Trading can seem daunting to anyone just starting out, and all the terminology you have to learn makes it worse.
Learning some key terms can help a beginner trader start to understand the basics of trading, and prepare them for more in-depth trading education.
Below is a list of 50 terms that all traders should know.
This guide to trading lingo is especially helpful for T3 Live subscribers — it will prepare you to better follow our instructors and to start profiting quickly.
Arbitrage
Arbitrage is the practice of buying and selling an asset in two different venues simultaneously to profit off a difference in the price. There is typically no holding period because both transactions happen at the same time.
Ask
The ask price is the price a seller is willing to accept for their stock. An ask quote will include the price and the number of share available to be sold at that price.
Bear Market
A bear market is a market that has declined 20% from the highs. The phrase “bear market” sometimes also refers to an individual security or commodity that has declined by at least 20%.
More on Bear Markets
Bid
In comparison to the ask price, the bid price is the amount a buyer is willing to pay for a stock.
Blue Chip Stocks
“Blue chip stocks” are big name companies that are well-established and with a large market value. The name comes from blue poker chips, which are the most valuable chips. Blue chip companies are usually valued at $10 billion or more and can be found in a major market index, like the S&P 500 or Nasdaq 100.
Bull Market
A bull market is the opposite of a bear market. In a bull market, stocks are 20% off the lows.
More on Bull Markets
Candlesticks
A candlestick looks like the wax part of a candle, and marks the opening or closing price of the stock and will be either black or red (if the stock closed lower) or white or green (if the stock closed higher). The thinner parts of a candlestick on the top and bottom, which look like the wicks on a candle, mark the highest and lowest prices of the day.
T3 Live Director of Education Sami Abusaad explains the candlestick chart in the Strategic Day Trader Ultimate Guide
Common Stock
Common stock is the type of stock that most people invest in; it represents a share of ownership in a corporation and affords the investor the right to vote on the company’s board of directors and policies. Common stock owners also have a claim on profits, although they are at the bottom of the priority ladder if the company goes bankrupt (creditors and preferred shareholders receive their shares first).
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