge of volume, leaving behind a "poor" high or low. | Traders who use this concept believe that the market will often return to an "unfinished" auction area in the future to complete the business at that price level. | Market Mechanics & Order Flow |
| Upthrust | A term from Wyckoff methodology that describes a false breakout above a resistance level that is quickly reversed. | An upthrust is a bearish sign designed to trap buyers. It shows that large operators have sold into the buying pressure and are now ready to begin a markdown phase. | Technical Analysis & Chart Patterns |
| V-Bottom/Top (Pipe) | A sharp, V-shaped reversal pattern characterized by a steep decline immediately followed by a steep advance (V-Bottom), or vice versa (V-Top). | This pattern reflects a sudden and violent shift in market sentiment. It is difficult to trade due to its speed, but it signals a major, emotionally charged market turning point. | Technical Analysis & Chart Patterns |
| Value Area | In Volume Profile analysis, the price range where a specific percentage (typically 70%) of the total volume was traded. | The Value Area represents the price range that the market has accepted as "fair." Price action outside of the value area is considered a potential breakout or a search for a new fair price. | Technical Analysis & Chart Patterns |
| Vanna | A second-order "Greek" that measures the change in an option's Delta in response to a change in implied volatility. | Vanna helps traders understand how a change in volatility will affect their directional exposure. It's an important metric for those who hedge their Delta. | Options & Derivatives |
| Vaporware (Crypto) | A cryptocurrency project that is promoted but is never actually developed or released. | Vaporware projects are often used to raise money from investors with no intention of delivering a final product. Identifying vaporware is a key part of due diligence in the crypto space. | Trader Slang & Modern Lingo |
| Vega | The "Greek" that measures an option's price sensitivity to a 1% change in the implied volatility of the underlying stock. | Vega tells you how much an option's price will change if the market becomes more or less fearful about the stock's future movement. Positions with positive vega (like long calls/puts) profit from an increase in volatility. | Options & Derivatives |
| VIX (Volatility Index) | A real-time market index that represents the market's expectation of 30-day forward-looking volatility, derived from the prices of S&P 500 index options. | Often called the "fear index," the VIX is the most widely used measure of market volatility. A high VIX reading indicates fear and uncertainty, while a low reading indicates complacency. | Options & Derivatives |
| Volatility | A measure of how much and how quickly a stock's price fluctuates over a given period. | Day traders thrive on volatility because it creates the price swings needed for profit opportunities. However, high volatility also means higher risk, requiring wider stop-losses and more disciplined trade management. | Core Concepts |
| Volatility Contraction Pattern (VCP) | A chart pattern identified by Mark Minervini where a stock's volatility contracts in a series of smaller and smaller pullbacks before a powerful breakout. | The VCP is a visual representation of a stock coiling under accumulation. The tightening of the price range signals that supply has been exhausted and the stock is ready for a major move higher. | Technical Analysis & Chart Patterns |
| Volatility Crush | The rapid decrease in the implied volatility of an option after a major event, such as an earnings announcement, has passed. | A volatility crush causes a sharp drop in an option's premium, even if the stock price moves in the expected direction. This is a major risk for options buyers and a source of profit for options sellers around known events. | Options & Derivatives |
| Volatility Skew | A market condition where options with the same expiration but different strike prices have different implied volatilities. | Typically, out-of-the-money puts have a higher IV than out-of-the-money calls, creating a "skew" or "smirk." This reflects the market's tendency to fear a sudden crash more than a sudden rally. | Options & Derivatives |
| Volume | The total number of shares of a stock that are traded during a specific period, typically a single day. | Volume is a crucial confirmation tool; it signals conviction behind a price move. A breakout on high volume is much more likely to be legitimate than one on low volume, which can often be a trap. | Core Concepts |
| Volume Profile | An advanced charting tool that displays the total volume traded at each individual price level, shown as a horizontal histogram on the side of the chart. | Volume Profile allows traders to see the "anatomy" of a price move, identifying high-volume nodes (areas of high agreement/support/resistance) and low-volume nodes (areas of low agreement where price is likely to move through quickly). | Technical Analysis & Chart Patterns |
| VWAP (Volume Weighted Average Price) | An indicator that shows the average price of a stock adjusted for its volume. | Institutional traders and algorithms heavily use VWAP as a benchmark for execution quality. For day traders, price action above VWAP is generally considered bullish for the day, while action below it is considered bearish. The line itself often acts as dynamic support or resistance. | Core Concepts |
| WAGMI (We're All Gonna Make It) | A popular, optimistic acronym used in the crypto and NFT communities to build a sense of camaraderie and express a shared belief in the future success of their investments. | WAGMI represents the powerful sense of community and shared optimism that can drive speculative manias in emerging asset classes. | Trader Slang & Modern Lingo |
| Wallet (Crypto) | A digital wallet used to store, send, and receive cryptocurrencies. A "hot wallet" is connected to the internet, while a "cold wallet" is offline. | For traders, securely managing their crypto wallets is paramount. A hot wallet is convenient for active trading, while a cold wallet is used for long-term, secure storage. | Market-Specific Jargon |
| Warrant | A security, typically issued by a company, that gives the holder the right to purchase the company's stock at a specific price and date. | Warrants are similar to call options but are issued by the company itself and usually have much longer lifespans. They are often used to make a larger offering more attractive to investors. | Options & Derivatives |
| Watchlist | A curated list of securities that a trader monitors for potential trading opportunities. | A well-researched watchlist is the foundation of a successful trading day. It allows a trader to focus their attention on a small number of stocks that meet their specific criteria for a trade. | Core Concepts |
| Wedge Pattern | A chart pattern marked by two converging trendlines. The two main types are the rising wedge (bearish) and the falling wedge (bullish). | Wedges signal a weakening of momentum within a trend. Even though a rising wedge moves up, it's a bearish pattern, and even though a falling wedge moves down, it's a bullish pattern. | Technical Analysis & Chart Patterns |
| Weighted Moving Average (WMA) | A type of moving average that gives more weight to recent price data, similar to an EMA, but using a different calculation method. | Like EMAs, WMAs are more responsive to recent price action than SMAs, making them popular for shorter-term trading strategies. | Technical Analysis & Chart Patterns |
| Whale | An individual or entity that holds a very large amount of a particular stock or cryptocurrency, giving them the power to influence the market with their trades. | Traders constantly monitor for "whale activity," as a large buy or sell order from a whale can single-handedly change a stock's short-term trajectory. | Trader Slang & Modern Lingo |
| When Lambo? | A slang phrase in the crypto community that humorously asks when their investment will generate enough profit to buy a Lamborghini, a symbol of extreme wealth. | This phrase captures the get-rich-quick mentality that is prevalent in highly speculative markets. | Trader Slang & Modern Lingo |
| Whipsaw | A condition where a security's price heads in one direction and then is followed quickly by a movement in the opposite direction. | Whipsaws are common in choppy, ranging markets and are a major source of frustration for traders. They often lead to being stopped out of a trade just before the price moves in the originally intended direction. | Technical Analysis & Chart Patterns |
| Williams %R | A momentum indicator that is the inverse of the Stochastic Oscillator, used to identify overbought and oversold levels. | Williams %R fluctuates between -100 and 0. Readings above -20 are considered overbought, and readings below -80 are considered oversold. | Technical Analysis & Chart Patterns |
| Win Rate | The percentage of a trader's total trades that are profitable. | While many beginners obsess over win rate, it is meaningless without considering the risk/reward ratio. A trader can be very profitable with a low win rate (e.g., 40%) if their winning trades are significantly larger than their losing trades. | Core Concepts |
| Window Dressing | A strategy used by institutional fund managers near the end of a quarter or year to improve the appearance of their portfolio's performance by buying high-flying stocks and selling losing ones. | This can create predictable, short-term buying pressure in winning stocks and selling pressure in losing stocks in the final days of a reporting period, an anomaly that some traders try to exploit. | Trader Slang & Modern Lingo |
| Wolfe Wave | A market timing pattern that attempts to predict where a price is heading and when it will get there, based on a five-wave structure. | Wolfe Wave analysis is used to find natural supply and demand within a trend, providing traders with specific price targets and time projections for a trade. | Technical Analysis & Chart Patterns |
| WTI Crude (Commodities) | West Texas Intermediate; a benchmark grade of crude oil that is a primary price reference for North American oil. | WTI is the underlying commodity for the most actively traded oil futures contracts. Its price is a key indicator for the health of the US economy and the energy sector. | Market-Specific Jargon |
| Wyckoff Method | A comprehensive methodology for technical analysis based on the study of supply and demand, cause and effect, and effort versus result. | The Wyckoff Method provides a framework for understanding the market cycles of accumulation and distribution, allowing traders to identify the activity of large, institutional "smart money." | Technical Analysis & Chart Patterns |
| Yield (Bonds) | The income return on an investment, such as the interest received from a bond, usually expressed as an annual percentage. | Bond yields are a critical indicator of economic expectations and risk appetite. Rising yields can signal inflation or economic strength and often create a headwind for the stock market, particularly for growth and technology stocks. | Market-Specific Jargon |
| YOLO (You Only Live Once) | An acronym used to describe an extremely high-risk trade where a person invests a large portion of their account into a single, speculative position. | A YOLO trade is the polar opposite of professional risk management. While it can lead to spectacular, lottery-like gains, it far more often results in catastrophic, account-destroying losses and is considered a form of gambling. | Trader Slang & Modern Lingo |
| Zero-Coupon Bond (Bonds) | A debt security that does not pay periodic interest (a coupon) but is instead traded at a deep discount, rendering a profit at maturity when the bond is redeemed for its full face value. | These bonds are highly sensitive to changes in interest rates, making them a "pure play" for traders who want to speculate on the future direction of rates. | Market-Specific Jargon |
| Zig Zag Indicator | A technical indicator that filters out minor price movements, helping to identify significant trends and changes in trend. | The Zig Zag indicator connects significant swing highs and swing lows on a chart, making it easier to see the underlying market structure and apply principles like Dow Theory or Elliott Wave. | Technical Analysis & Chart Patterns |
| Zomma | A third-order "Greek" that measures the rate of change of an option's Gamma in response to a change in volatility. | Zomma is a highly advanced metric used by sophisticated traders and market makers to understand how the convexity (Gamma) of their position will change as market volatility changes. | Options & Derivatives |
| Zombie Stock | A stock of a company that is heavily in debt and on the verge of bankruptcy but is able to continue operating by covering its interest payments, without ever being able to pay off the principal. | These companies have no real growth prospects, and their stock prices often drift aimlessly or slowly decline, making them poor candidates for most trading strategies. | Trader Slang & Modern Lingo |
❓Your Questions About Trading Lingo Answered
Why is it so important for a new trader to learn this lingo?
Quick Answer: Mastering trading lingo is essential for understanding the market, executing trades with precision, and managing risk without the hesitation that leads to costly errors.
Explanation: The market moves in seconds. If you have to stop and think about what a term means, the opportunity is already gone. Knowing the language of trading allows you to process information instantly, understand analysis from other traders, and act decisively on your trading plan when it matters most.
Key Takeaway: Fluency in trading lingo is the bridge between your analysis and your ability to act on it.
Is it necessary to memorize all 500+ of these terms?
Quick Answer: No. The goal isn’t to memorize every term, but to master the “Core Concepts” and use this dictionary as your go-to reference for all the rest.
Explanation: Think of it like a doctor: they don’t have every medical condition memorized, but they know the critical ones by heart and know exactly where to look up the rest. We built this dictionary so you can start with the foundational terms and then use the search and filter functions to find any other term you encounter during your career.
Key Takeaway: Focus on mastering the foundational terms first and use this dictionary as your career-long reference guide.
What's the fastest way to learn the most essential trading terms?
Quick Answer: The fastest way to learn is through active application. Focus on the “Core Concepts” and use the terms while paper trading to connect them to live market action.
Explanation: Passive reading is slow and ineffective. To truly learn, you have to use the words. Open a paper trading account and narrate your actions out loud with the correct terminology. This active use forges a powerful link between the concept and the real-world event.
Key Takeaway: Active application in a simulated environment is the single most effective way to accelerate your learning.
How will understanding these terms actually help me make money?
Quick Answer: Precise language leads to precise execution. Understanding these terms helps you manage risk correctly and act decisively, which are the cornerstones of profitable trading.
Explanation: Our team has seen countless new traders lose money not because their idea was wrong, but because they used a market order instead of a limit order and got a terrible fill. Profitability is rooted in precise execution and flawless risk management. Misunderstanding the vocabulary leads directly to costly mistakes that eat away at your capital.
Key Takeaway: Knowledge of trading terms translates directly to lower costs, better risk management, and the ability to execute your strategy without error.
What is the biggest mistake beginners make with trading vocabulary?
Quick Answer: The biggest mistake is settling for a fuzzy, “close enough” understanding of a term. Vague knowledge leads to hesitation, and in trading, hesitation is incredibly expensive.
Explanation: Knowing “support” is a level is one thing. Knowing the critical difference between a “breakdown” and a “spring” at that level is what separates amateurs from professionals. Ambiguity leads to bad decisions. Your goal should be to achieve a crystal-clear, actionable understanding of every term you use.
Key Takeaway: Don’t settle for a fuzzy understanding; use this dictionary to build a precise and confident command of trading language.
Why can't trading just be explained in plain English?
Quick Answer: Trading uses specific jargon for the same reason medicine and law do: it requires precise language to describe complex situations quickly and without ambiguity.
Explanation: A term like “bearish engulfing candle” instantly tells a trader a multi-faceted story about momentum and sentiment. Explaining that same concept in “plain English” would take a full paragraph, and by then the trading opportunity would be long gone. Jargon is a form of professional shorthand that conveys maximum information with minimum words.
Key Takeaway: Trading lingo is a tool for speed and precision, and learning it is a rite of passage for any serious market participant.
How does this dictionary help me learn faster than just reading articles?
Quick Answer: This isn’t an article; it’s a high-speed reference tool. Its search and filter functions are designed to give you the exact definition you need in seconds, not paragraphs.
Explanation: When you encounter an unknown term in the middle of a trading day, you need an answer, not a story. This dictionary was built for speed. The A-Z list, powerful search, and category filters are designed to get you the precise information you need instantly, so you can get back to focusing on the charts.
Key Takeaway: Bookmark this page and use it as your go-to encyclopedia for instant clarity during the trading day.
Are the slang terms in this list actually important to learn?
Quick Answer: Absolutely. Slang terms are the language of market sentiment. Understanding terms like FOMO or FUD gives you a real-time reading on the crowd’s psychological state.
Explanation: When you see traders on social media talking about FOMO, it’s a clear signal that the market is likely getting over-extended and buying is being driven by emotion, not logic. When you hear chatter about a potential short squeeze, you know to be on alert for extreme volatility. This lingo is your barometer for the greed and fear that moves prices.
Key Takeaway: Learning trader slang is less about technical analysis and more about understanding the mass psychology of the market.
How does knowing the right terminology help with trading psychology?
Quick Answer: Clear language leads to clear thinking. A precise vocabulary allows you to define your situation objectively, which is the key to taming the emotions of fear and greed.
Explanation: When you can look at a losing trade and correctly identify it as a “normal drawdown within your plan,” it prevents you from panic-selling. When you can feel the urge to chase a runaway stock and label it as FOMO, you can stop yourself before making a critical error. Naming these phenomena strips them of their emotional power.
Key Takeaway: A clear vocabulary is the foundation of the objective, analytical mindset required to be a successful trader.
How often should I refer back to this page?
Quick Answer: Bookmark this page and make it your constant companion. Use it daily to look up any term you’re not 100% certain about, no matter how basic it seems.
Explanation: The best traders we know are never too proud to look something up. Make it a habit to spend five minutes a day reviewing a few terms. This continuous learning is what separates the pros from the amateurs. The market is always evolving, and your vocabulary should too.
Key Takeaway: Treat this dictionary as an active tool in your daily trading routine, not just a static piece of content.
© 2025 DayTrading Toolkit
