133 Day Trading Terms Every Trader Should Know: The Glossary

Read one momentum trader's post and you can hit six pieces of jargon in the first two sentences. This is the cheat sheet I wanted when I started: 133 terms, each in one or two sentences, linked to the full guide wherever we have one.

Quick Answer: What Are Trading Terms?

The groups follow the order you run into the words. The quote and your order come first, because that's where money changes hands. Then your account, the market, the chart, risk and slang, and last the investing words that still turn up in trading conversations. Hunting for one word? The A to Z index at the bottom jumps straight to it.

I build a chart grader, so before writing this I read the glossaries that rank for it. Several still print the $25,000 pattern day trader rule as if it were current, one gets its own bid-ask spread example wrong, and some describe a stop-loss as if it caps your loss. The entries below that touch a rule cite FINRA, the SEC, investor.gov or NYSE directly, and the chart section marks which words you can actually see on a chart. It's general education, not advice, and nothing here recommends a broker or a trade.

What Do Traders Mean by Bid, Ask, Spread and Order Types?

These are the words between you and a fill. Every trade crosses a bid or an ask, and the order type decides what you give up to get filled, a little price or a little certainty.

Bid

The highest price a buyer is offering for a stock right now. Sell with a market order and you usually get filled at or near the bid.

Ask (offer)

The lowest price a seller will accept right now, also called the offer. A market buy order usually fills at or near the ask.

Bid-ask spread

The gap between the bid and the ask, so a $50.00 bid and a $50.02 ask is a 2-cent spread. You pay it whenever you buy at the ask and sell at the bid.

Market order

An order to buy or sell right away at the best price available. It guarantees the order gets executed but not the price, so the fill can differ from the last price you saw.investor.gov on types of orders

Limit order

An order to buy or sell only at your price or better. You control the price, but if the market never reaches it you don't get filled.

Stop order (stop-loss)

An order that becomes a market order once price reaches your stop price, usually placed to get you out of a losing trade. Because it then fills like a market order, a fast market or a gap can fill you well past the stop.investor.gov on stop ordersAll the order types

Trailing stop

A stop that follows price by a set distance as the trade moves your way and stays put when price comes back. It protects part of an open gain, with the same gap risk as any other stop.

Fill (execution)

The trade itself, meaning the price and number of shares you actually got. A partial fill means only some of your order traded.

Slippage

The difference between the price you expected and the price you got. It can go either way, it isn't the same thing as the spread, and it's usually worst in fast markets and on stop orders.

Liquidity

How quickly shares can change hands without moving the price much. Liquid stocks usually have tight spreads and steadier fills than thin ones.investor.gov on liquidity

Volume

The number of shares traded in a period, drawn as bars under most charts. Rising volume behind a move means more traders are taking part in it.

Level 2 (order book)

A live list of the bids and offers waiting at each price, beyond the single best bid and ask. It comes from your broker's data feed and doesn't show on a price chart.

What Do Long, Short, Margin and PDT Mean Now?

Account words never show up on a chart, and they're where most of the out-of-date definitions live. The PDT entry is the big one. FINRA's Regulatory Notice 26-10 replaced the pattern day trader rule and its $25,000 minimum with intraday margin rules effective June 4, 2026. Brokers can phase that in until October 20, 2027, so what applies to your account depends on your broker.

Long

Owning shares because you expect the price to rise. You make money if you sell higher than you bought.

Short (short selling)

Selling shares you don't own, borrowed through your broker, and buying them back later at what you hope is a lower price. Your loss has no fixed cap, because a stock can keep rising.investor.gov on short sales

Position

The shares or contracts you hold right now, long or short. Being flat means you have no position.

Short squeeze

A fast rise fed partly by short sellers buying back shares to cut their losses, which pushes the price higher still. It usually needs heavy short interest and a catalyst.

Short interest

The number of a stock's shares currently sold short, often shown as a percentage of the float. It's reported on a delay, so it's never a live number.

Broker

The firm that holds your account and sends your orders to the market. US brokers are regulated by the SEC and FINRA.

Margin

In a stock account, money your broker lends you to buy securities, with your account as collateral. In futures, margin is a good-faith deposit you post to hold a contract, which is a different thing.Futures margin, in the futures guide

Leverage

Controlling a position bigger than your own money, so gains and losses both grow relative to your account. Margin is the loan (stocks) or the deposit (futures) that makes it possible.

Margin call

A demand from your broker to add cash or securities when your margin account falls below its requirement. The firm can also sell your holdings to cover the shortfall without telling you first.investor.gov on margin calls

Buying power

How much you can buy right now in your account. In a margin account your broker sets it from its margin rules, which are moving to FINRA's intraday margin standards, so go by the number your broker shows.FINRA on the new intraday margin rules

Pattern day trader (PDT)

The old FINRA label for a margin account that made four or more day trades in five business days, which then had to hold $25,000. FINRA replaced it with intraday margin rules effective June 4, 2026, and brokers can phase the change in until October 20, 2027, so check yours.FINRA Regulatory Notice 26-10investor.gov on pattern day traders

Equity

In your account, equity is what's left if you closed every position and repaid any margin loan. In the market, an equity is a share of a company, which is why stocks get called equities.

Settlement (T+1)

The official handover of shares and cash after a trade. US stock trades settle one business day after the trade date, called T+1, the standard since May 28, 2024.SEC on the move to T+1

P&L

Profit and loss, for a single trade or a day, week or whole account. Realized P&L comes from closed trades, and unrealized P&L is what your open positions show right now.

Market Basics: Stocks, Sessions, Float and Catalysts

The words for what you're trading and when. Regular US stock hours run 9:30 a.m. to 4:00 p.m. ET, per NYSE's trading hours page. Pre-market and after-hours times depend on the venue and your broker, and many brokers take only limit orders outside the regular session.

Stock (share)

A stock is part ownership of a company, and a share is one unit of it. In trading talk the two words mean the same thing.

Exchange

A regulated marketplace where buy and sell orders meet, like the NYSE or Nasdaq. Plenty of US stock volume also trades off-exchange, at venues your broker routes to.

Index

A basket of stocks tracked as a single number, like the S&P 500 or the Nasdaq-100. You can't buy an index directly, so traders use ETFs or futures that follow it.What the S&P 500 holds

Ticker symbol

The short code a stock trades under, like AAPL for Apple.

Market maker

A firm that keeps quoting both a bid and an ask in a stock, ready to trade either side. It earns the spread in return for that liquidity.

Bull market and bear market

A bull market is a long stretch of rising prices. A bear market generally means a broad index falling 20% or more over at least two months.investor.gov on bear markets

Bullish and bearish

Expecting prices to rise (bullish) or fall (bearish), said of a chart, a market or a trader.

Correction

A drop of roughly 10% to just under 20% from a recent high. Past 20% on a broad index, people start calling it a bear market.

Volatility

How much and how fast a price swings. Higher volatility means bigger moves both ways, so the same trade idea needs a wider stop.

Market cap

Share price times shares outstanding, the quick measure of how big a company is. It's how indexes and scanners sort stocks into size buckets.

Large cap and small cap

Size labels based on market cap, running from mega and large caps down to small and micro caps. The cutoffs vary by index provider, and the Russell 2000 is the best-known small-cap index.

IPO

Initial public offering, the first time a company sells shares to the public and lists on an exchange. After that, the stock trades like any other.

ETF

Exchange-traded fund, a fund holding a basket of assets (often an index) that trades on an exchange like a single stock. Leveraged and inverse ETFs aim for a multiple of one day's move and behave differently over longer holds.

Earnings and EPS

A company's profit for a quarter or year, and EPS is that profit divided by shares outstanding. Earnings reports are a common catalyst for big gaps.

Rally

A strong run higher, in one stock or the whole market.

Pre-market

Trading before the 9:30 a.m. ET open, with start times that depend on the venue and your broker. Volume is thinner, spreads are wider and many brokers take only limit orders.

After-hours

Trading after the 4:00 p.m. ET close, until a cutoff that depends on the venue and your broker. The SEC warns that spreads tend to be wider then, and many brokers accept only limit orders.SEC bulletin on after-hours trading

Float

The shares actually available to trade, which excludes restricted shares held by insiders. There's no official cutoff for a low float stock, so treat any number you hear as one trader's filter.

Catalyst

The news behind an unusual move, such as earnings, an FDA decision, a big contract or an analyst call. Momentum traders want to know the catalyst before they trust a gap.

Stock in play

A stock getting unusual attention today, usually from a catalyst, a gap and heavy relative volume. It's where day traders focus, because that's where the volume is.

Penny stock

In trading talk, a low-priced stock of a small company, usually under $5 a share. The SEC's legal definition excludes most exchange-listed stocks, so many cheap Nasdaq names are low-priced stocks rather than legal penny stocks.

Trading halt (circuit breaker)

A pause in trading, either in one stock (pending news or a limit move) or across the whole market. Market-wide circuit breakers trigger on S&P 500 declines of 7%, 13% and 20% in a single day.investor.gov on circuit breakers

Trading styles

Mostly a question of how long you hold. The shorter the hold, the more the spread and your fills matter.

Day trading

Opening and closing trades within the same session and holding nothing overnight. Investor.gov calls it extremely risky, with the potential for big losses in a short time.investor.gov on day trading

Swing trading

Holding trades for a few days to a few weeks to catch one swing of a trend. You take on overnight and weekend gap risk in exchange for bigger moves.

Scalping

Very short trades, often seconds to a few minutes, for small moves many times a day. Spreads, commissions and slippage eat a bigger share of each win.

Momentum trading

Trading in the direction of a strong move, on the idea that strong moves tend to keep going for a while. Momentum day traders usually want a catalyst, high relative volume and a clean pullback to enter on.

Algorithmic trading (HFT)

Algorithmic trading means a program places orders by rule, and high-frequency trading (HFT) is the version that trades in fractions of a second.

Which Trading Terms Can You Actually See on a Chart?

This group, plus volume from the first one. Here are the main ones on a single hypothetical chart. A stock gaps up, trends higher, prints its high of day and pulls back to the 9 EMA, above support and VWAP, on lighter volume.

Chart and indicator words

Trend

The overall direction of price, set by its swings. An uptrend makes higher highs and higher lows, and a downtrend makes lower highs and lower lows.

Support

A price zone where buyers have stepped in before and stopped a decline. Treat it as a zone rather than an exact price, and expect it to turn into resistance once it breaks.

Resistance

A price zone where sellers have capped rallies before. A break above it on rising volume is what breakout traders wait for.

Pullback

A short move against the trend before it carries on, like a few red candles in an uptrend. Buying one is the classic with-trend entry, and the hard part is telling it apart from a breakdown.The EMA pullback setup

Range (consolidation)

Price moving sideways between a clear high and a clear low. A tight range after a strong move is where many continuation setups form.

Gap

Empty space on a chart between one candle's close and the next candle's open. Most stock gaps happen overnight, between one session's close and the next open.

Candlestick

A bar showing one period's open, high, low and close, with a body between the open and close and wicks out to the extremes. A green (or hollow) candle closed above its open, and a red one closed below it.

Moving average (SMA)

The average closing price over the last set number of candles, drawn as a line that smooths out the noise. A simple moving average (SMA) weights every candle equally.

EMA

Exponential moving average, a moving average that weights recent candles more, so it turns faster than an SMA. Day traders watch the 9 and 20 EMA as moving support in a trend.

VWAP

Volume-weighted average price, the session's average price weighted by how many shares traded at each price. It resets every session, and many intraday traders read price above it as buyers in control.

RSI

Relative Strength Index, a 0 to 100 oscillator comparing recent gains with recent losses, with 70 and 30 as the usual overbought and oversold lines. In a strong trend it can stay overbought for a long time.

Bollinger Bands

A moving average with bands set two standard deviations above and below it by default. The bands widen when volatility rises and squeeze together when it drops.

MACD

Moving average convergence divergence, the gap between a fast and a slow EMA, plotted with a signal line and a histogram. Crosses of the signal line and the zero line are what most traders watch.

ATR

Average true range, the average size of each candle's full range, gaps included, over recent periods. Traders use it to set stops that fit how much a stock actually moves.

Relative volume (RVOL)

Current volume compared with the stock's average volume, often for the same time of day. An RVOL of 3 means three times the usual activity.

Fibonacci retracement

Lines at 38.2%, 50% and 61.8% of a prior move, used to estimate where a pullback might stop. They mean more when they line up with a real level.

Divergence

Price and an oscillator like RSI or MACD disagreeing, such as a higher high in price with a lower high in the indicator. It hints that momentum is fading before price shows it.

Trend line

A line drawn across the swing lows of an uptrend, or the swing highs of a downtrend. A break of it is an early warning that the trend is weakening.

Channel

Two parallel lines that contain price, sloping up, down or flat. Traders watch the edges for bounces and breaks.

Market structure (BOS, CHoCH)

The pattern of swing highs and swing lows that defines a trend. A break of structure (BOS) takes out the last swing in the trend's direction, and a change of character (CHoCH) is the first break against it.

Indicator

Any calculation plotted from price or volume, such as an EMA, VWAP, RSI or MACD. Indicators are built from price, so they lag it.

Technical analysis

Reading price, volume and indicators to judge where price might go next. Day trading runs almost entirely on it.

Fundamental analysis

Judging a company by its business, like revenue, earnings, debt and valuation. It matters more for holds of months or years than for a five-minute chart.

Setup, pattern and candle words

The names traders give to specific shapes and entries. Each one has its own page, and the chart pattern library covers the rest of the catalog.

Breakout

Price pushing through resistance, or below support, and holding beyond it. A breakout that fails and snaps back is a fakeout.Breakout vs break and retest

Break and retest

A breakout followed by a pullback to the broken level, which then holds as support. Many traders enter on the retest instead of the first push.

Bull flag

A sharp move up (the pole) followed by a short, orderly drift lower on lighter volume (the flag). The usual trigger is a break of the flag's high.The bull flag setup

Opening range (ORB)

The high and low of the first minutes after the open, often the first 5, 15 or 30. An opening range breakout (ORB) trades the move out of it.

Gap and go

Buying a stock that gapped up on a catalyst as it pushes through the pre-market high early in the session. It only works while the gap holds.

Red to green

A stock that opens below the prior close (red on the day) and then trades back above it (green). That prior close is the trigger level.

Fair value gap (FVG)

An ICT term for a three-candle imbalance where the first and third candles' wicks don't overlap. Traders watch for price to come back and fill it.

Order block

In ICT terms, the last opposite-colored candle before a strong move that breaks structure. Traders mark its range as a zone where price may react when it returns.Smart money concepts

Liquidity sweep (stop hunt)

Price spiking through an obvious high or low where stops cluster, then snapping back. Stop hunt is the name for the same move from the side of the trader who got stopped.Stop hunting explained

Confluence

Several separate reasons lining up at one price, like support, VWAP and the 20 EMA in the same spot. More independent reasons usually means a better-defined trade.

Doji

A candle that opens and closes at almost the same price, showing indecision. It means more at a key level than in the middle of a range.

Engulfing candle

A candle whose body completely covers the prior candle's body, in the opposite direction. A bullish engulfing at support in an uptrend is one of the cleaner candle signals.

Hammer

A candle with a small body near the top and a long lower wick, where sellers pushed price down and buyers pushed it back. Where it prints matters more than the shape.

Head and shoulders

A reversal pattern of three peaks with the middle one highest and a neckline under them. The signal is a break of the neckline.Every chart pattern, in one library

Double top and double bottom

Two failed pushes at about the same high (top) or low (bottom). The pattern is confirmed when price breaks the level between them.

Dead cat bounce

A short rally after a steep drop that fails and rolls back over. It looks like a recovery until the next lower high.

Bull trap and bear trap

A breakout above resistance that quickly fails and traps the buyers who chased it. A bear trap is the same thing below support.

Overextended

A stock that has run far above its moving averages or VWAP without a pullback. Buying there is chasing, because the logical stop is a long way down.

Chart word or account word?

No glossary I read splits the words this way, and it's the split that matters most once you start using any chart tool. Some words describe what price did. Others describe your order, your account or data that never appears on a chart.

A screenshot can answer the yes rows. The no rows need your broker, a scanner or the news, and staring at candles won't tell you the float. If you want the chart side in more depth, the guide to reading price action builds on most of these words.

Which of these words show up in a SnapPChart grade?

Mostly the yes rows. SnapPChart grades one chart screenshot. From that image the grade reads the trend structure, support and resistance zones, where price sits against the 9 and 20 EMA and VWAP, MACD, volume, the pullback, and candle signals like engulfing candles, hammers and dojis, and it grades with-trend continuation setups only (a pullback in an uptrend for a long, a rally in a downtrend for a short). It also shows a market structure and ICT read, such as liquidity sweeps, fair value gaps and order blocks, beside the grade without scoring on it. It has no dedicated RSI or Bollinger Band read, and it can't see the float, the spread, Level 2, the news, your account or your PDT status, so those checks stay yours. Your first grade is free and shows the setup's grade and the general read. Entry, stop, targets and the trade plan come with a paid plan. There's more on how AI chart analysis works from one screenshot, and the AI trading guide's section on what AI can't see applies here too.

What Do Risk Words and Trader Slang Mean?

Risk words decide if you're still trading next month. They're also the least exciting group on this page, which is probably why so many people learn them last.

Risk management

The rules that stop one trade or one bad day from doing real damage, like a fixed risk per trade, a daily loss limit and a stop on every position. It decides how long you last more than any entry does.

Risk/reward ratio

What you stand to make versus what you stand to lose, measured from entry to target and from entry to stop. Risking $1 a share to make $3 is 3:1.Breakeven win rate calculator

Position size

How many shares you buy, worked out from your stop distance and the dollars you're willing to lose. A wider stop means fewer shares for the same risk.Position size calculator

Drawdown

The drop from your account's peak to its lowest point before a new high. A 50% drawdown needs a 100% gain to get back to even.

Averaging down

Buying more of a losing position to lower your average cost. For a day trader it's usually how a small loss becomes a big one.

Price target

The price where you plan to take profit, or an analyst's estimate of where a stock is headed. On a chart it's usually the next resistance level.

Trading plan

Your written rules for what you trade, how you enter, where the stop goes and when you're done for the day. You write it before the session so you aren't making it up mid-trade.

Trading journal

A record of every trade with the setup, entry, stop, exit, result and what you were thinking. It's how you find out which setups actually pay you.

Paper trading

Practicing with simulated money on live market data. It teaches the mechanics, though fills are kinder than real ones and the fear is missing.

Backtesting

Testing a set of trading rules against past charts to see how they would have done. The usual trap is tuning the rules until they fit the past.

Revenge trading

Jumping into a trade to win back a loss right away, usually bigger and sloppier than the trade before. Overtrading is its cousin, too many trades with no real setup.

Slang you'll see in trading posts

Translate a trading post

Here's the kind of post you'll see on any busy morning, written by me with a ticker that doesn't exist, translated phrase by phrase.

Every word decoded, and you still can't tell if it's a good trade. Is the float actually low? Is 6x relative volume early in the move or after it already ran? How far below the entry is the PM low, and is there room for 3R before the high of day? The vocabulary gets you into the conversation. Judging the setup is the part that takes practice, which is the whole point of a trading edge.

Investing Words You'll Still Hear as a Trader

Day traders rarely use most of these, but they come up on financial news, in your broker's app and at tax time. One line each, and none of it is tax advice.

Dividend

Cash a company pays its shareholders out of profits, usually every quarter. Buybacks are the other main way companies return cash.

Yield

Yearly income from an investment as a percentage of its price, like a stock's dividend yield or a bond's yield.

P/E ratio

Price-to-earnings, the share price divided by earnings per share. It's a rough gauge of how much the market pays for each dollar of profit.

Portfolio

Everything you hold, across stocks, funds, bonds and cash, looked at as a whole.

Diversification

Spreading money across different holdings so one bad position can't sink the whole account.

Asset class

A broad category of investments that tend to behave alike, such as stocks, bonds, cash, commodities or real estate.

Arbitrage

Profiting from a price difference for the same asset in two places, a gap fast traders usually close almost instantly.

Hedge

A position that offsets risk in another, like an inverse ETF held against a portfolio of large US stocks. It costs something, and an inverse-fund hedge held for weeks can drift from the cover you think you have.

Bond

A loan to a government or company that pays interest and returns the principal at maturity.

Mutual fund

A pooled fund priced once a day after the close, where an ETF trades all session long.

Blue chip

A large, long-established company with a solid record, the kind you find in the Dow Jones Industrial Average.

Beta

How much a stock has tended to move compared with the overall market, where 1 means in step. A beta of 2 means it has historically moved about twice as much.

Capital gain

Profit from selling something for more than you paid. In the US, gains on positions held a year or less are short-term and taxed as ordinary income, which covers nearly every day trade.

Wash sale

A US tax rule that disallows a loss if you buy the same or a substantially identical stock within 30 days before or after selling it at a loss. Active traders hit it often, which is one more reason to keep good records.

Derivative

A contract whose value comes from something else, like a stock, an index or a commodity, with futures and options the common examples.

Futures and options, briefly

Neither is a stock, and both deserve more than a line before you trade them.

Futures

A contract to buy or sell something at a set price on a set future date, traded on margin. Most traders close the contract before it expires.Micro futures

Option

A contract that gives you the right to buy or sell a stock at a set price by a set date, with no obligation to use it.

Call

An option to buy at the strike price, which gains value when the stock rises.

Put

An option to sell at the strike price, which gains value when the stock falls.

Strike price

The fixed price at which an option lets you buy (call) or sell (put) the stock.

Expiration

The last date an option or futures contract can be traded or used, and an out-of-the-money option is worthless after it.

All 133 terms, A to Z