Stock Market Terminology and Definition

Account Type: Cash
A brokerage account where you can only trade with the cash you deposit. You must fully pay for purchases, and proceeds from sales must settle within two business days (T+2 rule applies).
Account Type: Margin
A brokerage account that allows you to borrow money from your broker to trade. Offers leverage but also comes with interest charges and increased risk.
Acquisition
A transaction in which one company purchases another, either by buying its stock or assets, often leading to strategic growth and synergies.
After-Hours Market
The period of trading that takes place after the regular market session, typically from 4:00 PM to 8:00 PM EST. It can show extended volatility due to earnings or news releases.
Analysts
Financial experts who research and evaluate stocks, issuing buy, sell, or hold recommendations based on company performance and market trends.
Ask
The lowest price a seller is willing to accept for a stock.
Average Day Range (ADR)
A metric that calculates the average distance between a stock's daily high and low over a set period. It helps traders anticipate potential price movements.

Bollinger Bands
A volatility indicator that consists of a middle band (simple moving average) and two outer bands based on standard deviation. Used to assess whether a stock is overbought or oversold.
Bid
The highest price a buyer is willing to pay for a stock.
Big New Investor
A well-known institutional or individual investor acquiring a significant stake in a company can increase confidence and drive up stock prices.
Blue Cap Stocks
Large-cap companies have a market capitalization typically over $10 billion. These stocks are generally stable, well-established, and considered safer long-term investments.
Breakout
When a stock price moves above a defined resistance level with increased volume, it signals potential continued upward momentum.
Brokers
Platforms that allow you to buy and sell stocks.
- Good Brokers: Offer low fees, fast execution, intuitive platforms, and quality customer service.
- Bad Brokers: May have high fees, lagging execution, and poor support, leading to missed opportunities and frustration.
Borrowing Shares to Short
The process of borrowing stock from a broker to sell short requires a margin account.

Catalysts
Events that drive stock price movements include earnings reports, news releases, analyst upgrades, or major business developments.
Chatrooms
Online communities where traders discuss stocks, market trends, and trading strategies often influence market sentiment.
Contract Winners
Companies that secure large business contracts, government deals, or other major agreements that positively impact their stock price.

Due Diligence
The research and analysis a trader or investor conducts before making an investment. This includes reviewing company financials, filings, sector news, and risks.

Earnings Winner
A stock that rises significantly after a company reports better-than-expected earnings results.
End of Day (EOD)
Refers to the market's close at 4:00 PM EST. EOD prices are used for analysis and planning future trades.

Facts vs Rumors
Facts are verified, data-backed information, while rumors are unverified claims that may spread through social media, chat rooms, or speculative reporting.

Gap Down
When a stock opens significantly lower than its previous closing price, it is often due to negative news.
Gap Up
When a stock opens significantly higher than its previous closing price, it is often due to positive news.
Green on the Day
A stock is currently trading above its previous day’s closing price.
Green to Red (G/R)
A setup where a stock opens green (above the previous close) but fades below the prior day's closing price, signaling potential weakness.

High of Day (HOD)
The highest price a stock reaches during the trading day. Breaks of HOD can signal momentum.
HTB (Hard to Borrow)
A designation for stocks that are difficult to borrow for short selling due to limited availability.

IPO (Initial Public Offering)
The first time a private company sells its shares to the public, allowing investors to buy into the company.

Level 2
A trading tool that shows real-time bid and ask prices from multiple market participants.
Limit Orders
Orders to buy or sell a stock at a specific price or better.
Low Float
Stocks with a small number of shares available for public trading. These tend to be highly volatile and can spike rapidly on volume.

Market Capitalization
Total value of a company's outstanding shares, calculated as share price × number of shares.
Market Orders
Orders to buy or sell a stock at the best available price.
Micro Cap
A company with a market capitalization between $50 million and $300 million.

Nano Cap
A company with a market capitalization below $50 million.
Newsletters
Periodic reports providing trading insights, alerts, and stock ideas.

Offerings/Financings
When a company raises capital by issuing new shares or securities.
OTCMarkets.com
A platform for Over-the-Counter stocks (non-exchange-listed securities).

Partnership
A collaboration between two companies to expand product or market reach.
PDT Rule (Pattern Day Trader Rule)
A FINRA regulation that requires traders who execute four or more day trades within five business days (in a margin account) to maintain a minimum account balance of $25,000. Violating this rule can result in account restrictions.
Penny Stock
Stocks that trade under $5. Highly speculative, often with low volume and high volatility.
Premarket
The session before the market opens (typically 4:00 AM to 9:30 AM EST). Traders use it to react to earnings, news, and global events.
Press Releases
Official announcements from companies regarding key events.
Public Float
Shares available for public trading, excluding restricted insider shares.

Red on the Day
A stock trading below its previous day's close.
Red to Green (R/G)
A stock that starts the day red (below the previous close) and turns green during trading, often signaling momentum.
Resistance
A price level where selling pressure tends to overcome buying interest, preventing the stock from moving higher.
Restricted Shares
Shares that can't be traded immediately due to lock-up periods.
Reverse Merger
A method for private companies to go public by merging with a public shell company.

SEC Filings
Mandatory documents companies file with the SEC, including 10-Ks and 8-Ks.
Shares Outstanding
The total number of shares a company has issued.
Share Price
The current value of a single share of stock.
Short Sale Restriction (SSR)
Restricts short selling on a stock that has dropped more than 10% in one day.
Short Selling
Selling borrowed shares in anticipation of a price drop to buy back at a lower price.
Short Squeeze
A rapid price increase that forces short sellers to cover positions, pushing prices even higher.
Small Cap
A company with a market capitalization between $300 million and $2 billion.
Social Media
Platforms like Twitter and Reddit, where stock news and rumors can go viral.
Stock Halt
A pause in trading, often due to volatility or pending news.
Support
A price level where buying interest is strong enough to overcome selling pressure, helping to prevent the stock from falling further.

Time in Sales
A real-time record of each trade executed, showing the price, size, and time of transaction. Used to confirm momentum, breakouts, or reversals.

Volatility
The degree of variation in a stock’s price over time. High volatility means larger price swings, which can provide an opportunity but also increase risk.
Volume
The number of shares traded during a given period. Higher volume generally indicates greater interest or momentum in a stock.

Unrestricted Share
Shares that can be traded freely without any restrictions.

Wall of Buyers
A large number of buy orders at a price level, acting as support.
Wall of Sellers
A large number of sell orders at a price level, acting as resistance.

“Your Edge Starts Before the Breakout.”

Stock Market Terminology and Definition

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