Trading Terms Glossary
Trading can certainly be an intriguing concept to many; however, to really understand how it works, it is crucial to understand the language and terminology used in trading.
This beginner’s guide lists some of the main trading terms to help new traders navigate the markets more easily and with confidence.
We have divided the terms into relevant subcategories.
Glossary of Basic Trading Terms for Beginners
Assets or trading assets refer to financial instruments that have an economic worth. This can range from Forex to Indices, Commodities to Stocks, among others.
The highest price a trader is willing to pay in order to purchase a certain market asset.
The price given to a certain stock or security on an exchange.
The buying or selling of a certain security immediately at the current market price.
Trading Strategy Terms
Opening a buy position on a certain market asset.
Opening a sell position on a particular asset.
A strategy that attempts to benefit from price swings over days to several weeks.
Buying and selling assets within a short period—minutes, hours, or a single day; commonly in Forex.
A longer-term approach whereby traders keep a position open for weeks or months.
Utilizes chart trends to analyze an asset’s overall direction and potentially benefit from up or down moves.
Fundamental Analysis Terms
Price to Earnings ratio used to assess whether a company’s stock is expensive or cheap relative to earnings.
Earnings Per Share—company profit divided by number of shares outstanding; higher EPS can indicate more profitability.
otal market value of a publicly traded company’s outstanding shares.
Technical Analysis Terms
A price level where demand is strong enough that it’s hard for the asset to fall further.
A price level where supply is strong enough that it’s hard for the asset to rise further.
A line drawn on a chart to show price trends and the asset’s highs and lows.
A technical indicator that smooths price data to help gauge direction.
General Market & Trading Terms
Unpredictable and rapid price swings.
Opening a position without committing the full amount; can magnify gains and losses.
Capital needed to open and maintain a leveraged position.