| Alternative trading system (ATS) |
Another term to describe [dark pools] or other types of off-market trading arrangements. |
| Bagholder |
An individual who holds stake in an equity that has decreased in value heavily. A Bag Holder typically holds on to these shares or options in the hopes that they will recover. |
| Bear market |
When market conditions produce prolonged and/or substantial declines. |
| Bearish |
A belief that the value of a thing will fall. i.e. I am bearish on SPY. |
| Beta |
A measurement of how a stock performs against the market in general (the S&P 500 for the most part). |
| Bid rotation |
A conspiracy to reduce or increase the price of a security by bidding down or bidding up between all the parties. |
| Bloomberg Terminal |
A reasonably expensive piece of software that gives you a huge amount of information about the market and the securities in it. Sometimes simply called "a terminal." |
| BTD /BTFD / Buy the dip |
When an asset has declined in price in the short-term. Therefore, traders are buying when the price drops in order to profit from some potential future price rise |
| Bull market |
When market conditions produce rising prices or are expected to produce rising prices. |
| Bull run |
Indicates that a security had a substantial increase. |
| Bullish |
A belief that the value of a thing will rise. i.e. I am bullish on GME. |
| Cash |
Value stored in currency as opposed to positions. |
| Chart |
A visual representation of stock pricing and volume. |
| Circuit breaker |
Put in place to interrupt price changing momentum and make sure that information is properly disseminated throughout the market when big moves happen. Could apply to the entire market or specific securities. |
| Clearing/clearance |
The resolution of a settlement process resulting in a successful exchange. |
| Collateral |
Assets or cash provided to a lender to give them an acceptable risk exposure profile. |
| Consolidation |
Periods of time where the price of a security bounces around between a rough high and a rough low. |
| Continuous net settlement (CNS) |
A settlement process used by the NSCC. |
| Dark pool |
A private exchange that is allegedly designed to allow large trades that do not affect the market price of a security as a result of bookkeeping share transfers. |
| Day trading/trader |
Trading on an intraday basis, i.e. purchasing or selling positions and then performing the converse operation generally within a day. |
| Derivative |
A position that derives its value from something else. For example, options are derivatives of their underlying assets. |
| Exposure |
The quantity of currency that was put at risk by opening positions. |
| Financials |
Earnings reports and balance sheets. Used to make a fundamental case for the business. |
| Front-running |
A practice where knowledge of a transaction taking place allows the party with this non-public knowledge to profit from the transaction. Typically this is done by brokerages or market makers. |
| Fundamental investing/trading |
Investing or trading on the basis of balance sheets, earnings reports, sector information, and general financial environment information. |
| Hedging |
Opening positions that will mitigate losses for your primary guesses about asset price direction. |
| HFT |
High-Frequency Trading - A method of trading huge volumes in fractions of a second. |
| Hold the Line |
Holding on to a stock, even if it goes down in value. (See Hodl) |
| Insider |
A slightly overloaded term. Company insiders are company employees that have filing requirements for transfer of their stock. Insider trading is on the basis of privileged knowledge. For example, before an event is public knowledge, the persons that know about the event trade on the basis of information they have that is not public. |
| Interest |
There are numerous financial uses of the term, but the one you'll frequently find in use here is "open interest" which indicates how many of a particular kind of position are being carried from day to day. |
| Investing |
Generally characterized by long-term (1 year or more) holding periods for positions. |
| Limit order |
An order type that expresses a desire to exchange a security at a specific price or better. |
| Limit up, limit down (LULD) |
A reference to [circuit breaker] rules where stocks or market trading in general are halted when there are large enough changes to prices. |
| Liquidity |
The property of being able to be exchanged for cash quickly. More liquid securities can be exchanged quickly for cash and less liquid securities might have delays. |
| Long |
Indicates a bullish strategy such as buying calls, selling puts, buying and holding stock, etc. The belief is that the value will go up. |
| Margin account |
Essentially an account that gives you temporary loans to increase your ability to take advantage of market conditions. |
| Open interest |
Indicates how many of a particular kind of position are being carried from day to day. |
| Over the counter (OTC) |
Used to describe transactions done on [dark pools] - A decentralized market where trading between two parties can take place without the use of a stock exchange. Should be called "under the counter" instead. |
| Payment for order flow (PFOF) |
A compensation scheme between brokerages and market makers where retail investor orders get routed through the market makers. This is opposed to the retail investor paying the brokerage a commission on trades. |
| Portfolio |
A collection of positions. |
| Position |
A purchased or borrowed stake of an asset or derivative. |
| PostMarket / After hours (AH) |
After market hours. US markets are generally open Monday through Friday from 9:30 AM to 4PM Eastern Time Zone. Some trading days have an early close and some trading days don't happen on account of holidays. |
| Premarket |
Before market hours. US markets are generally open Monday through Friday from 9:30 AM to 4PM Eastern Time Zone. Some trading days have an early close and some trading days don't happen on account of holidays. |
| Price action |
The way a price moves over time. |
| Settlement |
The process that happens transparently to you after you buy or sell a position. You might own that position on paper, but it takes time for everything to go through. |
| Short attack |
A planned and coordinated attack by an activist short seller that involves taking out a large short position and then attempting to drive the price down with negative information. |
| Short interest (SI) |
The open interest of short shares, typically expressed as a percentage of [float]. |
| Short ladder attack |
A term that was not in common usage before the GameStop saga. It probably refers to a mechanism of price manipulation where one or more parties short at a specific price level to cause the price to drop and then proceed to do it some more after the price has dropped (hence, a ladder). |
| Short sale restriction (SSR) |
When a security drops by 10% or more from the previous day's closing price, it gets put on short sale restriction. This prevents short selling on "downticks" (price movements downward). Once invoked, it's active until the end of the next trading day, provided that the stock doesn't re-trigger the effect. |
| Stop loss |
An order type that allows you to limit the downside of a position. |
| Swing trading |
Trading that generally holds positions more than a day. |
| Synthetic shares |
Formed when a share is sold short. The share is borrowed and then the buyer also has a share. Now there are two shares. Can come from coupled option contracts. If you buy a put and a call you have created a synthetic share. Can be used to repeatedly short sell, or hide FTDs. |
| Trading |
Generally characterized by short-term (under 1 year) holding periods for positions. There are classifications for various kinds of traders - day traders, swing traders. |
| Trading sideways |
Periods of time where the price of a security does not move very much. Usually denotes uncertainty in the market. |
| Unrealized |
Gains or losses of a security are unrealized until you close the position. |
| Value investing/trading |
Investing or trading on the basis of the value being different from the market's current assessment. This could mean that the market price is thought to be too low or too high. |
| VIX |
Market index representing the market's expectations for [volatility] over the coming 30 days |
| Volatility |
The amount of movement of a measurement. Low price volatility means the price does not move much. Used for both prices and volumes and can be as specific as a stock or as broad as the market. |
| Volume |
The quantity of transactions for a given [security]. |
| Wash sale |
Not to be confused with [wash trade]. It refers to buying or selling a "substantially similar" security within a 30 day window before or after you sell a security at a loss. Tax related. |
| Wash trade |
Not to be confused with [wash sale]. It refers to a transaction where the buyer and the seller are the same entity or a broker and trader are colluding to manipulate the price. This is obviously not legal. |
