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Trading Dictionary

Learn the language of the market in plain English.

65 terms

• After HoursMarket SessionsTrading that happens after the regular session closes at 4:00 PM Eastern Time.
• Ask PriceOrdersThe lowest price a seller is currently willing to accept.
• At the MoneyOptionsAn option whose strike price is at or very near the current price of the underlying asset.
• BearishMarket DirectionAn expectation that price will fall.
• Bid Ask SpreadOrdersThe difference between the highest bid and the lowest ask.
• Bid PriceOrdersThe highest price a buyer is currently willing to pay.
• Break and HoldCharts and LevelsPrice moves beyond a level, closes beyond it, and shows evidence of staying there.
• BreakdownCharts and LevelsPrice falls below a support level or the low of a range.
• BreakoutCharts and LevelsPrice moves above a resistance level or out of a defined range.
• BullishMarket DirectionAn expectation that price will rise.
• Call OptionOptionsA contract giving the buyer the right, but not the obligation, to buy the underlying asset at the strike price before expiration.
• CandlestickCharts and LevelsA chart bar showing the open, high, low, and close for one time period.
• Confirmation CandleCharts and LevelsA later candle that supports the initial break instead of reversing it.
• ConsolidationCharts and LevelsA period where price moves sideways in a narrow range.
• Day TradeRiskA position opened and closed within the same trading day.
• Delayed DataMarket SessionsPrices that update only after a stated delay, commonly 15 minutes.
• DeltaOptionsHow much an option's price is expected to move for a $1 move in the underlying.
• Exchange Traded FundIndicatorsA basket of assets that trades on an exchange like a single stock.
• Expiration DateOptionsThe date an option contract stops existing.
• False BreakoutCharts and LevelsPrice pushes past a level and then quickly reverses back through it.
• GammaOptionsHow fast an option's delta changes as the underlying moves.
• GapCharts and LevelsA jump between one session's close and the next session's open, with no trading in between.
• GreeksOptionsA set of measures describing how an option's price reacts to different forces.
• Historical DataMarket SessionsMarket data from a past session or an earlier timestamp — never current.
• Implied VolatilityOptionsThe market's estimate of how much an asset will move — the size of the move, not its direction.
• In the MoneyOptionsAn option that has intrinsic value at the current price.
• IndexIndicatorsA measure that tracks the combined performance of a group of assets.
• Limit OrderOrdersAn order to buy or sell only at a specified price or better.
• LiquidityRiskHow easily an asset can be bought or sold without moving its price.
• Live DataMarket SessionsPrices that update during the current session, subject to feed coverage.
• Long PositionMarket DirectionOwning an asset or contract, so you profit if its value rises.
• Market OrderOrdersAn order to buy or sell immediately at the best available price — the final price is not guaranteed.
• Moving AverageIndicatorsThe average price over a set number of periods, redrawn as each new period closes.
• Nine EMAIndicatorsA fast exponential moving average that reacts quickly to recent prices.
• Opening RangeMarket SessionsTAI defines the opening range as the first 15 minutes of regular trading, 9:30 AM through 9:45 AM Eastern Time.
• Opening Range BreakoutMarket SessionsPrice breaking above the opening range high or below the opening range low.
• Option ContractOptionsAn agreement covering the right to buy or sell an underlying asset at a set price before a set date.
• Out of the MoneyOptionsAn option with no intrinsic value at the current price.
• PremarketMarket SessionsTrading before the regular session, from 4:00 AM to 9:30 AM Eastern Time.
• PremiumOptionsThe price paid for an option contract.
• Price ActionCharts and LevelsHow price actually behaves on the chart, read without relying on indicators.
• PullbackCharts and LevelsA temporary move against the prevailing trend.
• Put OptionOptionsA contract giving the buyer the right, but not the obligation, to sell the underlying asset at the strike price before expiration.
• Regular Market HoursMarket SessionsThe main US session, 9:30 AM to 4:00 PM Eastern Time on trading days.
• Resistance LevelCharts and LevelsA price area where selling has repeatedly stopped price from rising.
• RetestCharts and LevelsPrice returning to a broken level to see whether it now holds from the other side.
• Risk to Reward RatioRiskHow much you stand to lose compared with how much you stand to gain on a trade.
• ScalpRiskA very short trade aiming for a small move, often held seconds to minutes.
• Short PositionMarket DirectionA position designed to benefit from a decline in price.
• SpreadOptionsTwo different meanings: the gap between bid and ask, and an options position built from multiple contracts.
• Stop LossRiskA predefined exit that closes a trade once price moves against you by a set amount.
• Strike PriceOptionsThe price at which an option can be exercised to buy or sell the underlying asset.
• Support LevelCharts and LevelsA price area where buying has repeatedly stopped price from falling.
• Theta DecayOptionsThe loss in an option's value simply because time is passing.
• Ticker SymbolIndicatorsThe short code that identifies a tradable security on an exchange.
• TrendMarket DirectionThe general direction price has been moving over a chosen timeframe.
• Twenty One EMAIndicatorsA smoother exponential moving average that gives broader short-term trend context.
• Two Hundred SMAIndicatorsThe average of the last 200 closing prices on whatever chart timeframe you are viewing.
• Underlying AssetOptionsThe stock, ETF, or index that a derivative contract is based on.
• VegaOptionsHow much an option's price changes when implied volatility changes by one point.
• VolatilityRiskHow much and how quickly price moves.
• VolumeIndicatorsThe number of shares or contracts traded during a period.
• Volume ConfirmationIndicatorsUsing an increase in volume to support the validity of a move.
• VWAPIndicatorsThe current session's average price, weighted by volume.
• WickCharts and LevelsThe thin line above or below a candle body showing prices that were reached but not held.

TAI provides trading education and market information, not personalized financial advice.