Alert: Alerts can be set within most charting tools to notify you of price crossing the specified area you have marked as an interest.
Average True Range – ATR: The Average True Range is a trading term used to the measure the volatility of a stock or index and tells us the average price range a stock typically trades in.
Bag holding: This is a term used to describe an investor who holds a position that decreases in value for a long period of time.
Bear Market: A bear market is a financial market experiencing prolonged price declines, generally of 20% or more. A bear market usually occurs along with widespread investor pessimism, large-scale liquidation of securities and other assets, and a weakening economy.
Bearish: Describes the decreasing price of an asset (stock).
Bid and Ask: The Bid Price is the price traders are currently bidding a stock at. The Ask price is the price traders are currently asking to sell the stock at. The Spread is the difference between the Bid price and the Ask price.
Breakout: The price has moved above key resistance.
Bull Market: A bull market is the condition of a financial market in which prices are rising or are expected to rise. The term “bull market” is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, and commodities.
Bullish: Describes the increasing price of an asset.
Buy Backs: A Share Buyback program is when a company buys back shares that were sold during the IPO. By doing this they are reducing the number of shares available to trade and everyone holding shares of the company will see their shares increase in value. Share Buybacks will decrease the float and can lead to increased prices.
Bollinger Bands: These are moving averages that are offset by a standard deviation. This means 95% of all price action will take place in between the top and bottom bands. You can find more about them here.
Bonds: Bonds are debt instruments and represent loans made to the issuer. Bonds allow individual investors to assume the role of the lender. Governments and corporations commonly use bonds to borrow money to fund roads, schools, dams, or other infrastructure. Corporations often borrow to grow their business, buy property and equipment, undertake profitable projects, for research and development, or to hire employees.
Breakout: A breakout occurs because the price has been contained below a resistance level or above a support level, potentially for some time. The resistance or support level becomes a line in the sand which many traders use to set entry points or stop loss levels. When the price breaks through the support or resistance level traders waiting for the breakout jump in, and those who didn’t want the price to breakout exit their positions to avoid larger losses.
Candle: Refers to the green and red bars on the chart of an asset. A candle stick includes 4 pieces of information. The open price, the close price, the high of the period price, an the low of the period price.
Consolidation: The price has been in the same range for multiple candles, signalling a move will happen soon.
DD: Due Diligence or Deep Dive. This is a catch all phrase when referring to a high level of study into a stock.
Day Trading: Day Trading is defined as the simple act of buying shares of a stock with the intention of selling them on the same day
Diversification: Diversification is a risk management strategy that creates a mix of various investments within a portfolio. A diversified portfolio contains a mix of distinct asset types and investment vehicles in an attempt to limit exposure to any single asset or risk.
Dollar Cost Averaging – DCA: This means that if every month you add $1000 of stock even though you were adding at various prices throughout the year, you will have a dollar cost average that helps balance out the big ups and big downs that may have been occurring when you were taking positions.
Doji Candle Stick Pattern: A Doji candle stick has a long upper wick or lower wick. The wick refers to the high or low of day. The body of a Doji is smaller than the candle win, meaning the open and close price were fairly close together. This candles are considered candles 0f indecision.
Drawdown: A drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund. It is usually quoted as the percentage between the peak and the subsequent trough.
Duopoly: This happens when two companies have dominant or exclusive control over a market. Good examples of this are pairings such as, Mastercard Vs Visa, Coke Vs Pepsi and Unreal Vs Unity. Side note, a monopoly can also occur. You will find that explained on this list.
Exponential Moving Average – EMA: Exponential Moving Average: an indicator on the chart that shows the average price over recent days, used as support and resistance. You can find more about it here.
Fibonacci and Trend Based Fibonacci: This is a technical indicator based on a mathematical formula that affects our everyday life. Its used to point out key areas for support and resistance. For Fibonacci you can find out more about it here. You can also find out more about trend based Fibonacci here.
Float: The number of shares available to trade, the lower the amount of shares the more it will move per buy.
Fundamentals: Company financial analysis and management.
Gap or Gapper: Stock price has increased significantly between yesterday’s close and today’s open and left a visible gap on the chart. The closing of this gap is known as gap filling.
Hammer Candle Stick Pattern: A hammer candle occurs at the bottom of a long down trend and looks like a hammer. It has a long lower wick (like a doji), that forms the handle. The small body on the top is the hammer that swings down. This is considered a stock hammering out it’s base. That’s because the candle wick shows that even though the price dropped it surged back up quickly. This make good bounce confirmation signals. An inverted hammer is the same concept, just flipped.
Index Funds: Index funds aim to mirror the performance of benchmarks like the S&P 500 by mimicking their makeup. These passive investments, long considered an unimaginative way to invest, are behind a quiet revolution in U.S. equity markets as they seize the attention and dollars of a widening swath of investors. The numbers tell the story: passive index funds tracking market benchmarks accounted for just 21% of the U.S. equity fund market in 2012. By 2023, passive funds had crossed above 50% of assets, beating their actively traded peers
Initial Public Offering: When a company does an IPO, they sell a fixed number of shares onto the open market to raise money. personally I avoid trading these as they can swing huge and have very little trading history to base any thesis on.
Institutional Buyers – Whales: These buyers are the professionals. The big boys with big money. They are the people that move the majority of the market. As a small fish, we want to be swimming with them, not against them.
Insider Ownership : Insiders are a company’s executives and employees with access to key company information before it’s made available to the public. By paying close attention to what insiders do with company shares, we can assume they know a lot more about their company’s prospects than the rest of us.
Limit Orders: A limit order is when you ask your broker to buy you shares and state the most you are willing to pay.
Leveraging: The rate that your cash deposit will be multiplied to give you total buying power.
Long Position: Position that will increase in price if the stock price increases.
Long Term Strategy: This implies positions would be held for a period of years. Commonly 5 to 10 years.
Macro Environment: Refers to external forces that affect the market conditions, such as inflation, war, monetary policy, employment numbers and more.
Market Makers: They create the spread. They are large institutional banks that are both buyers and sellers of a stock. They will post a Bid, and Post an Ask. They create the spread, and the profit by selling shares between the spread. The larger the spreads, the more the market makers can profit
Market Orders: A market orders tells our broker to get you shares at current market prices.
Mean Reversion: When an asset’s current market price is less than its average past price, it’s considered attractive for purchase. Conversely, if the current price is above the average, it’s expected to fall. Traders and investors use mean reversion for timing of their respective trading and investment strategies.
Meme Stocks: Describes a stock that has become viral, such as the stock AMC.
Monopoly and Moat’s: This happens when one company has a dominant or exclusive control over a market. Often times companies with this characteristic will be targets for lawsuits as its generally frowned upon for a company to hold such power in a free market. That doesn’t mean we still don’t get example’s of companies with short term monopolies based in patented tech (Such as NVDA and Tesla. These provide short term monopolies and are often called ”Moats”, which can take a long time for other companies to catch up with. Note: We do get a lot of utility type monopoly companies in the US for water, natural gas, telecommunications, and electricity. This is because they are government created.
Pattern: Patterns that form in price action on charts. For example, a bull flag, wedge, or channel. (Please check out here – insert link to guide)
Price to Earnings Ratio – P/E : This ratio measures a company’s share price relative to its earnings per share (EPS). It helps to determine whether a stock is overvalued or undervalued. The P/E can be benchmarked against other stocks in the same industry or against the broader market, such as the S&P 500 Index.
Portfolio: A portfolio is a collection of financial assets held by an investor. A portfolio can include stocks, bonds, mutual funds, ETFs, cash, and cash equivalents.
Relative Strength Index – RSI: This is a technical indicator used to show the speed of an assets price changes in a digestible format to show overvalued or undervalued conditions. You can learn more about it here.
Risk Averse: Risk aversion is the tendency to avoid risk. The term risk-averse describes the investor who chooses the preservation of capital over the potential for a higher-than-average return. In investing, risk equals price volatility. A volatile investment can make you rich or devour your savings. A conservative investment will grow slowly and steadily over time.
S&P500: Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. You can’t directly invest in the S&P 500 because it’s an index, but you can invest in one of the many funds that use it as a benchmark, tracking its composition and performance, or you can invest via a CFD. Please also refer to the index fund explanation on this page.
Scaling In: To enter or to exit a position a trader may “scale.” This technique, when used to scale in, means buying a partial position at 5.50, and adding (or scaling) with a 2nd position at 6.00. Due to scaling in with equal sizes, the trader has a cost average of 5.75.
Short Position: Position that will increase in price if the stock price decreases.
Short Term Strategy: This includes trades that would be held for a period of days and months.
Short Interest: This refers to the number of shares all traders around the world are currently holding as a short position against the stock.
Short Squeeze: his is when a stock suddenly starts moving up, and traders who are holding short positions start buying to cover their position, or their broker covers their position for them because they’ve hit a max loss on their account. This creates an extreme buy/sell imbalance and can lead stocks to making 50-100% moves intraday.
Slippage: Slippage is the difference between the price you thought you would trade at, and the price the trade actually went through at.
Stop Loss: This is a predefined price point that you set for your trades to close at a loss. A variation of this is also a trailing stop loss. (See below)
Stock ticker: A stock ticker is a report of the price of certain securities, updated continuously throughout the trading session by the various stock market exchanges.
Stock Split: Stock Split can change the price of a stock. Apple did a 7:1 stock split. The $700 stock multiplied all shares x 7 to reduce the price of the stock to $100. This means if you held 1000 shares at $700, you now own 7000 at $100.
Swing Trade: This is a style of trade that is held short term but longer than 1 night, usually for a few days or weeks.
Take Profit or Trim: This is a predefined price point that you set for your trades to close in profit.
Technicals: Is analysis of an assets chart. Used to figure out what prices would be a good entry and exit.
Trailing Stop Loss: The stop price moves with the market price when the market is moving in your favour; it stays in place when the market is moving against you.
Trendline: Trendlines are easily recognizable lines that traders draw on charts to connect a series of prices together or show some data’s best fit. The resulting line is then used to give the trader a good idea of the direction in which an investment’s value might move. These can be called support and resistance lines. They may also form patterns such as a descending triangle.
Volatile: Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security. Volatility is often measured from either the standard deviation or variance between returns from that same security or market index.
Volume: The number of shares traded that day or candle.
VWAP: Volume Weighted Average Price indicator that gives an average price while taking volume into consideration. You can find out more about it here.
