Trading
Glossary

The lowest price at which a seller is willing to sell a security. Also known as the offer price, it represents the minimum price that someone is willing to accept for their shares.

A technical indicator that measures market volatility by calculating the average of true ranges over a specified period. ATR is commonly used to set stop-loss levels and determine position sizing.

The highest price that a buyer is willing to pay for a security. The bid price represents the maximum price that someone is prepared to pay for shares at a given moment.

A price movement outside a defined support or resistance level with increased volume. Breakouts often signal the beginning of increased volatility and potential trend changes.

A market condition characterized by rising stock prices and positive investor sentiment. Bull markets are typically defined by a 20% or more increase from recent lows, lasting several months to years.

A financial contract giving the holder the right, but not the obligation, to buy an underlying asset at a specified price within a certain time period. Calls are bullish instruments that profit from rising prices.

A type of price chart that displays the high, low, open, and closing prices of a security for a specific period. Each candlestick provides visual insight into market sentiment and price action patterns.

The practice of buying and selling securities within the same trading day. Day traders aim to profit from short-term price movements and typically close all positions before the market closes.

A payment made by a corporation to its shareholders, typically derived from profits. Dividends can be paid in cash or additional shares and represent a way for companies to return value to investors.

An investment strategy where you invest a fixed amount of money into a particular investment at regular intervals, regardless of the asset's price. This strategy helps reduce the impact of volatility on purchases.

Dividend Reinvestment Plan - a program that allows investors to automatically reinvest their dividend payments into additional shares of the same stock, often without paying brokerage commissions.

A type of moving average that gives more weight to recent prices, making it more responsive to new information. EMAs react more quickly to recent price changes than simple moving averages.

A company's net profit divided by the number of outstanding shares. EPS is a key metric used to evaluate a company's profitability and is often used in valuation ratios like P/E ratio.

Trading contracts that obligate the buyer to purchase, or the seller to sell, an asset at a predetermined price at a specific date in the future. Futures are used for both hedging and speculation.

A sophisticated options trading strategy that focuses on the rate of change in an option's delta relative to changes in the underlying asset's price. Gamma is highest for at-the-money options.

An order to buy or sell a security at a specific price or better. Buy limit orders are executed at the limit price or lower, while sell limit orders are executed at the limit price or higher.

The ease with which an asset can be converted into cash without affecting its market price. High liquidity means you can buy or sell quickly with minimal price impact, while low liquidity can lead to larger spreads and price volatility.

The total value of a company's shares, calculated by multiplying the stock price by the number of outstanding shares. Companies are typically classified as small-cap, mid-cap, or large-cap based on their market capitalization.

A financial theory suggesting that asset prices and returns eventually move back toward their long-term average or mean. This concept is fundamental to many trading strategies and risk management approaches.

A technical indicator that smooths price data by creating a constantly updated average price over a specific time period. Moving averages help identify trend direction and are commonly used in trading strategies.

Financial contracts that give the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price within a certain time period. Options include calls (right to buy) and puts (right to sell).

A trading strategy that identifies the high and low prices during the first few minutes of trading, then trades breakouts above or below this range. ORBs are popular among day traders for capturing early momentum.

The price level with the highest traded volume during a specific time period in volume profile analysis. POC represents the price where most trading activity occurred and often acts as support or resistance.

A financial contract giving the holder the right, but not the obligation, to sell an underlying asset at a specified price within a certain time period. Puts are bearish instruments that profit from falling prices.