Trade the Trend
Trader Talk
ASK
The lowest price a seller is willing to accept for a stock. Often the price a trader looking to buy a stock must pay if wants order to fill immediately.
Bear Market
A market environment where prices are generally declining, hitting lower lows. This is type of environment where more experienced traders are trying to profit via puts, short selling and/or buying inverse ETF's (Exchange Traded Funds). A Bear market is defined by a stock or market trading more than 20% below the recent highs.
Bid
The bid price is the highest price a buyer is willing to pay for a stock. It's the price you will typically get filled at when you're selling a stock and want your order to be executed immediately.
The Spread
The difference between the bid‑ask is the spread, which reflects market liquidity and impacts trading costs.
Breakout
When a stock moves above resistance level with strong momentum.
Bull Market
A market environment where prices are generally rising. By definition, a market is in a "bull market" once it is trading at least 20% above the recent lows.
Trading Edge
A system or setup providing a repeatable advantage or strategy that improves the probabilities of success in your trades over time.
ETF's
ETF's stands for Exchange-Traded Fund, which is a basket of stocks that trades on an exchange like a single stock.
FOMO
FOMO stands for Fear Of Missing Out. Its an emotional reaction where traders feel got to immediately enter a trade because they fear missing a move, and making profits. Typically a buy after a major run, and typically leads to sitting in a losing position shortly after, as the stock pulls back to a normal more appropriate fair market value.
FUD
Short form for Fear, Uncertainty, and Doubt- negative sentiment or rumours that create panic or hesitation among traders. Typically a time, a shareholder sells at an oversold low only to see the stock rise quit dramatically shortly thereafter.
Limit Order
An order to buy or sell a stock/ETF at a specific price (or better)
Liquidity
How easily a stock can be bought or sold without significantly affecting its price. To determine the liquidity of a ticker, want to check average daily volume aka number of shares traded in a day. Most traders look at three month, or six month average daily.
Long Position
Buying a stock with the expectation that its price will rise. Looking for an upward price movement.
Market Order
An order to buy or sell immediately at the current best price available. Usually only best when want an immediate exit to raise capital.
Momentum
The strength of a price move in a particular direction.
Moving Average
A technical indicator that smooths price data to identify trends. Most commonly used Moving Averages are 20 Day (for short term direction/trend), and 100/200 Day Moving Average (examining the longer term trend).
Over Trading
Taking too many trades, often driven by emotion rather than strategy.
Pullback
A temporary decline in price within a larger upward trend. Typically caused by profit takers selling.
Resistance
A price level where a stock historically struggles to rise above due to selling pressure.
Risk-Reward
The comparison between potential profit and loss on a trade, typically based off of closest support and resistance levels.
Sector
A group of companies that operate within the same industry (e.g Technology, Healthcare, Biotech)
Short Position
Selling borrowed shares with the intention of buying them back at a later time at a lower price. Typically a strategy used when stock is in a downtrend and expecting lower stock price in the future.
Stop Loss
An order placed to automatically exit a trade at a particular price, when price movement goes against you. Risk management parameter for capital preservation.
Trend
The overall direction of a stock or market over time. Uptrend you are looking for higher highs and higher lows, where as in a downtrend you will find the stock hitting lower highs and lower lows.
Volatility
The degree to which a stock's price moves up or down over time, or within a given day. More advanced traders with an edge actually prefer high volatility to take advantage of short term swings to scalp quick profits.
VWAP
Volume Weighted Average Price.
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Trade the Trend provides educational services only. Nothing on this site constitutes financial, investment, or tax advice. All trading involves risk. Past performance does not guarantee future results. Only trade with risk capital you can afford to lose.