One of the first steps in day trading is to learn these basic day trading terms…
The following 15 day trading terms will help you hold your own in any conversation that surrounds day trading:
- When a day trader says “buy,” it means getting into a trade at its low point and waiting for the market to increase.
- When a day trader says “sell,” it means getting into a trade at its high point and waiting for the market to decrease.
- A charting icon that shows the open, close, high and low points of a specific market during a specific period of time.
- Buying stock shares with the intention of selling them in the same day and taking the small profit from the transaction.
- Short for Foreign Exchange
- This is the market in which foreign currencies are exchanged.
- Largest, most liquid market in the world.
- Financial contracts which obligate the buyer/seller to purchase/sell the asset at a future, predetermined day and time.
Gap Up/Gap Down
- When a stock opens at a higher or lower price point than when it last closed.
- One of the most common terms used in day trading.
- Short for point in percentage.
- Measurement unit which shows the amount of change in a currency pair found in the foreign exchange market.
When a day trader refers to their profit, they are referring to the amount of increase within a financial account created by different trades.
Day Trading Term Tip
If a trader has $10,000 in a trading account, but after making a trade has $12,000, the profit is equal to $2,000.
When a day trader refers to their loss, they are referring to the amount of decrease within a financial account created by different trades.
Day Trading Term Tip
If a trader has $10,000 in a trading account, but after making a trade has $5,000, the loss is equal to $5,000.
- Level of price in which buyers are overpowered by sellers, making if tough for the market to cross over.
- A style of day trading in which the trader takes advantage of very small changes in price within the market.
- Selling un-owned stock shares hoping to buy them back at a lower price point.
- Bid and Ask price difference.
- Level of price in which sellers are overpowered by buyers, making if tough for the market to cross over.
The general direction in which a market has moved in a certain period of time.
An “Uptrend” occurs when the market has been generally increasing over time.
A “Downtrend” occurs when the market has been generally decreasing over time (see below).
- Number of stock shares that have been traded during a specific amount of time.