📘 Core Trading Terms
| Term | Meaning |
|---|---|
| Bid Price | The highest price a buyer is willing to pay for an asset. |
| Ask Price | The lowest price a seller is willing to accept. |
| Spread | The difference between the bid and ask price — a hidden cost of trading. |
| Order | An instruction to buy or sell a security. |
| Market Order | Buys/sells immediately at current market price. |
| Limit Order | Sets a specific price to buy/sell — won’t execute unless the market hits it. |
| Stop-Loss Order | Automatically sells to limit your losses if the price drops to a certain point. |
| Take-Profit Order | Automatically sells to lock in profit once a certain price is reached. |
📊 Technical Terms
| Term | Meaning |
|---|---|
| Candlestick Chart | A chart showing price movement (open, high, low, close) for a given time period. |
| Volume | The number of shares or contracts traded in a period — shows market activity. |
| Support | A price level where a stock tends to stop falling and bounce back. |
| Resistance | A price level where a stock tends to stop rising and pull back. |
| Trend | The general direction of a stock’s price (uptrend, downtrend, sideways). |
| Breakout | When price moves outside a defined support/resistance or chart pattern. |
| Volatility | How much and how quickly a price moves — high volatility means bigger swings. |
💼 Account & Trade Management
| Term | Meaning |
|---|---|
| Portfolio | The collection of all your investments. |
| Equity | The value of your portfolio (or an individual position). |
| Leverage | Borrowed money used to increase potential gains (and risk). |
| Margin | Money you borrow from a broker to trade — must be repaid. |
| Drawdown | The decline from a peak to a low point in your trading account — measures risk. |
| P&L (Profit and Loss) | Your gains or losses on a trade or total account. |
🧠 Types of Traders
| Term | Meaning |
|---|---|
| Day Trader | Buys and sells within the same day — avoids overnight risk. |
| Swing Trader | Holds positions for days or weeks to catch medium-term moves. |
| Scalper | Makes quick trades lasting seconds or minutes — small gains, high frequency. |
| Position Trader | Long-term trader, holds positions for months or years. |
💡 Risk & Psychology
| Term | Meaning |
|---|---|
| Risk/Reward Ratio | Compares potential loss vs. potential gain — key to good trade planning. |
| Overtrading | Trading too frequently or emotionally — a common mistake. |
| FOMO (Fear of Missing Out) | Jumping into trades late due to hype or emotion. |
| Discipline | Sticking to a strategy or rules regardless of emotions. |
| Backtesting | Testing a trading strategy using historical data. |
📦 Bonus: Advanced but Common
| Term | Meaning |
|---|---|
| Short Selling | Selling a stock you don’t own, betting the price will go down. |
| Liquidity | How easily an asset can be bought/sold without affecting the price. |
| Slippage | The difference between expected and actual trade price — happens in fast markets. |
| Hedging | Taking a trade to offset risk in another trade. |