Terminology Reference

The highest and lowest prices a stock has traded at over the past 52 weeks. Used as context for momentum — breakouts above the 52-week high often attract momentum interest; proximity to the 52-week low raises questions about underlying weakness.

Trading after the regular session (4:00 PM – 8:00 PM ET). Lower liquidity, wider spreads, and price moves here can differ significantly from where the stock opens the next day. Earnings are frequently released after hours.

Bid = highest a buyer will pay. Ask = lowest a seller will accept. Spread = the gap between them. A wide spread is an immediate transaction cost on every trade.

Breakout: price moves convincingly above resistance on elevated volume. Breakdown: the bearish version — price falling through key support. Not every breakout holds; fakeouts are common at obvious levels.

A chart element showing the open, high, low, and close for a given time period. The body shows open-to-close range. Wicks show extremes hit during the period. Patterns only matter in context of the broader trend and volume.

A specific news event or data release causing meaningful price movement. Earnings, FDA decisions, contract wins, macro data. Without a catalyst, a big move in a small stock is suspicious by default.

When a company issues new shares — via secondary offerings, convertible debt, or option exercises — increasing total share count and typically decreasing per-share value. Common in small caps and biotech.

A company's quarterly financial report. Both the actual numbers AND forward guidance matter — a company can beat estimates and sell off if the outlook disappoints. Markets price expectations, not just results.

Shares actually available for public trading, excluding insider lockups. Low-float stocks can make dramatic moves on small volume because supply is limited. High relative volume on a low-float stock is a meaningful signal.

When a stock opens significantly higher or lower than the prior close, usually because news hit after the regular session. Gaps can fill (price returns to pre-gap levels) or continue in the gap direction.

Buying an asset expecting the price to rise. Maximum loss is your investment.

Borrowing shares to sell now, with the obligation to buy them back later. Profit if price falls; losses are theoretically unlimited since price can rise indefinitely. Requires a margin account.

A temporary suspension of trading by the exchange. Can be triggered by extreme volatility, pending news, or regulatory review. You cannot enter or exit during a halt.

High of Day / Low of Day. These intraday levels often act as reference points for support, resistance, and momentum.

How easily you can enter and exit without meaningfully moving the price. High liquidity = tight spreads and deep order books. Low liquidity = wide spreads and potential for large slippage.

Total company value: share price × total shares outstanding. Mega-cap (>$200B), large-cap, mid-cap, small-cap, micro-cap. Smaller caps have higher volatility, lower liquidity, and higher manipulation risk.

The strength and persistence behind a price move. High momentum means fast price action with conviction. Can be measured by rate of change, RVOL, and the character of pullbacks within the move.

Trading before the regular session (4:00 AM – 9:30 AM ET). Thin, fast, and unreliable for many strategies. Price action here doesn't always carry into the regular session.

A pullback is a temporary retracement within a larger trend. A reversal is a sustained change in direction. You can't always tell which one it is in real time — only hindsight confirms it.

A price zone where selling pressure has consistently appeared, preventing further upward movement. It's a zone, not an exact line.

A price zone where buying pressure has consistently appeared. When support breaks convincingly, it often becomes resistance on the way back up.

Current volume compared to average volume for that time of day. RVOL of 3.0 at 10 AM = trading 3x normal volume for that time. High RVOL signals unusual interest and often precedes larger moves.

Percentage of a stock's float that has been sold short. Very high short interest (30%+) creates potential for a short squeeze if price rises and shorts are forced to cover.

Volume Weighted Average Price — the average price weighted by volume throughout the day. Widely used by institutions as a benchmark. Stocks holding above VWAP are generally considered stronger; below it, weaker.

Number of shares or contracts traded in a period. Volume confirms or questions moves. A breakout on elevated volume has more conviction than the same move on thin volume.

Gives the buyer the right — not the obligation — to purchase 100 shares at the strike price before expiration. You buy calls when you're bullish. The seller is obligated to deliver shares if assigned.

Gives the buyer the right — not the obligation — to sell 100 shares at the strike price before expiration. You buy puts when you're bearish. Also used to hedge long stock positions.

The price you pay (buyer) or receive (seller) for an option contract. Premium = intrinsic value + extrinsic value.

The price at which the option lets you buy (call) or sell (put) the underlying shares.

The date the contract expires worthless if not exercised or sold. All options expire. Time works against buyers and in favor of sellers.

In the Money (ITM) = has intrinsic value. Out of the Money (OTM) = no intrinsic value, expires worthless if stock doesn't reach the strike. At the Money (ATM) = strike near current stock price, highest extrinsic value.

Intrinsic = real, exercisable value based on stock price vs. strike. Extrinsic = time + implied volatility premium. Only extrinsic decays to zero at expiration. Sellers collect it. Buyers race against it.

A sharp drop in implied volatility right after a known event (earnings, FDA). Option prices collapse even if the stock moved in your direction. This is expected and structural — not manipulation. See IV & IV Crush.

How much the option price changes per $1 stock move. Delta 0.50 = $50 gain/loss per contract per $1 stock move. Also approximates the probability of expiring ITM.

How fast delta changes as the stock moves. Highest for ATM options near expiration. Why 0DTE options move so violently.

Daily time decay — how much the option loses in value each day from time passing alone. Negative for buyers, positive for sellers. Accelerates in the final 30 days.

How much the option price changes per 1% change in implied volatility. Matters most around events. Rising IV benefits long options; IV collapse hurts them.

When a short option position is exercised by the buyer, forcing you to fulfill the contract. Can happen any time before expiration for American-style options. Selling a naked call = potentially forced to deliver shares you don't own.

Options expiring the same day. Extremely high gamma, fast-moving, high risk. A 1% adverse move can wipe most of the premium. Requires a completely different approach than standard options.

A legally binding agreement to buy or sell something at a set price on a future date, traded on a regulated exchange. The exchange guarantees both sides.

E-minis are 1/5 the size of the original full contract. Micros are 1/10 of an E-mini. MES = Micro S&P 500 ($5/point). MNQ = Micro Nasdaq-100 ($2/point). ES = E-mini S&P 500 ($50/point). NQ = E-mini Nasdaq-100 ($20/point).

Dollar amount gained or lost per 1.00 full point of movement. ES = $50/point. MES = $5/point. NQ = $20/point. MNQ = $2/point. This is what you need to know to calculate risk and P&L.

Minimum price increment. For ES, MES, NQ, and MNQ: 0.25 (one-quarter point). Four ticks = one full point.

A performance deposit — not a loan — required to hold a futures position. A fraction of the notional value. Fundamentally different from stock margin.

Required to open a futures position. Set by CME, sometimes adjusted by brokers. Intraday rates are often lower — but expire at RTH close.

Minimum account level to keep a position open. Fall below this and your broker can auto-liquidate immediately with no warning required.

The full market value controlled by the contract. One ES contract at 5,000 = $250,000 notional. You post margin but are exposed to the full notional movement.

All futures trading outside RTH. Nearly 24/7. Thinner liquidity, and full exchange margin is required.

If equity drops below maintenance margin, the broker closes your position at market — no call, no email, no warning.

Closing the expiring contract and opening the next active month before expiration.

Two currencies quoted together. EUR/USD = euro priced in U.S. dollars. Buying EUR/USD means buying euros and selling dollars simultaneously.

Smallest standard price move — the 4th decimal place for most pairs (0.0001). JPY pairs use the 2nd decimal. Dollar value per pip depends on lot size.

Standard trade unit. Standard lot = 100,000 base currency units. Mini = 10,000. Micro = 1,000. Most retail traders use mini or micro.

Up to 50:1 in the U.S., higher internationally. Small price moves create large account swings. High leverage amplifies losses just as much as gains.

Extremely fast price movement triggered by economic releases — CPI, NFP, rate decisions. Spreads blow out, stops slip badly. Many experienced traders avoid trading the 5 minutes around major releases.

Interest charged or credited for holding a forex position overnight, based on the interest rate differential between the two currencies.

Buying/selling the actual cryptocurrency. You own it outright. No expiration, no leverage inherent in the position, maximum loss is your investment.

Futures with no expiration, common on crypto exchanges. Leverage can reach 10x, 25x, even 100x. At 100x leverage, a 1% adverse move is a complete liquidation.

Periodic payments between longs and shorts on perpetual contracts, keeping futures price anchored to spot. Holding leverage means continuously paying or receiving funding.

Price × circulating supply. A high price per coin doesn't equal high market cap if supply is small. Used to compare relative size across assets.

Cryptocurrency pegged to $1 USD. USDT and USDC are the most common. Used to hold value within crypto without converting to fiat.

Varies dramatically. BTC and ETH have reasonable depth. Below that tier, altcoins can move 20–30% on a single moderately sized order.

Executes immediately at the best available price. Guarantees a fill but not the price. In fast markets or thin liquidity, your fill can be far from the price you saw.

Executes only at your specified price or better. Guarantees the price but not the fill — you may not get filled if the market doesn't reach your level.

Triggers a market order once price reaches your specified level. The fill price may differ from the trigger — especially in fast conditions.

Triggers a limit order rather than market order when the stop level is hit. Protects against slippage but can result in no fill if the market blows through your limit.

The difference between expected fill price and actual fill. Common during fast moves, news events, and in illiquid instruments. A real, ongoing cost that adds up.

Ratio of maximum risk to potential reward. 1:2 R:R = risking $1 to make $2. Over many trades, even a 40% win rate can be profitable with a strong R:R.

How many shares, contracts, or units you're trading. This is where most risk management actually happens. The right position size lets you execute your plan calmly when the trade goes against you.

Decline from your account's peak equity to a subsequent trough. A 50% drawdown requires a 100% gain just to return to break-even.

Taking too many low-quality trades, driven by boredom, FOMO, or the belief that more activity equals more opportunity. Compounds costs and degrades decision quality.