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Day Trading Lingo: Basic Vocabulary to Help You Dive In and Have Fun

Day Trading Vocabulary

For a beginner Day Trading seems to have its own lingo and vocab that can seem scary when you first hear it. However, once you know the few basic terms, it really is quite simple and super easy to remember.

And in this post I will teach you the most common day trading terms you need to know. The day trading terms that are discussed in this post are definitely not everything you need and there are more terms you will learn over time. 

But these few basic terms and vocabulary are the fundamental ones you should become familiar with if you are new to trading.

After learning the basic vocabulary needed to understand what is going on with day trading you should then be in a great position to go on to  master the fundamentals of day trading and market movements which is the next important piece of the puzzle for trading success.

Basic Day Trading Terms you Should Know

There is a lot to learn in day trading in order to be profitable and developing the necessary skills is a big part of it. But without knowing th basic terminology and vocabulary you won’t be able to improve your skill and knowledge in trading.

So read on below, learn these basic day trading terms and you will soon find out that they are not as scary or complex and you  might have first thought.

So let’s break them down!

Intraday trading – this is commonly known as ‘day trading’. This is when you get in and out of all positions within the same day. With intraday trading you try to make profits through the trading day;s price movements and get out of positions before the trading day closes i.e not holding anything overnight or longer.

more day trading terms
Learn these basic day trading terms and you will soon find out that they are not as scary or complex and you  might have first thought.

Broker – in order to trade in stocks you  need to have a broker who will connect to the exchange where you can trade. The broker is the individual or firm who arranges the buy and sell transactions between traders.

Ask price – is a very common day trading term you need to know. It is also known as offer price and it is the lowest price that a seller is willing to accept i.e how low a seller is willing to go to sell a stock.

Bid price – another very important term that is related to the Ask price is the Bid price. This is the highest price that a buyer will agree to pay to buy an asset or stock.

Going long – going long means opening up a long position from which you want to make profit from the price going up i.e buy and then sell at a higher price. 

Bullish – this is when you are optimistic and fairly confident about the market going up and you plan to sell at a higher price. You probably have seen the big bull we see pictures of on Wall Street. This is where we get the bullish term from. The bull is charging.

bullish is one of the day trading terms you should know
‘Bullish’ is a fairly commonly used day trading term that you should be familiar with.

Going short – going short or opening a short position is a trade you would take if you are assuming price will go down from the price you enter the trade at. When you go short you sell stock that you borrow and plan to buy back at a lower price and take the difference as your profit.

Bearish – being ‘bearish’ in trading means you are pessimistic about price going up and assume that the market is going down. 

Buy – this is when you enter the market with the prospect of it going up so you can sell it at a higher price

Sell – this is when you are entering the market with the prospect of it going down, and you can earn money on the difference

NOTE – in the Futures Market, going long or going short is identical as in what we look for to trade. Future traders don’t care at all if the market is going up or down, as long as we enter properly into the trade and have specific targets (either less than our price or higher than our price)

Market Order – this is an order you would place to buy or sell a stock at the market price. This is usually the fastest way to enter and/or exit a trade i.e by setting your order to execute at the market price.

Liquidity – this is a very important term to know in trading as it relates to how easily you can buy or sell a stock. If there are a lot of buyers and sellers there is high liquidity and your order is easier to fill. Low liquidity means there are not many buyers or sellers and you could find it hard to buy or sell a stock.

day trading terms you should know
Charts are where you will draw, plot and plan out your trades and let’s you use indicators to try to gauge the strength and direction of the market you are trading.

Charts – this is the holy grail for traders, everything you will be doing is from your chart and indicators.

Indicators – this is what you will be using on your chart to help you see the green lights for your entries.

Software – many traders and companies will be talking about softwares, all I have to say is beware. You don’t EVER need to buy any software to trade. Indicators, for the most part will be what you use, and they usually come for free with good chart/trading platforms.

Trading Platforms – this is the actual software that your charts will be coming from. You will need to use a platform that is connected to your brokerage account. I recommend only working with trading platforms that are free.

Risk management – you always, ALWAYS, need to have a risk management in place. You can never ever enter a trade without having your risk already there, or will lose it all. You can set this up with your trading platform, by putting in the amount of risk you are willing to give per trade. Or, if you want to manage it manually, make sure you know exactly what is the risk you are willing to put up and get out when it is in that range – NO MATTER WHAT.

Stop limit – this is your risk management. You will always have one in place. When you take a course that program can advise on the best stop management for you. But never enter a trade without one. You will lose everything. Stop limit is what you set on your trading platform so it is there to help you get out when you say you want to.

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Target – this is what your target profit will be. It can either be up or down depending if you are buying or selling (going long or going short). You can set this up with your trading platform, or know when you want to get out. Remember, the key is not to get greedy and get out when you say you will.

Market entry – this is when you enter the market at the exact price it is at the moment. Traders never do this, you always know which price you want to enter at.

Limit Order – This is how traders enter the market. They have their entry waiting for a good trade setup at a certain price point that they are looking to enter in.

Let me know what questions you have and also if you have heard other terms and need help with

Day Trading Terms You Need to Know: Wrap up

So there you have it. Above are the most commonly used and most important basic day trading terms you need to know in order to become a successful and profitable day trader.

Try no to get too overwhelmed and understand that once you get the hang of these terms they will become much easier to use and understand.

And as always I would recommend keeping things simple as much as possible whether simplifying your day trading technical analysis and indicators or even with the terminology and vocabulary for day trading.

Let me know what questions you have and also if you have heard other terms and need help with.

Related Read: Day Trading Terms And Definitions

How to Start Day Trading

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Day Trading Lingo - Basic Vocabulary to Help You Dive In and Have Fun
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