It's time to brush up on your stock market terms and learn the words traders and investors are using to talk the talk. Learning this stock market terminology is going to be beneficial if you're studying the market and feeling confused about what people are saying. What the video below for an in depth lesson.
The market is confusing enough without understanding the stock market terminology and lingo that everyone is using. Below is a short list of the most common terms that you will hear as a trader.
Having a solid understanding of these terms will allow you to communicate in the chat rooms, understand the Bullish Bears lessons, and become an overall more efficient trader. We can't stress enough how very important it is to learn the basics of the stock market before trading!
Most Popular Stock Market Terms
- 52-week high/low – When a stock hits a yearly high or low
- After Hours – Trading done after the market closes
- Ask – The price a seller is willing to sell for. (The lowest ask price is most commonly referenced)
- Bid – The price a buyer is willing to buy for. (The highest bid price is most commonly referenced)
- Breakouts – When a stock “breaks out” above it’s previous resistance level
- Candlesticks – A type of chart where each candle represents the high, low, open & close for a given period
- Covering – Buying back the shares that were sold short
- ETF – An exchange traded fund comprised of a set of equities
- Earnings Reports (E/R) – A company’s quarterly/annual report of their financials
- Filing – A document filed with the SEC regarding company updates
- Float – The amount of shares available for public trading
- Fundamental Analysis – Analyzing a company & its industry (financials, filings, sector, etc.)
1. Gap's, Float, PDT: Stock Market Terms
- Gap Up/Down – When a stock opens above or below its previous closing price
- Going Long – Buying a stock with intentions of selling at a higher price
- High/Low of Day (HOD/LOD) – A stock’s highest or lowest price for the day
- Hard-to-borrow – A stock that is not readily available to short. Brokers will often charge an additional fee to those trying to short hard to borrow stocks.
- Liquidity – The ease with which a stock can be bought or sold without drastically affecting the stock’s price
- Low Float – A stock with a low amount of publicly traded shares, often times experiencing higher volatility
- Market makers – The firms responsible for facilitating buy & sell orders and maintaining liquidity in the markets.
- Market Cap – The total dollar value of a company based on the stock’s price and outstanding shares.
- Outstanding Shares – The total amount of shares issued, including both the float and institutional ownership
- Pre-Market – Trading done before the market opens
- Profits & Losses (P&L) – A portfolio’s gains/losses for a given period
- Pattern Day Trader Rule (PDT) – An SEC rule limiting traders with under $25,000 in their accounts to a maximum of four day trades in five days.
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2. Reward & Support
PR – A press release issued by a company
Red-to-Green & Green-to-Red – When a stock goes from being up on the day to down on the day (or vice versa)
Resistance – A price level at which sellers repeatedly overpower buyers, making it difficult for the stock to increase in price.
Risk/Reward – How much money you plan to risk on a trade compared to how much you expect to gain
Scalp – Taking advantage of very small price changes
Short Selling – Selling shares of a stock that you do not own in hopes of buying the shares back at a lower price (the opposite of going long). Very popular when trading penny stocks.
Spread – The price difference between the bid and the ask
Support – A price level at which buyers repeatedly overwhelm sellers, making it difficult for the stock to drop lower in price.
Technical Analysis – Analyzing a stock’s historical price action (using charts and technical indicators) to predict future movement.
What Are the 4 Types of Stocks?
- There are more than 4 types of stocks. Here are the most popular:
- Dividend stocks.
- Blue chip stocks.
- Biotech stocks.
- Gold stocks.
- Oil stocks.
- Bank stocks.
- Tech stocks.
- Defense stocks.
- Consumer staples and discretionary.
What Is It called When a Stock Goes Up?
- There are several terms for when a stock goes up:
- Bullish.
- Gap up.
- Uptick.
- Uptrend.
1. Volume, Long, Short: Stock Market Terms
Trend – The general direction of a stock’s price movement. A stock can be in an uptrend or downtrend.
Volume – The amount of shares a stock trades for a given time period
Long – When a trader buys a position in a stock or option.
Short – When a trader sells (borrows from their broker to sell the position on the open market) a position in a stock or option.
Level 2 – Level 2 trading is a tool used by traders to see bid ask spreads. Breaking down how to trade level 2 allows you to see what others are looking at when buying a stock.
We will continue to add to this list of stock market terms as time goes on. The world is always changing and we need to keep up to date! Remember, with learning the stock market, it takes time! You may feel overwhelmed on where to start. No problem! We all have felt that way and we wrote a page on getting started just for YOU right here.
