RiskPicksTrading Glossary
75 trading terms, from basic concepts to advanced indicators.
A
B
Bag Holder
A trader or investor stuck holding shares of a stock that has dropped significantly below their purchase price, often hoping for a recovery that may never come.
Price & VolumeBid-Ask Spread
The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask).
Technical IndicatorsBollinger Bands
A volatility indicator with a middle SMA band and upper/lower bands set at 2 standard deviations.
Chart PatternsBreakout
When price moves above resistance or below support with increased volume, signaling a potential new trend.
Chart PatternsBull Flag / Bear Flag
A continuation pattern where price consolidates in a tight channel (the flag) after a strong move (the pole).
Chart PatternsBull Trap
A false breakout above resistance that lures buyers in, then quickly reverses below the breakout level, trapping longs in a losing position.
C
Candlestick
A chart element showing open, high, low, and close prices for a time period. The body shows open-to-close range.
Market StructureCatalyst
An event or news that triggers a significant price move: earnings, FDA approvals, analyst upgrades, etc.
Market StructureChop
Choppy, directionless price action where a stock trades sideways in a tight range with no clear trend, repeatedly triggering stop losses on both sides.
Chart PatternsConsolidation
A period where price trades in a tight range, indicating a pause before the next directional move.
D
Dark Pool
Private exchanges where large institutional orders are executed away from public markets to avoid moving the price.
Trading StrategiesDead Cat Bounce
A temporary recovery in a stock that's been falling sharply: the bounce is short-lived and selling resumes.
Chart PatternsDoji
A candlestick where open and close are nearly equal, signaling indecision between buyers and sellers.
E
F
FOMO
Fear of missing out. The emotional impulse to chase a stock that is already running because you are afraid of missing the move, often leading to buying at or near the top.
Chart PatternsFair Value Gap (FVG)
A three-candle pattern where the wicks of candles 1 and 3 don't overlap, leaving an imbalance zone price often returns to fill.
Technical IndicatorsFibonacci Retracement
Horizontal levels at key Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%) that identify potential support and resistance.
Order TypesFill
When your order is executed: 'getting filled' means your buy or sell order has been completed.
Price & VolumeFloat
The number of shares available for public trading, excluding restricted and insider-held shares.
G
H
I
L
Level 2 / Order Book
A real-time display of all pending buy and sell orders at every price level, showing market depth.
Order TypesLimit Order
An order to buy or sell at a specific price or better. Only executes at the limit price or more favorable.
Market StructureLiquidity
How easily a stock can be bought or sold without significantly affecting its price.
Chart PatternsLiquidity Sweep
When price briefly breaks above a high or below a low to trigger stop losses before reversing sharply.
M
MACD
Moving Average Convergence Divergence: a trend-following momentum indicator showing the relationship between two EMAs.
Account & RegulationMargin
Borrowed money from your broker to trade larger positions. Amplifies both gains and losses.
Order TypesMarket Order
An order to buy or sell immediately at the best available price. Guarantees execution but not price.
Chart PatternsMarket Structure
The pattern of higher highs and higher lows (uptrend) or lower highs and lower lows (downtrend) on a chart.
Risk ManagementMax Drawdown
The largest peak-to-trough decline in account value. Measures the worst-case loss experienced.
Trading StrategiesMean Reversion
The theory that price tends to return to its average over time: trading extreme moves back toward the mean.
Market StructureMidday Lull
The low-volume, low-volatility period between roughly 11:00 AM and 2:00 PM ET when trading activity drops off and stocks tend to drift sideways.
Trading StrategiesMomentum Trading
A strategy that buys stocks making strong moves on high volume, riding the trend until momentum fades.
Technical IndicatorsMoving Average
A smoothed line that averages price over a set number of periods, used to identify trend direction.
O
Opening Drive
The first 30-60 minutes after the market opens (9:30-10:00 or 10:00 AM ET), characterized by the highest volume and volatility of the day as overnight orders, gap reactions, and early momentum trades execute.
Trading StrategiesOpening Range Breakout (ORB)
A day trading strategy that marks the high and low of the first 15 or 30 minutes after market open, then trades the breakout in whichever direction price moves outside that range.
Chart PatternsOrder Block
The last opposing candle before a strong move: an area where institutional orders were placed.
P
PDT Rule
FINRA's former Pattern Day Trader rule required a $25,000 minimum for active day trading. Overhauled April 2026: the $25K floor is gone, replaced by a $2,000 margin minimum and real-time intraday margin.
Trading StrategiesPaper Trading
Simulated trading with fake money to practice strategies without financial risk.
Risk ManagementPosition Sizing
Determining how many shares to buy based on your account size, risk tolerance, and stop loss distance.
Market StructurePower Hour
The last hour of the regular trading session (3:00-4:00 PM ET), known for increased volume, volatility, and decisive price moves as institutional traders and algorithms execute end-of-day orders.
Market StructurePre-Market / After-Hours
Extended trading sessions before (4-9:30 AM ET) and after (4-8 PM ET) regular market hours.
Risk ManagementProfit Factor
Total gross profits divided by total gross losses. Above 1.0 is profitable, above 2.0 is excellent.
R
R-Multiple
A trade's profit or loss expressed as a multiple of the initial risk (R). A 3R trade made 3x what was risked.
Technical IndicatorsRSI
Relative Strength Index: a momentum oscillator (0-100) measuring speed and magnitude of price changes.
Technical IndicatorsRelative Volume (RVOL)
Current volume compared to the average volume for the same time of day. RVOL > 2 signals unusual activity.
Price & VolumeRelative Volume (RVOL)
A ratio comparing the current trading volume to the average volume over a lookback period, typically 10 or 20 days. An RVOL of 2.0 means twice the normal volume.
Market StructureRetail Trader
An individual trading their own money through a personal brokerage account, typically with smaller position sizes than institutions.
Risk ManagementRevenge Trading
Emotionally-driven trading to recover losses, typically with larger size and less discipline: almost always makes things worse.
Risk ManagementRisk/Reward Ratio
The ratio of potential loss to potential gain on a trade. A 1:3 ratio means risking $1 to potentially make $3.
Trading StrategiesRound Trip
A complete trade cycle: opening a position and then closing it. Counted as one round trip regardless of share count.
S
SEC Form 4
An SEC filing required when a corporate insider (officer, director, or 10%+ shareholder) buys or sells company stock, due within 2 business days of the transaction.
Account & RegulationSTOCK Act
The Stop Trading on Congressional Knowledge Act of 2012, which requires members of Congress to disclose stock trades within 45 days and prohibits them from trading on non-public information.
Trading StrategiesScalping
A strategy of making many small trades for tiny profits, holding positions for seconds to minutes.
Market StructureSector Rotation
When money flows from one market sector to another as economic conditions change or investors shift risk appetite.
Trading StrategiesShort Selling
Selling borrowed shares to profit from a price decline. Buy them back cheaper to close the trade.
Market StructureShort Squeeze
A rapid price spike caused by short sellers being forced to buy back shares, creating a feedback loop of buying pressure.
Order TypesSlippage
The difference between the expected price and the actual fill price, usually caused by fast-moving markets or low liquidity.
Order TypesStop Loss
An order to sell a position when it reaches a specified price, limiting potential losses.
Chart PatternsSupply and Demand Zones
Price areas where imbalances between buyers and sellers caused sharp moves: stronger than traditional support/resistance.
Chart PatternsSupport and Resistance
Price levels where buying (support) or selling (resistance) pressure historically prevents further movement.
Trading StrategiesSwing Trading
A strategy of holding positions for days to weeks, capturing medium-term price swings.
T
V
VWAP
Volume Weighted Average Price: the average price weighted by volume throughout the trading day.
Price & VolumeVolume
The total number of shares traded during a given period. High volume confirms price moves.
Technical IndicatorsVolume Profile
A chart study showing volume traded at each price level, revealing where the most activity occurred.