Trading jargon and terminology used in intra-day trading

Trading jargon and terminology used in intra-day trading

"In the short run, the market is a voting machine but in the long run, it is a weighing machine." - Benjamin Graham

Intra-day trading requires quick decision-making and an understanding of the trading jargon and terminology used in the industry. In this blog, we will explore some of the most common trading jargon and terminology used in intra-day trading.

1. Bid and Ask: Bid and ask prices are the prices at which buyers and sellers are willing to buy or sell a stock, respectively. The bid is always lower than the ask, and the difference between the two is called the spread.
2. Spread: The spread is the difference between the bid and ask prices of a stock. A narrower spread indicates a more liquid market, whereas a wider spread indicates less liquidity.
3. Volume: Volume refers to the total number of shares traded in a specific time period. High volume indicates increased trading activity, which can lead to greater price volatility.
4. Liquidity: Liquidity refers to how easily a stock can be bought or sold without affecting its price. Highly liquid stocks have a lot of buyers and sellers, which makes it easier to execute trades quickly.
5. Candlestick chart: A candlestick chart is a type of chart used to represent the price movement of a stock over a specific time period. It shows the opening and closing prices, as well as the high and low prices during that time.
6. Resistance and Support: Resistance refers to a price level at which selling pressure is expected to increase, whereas support refers to a price level at which buying pressure is expected to increase. Traders use these levels to determine when to buy or sell a stock.
7. Stop loss: A stop loss is an order placed by a trader to automatically sell a stock if it reaches a certain price. This helps limit potential losses if the stock price drops below a certain level.
8. Short selling: short selling is the practice of selling borrowed shares in the hopes of buying them back at a lower price. This is a risky strategy that can lead to significant losses if the price of the stock goes up instead of down.
9. Margin: Margin refers to the amount of money borrowed from a broker to purchase securities. Margin trading can increase potential profits but also comes with higher risks.
10. Day trader: A Day trader is someone who buys and sells stocks within a single trading day with the goal of making a profit.

In conclusion, understanding the jargon and terminology used in intra-day trading is essential for any trader who wants to be successful in this industry. By familiarizing yourself with these terms and concepts, you can make more informed decisions and minimize your risks.