Master Trading Terminology

Expand Your Knowledge with Our In-Depth Dictionary of Terms

A-F

Ask Price

The lowest price a seller is willing to accept for an asset.

Bid Price

The highest price a buyer is willing to pay for an asset.

Bear Market

A period of declining stock prices.

Bull Market

A period of rising stock prices.

Candlestick Chart

A visual representation of price movement over time, using bars with "wicks" to show high and low prices.

Contract

An agreement to buy or sell an asset at a specific price and date in the future (futures contract).

Divergence

When a technical indicator's movement is not in line with the price of the asset.

Fundamental Analysis

Analyzing a company's financial statements and other factors to determine its intrinsic value.

Forex (Foreign Exchange)

The trading of currencies.

G-M

Gap

A noticeable space on a chart where no trading occurred.

Leverage

Borrowing money from a broker to increase the potential return on an investment but also amplify losses.

Limit Order

An order to buy or sell an asset at a specific price or better

Liquidity

The ease with which an asset can be bought or sold without affecting its price.

Margin

The collateral required to open a leveraged position.

Market Order

An order to buy or sell an asset at the current market price.

Moving Average

A technical indicator that shows the average price of an asset over a specific period.

Gain/Loss

The difference between the purchase and sale price of an asset.

N-R

Pip

The smallest unit of price movement for certain assets (e.g., for currencies, one pip is typically 0.01%).

Position

The amount of an asset you own (long) or have sold short.

Resistance Level

A price point at which an asset's price has historically struggled to rise above.

Risk Management

Strategies used to limit potential losses in trading.

Stop-Loss Order

An order to automatically sell an asset if its price falls below a certain level.

Support Leve

A price point at which an asset's price has historically struggled to fall below.

Technical Analysis

Analyzing price charts and technical indicators to identify trading opportunities.

Order

This is an instruction to buy or sell a stock.

Open and close

These are the prices of a stock at the beginning and end of a trading day.

S-Z

Short Selling

Borrowing an asset and selling it, with the hope of repurchasing it later at a lower price.

Spread

The difference between the ask and bid price of an asset.

Volatility

The degree to which an asset's price fluctuates.

Shares and dividends

These are the basic units of a company's stock, and dividends are a portion of the company's profits paid to shareholders.

Stop Order

This is an order to buy or sell a stock if the price reaches a certain level.

Volume

This is the number of shares of a stock that are traded in a day.

Yield

The return on an investment, such as the annual percentage return (APR) on a bond or the dividend yield of a stock.

Watchlist

A list of assets you are interested in and track their price movements.