Humble-Trader Glossary of Trading Terms
stock
a stock also known as shares or equity is a type of security that represents partial ownership in a publicly
traded company.
Market cap
the total dollar value of a company. calculated by multiplying the number of stock shares by the current
stock price.
Value Investing
value investing generally involves putting money into companies for long-term growth colon also known
as the buy-and-hold strategy.
swing Trading
a style of trading that attempts to capture gains in a stock hear it a few days or several weeks.
Day trading
the buying and selling of the same stock within a single trading day in an attempt to profit from volatile
changes in a Securities price in a short time.
Fundamental analysis
A method of evaluating a company's value by looking at its underlying finances and business operations.
Technical Analysis
instead of looking at a company's earnings statement, technical analysis is a practice that uses historical
stock charts and prices to predict where the stock could go in the future.
long position
a long position or (going long) is the buying of a stock with the expectation the price could rise in value,
essentially betting in favor of the stock.
short position
a short position (going short) is when a trader sells a stock to buy it back later Define to recover at a
lower, price essentially betting against the stock.
bull market
investors are optimistic about the stock market. being bullish means you are expecting talk to increase in
the price.
bear Market
investors are generally pessimistic about the stock prices are depressed. being bearish means you are
expecting the stock to decrease in price.
Pattern day trader rule
a pattern day trader is a regulatory designation for Traders or investors who execute four or more day
trades within five business days in a margin account. if a margin account has less than $25,000, the
trader is limited to three-day trades for every five rolling days.
Margin
a margin is a loan that Traders could borrow from their broker. only margin accounts have access to
margin loans.
Risk reward ratio
the amount of potential loss compared to the amount of potential profit. generally, we aim for a riskreward ratio greater than 1:2 and 1:3 in trading.
Retail traders
individual traders who buy and sell stocks with their capital.
institutional ownership (IO)
the amount of a company's available stock owned by big Financial entities (not by retail Traders).
float
the number of shares of a company stock that is available to be traded.
short position
a short position going short is when a Trader sells stock to buy it back later or buys to cover at a lower
price, essentially betting against the stock.
short interest
short interest or short float % is the percentage play Company stock that is being shorted.
short squeeze
a short squeeze occurs when a highly shorted stock rallies sharply higher.
volume
the number of shares of a stock traded during a given time.
liquidity
liquidity refers to how easily a stock can be traded without affecting its price. a stock needs to be trading
in high volume to be liquid enough for Traders to buy and sell at any time.
illiquid
stock cannot be sold how to substantial loss and value.
ask/ offer
the best price at which a stock can be sold and or bought at the current time.
spread
the difference in price between the bid and the ask.
level 2
also known as L2. it shows all the pending orders to buy, as well as their bid/ for each trade ask price,
order size, and exchange.
time and sales (tape)
Time and sales show volume, price, Direction, date, and time data on an exchange.
previous day close PDC
A stock's closing price at 4:00 p.m. Eastern time the previous trading day.
bullish sentiment
being bullish in trading means you believe that a stock or the overall Market is going to increase in value.
bearish sentiment
being bearish in trading means you believe that a stock or the overall Market is going to decrease in
value being bearish is the opposite of being bullish.
Red to Green move
when a stock opens below PDC (negative) on the day, but breaks above the level timer later on, turning
the stock green (positive) for the day. red to green move signifies a bullish sentiment for the stock.
Green to read move
when a stock opens above PDC (positive), only to break down that level and go red (negative) on the day.
green to read moves signal a bearish sentiment for the stock.
All-time high (ATH)
all-time high refers to the highest historical price level a stock has traded.
Premarket High
the lowest price level the stock has traded during pre-market trading session on the day.
High of day (HOD)
high of day are they high is the highest price switch the stock traded during the course of the regular
trading session.
New high of day (NHOD)
this means a stock is breaking out of its previous HOD making a brand new high price. does generally a
bullish sign.
Low of-day LOD
low of the day, or days Low, is the lowest price at which a stock trades over the course of a trading day.
New low of day NLOD
this means a stock is dropping below the previous LOD. This is generally a better sign talk keeps making
new Lows.
Short seller restriction
the short-sale restriction is a sec trading regulation that limits Short Selling orders to be placed at the ask
only.
Short locates
in order to short-sell stocks, Traders need to locate or borrow shares from their brokers. having locates
or borrows available means the trailer can short-sell certain stocks.
Easy to borrow ETB
easy to borrow, means talk is readily available for short selling in many brokers.
Hard to borrow HTB
hard to borrow HTB means the stock is very difficult to locate Short.
Bag holding
a bag holder is a colloquial term used to describe a Trader who does not respect their stop losses in the
position due to stubbornness or fear of taking losses and holds a stock that continues decreasing in value
for an extended amount of time.
Stop-loss order
Stop Plus orders are used to stop your position and get out. play you get to limit your losses according to
your risk, and protect your account capital.