By Your Trading Mentor,
Trading Angel
When you first start trading the financial markets it can be like learning a new language. So I‘ve made this guide for you to help save you as much time as possible navigating your way through the new lingo. I’ve first of all listed all the words in order of how basic they are and how likely you will be to need to understand and find them when needed, with the slightly more obscure ones at the end. I’ve then decided to list them again below that in alphabetical order so that you can find the one you need quickly and easily if you are in a hurry
Happy Trading!
Love From, Your Trading Mentor x
LONG
A long position in trading means buying.
SHORT
A short position in trading means selling.
BULLS AND BEARS
In trading, bulls refer to the buyers and bears refer to the sellers. If a trader was looking for buy positions they could be said to be bullish, whereas if they were looking for sell positions they could be said to be bearish. It’s thought the origin comes down to the way in which the animals fight. Bulls fight UP with their horns and bears claw DOWN.
BROKER
A broker is an independent person or a company that organises and executes financial transactions on behalf of another party. They can do this across a number of different asset classes, including stocks, forex, real estate and insurance. A broker will normally charge a commission for the order.
ASK PRICE
“ask” refers to the lowest price at which a seller will sell the stock. The bid price will almost always be lower than the ask or “offer,” price. The difference between the bid price and the ask price is called the “spread.”
BID PRICE
“bid” refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The term ask refers to the lowest price at which a seller will sell the stock. The bid price will almost always be lower than the ask or “offer,” price.
SPREAD
The spread is the difference between the bid and the ask price. It is effectively a fee which you pay to your broker for each trade which you place. It’s always a good idea to try and find broker with the lowest spread possible to make it easier for you to make money.
SCALP TRADER
Scalp trading is the shortest form of trading with traders getting in and out of their positions very quickly, often just minutes but sometimes as quickly as seconds. Scalp trading requires a lot of attention to detail and very precise entries, while new traders are often easily tempted by the quick profits of scalp trading it can be a lot more difficult to master than slower forms of trading. Scalp traders will use small time frames such as 15M or 5M sometimes they even use 1M chart.
DAY TRADER
Day traders open and close their trades in the same day so they often hold their trades for a few hours but close them before going to bed meaning they wont have trades open overnight and they won’t need to pay overnight fees to their brokers. Day traders will pay close attention to daily market cycles such as session open and close times. They will trade on time frames such as 1D chart and 4H and even smaller time frames for entries such as 1H and 15M.
SWING TRADER
Swing traders will hold their trades overnight so they will hold for at least a couple days sometimes even as long as weeks. They will use time frames such as , 1W, 1D or 4H for entries.
POSITION TRADER
Position traders are not interested in the small day to day fluctuations in price, they are really only interested in the bigger picture as they hold their trades for long periods of time, weeks, months and even years. Understanding fundamental analysis and what moves the markets long term becomes a key skill for position traders.
PRICE ACTION
Price Action is a form of technical analysis which looks at price and time rather than indicators. Forex traders look at candlesticks and charts and the journey they have been on in a certain time period, to help them make decisions about market sentiment, where the price is likely to go next and also for precise entries and exits. This is price action trading. Ultimately price action is any action which is taken from price. It includes support and resistance levels, trend lines and channels.
INDICATORS
The use of technical indicators in trading is part of technical analysis. Indictors are tools which traders use to help them make decisions on their trading, they are often based on lagging information technical indicators are used to see past trends and anticipate future moves. Moving averages, relative strength index, and stochastic oscillators are examples of technical indicators
SLIPPAGE
Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. Slippage can occur at any time but is most prevalent during periods of higher volatility when market orders are used.
MARGIN
Margin is the amount of equity a trader has in their broker account. When a trader opens a broker account they need to have a certain amount of margin in that account at all times. If you go over this limit you will be given margin call from your broker, which is pretty much one of the most disastrous things that can happen to a trader.
MARGIN CALL
When you get a margin call from your broker this means you don’t have enough equity in your account to keep trading and usually your broker will close any open trades and tell you to add more money before you are allowed to continue trading. You must always have a certain amount of margin or equity in your account to cover your open trades, this is to prevent your broker for being penalised for your bad trading decisions.
LEVERAGE
Leverage in trading means you are given more buying power so your trades are worth more. Leverage is a double edged sword as you can make more money from leverage if you are a good trader but you can also lose more money more quickly if you make bad trading decisions. If, for example, you had leverage of 1:100 this would mean that you are able to trade with 100X the equity which is in your account
COVERING
When a trader closes a short position they must cover their position. When they buy a market to cover the shares they borrow from their broker.
SUPPORT AND RESISTANCE
Support and resistance levels in forex refers to horizontal lines which traders draw across the chart to help them identify key levels. Resistance levels are above price and support levels are below price. However these can be interchangeable as what was once support can become resistance and vice versa. Support occurs when falling prices stop, change direction, and begin to rise. Support is often viewed as a “floor” which is supporting, or holding up, prices. Resistance is a price level where rising prices stop, change direction, and begin to fall.
BREAKOUT
A breakout is any price movement outside a defined support or resistance area. Breakout trading involves looking for the price to cross these key levels and accelerate on to the next .
TECHNICAL ANALYSIS
Technical analysis is a range of techniques used to try and forecast future price movements of financial markets based on historical price movements and patterns. Technical analysis is when traders use the information on a chart to help them make trading decisions. This includes the use of price action and technical indicators.
FUNDAMENTAL ANALYSIS
Fundamental analysis looks at what is going on in the world rather than on the charts to make trading decisions. Fundamental analysis consists of three main parts: Economic data. Industry analysis. Company analysis.
MARKET SENTIMENT
Market sentiment refers to the overall attitude of traders toward a particular financial market.
RALLY
A rally refers to a period of continuous increase in prices
FADING
Fading is a contrarian strategy where traders seek to buy an asset whose price is falling and short one whose price is rising.
CABLE
Cable refers to the forex pair USDGBP, it dates from the days of the transatlantic cable that enabled faster communications between London and New York.
NINJA
Ninja refers to the forex pair USDJPY, because the famous heroic character originates from Japan.
DOLLAR
Although several currencies are types of dollar (such as Australian Dollar or New Zealand Dollar) referring to a Dollar pair or just Dollar this typically means US Dollar
LOONIE
Loonie is the nickname for the Canadian Dollar because the $1 Canadian coin has a picture of a loon on the reverse side of the coin.
AUSSIE
This refers to the Australian Dollar
KIWI
This refers to New Zealand Dollar
SWISSY
This refers to the Swiss Franc
PROP FIRM
A proprietary firm, otherwise known as a prop firm, is company which will fund a trader so that the trader can trade with money which isn’t their own. There is then an agreed upon split of profits usually around 50/50. This can be mutually beneficial if a trader knows how to trade but doesn’t have enough of their own money to make their profits worth while, whereas the prop firm may have the capital available to be invested and are happy to delegate the workload to the trader.
CFD
Contract For Difference Accounts are a type of trading account. When you buy through a CFD you aren’t buying an asset you are instead buying a contract to buy a certain quantity of the asset. You can then sell the contract as the price increases. CFD trading is illegal in the United States.
SPREAD BETTING
Spread betting is a form of trading where traders don’t actually own the assets of the market they are trading they are just speculating on whether the market will rise or fall. As it’s considered to be technically betting it is exempt from capital gains tax.
MARKET MAKER
A market maker is a company that quotes both a buy and sell price in a tradable asset.
LIQUIDITY
Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they’re trading. One reason the forex markets are so liquid is because it is tradable 24 hours a day during weekdays.
LIMIT ORDER
A limit order is an order to buy or sell a security at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
STOP ORDERS
A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the specified price is reached, your stop order becomes a market order. The advantage of a stop order is you don’t have to monitor how a stock is performing on a daily basis.
GETTING FILLED
If an order you placed gets filed it means the price has reached the right price to trigger an entry
GAP UP OR GAP DOWN
This is when the market opens either up or down with a gap in the market, this is often because there was a big move overnight.
BLACK SWANS
A back swan in the financial markets refers to a crash or a situation which is incredibly rare. Think situations such as the oil crash of 2020 or Brexit.
HAWKS
Hawks in finance like central bank policy to be tighter with higher interest rates. A hawkish hike could refer to an increase of interest rates. The higher the hike the more hawkish it could be said to be. On the whole a hawkish move by central banks often see a rise in the currency but a subsequent fall in equities.
DOVES
Doves in finance prefer central bank policy to be looser and opt for quantitative easing rather than tightening. This means they prefer lower interest rates. If a move by a central bank is described as dovish this tends to mean a move down for the currency but a subsequent move up for the equities.
COMMITMENT OF TRADERS
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate holdings of different participants in the financial markets. These can be found here:
TO THE MOON
This is often said when it’s believed a market is going to rise dramatically. It is a popular term in crypto trading
BAG HOLDER
A bag holder in trading is someone who holds a losing position for an irrationally long period of time
PUMP AND DUMP
A pump and dump is when false or misleading information creates a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling shares at the inflated price.
TRADER TERMS IN ALPHABETICAL ORDER
ASK PRICE
“ask” refers to the lowest price at which a seller will sell the stock. The bid price will almost always be lower than the ask or “offer,” price. The difference between the bid price and the ask price is called the “spread.”
AUSSIE
This refers to the Australian Dollar
BAG HOLDER
A bag holder in trading is someone who holds a losing position for an irrationally long period of time
BID PRICE
“bid” refers to the highest price a buyer will pay to buy a specified number of shares of a stock at any given time. The term ask refers to the lowest price at which a seller will sell the stock. The bid price will almost always be lower than the ask or “offer,” price.
BLACK SWANS
A black swan in the financial markets refers to a crash or a situation which is incredibly rare. Think situations such as the oil crash of 2020 or Brexit.
BREAKOUT
A breakout is any price movement outside a defined support or resistance area. Breakout trading involves looking for the price to cross these key levels and accelerate on to the next .
BROKER
A broker is an independent person or a company that organises and executes financial transactions on behalf of another party. They can do this across a number of different asset classes, including stocks, forex, real estate and insurance. A broker will normally charge a commission for the order.
BULLS AND BEARS
In trading, bulls refer to the buyers and bears refer to the sellers. If a trader was looking for buy positions they could be said to be bullish, whereas if they were looking for sell positions they could be said to be bearish. It’s thought the origin comes down to the way in which the animals fight. Bulls fight UP with their horns and bears claw DOWN.
CABLE
Cable refers to the forex pair USDGBP, it dates from the days of the transatlantic cable that enabled faster communications between London and New York.
CFD
Contract For Difference Accounts are a type of trading account. When you buy through a CFD you aren’t buying an asset you are instead buying a contract to buy a certain quantity of the asset. You can then sell the contract as the price increase. CFD trading is illegal in the United States.
COMMITMENT OF TRADERS
The Commitment of Traders (COT) report is a weekly publication that shows the aggregate holdings of different participants in the financial markets. These can be found here:
COVERING
When a trader closes a short position they must cover their position. When they buy a market to cover the shares they borrow from their broker.
DAY TRADER
Day traders open and close their trades in the same day so they often hold their trades for a few hours but close them before going to bed meaning they wont have trades open overnight and they won’t need to pay overnight fees to their brokers. Day traders will pay close attention to daily market cycles such as session open and close times. They will trade on time frames such as 1D chart 4H and even smaller time frames for entries such as 1H and 15M.
DOLLAR
Although several currencies are types of dollar (such as Australian Dollar or New Zealand Dollar) referring to a Dollar pair or just Dollar this typically means US Dollar
DOVES
Doves in finance prefer central bank policy to be looser and opt for quantitative easing rather than tightening. This means they prefer lower interest rates. If a move by a central bank is described as dovish this tends to mean a move down for the currency but a subsequent move up for the equities.
FADING
Fading is a contrarian strategy where traders seek to buy an asset whose price is falling and short one whose price is rising.
FUNDAMENTAL ANALYSIS
Fundamental analysis looks at what is going on in the world rather than on the charts to make trading decisions. Fundamental analysis consists of three main parts: Economic data. Industry analysis. Company analysis.
GAP UP OR GAP DOWN
This is when the market opens either up or down with a gap in the market, this is often because there was a big move overnight.
GETTING FILLED
If an order you placed gets filled it means the price has reached the right price to trigger an entry
HAWKS
Hawks in finance like central bank policy to be tighter with higher interest rates. A hawkish hike could refer to an increase in interest rates. The higher the hike the more hawkish it could be said to be. On the whole a hawkish move by central banks often sees a rise in the currency but a subsequent fall in equities.
INDICATORS
The use of technical indicators in trading is part of technical analysis. Indictors are tools which traders use to help them make decisions on their trading, they are often based on lagging information. Technical indicators are used to see past trends and anticipate future moves. Moving averages, relative strength index, and stochastic oscillators are examples of technical indicators
KIWI
This refers to the New Zealand Dollar
LEVERAGE
Leverage in trading means you are given more buying power so your trades are worth more. Leverage is a double edged sword as you can make more money from leverage if you are a good trader but you can also lose more money more quickly if you make bad trading decisions. If, for example, you had leverage of 1:100 this would mean that you are able to trade with 100X the equity which is in your account
LIMIT ORDER
A limit order is an order to buy or sell a security at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
LIQUIDITY
Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they’re trading. One reason the forex markets are so liquid is because it is tradable 24 hours a day during weekdays.
LONG
A long position in trading means buying.
LOONIE
Loonie is the nickname for the Canadian Dollar because the $1 Canadian coin has a picture of a loon on the reverse side of the coin.
MARGIN
Margin is the amount of equity a trader has in their broker account. When a trader opens a broker account they need to have a certain amount of margin in that account at all times. If you go over this limit you will be given a margin call from your broker, which is pretty much one of the most disastrous things that can happen to a trader.
MARGIN CALL
When you get a margin call from your broker this means you don’t have enough equity in your account to keep trading and usually your broker will close any open trades and tell you to add more money before you are allowed to continue trading. You must always have a certain amount of margin or equity in your account to cover your open trades, this is to prevent your broker for being penalised for your bad trading decision.
MARKET MAKER
A market maker is a company that quotes both a buy and sell price in a tradable asset.
MARKET SENTIMENT
Market sentiment refers to the overall attitude of traders toward a particular financial market.
NINJA
Ninja refers to the forex pair USDJPY, because the famous heroic character originates from Japan.
PUMP AND DUMP
A pump and dump is when false or misleading information creates a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling shares at the inflated price.
POSITION TRADER
Position traders are not interested in the small day to day fluctuations in price, they are really only interested in the bigger picture as they hold their trades for long periods of time, weeks, months and even years. Understanding fundamental analysis and what moves the markets long term becomes a key skill for position traders.
PRICE ACTION
Price Action is a form of technical analysis which looks at price and time rather than indicators. Forex traders look at candlesticks and charts and the journey they have been on in a certain time period, to help them make decisions about market sentiment, where the price is likely to go next and also for precise entries and exits. This is price action trading. Ultimately price action is any action which is taken from price. It includes support and resistance levels, trend lines and channels.
PROP FIRM
A proprietary firm, otherwise known as a prop firm, is a company which will fund a trader so that the trader can trade with money which isn’t their own. There is then an agreed upon split of profits usually around 50/50. This can be mutually beneficial if a trader knows how to trade but doesn’t have enough of their own money to make their profits worth while, whereas the prop firm may have the capital available to be invested and are happy to delegate the workload to the trader.
RALLY
A rally refers to a period of continuous increase in prices
SCALP TRADER
Scalp trading is the shortest form of trading with traders getting in and out of their positions very quickly, often just minutes but sometimes as quickly as seconds. Scalp trading requires a lot of attention to detail and very precise entries, while new traders are often easily tempted by the quick profits of scalp trading it can be a lot more difficult to master than slower forms. Scalp traders will use small time frames such as 15M or 5M sometimes they even use 1M chart.
SHORT
A short position in trading means selling.
SLIPPAGE
Slippage refers to the difference between the expected price of a trade and the price at which the trade is executed. Slippage can occur at any time but is most prevalent during periods of higher volatility when market orders are used.
SPREAD
The spread is the difference between the bid and the ask price. It is effectively a fee which you pay to your broker for each trade which you place. It’s always a good idea to try and find a broker with the lowest spread possible to make it easier for you to make more money.
SPREAD BETTING
Spread betting is a form of trading where traders don’t actually own the assets of the market they are trading they are just speculating on whether the market will rise or fall. As it’s considered to be technically betting it is exempt from capital gains tax.
STOP ORDERS
A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the specified price is reached, your stop order becomes a market order. The advantage of a stop order is you don’t have to monitor how a stock is performing on a daily basis.
SUPPORT AND RESISTANCE
Support and resistance levels in forex refers to horizontal lines which traders draw across the chart to help them identify key levels. Resistance levels are above price and support levels are below price. However these can be interchangeable as what was once support can become resistance and vice versa. Support occurs when falling prices stop, change direction, and begin to rise. Support is often viewed as a “floor” which is supporting, or holding up, prices. Resistance is a price level where rising prices stop, change direction, and begin to fall.
SWING TRADER
Swing traders will hold their trades overnight so they will hold for at least a couple days sometimes even as long as weeks. They will use time frames such as , 1W, 1D or 4H for entries.
SWISSY
This refers to the Swiss Franc
TEQUNICAL ANALYSIS
Technical analysis is a range of techniques used to try and forecast future price movements of financial products based on historical price movements and patterns. Technical analysis is when traders use the information on a chart to help them and make trading decisions. This includes the use of price action and technical indicators.
TO THE MOON
This is often said when it’s believed a market is going to rise dramatically. It is a popular term in crypto trading
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