Individuals who are new to trading tend to feel a bit overwhelmed. Our goal is to provide you with the information necessary to study the stock market by making it as easy as possible. Below is a trader’s glossary of stock market terms to assist individual investors who may be new to trading. You can also learn about additional financial terms in other postings in this site including the Stock Market Glossary listing, the Stock Trading Terminology post, the Stock Market Trading Terms listing, and the Stock Market Definitions posting, in addition to this glossary of stock market terms.

Glossary of Stock Market Terms S-Z

Simple moving average (SMA)
Adding prices together and smoothing the price data to obtain an average. ‘Moving’ is added because each day the new price information is added to the number, dropping the oldest data.

Stochastics
An oscillator measuring the position of closing prices compared to the trading range over a set period of time. %K refers to the fast stochastic, %D refers to the slow stochastic.

Stock Options awards the holder the right (but not an obligation) to buy or sell particular shares of stock for a set price within a fixed time period. They can be traded in very much the same way as their underlying stocks.

Stop Loss
Pre-determined price where you will exit a position if that price is reached.

Stop Order
A stop loss order is used to instruct your broker to close a position when it hits a predetermined price.

Stock
Owning shares of a stock with rights to ownership on the company’s earnings and assets.

Strike price
In options, a specific pre determined price where you can buy or sell the shares.

Short
Sell a stock to which you do not own the underlying security.

Support level
Level where buyers are known to step in and hold prices above that level.

Tick volume
The number of trades occurring during a specific time interval.

Trend
A price’s prevalent direction.

Trend-line
A line that can be drawn along a series of highs or lows. The  more points that can be connected, the more strength.

Support
A technical analysis term used to identify a floor(or level) lower than the current price of the stock, where previous demand ‘supported’ and price did not go past this point. The anticipation is that history will repeat itself and the price will stop declining at this level. (Not only is this term explained in this glossary of stock market terms, but it will also be addressed in the technical analysis section of this site).

Underlying Security
The stock an option taker has the right to buy or sell if they choose to exercise their option.

Volatility
Measurement of an underlying stock is expected to vary or fluctuate in a given time period

Volume
The number of transactions that took place within a trading day, indicating the number of buyers and sellers.

Weighted moving average
Another moving average where the most recent data is given greater value over the oldest data. (See additional different types of moving averages)

Traders have their own language and our listings of financial terms will have you speaking the lingo in no time! This glossary of stock market terms includes terms that are used in greater detail in our Japanese Candlesticks Category, our Technical Analysis Category, and illustrations in our Daily Market View.

 Stock Market Glossary (A-B)    Stock Market Terminology (C-E)
Stock Market Trading Terms (F-L)    Stock Market Definitions (M-R)
Glossary of Stock Market Trading Terms (S-Z)

Here you will find additional stock market definitions that we put into words to make it as easier for new and also non-investors to understand. Many of these stock market terms are also used in greater detail in our Japanese Candlesticks Category, our Technical Analysis Category, and in illustrations in our Daily Market View.

We hope that you will find this information useful to your stock market trading education!

Stock Market Definitions M-R

Market Maker is an exchange member whose function it is to assist in the making of a market. The broker/dealer offers both  bids and offers, when there are no public buy or or sell orders.

Market Order is an order to buy or sell options at the current market price.

Moving Average Convergence-Divergence\ (MACD)
A combination of three exponentially smoothed moving averages.

Mutual Fund: Fund run by an investment company that raises money from shareholders and then invests it in bonds, options, stocks, commodities or money markets.

Naked Option or Uncovered Option is where an investor buys or sells an option without owning the underlying security.

On-Balance Volume (OBV)
This stock market definition means cumulative volume. If prices close higher than the previous trading session, the volume for the higher day is added to the OBV. On the other hand, volume is subtracted from the OBV on days when prices close lower than the prior day.

Open interest
In futures contracts it is the number of outstanding contracts. It is equal to the total number of long and short positions.

Overbought
A term used when a price has moved too far, too fast in an upward direction.

Oversold
A term used when price has moved too far, too fast in a downward direction.

Open Interest is the total number of outstanding open contracts in a particular option series.

Out of the Money
In options a call is out-of-the-money when the stock price is below the strike price. (conversely, a put option is out-of-the-money when the stock price is higher than the strike price.

Overvalued
A term used to describe when a stock is trading at a higher than reasonable price.

Paper trade
A popular way individuals new to investing can simulate real-life trade circumstances, using imaginary (or paper) money.

Position
A term used to describe a current open trade. i.e. If you bought 100 shares of XYZ,  your position  would be long 100 shares of XYZ .

Portfolio: The combined holdings of an individual’s of  assets, including stock, bonds, commodities, real estate investment, etc

Protective Stop
To limit losses on an open position, investors place a ‘protective stop’, or a ‘stop order’ to close the position at a predetermined level.

Put Options
The right (but not the obligation) to sell the underlying stock at a predetermined price within a certain time period.

Relative Strength Index (RSI)
An oscillator developed by Welles Wilder, which compares the ratio of positive to negative closes over a specific time period.

Resistance Level
A trading level where evident selling holds the prices from advancing.

Retracement
Price movement in the opposite direction of the recent trend.

Reverse Stock Split
A balanced decrease in the shares of stock held by stockholders. i.e. a 1-for-2 stock split would result in stockholders owning 1 share for every 2 shares owned before the split. (companies will initiate a reverse split to increase the market price of its own stock)

Resistance
A technical analysis stock market definition used to identify a price level that is higher than the current stock price and where the stock has previously traded but failed to break through.

Reward / Risk Ratio
Pertains to the amount of risk involved in a position as compared to the potential profit. Divide the maximum profit by potential loss. A risk/reward ratior of 1 or better mean the potential profit is higher than the potential risk.

Return on Investment
The percentage of profit (or loss) you might make on an investment.

Stock Market Glossary (A-B)    Stock Market Terminology (C-E)
Stock Market Trading Terms (F-L)    Stock Market Definitions (M-R)
Glossary of Stock Market Trading Terms (S-Z)

Stock Market Terminology C- E 

Candlestick Signals
Japanese candlesticks also provide more of a real time depiction of market sentiment whereas bar charts often only signify market noise. Candlesticks utilize one to three time periods and are able to visually block out market noise unlike bar charts. Bar charts will actually allow spikes to highs and lows to be prominent in their data unlike candlesticks which are able to focus on what the market actually did to force price action during a period of trading.

Confirmation
When a move or anticipated action is verified by another indicator.

Congestion area
When price movement stays within a trading range for an extended time period.

Call Option
An option giving the holder the right, (but not the obligation) to buy a set amount of an underlying stock at a specified price within a fixed timeframe. Investors purchase calls when they anticipate a price increase. 

Commodities
Products that are traded on the commodities exchange. Such as agricultural products, timber, oil and metals. Commodities are the basis for futures contracts.

Contract Size
The amount of underlying stock covered by an option contract. In the U.S this is 100 shares.

Closing Order
An order placed to close an open position, whether it be a sell to close or a buy to close order.

Day Order
An order that expires at the end of the trading day if it is not filled.

Day trading
The practice of making multiple trades which you plan to open and close within the same trading day. **This is personally one of our favorite trading styles at Hit and Run Candlesticks. Check out the Profit Scanner we use to grab quick profits.

Dividend
Distribution to shareholders of cash or stock declared by the company’s board of directors.

Derivatives 
A financial instrument where the value is ‘derived’ based upon the value and characteristics of another financial instrument. (Stock Options are derivatives of the corresponding stock.)

Divergence
Difference between indicators after a price move. One indicator confirms the move, while another indicator shows the opposite.

Double bottoms
Prices forms a W-shaped bottom where prices reverse at just about the same lows.

Double tops
Price forms an M-shape where the highs are approximately the same.

Exchange Traded Funds or ETF’s
Exchange traded funds, or ETFs, are securities that track on an index, a commodity, or a basket of assets like an index fund, but that trades like stock on the major stock exchanges.

Exponential moving average (EMA)
Used in Technical Analysis and is similar to a simple moving average, except greater weight is given to the most recent price data and therefore moves more quickly.

Earnings
Income of a business (revenue minus expenses).

Earnings per share or EPS:
Income (earnings) for a particular period (typically quarterly or end-of-year) divided by the average number of shares outstanding during that period.

Expiry Date
Date that an option contract expires.

Exercise
The procedure of satisfying the put option contract and buying or selling the shares.

 Stock Market Glossary (A-B)    Stock Market Terminology (C-E)
Stock Market Trading Terms (F-L)    Stock Market Definitions (M-R)
Glossary of Stock Market Trading Terms (S-Z)

Here you will find stock trading terms that we put into words to make it easier for new and also non-investors to understand. Individuals who are new to trading tend to feel a bit overwhelmed so our goal is to provide you with the information necessary to study the stock market by making it as easy as possible. We also do this in our Technical Analysis section and in our Japanese Candlesticks section of this website. In these sections you can learn about the different types of Japanese Candlestick patterns utilized by individual traders and also learn of the most profitable technical indicators available.

Below is a trader’s dictionary of common stock market trading terms to assist individual investors who may be new to trading. Before viewing the terms below, take a look at the listings of financial terms found in our Stock Market Glossary and the Stock Market Terminology postings.

We hope that you find this information useful in your stock market education.

Stock Market Trading Terms F-L

Fibonacci numbers
A sequence of numbers that are derived by adding the two previous numbers to obtain the next number. (The first number of the sequence is 0, the second number is 1, and each subsequent number is equal to the sum of the previous two numbers of the sequence itself.) The series of numbers produces ratios used by technical analysts to plot trading algorithms. Classic forms include: the Fibonacci fan, Fibonacci Arc, Fibonacci Retracement and the Fibonacci Time Extension. A popular indicator used in Technical Analysis.

Fair Value is used in options to depict the value by mathematical calculations.

Fundamental Analysis is the evaluation of a companies fiscal details to form an opinion as to potential price moves in the future.

Gap
A price void often caused by news after the stock market closes. When the market reopens, it jumps (or gaps) to a new high or low causing a hole (or gap) in the chart pattern. 

Good Until Canceled is an order that remains effective until it is cancelled or filled.

Greeks is the mathematical criterion used to calculate stock option prices.

Hedge is to protect against potential losses.

High of Day simply stated, is the highest price a stock trades during the day.

In the Money
A call option is in-the-money when the underlying stock price is higher than the strike price of the call, and a put option is in-the-money when the stock price is below the strike price.

Inside session
Trading session where the high and low of a trading period stays within the high and low of the previous trading session.

Intra-day
Trading periods that begin and end within a one-day time frame.

Intrinsic Value
This stock market trading term is the difference between the current stock price and the strike price. This is the amount by which an option is in the money, and indicates the value of an option if it were to expire right now.

IPO: A company’s first sale of stock to the public

Limit Order is an order to buy or sell options at a certain, or limited price.

Long; if you go long in the market you are buying

Liquidity is how easily you may buy or sale an equity. The higher the volume, the more liquid. This is why you set filters on your stock scanning tool. It can become dangerous to be in a stock that is not liquid, making it difficult to find buyers.

 Stock Market Glossary (A-B)    Stock Market Terminology (C-E)
Stock Market Trading Terms (F-L)    Stock Market Definitions (M-R)
Glossary of Stock Market Trading Terms (S-Z)

As mentioned above, many of these stock market trading terms are used in greater detail in our Japanese Candlesticks Category, our Technical Analysis Category, and in also as illustrations in our Daily Market View.

Individuals who are new to trading tend to feel a bit overwhelmed with all the new stock market terms. Our goal is to provide you with the information necessary to learn about and study the stock market by making it as easy as possible. We try to take stock market definitions and put them into words that make it as easier for new and even non-investors to understand. We also do this in our Japanese Candlesticks section and the Technical Analysis section of this site. In these sections you can learn about the most profitable technical indicators available and also about the different types of Japanese Candlestick patterns utilized by individual traders.

We hope that you find this information useful in your stock market education.

Stay tuned to our Blog for more stock market terms!

Stock Market Glossary from A to B

Ask (or Offer)
The price Market Makers are willing to sell. The current price traders are able to purchase a security.

All-or-None Order
A method to place an order, that must be filled completely or your trade will not take place.

Assets
Everything a company owns, such as money, securities, equipment and real estate. Assets include everything that is owed to the company and can be found on a company’s balance sheet.

At the Money
Used in options, where the strike price is the same as the current stock price.

Averaging Down
Buying more of a security at a lower price than one paid for the initial asset. The intention of averaging down is to reduce the overall average cost per unit.

Bar Chart
The usual graphic portrayal of price activity using vertical lines to illustrate high to low prices during a time period. The opening price is represented by a short horizontal line attached to the left side of a vertical line. The closing price is represented with a horizontal line to the right. Price is denoted on the vertical scale of the chart. Time is denoted on the horizontal scale.

Breakout
Price  movement that pushes through previous resistance or support levels.

Bearish
Outlook someone has where they believe the stock market or individual security will continue to go down in price.

Bid Price
Price option buyer is willing to buy.

Bullish
Outlook someone has where they believe the stock market or individual security will continue to go up in price.

Block Trades
Trades greater than or equal to 10,000 shares in size and greater than or equal to $100,000 in value.

Blue Chip Stocks
Stocks of established companies that are well known with a history of dividend payments and/or other strong investment characteristics.

Bonds
Promissory notes issued by a corporation or government to its lenders, usually with a set amount of interest for a specific period of time.

Broker or Brokerage Firm
A securities firm which serves as the link between investors and the stock market. Brokers act as agents for traders and charge varying commissions for their services. A Full Service Broker deals directly with traders and executes your orders. You pay higher commissions for their service, but they can come in handy if you are new to trading. A discount broker works at a firm that offers low commission rates.

Buy To Close
Buy back an option contract to close out a position that you previously shorted.

Bear Market
Strong downtrending market in which stock prices are falling.

Bull Market
Strong uptrending market in which stock prices are rising.

Bid/Ask Spread
The difference in price between the bid and ask price in an option contract.

Buy to Open
Option trading order to go long (buy) a position in an option contract.

Many of the terms used in the stock market glossary are used in greater detail in our Japanese Candlesticks Category, our Technical Analysis Category, and illustrations in our Daily Market View.

  Stock Market Terminology (C-E)
Stock Market Trading Terms (F-L)
Stock Market Definitions (M-R)
Glossary of Stock Market Trading Terms (S-Z)
Stock Market Glossary (A-B)