Stock Trading Terms

Below you will find definitions of some of the stock trading terms frequently asked about and used throughout this website. I will be making additions to this list as time goes by.


Bear Market:
A period of declining market prices generally accepted as starting 20% or more from the peak, or top of the market. There is widespread pessimism during a bear market.
Blue Chip Stocks:
Typically large cap stocks that have a track record of good performance and are profitable. Read more here about Blue Chip Stocks
Bull Market:
A period of increasing market prices generally accepted as starting 20% or more from the low, or bottom of the market. There is widespread optimism during a bull market.
Cost Basis:
The cost of purchasing a financial asset including commissions, dividends, stock split adjustments, future sales or purchases on the same position and any Option Trading Strategies used in conjunction with the same position.
Deflation:
The term used for a contraction in the volume of available money and credit that results in a decline in previously inflated prices.
ETF:
"Exchange Traded Fund". An investment fund that represents a basket of stocks, that trade intraday like a stock. Prices can mis-represent the actual stocks prices at times and therefore are adjusted on a periodic basis to correct this.
ETN:
"Exchange Traded Note". A structured investment product that is based on Debt Notes. These Notes trade intraday like a stock.
Inflation:
The term used for an expansion in the volume of money and credit available that results in an increase in prices at faster than normal levels.
Limit Order:
An order that once triggered, gets filled only at the price you specify or better.
Market Order:
An order that gets sent into the market and gets filled at the next available price.
NAV:
Net Asset Value. The value per share of a mutual fund or closed-end fund calculated by taking the total assets minus liabilities of the fund, divided by the number of outstanding shares. Read more here about what is NAV
OTCBB Stock Trading:
(OTCBB = Over-the-Counter Bulletin Board) Trading involving much more risk, caution, potential volatility and practice. Check out more info we've written here on OTCBB Stock Trading
Quantitative Analysis:
The process of applying numerical values and mathematical formulas to a companys financial statistics such as revenues, debt, income, market share.
Reverse Stock Split:
Also know as a Reverse Split, this is an action taken by a corporation that reduces the number of stock shares outstanding and increases the value of each individual new share produced after the exchange. Read more here:
Short Selling:
The process of selling a stock before you own the stock, and then buying it back at a later time/date.
Stop Limit:
An order that can be placed at a certain price or percentage point to help minimize losses of a position you already have open. Once triggered, this order becomes a "limit" order.
Stop Loss:
An order that can be placed at a certain price or percentage point to help minimize losses of a position you already have open. Once triggered, this order becomes a "market" order.
Trailing Stop Loss Order:
You set an initial dollar or percentage amount at your maximum acceptable loss that follows (trails) the stock price as it moves up and down. Once triggered, this order becomes a Market Order.
Trailing Stop Limit Order:
You set an initial dollar or percentage amount at your maximum acceptable loss that follows (trails) the stock price as it moves up and down. Once triggers, this order becomes a Limit Order.
Trend line:
A Trend Line is a line drawn on a chart that connects two or more points and extends into the future. The trend line drawn can be used to help identify past and future support and resistance levels.

Looking for a specific stock trading term and cannot find it here? Take a look at InvestorWords.com for a compilation of over 6000 investing related definitions.




Return From "Stock Trading Terms" To "Basics"

Go To Complete "Beginner Stock Market Investing Category Pages"


Elliott Wave Videos

Learn to trade in the direction of the forecasted trend with this free video course. Click here to start watching: Free Elliott Wave Video Lessons

Free Newsletter Updates

Trading Resources

Stock Trading Software
Stock Trading Software
Stock Trend AnalysisStock Trend Analysis