📖 Trading Terminology

----- 📖 TRADING TERMINOLOGY -----

A reference glossary of terms used throughout this Discord.
You don’t need to memorize this — you’ll understand it faster by seeing it in real trades.

Ticker

The stock’s trading symbol (e.g., AAPL, NVDA, TSLA).
This is what you type into your broker or charting platform to pull up a stock.

Shares

Units of stock you buy or sell.
If you buy 100 shares of a stock at $10, you’ve put $1,000 into that trade.

Price Action

How a stock is moving on the chart — without relying heavily on indicators.
This includes structure, levels, candles, and how price reacts at key areas.

Entry

The price where you enter a trade.
Example: Buying at $10.50 as the stock breaks resistance.

Exit

The price where you close the trade.
This could be for profit or to cut a loss.

Average Entry

Your overall entry price if you entered in multiple parts.
Example:

Buy at $10
Add at $11
→ Average entry ≈ $10.50
.

A trade you are currently in (open trade).

Position Size

How much capital or how many shares you put into a trade.
Example: $1,000 position vs $5,000 position — same setup, very different risk.

Starter Position

A smaller initial entry before full confirmation.
Used when you want exposure early but still leave room to add.

Add / Adding

Increasing your position after entering.
Usually done when the trade starts working in your favor.

Trim

Selling part of your position to lock in profit while keeping some exposure.

Full Exit

Closing the entire position — you’re completely out of the trade.

Scaling In

Entering a trade in pieces instead of all at once.
Helps reduce risk if your timing isn’t perfect.

Scaling Out

Exiting a trade in pieces instead of all at once.
Example: take partial profit at +5%, let the rest run.

PnL (Profit and Loss)

The result of your trade — either profit or loss.

Unrealized PnL

Profit or loss on a trade that is still open.

Realized PnL

Profit or loss after the trade is closed.
.

An order that executes immediately at the current market price.
You’ll get filled, but not necessarily at the exact price you see.

Limit Order

An order that only fills at your chosen price or better.
You control price, but it may not fill.

Fill

When your order actually executes.

Partial Fill

When only part of your order gets filled (common in lower liquidity stocks).

Slippage

When you get filled at a worse price than expected.
Example: you try to buy at $10, but get filled at $10.15 because price moved quickly.

Bid

The highest price someone is willing to pay.

Ask

The lowest price someone is willing to sell for.

Spread (Bid-Ask Spread)

The difference between bid and ask.
Example:
Bid = $10.00
Ask = $10.10
Spread = $0.10

Wider spreads = harder to get clean entries/exits.

Liquidity

How easy it is to enter and exit a trade without moving the price too much.
High liquidity = smoother trading
Low liquidity = more slippage and volatility

Volume

The number of shares being traded.
Higher volume usually means more interest and stronger moves.

Relative Volume (RVOL)

How current volume compares to normal volume.
Example:
RVOL = 2.0 → trading at 2× its usual volume

This often signals unusual activity.
.

The number of shares available for public trading.

Typical ranges:

Low float: under 20M shares
Mid float: 20M–100M
High float: over 100M

Lower float stocks tend to move faster because there are fewer shares available.
Higher float stocks tend to move more slowly and smoothly.

Market Cap (Market Capitalization)

The total value of a company.
Formula: Share Price × Shares Outstanding

Typical ranges:

Small cap: under $2B
Mid cap: $2B–$10B
Large cap: over $10B

Premarket

Trading that happens before the market opens.
Usually lower volume and more volatile.

After Hours

Trading that happens after market close.

Gap Up

When a stock opens higher than the previous day’s close.

Gap Down

When a stock opens lower than the previous close.

Catalyst

News or an event that triggers a stock to move.
Examples: earnings, FDA approval, contract win, sector news.
Catalysts often drive momentum setups.

Trend

The overall direction of the stock.

Uptrend

Higher highs and higher lows — consistent upward movement.

Downtrend

Lower highs and lower lows — consistent downward movement.

Runner

A stock that keeps trending hard over multiple days without giving back much.
We track runners because they often set up again.

Range

When a stock moves between support and resistance without trending.

Consolidation

When price tightens and pauses before the next move.

Choppy Price Action

Messy movement with no clear direction.
These conditions usually have poor follow-through.
.

A level where buyers tend to step in and hold the stock up.

Resistance

A level where sellers tend to step in and push the stock down.

Breakout

When price moves above resistance.
Example: stock stuck under $10 finally breaks above → breakout.

Breakdown

When price falls below support.

Reclaim

When price moves back above a level it previously lost.
Often a sign of regained strength.

Retest

When price comes back to test a level after breaking it.
Example: breaks $10 → pulls back to $10 → holds → continuation.

Pullback

A temporary move down within an overall uptrend.

Front Side

The part of a move where price is still rising and the trend is intact. Where we want to be.

Back Side

After the move has peaked and is fading. Higher risk, where we don't want to be.

Extension

When price is far above key levels (like moving averages).
Higher risk of reversal or pullback.

🏃‍♀️ Chasing
Entering after the move has already happened instead of at a proper entry.
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A visual representation of price over a set time period.

Wick

The top or bottom shadow of a candle — shows rejection or extremes.

Body

The main part of the candle between open and close.

Timeframe

The chart interval (1 min, 5 min, 30 min, daily, etc.).

Multi-Timeframe Alignment

When multiple timeframes support the same idea.
Example: daily trend up + intraday breakout → stronger setup.

Moving Average (MA)

An average price over a certain number of periods.

Example:
A 20 MA on the daily chart = average closing price over the last 20 days.

Used for:
trend direction
dynamic support/resistance

EMA (Exponential Moving Average)

A type of moving average that reacts faster to price changes.

Common ones:

8 or 9 EMA → short-term
21 or 23 EMA → trend
50 MA → bigger structure
200 MA → long-term trend

Example:
If price is above the 21 EMA → generally in an uptrend
If below → weaker structure

EMA Cross

When a shorter EMA crosses above or below a longer EMA.
Example: 9 EMA crossing above 21 EMA → momentum shift.

VWAP (Volume Weighted Average Price)

The average price of a stock based on volume during the day.

Example:
If price is above VWAP → intraday strength
If below → intraday weakness

This is a key level institutions watch.

Momentum

The strength and speed of a move.

Strong momentum = fast movement + volume
Weak momentum = slow or fading movement
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⚠️ Risk (Per Trade)
The amount you are willing to lose if the trade fails.

Stop Loss

Your exit level if the trade goes against you.
Example: enter at $10 → stop at $9.70 → risking $0.30 per share.

Account Risk

The percentage of your account risked per trade.
Example: risking 1% on a $10,000 account = $100 risk.

Risk-to-Reward (R:R)

How much you’re risking compared to potential gain.
Example: risk $100 to make $200 → 1:2 R:R

R (Unit of Risk)

A standardized way to measure trades.
1R = your risk
2R = double your risk

Win Rate

Percentage of trades that are winners.

Expectancy

Your average result per trade over time.
A system can be profitable even with a lower win rate if wins are larger than losses.

Edge

A repeatable advantage that produces profit over many trades.

Watchlist

A list of stocks you are tracking for setups.

Alert

A real-time trade idea shared based on a setup.

Trade Plan

Your planned entry, stop, and target before entering a trade.

Setup

A specific pattern or condition that defines a trade. Each setup has its own entry, stop, and target rules.
Examples: trend, pullback, snap back, reversal, channel, expansion (swing).

Trigger

The condition that confirms entry.
Example: breakout above resistance with volume.

Target

Where you plan to take profit.

T1 / T2

The first and second targets on a trade.
T1 = 1R (your risk in profit). T2 = 2R (double your risk).
Example: risk $100 → T1 hit = +$100, T2 hit = +$200.

Invalidation

The point where your trade idea is no longer valid.

Trade Recap

A review of what happened in a trade and what can be improved.