Trading Terminology Flashcards
Long Trade
You make money when the stock goes up in value
Short Trade
You make money when the stock goes down in value
Bullish Market
The market is going to go up in the future
Bearish Market
The market is going to go down in the future
Bid Price
The highest price a buyer is willing to pay for a stock
Ask Price
The lowest price a seller is willing to sell a stock
Spread
The difference between the bid price and ask price (5.30 - 5.35, Spread = 0.05)
Level II Data
Data containing bid and ask prices
Market Orders
Buying the stock for the price that it is at right now
Pro: You know that you will be in the trade
Con: You are buying the stock for the asking price at that moment
Limit Orders
When a stock goes down to a certain price, you buy the stock
Pro: You can purchase the stock for a cheaper price later
Con: The trade may not get filled if the stock price never reaches the given limit
Stop Orders
When a stock’s price increases to a certain price, you buy the stock
Con: The trade may not get filled if the stock price never reaches the given limit
Stop Loss Orders
When a stock goes down to your stop loss, you will exit the trade
Highs
If the market is making higher highs and higher lows, the market is going up
Lows
If the market is making lower highs and lower lows, the market is going down
A low is only a official low when…
The price surpases the high mark
