Plain-language definitions for the terms you'll actually hear in stock trading — from the everyday basics to small-cap momentum. 226 terms and counting. No jargon for jargon's sake — written for beginners, starting with the one this whole site is named after.
Expecting a price to rise. If you're bullish on a stock, you think it's heading higher and you position to profit from that move. The opposite is bearish (expecting a fall). The term comes from how a bull attacks — horns thrust upward. It's the whole idea behind this site: finding setups with room to run. (Being bullish is a thesis, not a guarantee — plenty of bullish setups still fail.)
The day's price move as a percentage of the prior close — the number momentum traders scan first, since a small-cap up 60% is what flags a stock in play. A +$1 move means very different things on a $2 stock versus a $200 one.
The highest price a stock has traded over the past year. Breaking to new 52-week highs means no overhead resistance from recent buyers — momentum traders read fresh highs as strength, though they can also mark exhaustion near the top.
The lowest price a stock has traded over the past year — the mirror of the 52-week high. Fresh lows signal heavy selling; some traders avoid them outright, others watch for a capitulation bounce.
The total capital in your trading account — the base figure your position sizing and risk limits are calculated from. A trader risking 1% per trade risks a very different dollar amount on a $5,000 account than on a $50,000 one, even with the identical setup.
Trading after the regular close — 4:00 PM–8:00 PM ET. Thinner volume and wider spreads; news dropped after the bell often moves a stock here first.
An automated notification that fires when a condition you set is met — a price level touched, a volume spike, a scan match. An alert tells you something happened; it does not tell you to buy. It lets you watch many names at once without staring at every chart — what you do when it fires is still your call.
Short for algorithm — an automated program that places trades by rules or code, with no human clicking each order. Much of the market's daily volume is algo-driven.
The return a trade or strategy earns above a relevant benchmark, after accounting for the risk taken. If the market returns 10% and your account returns 15% on comparable risk, that extra 5% is your alpha — the part you can credit to skill or edge rather than just riding the market. It's the flip side of beta, which measures how much you simply move with the market. Real, repeatable alpha is hard to produce, which is why most traders don't beat a simple index over time.
The ask price (or 'offer') — the lowest price a seller is currently willing to accept. You generally buy at the ask.
Anything you own that holds value — stocks, cash, crypto, real estate. In a brokerage account your assets are the cash plus the current value of every position you hold.
A 0–100 gauge of how strong a trend is — not its direction. Readings above about 25 suggest a trending market worth trading with the trend; low readings flag the kind of chop momentum traders avoid.
Buying more of a position you are already down on, at a lower price, to pull your average cost basis lower — so the stock needs a smaller bounce to get you back to break-even. It can rescue a sound thesis that simply dipped, but done reflexively it just pours more size into a losing trade, the opposite of cutting losses. Momentum traders generally avoid averaging down into a fading runner: the reason you entered is usually already broken.
A volatility measure: the average size of a stock's range over a lookback period. It gives no direction — traders use it to size stops and targets to how much a stock typically moves, so a wider-ranging name earns more room.
Running a strategy against historical data to see how it would have performed before you risk real money on it. A useful sanity-check, but past results can flatter a strategy — markets change, and a backtest can't capture slippage, emotions, or thin liquidity.
Hanging onto a deep-losing position long past your plan, hoping it climbs back to break-even instead of taking the loss — you are left "holding the bag." A bagholder is the trader stuck in a position that has fallen far below cost, often after a pump fades or a thesis breaks. It is one of the most common ways a small, manageable loss quietly becomes an account-denting one.
A continuation pattern in a downtrend: a sharp drop (the flagpole) followed by a slow, slightly upward drift that forms the flag, before price breaks down again to continue lower. The drift is just weak buyers catching a breath against a falling stock; when support at the bottom of the flag gives way, sellers take back over. It's the mirror image of a bull flag — same shape, opposite direction — and short sellers watch for the breakdown the way long traders watch a bull flag's breakout.
A prolonged market-wide decline — conventionally a drop of 20% or more from a recent high, measured on a major index like the S&P 500 rather than a single stock. The opposite of a bull market. Small-cap momentum can still produce sharp moves in a bear market, but tailwinds are thinner and failed breakouts more common, so the broader tape matters more than usual.
Expecting a price to fall. A bearish trader thinks a stock is heading lower — the opposite of bullish.
A measure of how much a stock moves relative to the overall market (usually the S&P 500). A beta of 1.0 moves roughly in line with the market; above 1.0 is more volatile (1.5 tends to swing about 50% more than the market), below 1.0 is calmer, and a negative beta tends to move opposite. High-beta names amplify both the upside and the pain — the small-cap momentum stocks traders chase effectively live at the high-beta extreme.
Your working lean on direction — bullish or bearish — heading into a trade or a session, formed from the catalyst, the chart, and the broader market. A useful starting point, but holding a bias too rigidly is how traders end up fighting what price is actually doing.
The bid price — the highest price a buyer is currently willing to pay right now. You generally sell at the bid.
A large, well-established, financially sound company that leads its industry — the term borrows from the highest-value chip in poker. Blue chips are relatively stable and slow-moving, the opposite end of the spectrum from the low-float small-caps momentum traders hunt. Worth knowing even if you rarely trade them: when people say "the market," they often mean baskets of blue chips.
A moving average with two bands plotted a set number of standard deviations above and below it. The bands widen when volatility rises and pinch in when it falls; price riding or poking outside a band is a common volatility read.
Two senses, same idea of something giving way. As a chart setup: price breaking down through support on volume — the bearish mirror of a breakout, and a common short trigger. In a journal: a breakdown in execution — abandoning your own plan (chasing, oversizing, moving a stop) — the kind of process failure worth logging so it doesn't repeat.
When price pushes through a level it had been stuck under (resistance) on rising volume, often kicking off a fast move.
The firm that holds your account and routes your buy and sell orders to the market — you can't trade stocks without one. Brokers differ on platform speed, fees, shares available to short, and which order types and tools they support. I keep accounts with several brokers, but my favorite is Webull. Check out my broker comparison page for the top 10 online brokers.
A continuation pattern: a sharp run up (the pole), then a tight, slightly downward drift on lighter volume (the flag), before another leg higher. Momentum traders like it because the flag offers a clean entry with a tight stop just beneath it.
A prolonged market-wide rise — conventionally a gain of 20% or more from a recent low on a major index. It is the backdrop most momentum strategies prefer: rising indices, healthy risk appetite, and more setups that actually follow through. The opposite of a bear market. (Bullish, lowercase, is your stance on a single stock; a bull market is the whole market's trend.)
The dollar amount you can put to work right now. In a cash account that's your settled cash; in a margin account it's cash plus borrowed funds, and since the 2026 rule change it updates in real time through the day.
A single bar on a candlestick chart that captures four prices for one period: the open, high, low, and close. The thick body runs open-to-close — green when it closed higher, red when lower — and the thin wicks above and below mark the high and low. It's the basic unit a chart is read in.
The money you have available to put to work — in trading, the cash in your account you can actually deploy into positions. “Preserving capital” (not losing it) is the first job; growing it is the second.
The point where a falling stock's holders finally give up all at once — selling in a panic rush that spikes volume and often marks a near-term bottom. With the weak hands flushed out, a sharp bounce frequently follows. Traders watch for the classic signature: a steep, high-volume sell-off and a long lower wick where buyers finally stepped in.
A brokerage account that trades only with money you've actually deposited — no borrowing. Sale proceeds must settle (T+1, the next business day) before you can reuse them, but there's no margin and no margin risk.
The news or event that gives a stock a reason to move: earnings, an FDA decision, a contract, an offering. Momentum traders want a clear catalyst behind a runner.
How much a stock's price has moved from a reference point — usually the prior close — in dollars and cents (e.g., +$0.42). Shown alongside % change to put the move in context.
The visual record of a stock's price over time and the trader's main workspace. Candles show each period's open, high, low, and close; overlays like VWAP ride on top.
Buying after a stock has already made a big, fast move — jumping in late on FOMO, usually right as it gets extended. The danger is that you become the exit liquidity for traders who got in earlier: a missed trade costs nothing, a chased one can cost a lot.
Price action that's erratic and directionless — overlapping candles, false moves, and no clean trend to ride. Choppy conditions chew up momentum traders, so many simply sit out until price picks a direction.
Exiting a trade — selling a long or buying back a short — to lock in the profit or loss. 'Close all' or 'flatten' means exiting every position at once.
The fee a broker charges to place a trade. Many brokers now charge $0 commission on U.S. stocks, but other costs — the spread, plus regulatory and routing fees — still apply.
A raw physical good traded in bulk and largely interchangeable — crude oil, gold, natural gas, wheat, copper. Commodities trade mostly through futures contracts and ETFs rather than as company shares, and they answer to their own drivers (supply, weather, geopolitics) more than to earnings. Most stock traders do not trade them directly, but they matter as context: oil moves energy stocks, gold reflects fear, and big commodity swings ripple into the sectors that depend on them.
When several independent signals line up at the same spot — say VWAP, a support level, and a fresh catalyst all together. Multi-point confluence means more boxes checked, which raises conviction in a setup.
A pause where price trades sideways between rough upper and lower bounds instead of trending. A “range on the daily” is one of the A+ checklist boxes.
How strongly a setup matches your criteria. Higher conviction usually means a larger, more confident position; lower conviction means smaller size or passing.
What you actually paid for a position — your entry price times shares, plus fees. It is the baseline every gain or loss is measured against: market value minus cost basis is your unrealized P&L, and it is the figure that matters at tax time. Averaging into a position blends your cost basis across the fills.
Buying back shares you sold short to close the position — "buy to cover." It returns the borrowed shares to your broker and locks in your gain or loss. When many short sellers are forced to cover at once — squeezed by a sharp move against them — their combined buying adds fuel to the rally, a key engine of a short squeeze.
A hard cap on how much you'll let yourself lose in one day — a preset dollar or R figure that ends your session the moment it's hit, no matter what. It's the rule that stops one bad morning from becoming a blown account; many traders treat it as non-negotiable.
An order that is only good for the current trading session — if it does not fill by the close, it cancels automatically. It is the default order duration at most brokers. The opposite is a Good Till Cancelled (GTC) order, which carries from day to day until it fills or you cancel it. For active intraday traders, day orders are usually what you want, since you are re-evaluating every session anyway.
Buying and selling within the same session so nothing is held overnight — the whole trade plays out intraday, opened and closed before the bell. Avoids overnight risk.
A short, sharp rally inside a larger downtrend that fools traders into thinking the bottom is in — before the stock rolls over and keeps falling. The grim name comes from the idea that even a dead cat bounces if it drops far enough. The danger is buying the bounce as a reversal when it is really just a pause; confirmation — higher volume, a real base, reclaimed levels — is what separates a genuine turn from a dead-cat bounce.
When a company issues new shares to raise cash (an offering, often filed as an S-1 or S-3). More shares can push the price down by spreading value across a larger float.
An ordinary moving average shifted forward or back on the chart. Shifting it forward can make it hug price better as dynamic support/resistance; the trade-off is added lag in the signal.
A slice of profit a company pays out to its shareholders, usually quarterly and quoted per share. Dividend yield expresses that as a percentage of the share price — a $2 annual dividend on a $50 stock is a 4% yield. Dividends are a hallmark of mature, profitable companies; the fast-moving small-caps momentum traders trade rarely pay them. Two things worth knowing: a stock typically drops by about the dividend amount on its ex-dividend date, and an unusually high yield can be a warning sign that the payout is at risk.
A candlestick whose open and close land at almost the same price, leaving a tiny body with wicks on one or both sides. It's a picture of indecision: buyers and sellers fought to a draw over that period. On its own a doji means little, but after a strong run or drop it can hint that momentum is stalling and a reversal may be near — especially when the next candle confirms the turn.
A bullish reversal shaped like a W: price drops to a low, bounces, pulls back to roughly the same low (the second bottom), then breaks out above the middle peak. The matching lows suggest sellers are exhausted; the breakout over the peak confirms it.
A drop in your account from a recent peak, usually shown as a percentage — the dip in the equity curve between high-water marks. Everyone has them; what matters is keeping them shallow enough to recover from. Distinct from a single trade's loss — drawdown is the cumulative slide.
A company's quarterly report of its profits, revenue, and guidance. Earnings are one of the biggest scheduled catalysts: a beat, a miss, or the forward outlook can gap a stock hard at the next open. Earnings season is the cluster of weeks each quarter when most companies report, so the calendar fills with catalysts. Many day traders avoid holding through the actual report — it is a binary, overnight event — and instead trade the reaction.
A company's profit divided by its shares outstanding — profitability on a per-share basis, and one of the most-quoted fundamental numbers. It is the "E" in the P/E ratio. Rising EPS is read as a healthier business; a quarterly EPS that beats or misses analyst estimates is often what moves the stock when earnings drop.
A running chart of your account value (or cumulative R) over time — the clearest single picture of whether you're improving. Smooth and up-and-to-the-right is the goal; jagged or sideways flags inconsistency. The curve on this site is plotted in R.
A basket of assets — often stocks tracking an index, sector, or theme — that trades on an exchange like a single stock: one ticker, all day, at a live price. ETFs give instant diversification at usually low cost, and the most popular ones, SPY (the S&P 500) and QQQ (the Nasdaq-100), are among the most heavily traded tickers in the entire market. Most are plain index funds, but they come in flavors: sector, bond, commodity, and the riskier leveraged and inverse kinds.
The marketplace where shares are listed and trades are matched — the NYSE and Nasdaq are the two big U.S. stock exchanges. Your broker routes your order to an exchange (or similar venue) to get it filled.
The moment your order actually gets filled in the market — the hand-off from "I want to trade" to "I am in (or out)." Execution quality is how close your fill lands to the price you expected, and it depends on liquidity, speed, the spread, and how your broker routes the order. Poor execution shows up as slippage; for active traders, a fast and reliable platform is part of the edge.
What you can expect to make per trade on average, in dollars or R: (win rate × average win) − (loss rate × average loss). Positive expectancy means the system makes money over enough trades — it ties win rate and average R into one honest number.
A move that looks like a real breakout (or breakdown) but immediately reverses, trapping everyone who entered on the break. It often shows up as a push past a level on weak volume that snaps right back — the reason disciplined traders wait for confirmation instead of the first poke through.
The original, more sensitive form of the stochastic — %K with little smoothing — so it reacts faster and whipsaws more. The “slow” stochastic smooths it to cut that noise.
Horizontal levels drawn at set percentages of a prior move — notably 38.2%, 50%, and 61.8% — where a pullback might stall before the trend resumes. Widely watched, partly self-fulfilling, and best paired with other confirmation.
The execution of your order — and the filled price is the price you actually got, which can differ from what you saw when you clicked (see slippage). A partial fill means only some of your shares executed; the rest stays working or gets cancelled.
The Financial Industry Regulatory Authority — the self-regulatory body that oversees U.S. brokers and writes the margin rules, including the former Pattern Day Trader rule.
The number of shares actually available for the public to trade, excluding insider-locked shares. A low float (say, under 20M) can move violently because a little buying pressure goes a long way.
When a stock's daily volume equals or exceeds its entire float — the available shares have effectively turned over at least once. A sign of intense activity. Measured by turnover.
The slice of the session you commit to actively trading — for many day traders the 9:30–11:00 a.m. ET window, when volume, volatility, and clean moves are richest. Defining one keeps you from overtrading the dead, choppy midday hours where edges thin out.
The Federal Open Market Committee — the Federal Reserve group that sets the direction of U.S. interest rates. It meets eight times a year, and the announcement (typically 2:00 PM ET, followed by a press conference) is one of the most reliable volatility events on the calendar: the whole market can whipsaw violently in minutes. Many short-term traders size down, sit out the initial spike, or wait for the dust to settle rather than guess the reaction.
Fear of missing out: chasing a move after it's already run because you don't want to be left behind. A common reason traders abandon their own rules.
The foreign exchange market — trading one currency against another (EUR/USD, USD/JPY, and so on). It is the largest and most liquid market in the world, runs roughly 24 hours a day five days a week, and is quoted in pairs with often very high leverage. A different instrument from stocks, but the chart-reading and risk discipline carry over; the outsized leverage is what tends to hurt beginners.
Sizing up a stock by the business behind it — revenue, earnings, debt, growth, management, the industry — to estimate what it is worth, rather than reading the chart. It is the counterpart to technical analysis: fundamentals ask "is this a good company at a fair price?" while technicals ask "what is price doing right now?" Momentum and day traders lean heavily technical, but fundamentals still drive the catalysts, like earnings and guidance, that set stocks moving.
Contracts to buy or sell an asset at a set price on a future date, regulated by the CFTC rather than the stock rules. Often used for index or commodity exposure; like options, more advanced than buying shares.
A sharp upward spike driven by the options market rather than by short sellers covering. When traders buy large amounts of call options, the market makers who sold those calls hedge by buying the underlying stock — and the faster the stock rises, the more they must buy, which pushes it higher still. That feedback loop is the gamma squeeze. It often runs alongside a short squeeze (the two amplified each other in names like GME), but the engine here is options hedging, not short covering.
A stock that gaps up on a catalyst at the open and keeps going rather than fading. Traders want the first push to hold above the premarket high or opening range on strong volume — the bread-and-butter momentum play on a green premarket.
When price retraces to fill the empty space a gap left behind, trading back to the prior session's close. A gap up that fills is a move down; a gap down that fills is a move up — so the direction depends on the gap. Some traders fade gaps expecting the fill; others wait to see if it holds.
A stock that opens meaningfully higher (or lower) than its prior close, usually on overnight news. Premarket gappers are a core momentum scan.
An order that stays working until it fills or you cancel it, instead of expiring when the session ends. The opposite is a day order, which dies at the close if it has not filled. GTC is useful for resting a limit order at a target price you do not want to babysit — though most brokers auto-expire them after 30 to 90 days, and a resting order can quietly fill on a fast spike you would rather have skipped.
The universal color code: green = up / gaining, red = down / losing — on candles, tickers, and your P&L. A green candle closed above its open; a red one closed below.
A green day is a session you finished net profitable; a red day, net negative. The ratio of green to red days is a simple health metric, and a string of red days is a common journaling cue to size down or step back. (Distinct from the green/red color code on candles and tickers.)
Entering with half (1/2) of your normal position size — a middle gear between a full-conviction trade and a quarter-size probe, used to take a setup you like but want to keep lighter risk on.
A temporary trading pause triggered when a stock moves too far too fast (Limit Up–Limit Down) or pending news. Trading resumes after a short cooldown.
A single candlestick that can mark the end of a downtrend: a small body up near the top with a long lower wick, like a hammer. The long tail shows price sold off hard during the period but buyers stepped in and drove it back up before the close — a shift in control from sellers to buyers. It carries the most weight at the bottom of a clear decline; flipped upside down at the top of a run, the same shape is a shooting star and warns of the opposite.
A pooled investment fund for institutions and wealthy investors that chases returns with aggressive, lightly-regulated strategies — leverage, short selling, derivatives, concentrated bets. They typically charge a management fee plus a slice of the profits (the classic "2 and 20"). They matter to retail traders because they are often the big money on the other side of the tape — the 2021 GameStop squeeze famously ran over funds that were heavily short.
The highest price a stock has traded so far in the current session (its mirror is the low of day, LOD). Momentum traders watch it closely — a stock printing fresh HODs is showing strength, and a clean break above HOD on volume is a common long trigger.
Keyboard shortcuts mapped to trade actions — buy, sell, cancel, set a stop — so you act in a keystroke instead of hunting for a button. Essential for scalping, where seconds matter.
A multi-line Japanese indicator that maps trend, momentum, and support/resistance at once. Its shaded “cloud” acts as a dynamic support/resistance zone — price above the cloud is bullish, below it bearish. Information-dense, and divisive among traders.
Calculations plotted on a chart to help read momentum, trend, or volume — moving averages, VWAP, RSI, MACD, and the like. They describe what price has done; they don't predict what it will do, and stacking too many just buries the signal in noise.
Within a single trading day. An intraday move, chart, or position lives between the open and the close rather than spanning days. Day traders work almost entirely on intraday timeframes — 1- and 5-minute charts.
Buying and holding for the long haul — months, years, often decades — on the belief that a company or fund will be worth more over time. Investors weigh fundamentals, earnings growth, and compounding far more than intraday charts, and they ride out drops that would shake a trader out, sometimes adding on weakness. It's the slowest, most forgiving end of the spectrum: time in the market does much of the work, and a single bad day rarely matters.
Initial Public Offering — a company's first sale of shares to the public, listing it on an exchange. SpaceX's June 2026 Nasdaq debut (ticker SPCX) was the largest IPO in history, raising about $75 billion and topping a $2 trillion valuation.
A running record of your trades — entries, exits, size, the setup, and ideally why you took it and how you felt. The journal is where an edge actually gets found: reviewing it turns scattered trades into patterns, and most of the metrics in this category come straight out of it.
The Kelly criterion — a formula for the position size that maximizes long-run growth given your win rate and payoff. It often spits out an aggressively large number, so most traders use a fraction (“half-Kelly”) to tame the volatility. Treat it as a sizing sanity-check, not a literal rule for fast trades.
A momentum oscillator that blends rate-of-change readings from several timeframes into one smoothed line, plus a signal line. Built to cut noise; a cross of the two lines is the usual signal.
The price of the most recent completed trade — what the stock last changed hands at. Many broker order tickets pre-fill a limit order with the last price as a starting point.
The most basic real-time quote: the current best bid, the current best ask, and the last traded price, along with the size sitting at the inside. It tells you where a stock can be bought and sold right now, but nothing about the orders stacked behind those prices. Level 1 is enough for many traders; if you want to see the depth behind the quote — who's lined up at each price level — that's Level 2.
A live view of the order book showing the bids and asks stacked at multiple price levels, with the size at each — the market's depth, beyond just the best bid and ask.
Using borrowed money (margin) to control a larger position than your cash alone allows. It magnifies gains — and losses — in equal measure.
An ETF that uses derivatives and debt to multiply an index's daily move — a 2x or 3x fund aims to return double or triple what its index does that day (for example SOXL on semiconductors or TQQQ on the Nasdaq-100). The catch is the word daily: because the leverage resets every session, choppy or sideways markets grind these down over time — volatility decay, where the index can end flat while the leveraged fund bleeds lower. Powerful intraday tools, genuinely dangerous as a buy-and-hold.
An order to buy or sell only at a specified price or better. It controls your price but may not fill.
The exact price you set on a limit order — the worst price you'll accept (a maximum when buying, a minimum when selling). It fills at your limit or better, or not at all.
How easily you can get in or out without moving the price much. Thinly traded, low-liquidity names have wider spreads and more slippage.
A position that profits when the price goes up. “Going long” means buying expecting a rise. The opposite of short.
An account that lets you borrow from your broker to trade, using your holdings as collateral. It unlocks extra buying power but adds interest and the risk of a margin call. The old PDT rule applied only to margin accounts.
A demand from your broker to add cash or close positions when losses push your account below the equity it requires to keep your borrowed (margin) positions open. Ignore it and the broker can liquidate your positions for you, at whatever price the market offers. It is the sharp end of trading on margin: the leverage that boosted your buying power also forces the exit when a trade moves against you. Under the 2026 real-time margin framework, that maintenance check runs continuously through the day.
A company's total value: share price × shares outstanding. Small caps are the typical momentum playground.
The regular U.S. trading session: 9:30 AM–4:00 PM ET, Monday–Friday (excluding market holidays). Volume and liquidity are highest here. Outside it, trading splits into premarket, after-hours, and the overnight session.
A firm that continuously quotes both a bid and an ask in a stock, standing ready to buy from sellers and sell to buyers so trades can happen smoothly. They earn the spread between the two and supply much of the liquidity you tap when you hit the bid or lift the offer. On a Level 2 window, the stacked orders you see are largely market makers and other participants posting size at each price.
An order to buy or sell immediately at the best available price. It fills fast, but you don't control the exact price.
The overall mood of traders toward a stock or the market as a whole — bullish (expecting up), bearish (expecting down), or somewhere in between. Sentiment isn't a single number; it's read from price action, volume, how news is received, and gauges like the VIX or put/call ratios. It matters because crowds move markets: when sentiment turns euphoric, risk is often highest, and when it's washed out and fearful, the selling may be close to exhausted.
What a holding is worth right now at the current price — shares held × the latest price. It moves tick by tick with the market, unlike your cost basis, which is fixed at what you paid.
The deepest peak-to-trough drop your account has ever taken — the worst stretch you've actually lived through. It's a gut-check on risk: if your max drawdown is bigger than your stomach, your size is too big.
A stock that rips on social-media hype and crowd attention rather than fundamentals. The archetype is the January 2021 GameStop (GME) saga: traders on Reddit's r/wallstreetbets piled into a heavily shorted, left-for-dead retailer, igniting a short squeeze that ran the stock from a few dollars to the hundreds in weeks, handed some hedge funds enormous losses, and pushed brokers to restrict buying. AMC ran in sympathy the same week. Meme-stock moves are violent in both directions and can detach completely from the business, so they cut fast either way.
The tendency of a stock already moving fast on heavy volume to keep going in that direction, at least for a while. Momentum traders aim to ride the push and step off before it fades.
A bare-bones indicator plotting the difference between today's price and the price a set number of periods ago. Positive and rising means upward momentum is building; negative means it's fading. (Different from the broader Momentum category, and from STT's MOMO score.)
A quick read on how strong a move is — usually a small numeric scale — built from confluence across several signals at once: expanding relative volume, price on the right side of VWAP, and moving averages, RSI, and MACD aligned in the same direction. Platforms and community indicators score it differently, so treat the number as a confluence check, not a buy signal.
A line tracking the average price over a recent window, smoothing out the noise. A Simple Moving Average (SMA) weights every period equally; an Exponential Moving Average (EMA) weights recent prices more heavily, so it turns faster to follow price. The 9, 20, and 50 EMAs are common momentum reference lines — the 9 above the 20, with price holding above the 50, is a bullish alignment.
A trend-and-momentum indicator built from two moving averages: the MACD line (12 EMA minus 26 EMA) and a signal line (a 9 EMA of the MACD line). Traders watch the two lines cross and the histogram (the gap between them) flip — a popular read on momentum shifting.
A major U.S. electronic exchange, home to many technology and smaller growth companies. It runs the same 9:30 AM–4:00 PM ET core session as the NYSE — SpaceX (SPCX) listed here in 2026.
National Best Bid and Offer — the highest bid and lowest ask available across all exchanges at a given moment. It's the official 'quote' your order is measured against.
The New York Stock Exchange — the largest U.S. stock exchange, home to many established, larger companies. Regular trading runs 9:30 AM–4:00 PM ET, the same core hours as Nasdaq.
A running tally that adds the day's volume when price closes up and subtracts it when price closes down. The idea is that volume leads price — a rising OBV while price is flat is read as quiet accumulation.
A trade off the high or low of the opening range — the price band set in the first few minutes (often 1, 5, or 15) of the session. A push above the range high is the long version; a break below the low is the short. A clean, rules-based way to trade the morning expansion.
Contracts giving the right — but not the obligation — to buy or sell a stock at a set price by a set date. A separate, more advanced instrument with its own risks; most beginners start with shares first.
Your instruction to the market to buy or sell — a market order (fill now at the best price) or a limit order (fill only at your price or better), among other types.
The live list of all resting buy and sell orders at each price level. Level 2 is how you view it; it shows where supply and demand are stacked.
Where your order stands: Working (live, waiting to fill), Filled (executed completely), Partial (only some shares filled so far), or Canceled (pulled before filling).
Holding a position too large for your account — often using borrowed buying power (margin) — so a normal move against you does outsized damage. Being over-leveraged turns ordinary volatility into account-threatening swings.
Two sides of one idea: a stock that has run up so far, so fast it may be due to pull back (overbought), or fallen so hard it may be due to bounce (oversold). Momentum oscillators like RSI put numbers on it — readings above 70 are commonly called overbought, below 30 oversold. The catch: in a strong trend a stock can stay "overbought" for a long time and keep climbing, so treat these as context clues, not automatic buy or sell signals.
The newer overnight session bridging after-hours and premarket — roughly 8:00 PM–4:00 AM ET (Sunday–Thursday nights) on supported brokers and venues, pushing toward near-24/5 trading. Liquidity is thin and only limit orders are accepted, so treat overnight prices with extra caution.
Profit and loss — what you've made or lost on a trade, a day, or the account. Often split into realized P&L (closed trades) and unrealized P&L (open positions marked at the current price). Your daily P&L against your daily max loss is the number that ends sessions.
Price-to-earnings ratio — a stock's share price divided by its earnings per share (EPS). It is a quick read on how expensive a stock is relative to the profit it generates: a P/E of 20 means you are paying $20 for every $1 of annual earnings. High P/Es imply the market expects fast growth; low ones can signal a bargain or a struggling business. A valuation staple in fundamental analysis, and less central to momentum trading, where price action leads.
Practicing with fake money in a simulator — also called simulated trading — so you can test a strategy and learn the platform without risking real cash. Great for building reps before going live.
A move so steep the chart curves nearly vertical. Exciting on the way up, but parabolic moves tend to reverse just as fast.
The Pattern Day Trader rule. For over two decades it required a U.S. margin account to hold at least $25,000 to make four or more day trades in five business days — fall short and you were locked out of active day trading. FINRA's $25,000 Pattern Day Trader minimum was eliminated as of June 4, 2026, replaced by a real-time intraday margin framework — your broker's cutover date may vary. Kept here because older guides and videos still reference it.
Loosely, a low-priced stock (often under $5, sometimes under $1). Cheap share prices plus low floats are where small-cap momentum lives.
The full collection of positions and cash you hold. Day traders often run a lean portfolio — sometimes flat (all cash) overnight — while investors build a broader, longer-held mix.
Your current holding in a stock. A long position profits if it rises, a short position if it falls, and you're 'flat' when you hold none.
How many shares — and how much money — you put into a trade. Sizing is set by your risk, not by how much you like the stock. It's the core input the calculator solves for.
A longer-horizon style that holds for weeks to months, riding a larger trend or a fundamental story rather than short-term price action. Position traders check charts far less often, size for bigger swings, and sit through the day-to-day noise that would stop out a swing trader. It sits between swing trading and true long-term investing — more active than buy-and-hold, far more patient than day trading.
An official company announcement — earnings, FDA news, a contract, an offering — pushed out over the newswires. PRs are the catalysts behind many fast small-cap moves: a headline can spike a stock in seconds, and "sell the news" reversals are common once the move is priced in.
Trading before the regular open — commonly 4:00 AM–9:30 AM ET. Where overnight gappers and the day's first scans take shape; lighter volume means moves can be exaggerated.
What one share currently costs to buy or sell — the number on the chart or order ticket. It sits between the bid and the ask and updates with every trade.
How price actually moves on the chart — the run of highs, lows, and candles — read on its own, without leaning on indicators. 'Clean price action' (steady, readable moves rather than choppy chaos) is one of the A+ checklist boxes.
The money made on a position or over a period — realized once you close the trade, unrealized while it's still open. In a journal you track net profit (after commissions and fees), not just the gross price move.
A one-number read on whether your system makes money: gross profit divided by gross loss. Above 1.0 means winners outweigh losers; many traders look for 1.5–2.0+ as a durable edge. It says nothing about how you got there, so read it next to win rate and expectancy.
A temporary dip against the prevailing trend — an uptrending stock pausing and retracing some of its gain before (often) continuing higher. Momentum traders look to enter on a controlled pullback to support or a moving average rather than chasing the spike.
A manipulation scheme where promoters quietly accumulate a cheap, thinly traded stock, hype it hard — paid newsletters, social media, spam blasts — to lure buyers and inflate the price, then dump their shares into that demand, leaving latecomers holding the collapse. Low-float micro-caps and some crypto tokens are common vehicles. The tells: a no-name ticker suddenly "everywhere," manufactured urgency, and promises of guaranteed gains. Recognizing the pattern is how you avoid becoming the exit liquidity.
Entering with a quarter (1/4) of your normal position size — a way to take a lower-conviction setup, test a pattern, or scale in gradually while keeping risk small. Trading smaller when conviction or conditions are weaker is core risk management.
A snapshot of where a stock is trading right now — its current bid, ask, and last price. The NBBO is the official best quote across all exchanges.
Your risk on a trade expressed as “1R” — the distance from your entry to your stop. Gains and losses get measured in R (a +3R trade made three times what you risked), which is how an equity curve like the one on this site is plotted.
A sustained move higher — in a single stock, a sector, or the whole market — over minutes, days, or months. A rally inside a downtrend that fizzles is a relief rally (or bear-market rally); one that follows through becomes a new uptrend. Traders care less about the label than whether rising volume and higher highs confirm the move has legs.
A momentum indicator showing the percentage change in price over a set number of periods. Above zero means price is higher than it was N bars ago; the steeper the line, the faster the move.
Climbing back to a prior equity high after a drawdown. The math is unforgiving — a 50% drawdown needs a 100% gain just to get back to even — which is the whole case for keeping drawdowns small. A recovery factor (net profit ÷ max drawdown) measures how efficiently you dig out.
A momentum oscillator scaled 0–100 that gauges how fast and far price has moved recently. Above 70 is often called overbought and below 30 oversold — though in a strong trend a stock can stay “overbought” far longer than beginners expect.
Today's volume compared with what's normal for that stock. RVOL over 2 means it's trading at more than twice its usual pace — a sign something's happening.
A key price level where selling has repeatedly capped a stock's rise. Pushing above it is a breakout.
Jumping straight back in to win back money you just lost — usually bigger, faster, and without a real setup. It's an emotional reaction, not a strategy, and one of the quickest ways to turn a small red day into a blown-up account. The fix is a daily max loss and a hard stop for the day.
A trade betting a prevailing move is about to turn — a downtrend rolling up (bullish reversal) or an uptrend rolling over (bearish reversal). Higher-risk than trading with the trend, since you're calling the turn, so traders wait for confirmation like a reclaim, a double bottom, or a clear change in character.
Deciding before you enter how much you're willing to lose, then sizing the trade so that loss stays small and survivable. It's what keeps one bad trade from undoing many good ones.
A position you've made impossible to lose on — by booking enough profit and/or lifting your stop to your entry so the worst case left is a breakeven. A common way to manage a winner: take partials, move the stop to break-even, and let the rest ride with zero downside. (Different from the "risk-free rate" on Treasuries — here it just means the trade can't hurt you anymore.)
The size of your potential gain compared with your potential loss on a trade — for example, risking 1 to make 3 (1:3).
A stock making a big percentage move is a runner. A former runner is one that's run hard before, so traders watch it for a repeat.
The small piece of a position you leave on after scaling out of most of it — letting a partial "run" for extra upside while the rest is already booked. (Not to be confused with a "runner" meaning a stock making a big sustained move — same word, different sense.)
Entering or exiting a position in pieces instead of all at once. Scaling in means building your full size across several buys — a starter, then adds as the trade proves itself — so a single bad entry price hurts less. Scaling out means selling in portions as price runs, locking in profit on the way up while leaving some on to keep working. Both trade a bit of perfect-timing upside for smoother execution and tighter control of risk.
A fast style that takes small gains from short-term moves, often holding for seconds to minutes rather than hours.
A real-time tool that continuously watches the market and alerts you the moment a stock triggers your criteria intraday — a new high, a volume spike, a halt. A screener filters a snapshot; a scanner runs live.
A tool that filters the entire market down to the stocks meeting your criteria — price, float, relative volume, a catalyst — so you watch a handful instead of thousands. A screener works off a snapshot; a scanner (its live cousin) alerts in real time.
The Securities and Exchange Commission — the U.S. government agency that regulates securities markets, enforces the rules, and reviews company filings (like the S-1 a company files to go public).
A sale of additional shares after a company is already public. A dilutive secondary issues brand-new shares — raising cash for the company but increasing the share count, which thins each existing shareholder's slice and usually pressures the price; a non-dilutive secondary is just existing holders selling, with no new shares created. For small-caps, a surprise dilutive offering (often priced below market, sometimes dropped overnight or "at-the-market") is a classic catalyst that tanks a runner — which is why traders watch filings closely.
A broad slice of the economy that groups companies doing similar things. The standard framework (GICS) splits the market into 11: Technology, Health Care, Financials, Consumer Discretionary, Consumer Staples, Energy, Industrials, Materials, Utilities, Real Estate, and Communication Services. Stocks in the same sector tend to move together, so a catalyst in one name often drags its peers — the "sympathy" move momentum traders watch for. Sector strength also shows where money is rotating.
When you sell, the cash is not truly yours to reuse until the trade settles — one business day after the trade (T+1) for U.S. stocks. Settled cash has completed that cycle; unsettled funds are sale proceeds still clearing. It mainly bites in a cash account: spend unsettled proceeds and buy again too soon and you can trip a good-faith violation (or "free-riding"), which gets your account restricted. Margin accounts mostly sidestep this. Worth understanding now that more beginners are day trading in cash accounts since the $25K PDT floor was removed.
A single unit of a stock — one share is one piece of ownership in the company. 'Shares' and 'stock' are used loosely, but a share is the countable unit you actually buy and sell.
The total number of a company's shares in existence, including insider and restricted shares. The float is the freely tradable subset of these.
A measure of return relative to the risk taken to earn it — return above a risk-free baseline divided by volatility. Higher is better: it rewards steady gains and penalizes a wild ride to the same place. More common in portfolio land than day trading, but a useful lens on whether your returns are smooth or just lucky.
A position that profits when the price falls, by selling borrowed shares and buying them back lower. It carries open-ended risk if the stock rises instead. The opposite of long.
The total number of shares currently sold short in a stock — a read on how heavily traders are betting against it. Two derived figures drive squeeze potential: short float, the short interest as a percentage of the tradable float (a high reading, say 20% or more, means a crowded short), and days to cover, the short interest divided by average daily volume (how many days of normal trading it would take every short to buy back). The more crowded and harder-to-exit the short side, the more fuel for a short squeeze if price turns up.
A rule that kicks in when a stock falls 10% or more from the prior day's close: for the rest of that day and all of the next, you can only short it on an uptick — at a price higher than the last trade, never by hitting the bid on the way down. The SEC put it in place so shorts can't pile on and drive a falling stock straight into the ground. For small-cap day traders it matters constantly, since these names hit the trigger all the time; once SSR is on, shorting gets slower and harder to fill.
Betting that a stock will fall. You borrow shares from your broker, sell them now at the market price, then aim to buy them back later at a lower price — "covering" — return the borrowed shares, and keep the difference. The steps: (1) borrow shares, (2) sell at the current price, (3) buy them back lower (you hope), (4) return them and pocket the spread. The catch is that the risk is inverted: a stock can only fall to zero (your gain is capped) but can rise without limit (your loss is not), margin is required, and a short squeeze can force a rapid, painful buy-back that drives the price even higher. Used for hedging, speculation, or betting against an overvalued stock.
When a rising price forces short sellers to buy back to cap their losses, and that buying drives the price even higher — a feedback loop.
The profit on something you held for one year or less — which is essentially every day trade and most swing trades. In the U.S., short-term gains are taxed as ordinary income, typically a higher rate than the long-term rate that kicks in after a year. The practical takeaway for an active trader: a real chunk of your green days belongs to the IRS, so set money aside and keep good records. (This is general information, not tax advice — talk to a tax professional about your situation.)
A condition that flags a potential trade — a moving-average cross, a scan hit, an indicator trigger. A signal points your attention at something; it is not an instruction to buy. Treat it as one input into a decision, never the decision itself.
A moving average that weights every period in its window equally; most platforms just label it MA. The 200-day (MA-200) is the classic long-term trend line — many traders read price above the MA-200 as a longer-term uptrend and below it as a downtrend. Because it reacts slowly, it works better as a slow trend filter than a fast momentum signal (that's what the shorter EMAs are for).
Another name for paper trading — placing trades with fake money in a simulator to practice without financial risk.
The gap between the price you expected and the price you actually filled at. In fast or thin markets a market order can fill well past your intended level — slippage quietly eats your edge, which is why traders lean on limit orders for illiquid or fast-moving names.
A company with a relatively small market cap (broadly ~$300M–$2B; “micro” and “nano” caps are smaller still). Their size lets them move fast on modest volume.
The gap between the bid and the ask. A tight spread means good liquidity; a wide spread costs you more to get in and out.
A momentum oscillator (0–100) comparing the latest close to the recent high-low range, on the theory that closes near the top of the range signal strength. Plotted as %K and %D lines; crosses in the overbought or oversold zones are the usual signals.
A share of ownership in a company. Buying a stock makes you a part-owner, and its price reflects what the market will pay for that slice right now.
A basket of stocks bundled into a single number that tracks a slice of the market — the S&P 500 (500 large U.S. companies), the Nasdaq Composite (Nasdaq-listed names, tech-heavy), and the Dow (30 blue chips) are the headline U.S. indices. When someone says "the market was up today," they usually mean an index. Day traders watch them for overall risk-on / risk-off tone, since a strong tape lifts more setups; index ETFs like SPY and QQQ let you trade them directly.
The whole network of exchanges and venues where stocks are bought and sold — the NYSE, Nasdaq, and the systems that connect buyers and sellers.
A change to a company's share count that adjusts the price proportionally without changing the total value you hold. A forward split (say 4-for-1) multiplies your shares and divides the price — 100 shares at $200 becomes 400 at $50. A reverse split does the opposite (1-for-10): 1,000 shares at $0.50 becomes 100 at $5.00. Forward splits often follow strength; reverse splits are common in beaten-down small-caps trying to stay above an exchange's minimum listing price, and they can come right before more share dilution.
A predefined exit that caps your loss if a trade goes against you. A hard stop is an actual resting order; a mental stop is one you promise to honor — and honoring it is the discipline that protects the account.
An order that sits dormant until price hits your trigger ("stop") level, then springs into action — the usual way a stop loss is actually placed. Two flavors with a key difference: a stop-market becomes a market order and fills immediately, but in a fast move you can fill well past your trigger (slippage); a stop-limit becomes a limit order, protecting your price but risking no fill at all if price blows straight through. Fast or thin names punish the wrong choice — many momentum traders accept slippage on a stop-market to guarantee the exit.
A run of consecutive wins or losses. Streaks are part math, part psychology — a losing streak can wreck confidence and tempt revenge trades; a winning streak can breed overconfidence and oversizing. Journaling them helps you answer the pattern instead of the emotion.
A turn at a supply or demand zone — a price area where past selling (supply) or buying (demand) was heavy enough to stall or flip price before. A pivot off demand can launch a bounce; a pivot off supply can cap a rally. Direction depends on which zone price is reacting to.
A key price level where buying has repeatedly stepped in to halt a decline. The mirror image of resistance.
When a broken level switches roles — old resistance that price clears becomes new support on the pullback (bullish), and old support that breaks becomes new resistance (bearish). The flipped level gives traders a clean spot to enter with a tight stop.
A style that holds positions for several days to a few weeks, aiming to capture one "swing" in price rather than scalping intraday wiggles or investing for years. Swing traders accept overnight and weekend risk — gaps on news while they're out of the market — in exchange for needing far less screen time than a day trader. It leans on daily charts, support and resistance, and catalysts that play out over days.
Short for ticker symbol — the letter code that identifies a stock (e.g., NVDA). Same thing as a ticker; 'symbol' is the field name many platforms use.
A preset order or target that locks in gains at a chosen price — the upside mirror of a stop loss.
Reading price and volume on a chart — patterns, levels, indicators like VWAP and moving averages — to judge the likely next move, rather than analyzing the company's financials (that's fundamental analysis). Momentum trading leans heavily on it.
The smallest increment a price can move — for most stocks a penny ($0.01). “Ticking up” means each successive trade prints a little higher; on time & sales, every tick is one execution.
The short letter code that identifies a stock — AAPL for Apple, TSLA for Tesla. Also called the ticker symbol; it's how you pull up a stock on any platform.
The scrolling line of symbols and prices (like the one across the top of this site). Historically a printed paper tape; today it's the live crawl. Different from Time & Sales, which lists individual trades for one stock.
Often called 'the tape' — the running, time-stamped list of every executed trade in a stock (price, size, time). Watching it closely is 'reading the tape.'
How long an order stays active. The common beginner choices are Day (expires at the close if unfilled) and GTC, 'good-til-canceled' (carries over until it fills or you cancel it).
The slice of time each candle represents — and how often the chart prints a new one. Common intraday intervals are 1-minute, 5-minute, and 15-minute, plus the daily for the bigger picture. Also called the timeframe.
The hardware a trader works from — monitors, a fast machine, a dock, hotkeys. A clean multi-monitor desk lets you watch scanners, charts, and order entry at once instead of alt-tabbing at the worst moment.
A stop loss that automatically follows price in your favor, locking in gains as a trade works. You set it a fixed distance away — a dollar amount or a percentage — and as price rises the stop ratchets up with it; when price reverses by that distance, it triggers. Crucially, it never moves backward, so it lets a winner keep running while protecting the profit you have built. The tradeoff: set it too tight and normal wiggle shakes you out early.
The general direction price is travelling over time — higher highs and higher lows is an uptrend, lower highs and lower lows a downtrend, sideways is a range. "The trend is your friend": momentum strategies are built on trading with it, not fighting it.
Selling part of a position to bank some profit (or cut risk) while staying in for the rest of the move.
How much of a stock's float (or total shares) trades in a given period, often shown as a percentage. When turnover reaches 100% of the float, the float has rotated once — see float rotation.
The Cboe Volatility Index — a real-time gauge of how much volatility traders expect in the S&P 500 over the next month, derived from options prices. Nicknamed the "fear index," it usually spikes when the market drops and falls when things are calm, so it tends to move opposite to stocks. Day traders read a rising VIX as a stormier, riskier tape (bigger swings, more failed setups) and a low VIX as complacency.
How much and how fast a price moves. High volatility means big, quick swings — more opportunity and more risk. Small caps are highly volatile, which is exactly why momentum traders watch them.
The number of shares traded over a period. Volume confirms moves — breakouts and momentum need volume behind them to be trusted.
Volume-Weighted Average Price: the day's average price weighted by volume. Many momentum traders treat holding above VWAP as bullish and losing it as a warning. It's one of the A+ checklist boxes.
When a stock that slipped below VWAP pushes back above it and holds — flipping the day's average price from resistance back to support. Momentum traders read a clean reclaim as strength returning, and often use VWAP itself as the risk line.
A tax rule that disallows the loss when you sell a security at a loss and buy the same (or a "substantially identical") one back within 30 days, before or after — a 61-day window in total. The disallowed loss is not gone forever; it gets added to the cost basis of the replacement shares. It catches active traders constantly, since rapidly re-entering the same ticker is routine. It does not stop you trading — it just changes how the loss is counted at tax time. (General information, not tax advice — check with a tax professional.)
A curated short list of stocks you're monitoring for setups, usually built from your scans and screens before the session so you're watching a handful, not the whole market.
A momentum oscillator scaled −100 to 0, close in spirit to the stochastic: it measures where the latest close sits within the recent high-low range. Near 0 is overbought; near −100 oversold.
The share of your trades that close green — 6 winners in 10 is a 60% win rate. On its own it's misleading: a 40% win rate can be very profitable if winners dwarf losers, and a 70% win rate can still bleed if the losses are huge. Always pair it with average R and expectancy.
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