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Market Structure

Catalyst

An event or news that triggers a significant price move: earnings, FDA approvals, analyst upgrades, etc.

What is a Catalyst?

A catalyst is any event, news, or information that causes a significant move in a stock's price. Day traders scan for catalysts because they create the volume and volatility needed for profitable setups.

Common catalysts

  • Earnings reports: quarterly results beating or missing expectations
  • FDA approvals/rejections: huge moves in biotech stocks
  • Analyst upgrades/downgrades: institutional opinion shifts
  • Contracts and partnerships: new business announcements
  • Short squeeze setups: high short interest + positive catalyst
  • Sector news: one stock's news lifts or drags the whole sector

Related Terms

Gap

When a stock opens significantly higher or lower than its previous close, creating a 'gap' on the chart.

Momentum Trading

A strategy that buys stocks making strong moves on high volume, riding the trend until momentum fades.

Pre-Market / After-Hours

Extended trading sessions before (4-9:30 AM ET) and after (4-8 PM ET) regular market hours.

Relative 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.