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Trading Terminology!

• Day Trade- buying and selling a stock in the same trading day!
• Swing Trade- buying a stock and holding onto it, selling it at a later date!
• Bid- the price the buyer is willing to pay per share!
• Ask- the price the seller is willing to sell for !
• Position- the amount of shares you own in a stock !
• Bullish- the stock is either showing signs of getting ready to go up in
price or is already up trending!
• Bearish- the stock is either showing signs of getting ready to go down in
price or is already selling off!
• Spread- the difference in price between the bid and the ask!
• Volume- the amount of shares being traded in a certain stock!
• Resistance- when a stock continually hits a certain price and cannot break
it, or quickly breaks it and then retraces back below that price!
*** When the price pushes through that resistance line and does not
retrace, that resistance line now becomes support (usually)!
• Support- when a stock continually hits a certain price and then comes
back up in price !
*** When the price breaks that line of support and does not push back
above it, the support line now becomes resistance (usually)!
• Breakout- when a price breaks through resistance and climbs higher from
• Trend- a visible pattern a stock is showing either upwards or downwards!
• Market Order- an order that is placed that will be executed at either the
current bid or ask price!
• Limit Order- an order that is placed that is only executed at the price that
you are willing to buy or sell !
• Stop Loss- (either mental or stop order) the price that you have decided
the trade is not following through and you are going to sell to protect
yourself from further losses !

• OTC- Over The Counter. Stocks that are not traded on the normal
exchanges ( NYSE, AMEX, Nasdaq, etc). This is usually due to them not
being large enough companies !
• Long- buying a stock at a low price, hoping to sell at a higher price!
• Short- to short a stock you are essentially borrowing shares, selling them
at the highest price possible, planning to “buy them back” at a lower
price for profit!
• Earnings per share- the portion of a company’s profit allocated to each
outstanding share of common stock. E.P.S. serves as an indicator of a
company’s profitability!
• Catalyst- a positive driving force for the stock (example- positive news
• Chasing- buying a stock blindly because it is spiking, not waiting for a
good set-up!
• Technical Analysis- the study of charts and trends - Trading off the setups that have been working for years!
• Fundamental Analysis- the study of the value of the business - Looking
into factors like valuation, debt, performance, etc !
• P.D.T. Rule- Pattern Day Trader. The S.E.C. implemented a rule that limits
anyone with under $25k in their account to only 3 day trades in a rolling
5 day period. If you break this rule, your account will be frozen for 90
days. !