Glossary of Day Trading Terms Every New Trader Should Know

Welcome to this comprehensive guide where we dive into the jargon of day trading. If you’re a beginner, these terms will undoubtedly boost your understanding of the trading world.

1. Day Trading

Day trading involves buying and selling financial instruments within a single trading day. The goal is to profit from short-term price fluctuations.

2. Bull Market

A bull market refers to a financial market where prices are rising or are expected to rise. It’s named after the way a bull attacks – moving its horns up in the air.

3. Bear Market

Opposite of a bull market, a bear market signifies a period where prices are falling, encouraging selling. Named after a bear’s downward swipe.

4. Bid and Ask

The bid price is the highest price a buyer is willing to pay for an asset. The ask price, on the other hand, is the lowest price a seller is willing to accept.

5. Broker

A broker is an individual or firm that charges a fee or commission for executing buy and sell orders submitted by a trader.

6. Margin Trading

Margin trading allows traders to buy more stocks than they can afford. It’s a practice of buying stock with money borrowed from a broker.

7. Technical Analysis

Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements.

8. Fundamental Analysis

Fundamental Analysis is a method used to evaluate an asset’s intrinsic value by examining related economic and financial factors.

9. Stop-Loss Order

This is an order placed to sell a security when it reaches a certain price. It’s designed to limit a trader’s loss on a position.

10. Volatility

Volatility refers to the degree of variation of a trading price series over time. It can be used to gauge the risk associated with a particular security.

Understanding these terms will help you navigate the world of day trading. Remember, knowledge is power. Happy trading!