Basic Terminology

Day Trading: Day Trading is defined simply as the act of buying and selling the same asset on the same day.

Pattern Day Trader Rules (PDT): This is the bane of all small accounts, the PDT rules state that if a trader takes 3 or more day trades in a 5 day period, they are deemed a day trader and must maintain a minimum account balance of $25,000 USD. 

Swing Trading: This is the compromise for those that do not have the capital to day trade. Swing trading requires you to hold an option or stock overnight or for many nights to make a profit. These are still incredibly short-term investments but completely eliminate PDT.

Bull/Bullish: This term in regards to the market refers to a market in a strong uptrend with a positive sentiment. It can also be used to describe a particular stock or position if you believe that the sentiment is positive. 

Bear/Bearish: This term in regards to the market refers to a market with a fearful sentiment. A bear market is a market trending downward with further downside seen as inevitable. This can also be used to describe a particular stock or position if you believe the sentiment is negative and the price will go down.

Inflation: the overall rise in the price of goods and services

Hawk/Hawkish: A hawkish stance refers to economic policy that wants to protect the economy from excessive inflation. This stance usually involves raising the rate of interest.

 
Dove/Dovish: A Dovish stance refers to economic policy that promotes monetary policies that usually involve low-interest rates. They use expansionary monetary policy because they value indicators like unemployment over the possibility of a rise in inflation. This is a very conciliatory position. 

Initial Public Offering(IPO): An IPO is when a private company offers a limited amount of shares to the public for the first time. This is done to raise money for future growth.

 
Special Purpose Acquisition Company (SPAC): A SPAC is essentially a shell company that is often referred to as a blank-check company, this is because the company has no actual operations. They are used to take a private company public by raising capital in the form of an IPO to acquire an existing company. 

Float: This refers to the number of outstanding shares available to trade on a given stock. The float is equal to the supply level, stocks with limited supply and high demand are usually extremely volatile and move up and down in price fast.

Short Float: The ratio of tradable shares being shorted to shares in the market. 

Spread: The difference between the bid and ask price on a stock.

Squeeze: When short sellers are forced to buy back their shares due to increased buying pressure. 

Bag Holding: Holding shares of decreasing value in hopes that they will rebound or reverse the downward trend.

Pump & Dump: Artificially inflating the price of an asset through false and misleading positive sentiment in order to sell the cheaply purchased stock at a higher price and leaving those that followed holding the bags.

Share Buyback: This is when a company buys back shares that were sold from the original IPO. They do this to reduce the number of shares available to the public and reduce the float. This will cause the stock price to rise. 

Secondary Offering: This is when a company that has already done their primary offer in an IPO sells stocks, bonds, or other securities to the public. This is usually done by making some of their reserve of authorized shares available for sale to the public, all funds raised via this method go back to the company for future expenses. However, a secondary offering can also involve major shareholders, such as the founders, executives, and institutional investors. The money raised from this method goes to the original shareholders. In many cases, both the company and the major shareholders will do this at the same time.

Stock Splits: A company can divide the shares of its existing stock into multiple new shares to increase the stock’s liquidity. Although the amount of shares now outstanding in the float has increased, the total dollar value of the shares remains the same because splits do not add any real monetary value. The value of splitting comes from the ability to lower the trading price of their stock to a price range retail will feel comfortable buying at as well as increase the liquidity of the shares.
The most common split ratios are 2-for-1 or 3-for-1, which equates to each shareholder receiving two or three shares, respectfully, for each share previously held.

Reverse Split: This is effectively the opposite of a regular stock split, where a company is dividing instead of multiplying the number of shares each shareholder owns, raising the price per share. A reverse split can sometimes be seen as a red flag that a company is in financial trouble or being done to prevent being delisted from the exchange by boosting otherwise low-value shares.

Vwap: Volume Weighted Average Price is calculated by taking the price multiplied by the number of shares traded then divided by the total shares traded for the day. This indicator is usually used on intraday time frames. 

In the money: A call option is “in the money” if the strike price is below the stock price, while a put option is in the money if the strike price is above the stock price.

At the money: If the stock price and strike price are the same for either calls or puts, the option is “at the money.”

Out of the Money: A call option is “out of the money” if the strike price is above the stock price, while a put option is out of the money if the strike price is below the stock price.

Premiums: This is what you’ll have to pay to buy an options contract. Conversely, this is the money you’ll potentially make if you sell an options contract.

Derivatives:  A derivative is a type of financial product whose value depends on — is derived from — the performance of another financial instrument. Options are derivatives because their value is based on the changes in a stock’s price.

Spreads:  Spreads are an advanced trading strategy in which an options trader buys and sells multiple contracts at different strike prices.

Supply: In terms of the stock market, supply refers to the number of available shares, also known as the float. A security that has a small supply can see a rapid increase in price when demand rises. A security that has a larger supply takes much more demand to move. Corporate actions such as buybacks or issuance of new shares affect the supply. 

Demand: In terms of the stock market, demand refers to the rate at which investors want to buy or sell a security. A high demand generally sees an increase in the price of the security, while a fall in demand generally sees price decrease. Economic conditions, such as changes in interest rates, as well as corporate actions, such as earnings reports, can both affect the demand for a security.

Support: We define an area of support on a chart by finding price levels where there was previous heavy buying pressure. These levels can be flat lines at a price level or trend lines with an upward slope. Areas of support often signal points of bullish reversals. 

Resistance: We define an area of resistance on a chart by finding price levels where there was previous heavy selling pressure. These levels can be flat lines at a price level or trend lines with a downward slope. Areas of resistance often signal points of bearish reversals.

Level 2:   subscription-based service that provides real-time access to the NASDAQ order book. Basically, this shows *most* of the orders (bids and asks) that a ticker currently has. 

AH: After Hours( After the market closes.)

Bag holding: Holding shares of decreasing value in the hope that they will rebound or reverse downward trend

Beat: the stock has beaten earnings report expectations

Candle/Candlestick: Represents the trading activity for the given amount of time. 1 min chart each candle represents 1 minute of trading activity etc

Catalyst:  is an event that causes the price of a security to move, sometimes significantly. Examples of stock catalysts are Company earnings releases. Investor/Analyst Days. Analyst revisions. News or a press release.

C&H: cup and handle formation, lookup chart patterns for more

Channeling: When a stock continues to fluctuate through a particular set of price ranges on a fairly consistent basis.  Good for determining when to buy into a stock and when to sell, can be for a scalp play anywhere up to a 1-4 month play depending on the timescale of the fluctuations in price.

DCB: Dead Cat Bounce – a temporary recovery in share prices after a substantial fall

DD: Due Diligence (basically research and evaluation)

EMA: Exponential Moving Average – a type of moving average indicator frequently used in technical analysis

EOD: End of day

EPS: Earning per share

Float: The number of shares actually available for trading to the public. 

FOMO: Fear Of Missing Out

Former Runner: A specific ticker has moved a huge amount very quickly at some point in it’s life, showing the possibility for it to happen again.

Front Loading: Slowly loading a bunch of shares in a specific stock and then ‘pumping’ it.

Halt:  Trading has been paused by the market.

HOD: High of Day

Knife Catch: to buy into a stock that is currently experiencing a drastic fall in price near the lowest price before it begins to rebound.  From the phrase: “One should not try to catch a falling knife.”  This is not something a beginning trader should try.  Much like trying to catch an actual falling knife, it can be very risky, but with practice and familiarity with the history of a ticker, a successful knife catch can be executed.

LOD: Low of Day

LL: Limited Liquidity – limited number of shares available for trading by a brokerage (it’s difficult to buy into a stock that is LL)

Loading: Buying more shares of a stock that you already own

Low Float: Relatively small number of shares available for trading. Tend to be more volatile, meaning they move quickly

Mental/Mental Stop Loss: a non-literal stop loss that you place in your mind at which point you are determined to sell your shares of a stock. The point of doing this is to avoid having a literal stop loss triggered in the event of a sudden drop in ticker price that does not reflect the general trendline.

MM: Market Maker

NHOD: New High of Day

Offering: The issue or sale of a security by a company

Overnight: Just as it sounds, holding shares overnight

PDT: Pattern Day Trader

PM:  Pre-Market – Before the market opens.

POS: Position in the stock.

PR:  Press Release (news)

Print:  the complete execution of a trade. Example: “1.74 Print” means that the given ticker had an order purchase for 1.74 and it was completed.

Psych:  Psychological level (round numbers like $1, $1.50, $2)

PT: Price target

Pump/Pumper/Pump&Dump: Artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price.

RH:  Robinhood app (trading platform)

R/R:  Risk to Reward ratio

R/S: ‘Reverse Split’ – a reduction in the number of a company’s traded shares (float) that results in an increase in the par value or earnings per share.

Run/runner: A stock that drastically gains in value over a short period of time

R/G: Red to Green move.

Scale/Scale-out: To sell a portion of your shares.

Scanner: This scans for stocks within any given criteria. Barb is a scanner.

Short Float: The ratio of tradable shares being shorted to shares in the market.

Spread The difference between the bid and the ask price on a stock.

SMA: Simple Moving Average – a type of moving average indicator frequently used in technical analysis

Squeeze: When short sellers are forced to buy back their shares due to increased buying pressure

Sympathy: When a stock gains value due to another stock that is associated with it also gaining value.  Sympathy can be from being in similar sectors, having very similar equity curves, being based out of the same country, similar legal effects of new laws/restrictions/regulations, etc.

Slap: to hit the asking price with either a market buy or bid on the asking price

Swipes:  larger buys on the asking price pushing the stock up

Thin: Not many shares traded

Tutes: Institutional investors

VWAP: Volume Weighted Average Price – calculated by taking the price multiplied by a number of shares traded then divided by the total shares traded for the day. This is an indicator used in technical analysis

WL: Watch list

WW: Worth Watching

YOLO: acronym meaning you only live once.  To Yolo a stock is to say screw it, I’m just going to buy it and hope it goes up despite any catalyst or lack thereof.  This is not a sound investment strategy and should only be attempted for fun with relatively small positions if at all.

Failed Follow Through = Stock didn’t do what we wanted and we got stopped out or got out of our position

Fair Value Gap (FVG):  Instances in which there are inefficiencies, or imbalances, in the market. These ‘imbalances’ simply suggest that buying and selling are not equal.

Opening Range (OR): The opening range is the high and low of the stock over a designated time period. In TFC, we use the first 15-minute candle. The opening range gives the following levels:

• Opening Range High (ORH): This is the highest price the underlying was at within the opening range.
• Opening Range Mean (ORM): This is the mean price between the ORH and ORL.
• Opening Range Low (ORL): This is the lowest price the underlying was at within the opening range.

LL (Lower Low): The value of the underlying fell to a lower value than the local lowest value.

HH (Higher High): The value of the underlying rose to a higher value than the local highest value.

Volume Profile: A histogram that displays the volume of an underlying over a designated amount of time.

Point of Control (POC) – The price level for the time period with the highest traded volume.

Profile High – The highest reached price level during the specified time period.

Profile Low – The lowest reached price level during the specified time period.

Value Area (VA) – The range of price levels in which a specified percentage of all volume was traded during the time period. Typically, this percentage is set to 70%; however, it is up to the trader’s discretion.

Value Area High (VAH) – The highest price level within the value area.

Value Area Low (VAL)– The lowest price level within the value area.

Tick: The tick index compares the number of stocks that are rising to the number of stocks that are falling on the New York Stock Exchange (NYSE).

Vold: The VOLD is the difference between the up volume and the down volume on the NYSE.

A/D (Advance and Decline): The advance-decline line measures the number of advancing stocks to the number of declining stocks.

TRIN: TRIN is a combination indicator, showing the advance-decline line relative to VOLD.