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Terminology

by rich • Mar 6, 2022 • 87
edited by Meow on Sep 26, 2023

Top terms you'll see within our community

BTO (Buy to Open) - Opening a long position.

STC (Sell to Close) - Closing a long position.

STO (Sell to Open going short) -Opening a short sell position.

BTC (Buy to Close closing short) - Closing a short sell position.

CMP - Current Market Price

SL (Stop Loss) - An order placed to buy or sell a specific stock once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position.

TP (Take Profit) - A type of limit order that specifies the exact price at which to close out an open position for a profit.

PT (Price Target) - An analyst's projection of a security's future price.

Long - Refers to the purchase of an asset with the expectation it will increase in value

Short Selling (Shorting, Short) - A position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value. Speculates on the decline in a stock or other security's price. It is an advanced strategy that should only be undertaken by experienced traders and investors.


More Useful Terminology

Share/Shares - Are units of equity ownership in a corporation.

Daytrade - Buying then selling or short selling then buying the same security within the same day.

Swing - A style of trading that attempts to capture short- to medium-term gains in a stock (or any financial instrument) over a period of a few days to several weeks.

Scalp - Trading style that specializes in profiting off of small price changes and making a fast profit off reselling. 

Momentum trading -  A strategy that seeks to capitalize on momentum to enter a trend as it is picking up steam. 

Position trading - A position trader buys and holds until a trend peaks. A buy-and-hold investor buys for the long term.

Scaling - Scaling in is a trading strategy that involves buying shares as the price decreases.

Averaging Down - A strategy that involves a stock owner purchasing additional shares of a previously initiated investment after the price has dropped.

Bull - A bull is an investor who thinks the market, a specific security, or an industry is poised to rise.

Bear - A bear is an investor who believes that a particular security, or the broader market is headed downward and may attempt to profit from a decline in stock prices.

Bull Market - The condition of a financial market in which prices are rising or are expected to rise.

Bear Market - Is when a market experiences prolonged price declines. It typically describes a condition in which securities prices fall 20% or more from recent highs amid widespread pessimism and negative investor sentiment.

Brokerage - A brokerage company’s main duty is to act as a middleman that connects buyers and sellers to facilitate a transaction.

Exchange - A marketplace where securities, commodities, derivatives and other financial instruments are traded. (I.e. NYSE & NASDAQ)
Crypto Exchange - A platform to buy/sell/trade cryptocurrencies for other digital currency or fiat money.

Portfolio - A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs)

Cash Account - An Account with a brokerage firm requires that any securities transactions be payable in full from funds in the account at the time of the settlement.

Margin Account - An account is a brokerage account in which the broker lends the customer cash to purchase stocks or other financial products.

Order - A set of instructions to a broker to buy or sell an asset on a trader's behalf.

Market Order - An instruction to buy or sell a security immediately at the current price.

Limit Order - A limit order is a type of order to purchase or sell a security at a specified price or better. Guarantees that an order is filled at or better than a specific price level.

Leverage - An investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment.

GTC (Good Til Cancelled) - An order that is working regardless of the time frame, until the order is explicitly cancelled.

Execution - The completion of a buy or sell order for a security.

Bid -  Represents the maximum price that a buyer is willing to pay for a share of stock or other security.

Ask - Represents the minimum price that a seller is willing to take for that same security.

Spread - Refers to the gap between the bid (from buyers) and the ask (from sellers) prices of a security or asset.

Quote - The last price at which an asset traded; it is the most recent price that a buyer and seller agreed upon and at which some amount of the asset was transacted.

Volatility - Prive movements of a stock. Represents how large an asset's prices swing around the mean price—it is a statistical measure of its dispersion of returns.

Volume - Is the number of shares of a security traded during a given period of time.

Yield - A return measure for an investment over a set period of time, expressed as a percentage.

Rally - A period of sustained increases in the prices of stocks, bonds, or related indexes.

Intraday - Means within a day.

Dividend - Is the distribution of some of a company's earnings to a class of its shareholders quarterly or annually.

IPO (Initial Public Offering) - Refers to the process of offering shares of a private corporation to the public in a new stock issuance.

OTC Stocks (Over-The-Counter) - Securities are traded directly between counterparties without being listed on an exchange.

Indicators - Statistics used to measure current conditions as well as to forecast financial or economic trends.

MA (Moving Average) - A stock indicator that is commonly used in technical analysis.
SMA (Simple Moving Average) - Calculates the average of a selected range of prices, usually closing prices, by the number of periods in that range.

Beta - A measure of the volatilityor systematic riskof a security or portfolio compared to the market as a whole.

Sector - Are used to categorize the economic activity of consumers and businesses into groupings based on the type of business activity.

Float - The number of shares available for trading of a particular stock.
Low float - Stocks with a low number of shares.

Stock Split - Is when a company increases the number of its outsanding shares to boost the stock's liquidity.

Short Squeeze - An unusual condition that triggers rapidly rising prices in a stock or other tradable security. For a short squeeze to occur, the security must have an unusual degree of short sellers holding positions in it. The short squeeze begins when the price jumps higher unexpectedly. 

Cover/Covering - The act of reducing exposure in investing, by taking an action that limits a liability or obligation. Covering is different than closing a position, in that with covering, an investor might choose to keep a position open, but just have enough stock on hand to compensate for any risk.

Sources: Investopedia

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