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day trading

elders vovabulary list

TermDefinition
AH After Hours
Catalyst News or event (earnings) that can make a security trade with extra volatility and volume compared to its average trading volatility and volume.
Dead Cat Bounce Upwards bounce in a stock price after a drastic fall.
DD Due Diligence
EOD End of day
EOW End of week
Float refers to the number of shares that are available for trading to the public.
FOMO Fear of Missing Out. This can play with trader's emotions and make them make unrealistic decisions under normal circumstances.
Halt Trade halted, stocks will get halted on very volatile moves or sudden dramatic news. The stock will stop trading for a short period of time and be stuck at a price till it is unhalted.
IPO stands for 'Initial Public Offering'. This is when a company goes public on the stock market.
LOD Low of the day
Low Float referring to the number of shares that a company has available for trading. These stocks tend to see more volatility as the supply of stock is low.
PDT Pattern Day Trader - If trading account has less the 25,000 in value than you are limited to 3 trades a day. you can get flagged and account frozen. Most platforms will not allow this
PM Pre
R/S refers to 'Reverse Split'. This is a reduction in the number of a company's traded shares that results in an increase in the par value or earnings per share.
Runner Tickers that are moving up very rapidly
Scaling (in or out) Buying and selling positions in increments
Sympathy Tickers that move with another company in it's industry when it is being volatile (usually a larger company in the industry)
Lock book profit
In Took new position or bought the mentioned option
Out Exit from the position or dispose the position
Cut reduce loss or sold the position with loss
SL Stop Loss (where you would sell to minimize losses)
UT = Up Trend
DT Down Trend
LOD Low of Day
HOD High of day
R/R Reward to Risk Ratio
PT Price target on the position (where you would sell when in profits)
ER Earnings Result
PM Pre Market
S/R Support/Resistance
SMA Simple Moving Average
EMA Exponential Moving Average
DMA Daily Moving Average
FOMO Fear of Missing Out
P/E Price to Earnings Ratio. Used to determine if a stock is over or undervalued. As of January 16, 2021, the average P/E in the S&P 500 is 37.97.
P/S Price to Sales Ratio. Used to determine a stock’s valuation by comparing a company’s stock price to its revenue. Usually used in cases where a company is not profitable and therefore does not have a P/E.
ROE Return on equity. The amount that a company grows its assets in one year.
YOY Year over year
Free cash flow (FCF) The amount of money a company generates after taking into account expenditures and maintenance.
Book value The value of a company’s assets
Moat The advantages that a company has over its competitors (i.e., the degree of difficulty that another company would face if they were to challenge them for market share).
R&D Research and development
Growth stock A stock that is expected to outperform the market due to the company’s growth potential. These have historically been outperformed by value stocks but have recently achieved better performance.
Value stock A stock that is valued under what it should be worth. These have historically outperformed growth stocks but have recently underperformed.
Market capitalization The value of the company as priced by the market. Calculated by [number of shares] x [stock price].
Margin The percentage of a company’s revenue that becomes profit after taking out expenses
In the Money (ITM) A call option who’s strike price is less than the stock price, or a put option who’s strike price is more than the stock price.
Call an options contract that allows the owner to have the right, but not the obligation, to purchase shares of a stock at a given price within the expiration.
Put an options contract that allows the owner to have the right, but not the obligation, to sell shares of a stock at a given price within the expiration.
Expiration date the date that an options contract expires, this sets up a timeframe for when the contract is valid for. You can choose how long the contract is valid for, but usually the longer the time frame the more the premium.
Strike Price This is the price that you can buy or sell the stock if you want to exercise your right to the buying or selling of your shares.
Premium This is the price per share you pay for an options contract. A contract is typically made up of 100 shares.
Intrinsic Value This is the value that the stock is intrinsically worth, you can find this by subtracting the current stock price by the strike price.
Time Value The value of a contract based on the days until the contract expires. The further out a contract, the more chance the stock has of reaching the strike price, so thus the longer the time the more it is worth.
Value your intrinsic value must grow faster than the time value decreases. As the time frame gets closer to expiration, time value is lost due to a greek known as theta.
Last This was the last price paid for that option.
Bid This is the price the buyer is willing to pay for a contract.
Ask This is the price the seller is willing to sell for the contract.
Previous Close The price of the contract at the close of the last trading day.
Volume The number of contracts being traded each day
Open Interest (OI) The number of contracts currently being held
Implied Volatility (IV) tells you how expensive a contract is. increases whenever there is uncertainty around a stock. typically highest after news or ERs. If too high be weary of crash. as situation has more certainty IV will crush. Implies crush your premiums
Delta How much the option contract will move per dollar movement in the underlying stock.
Theta How much value you will lose overnight holding that option.
Gamma represents the change in Delta relative to the change in price in the underlying stock.
Vega How sensitive options change is to a change in volatility. If implied volatility goes up 1% the call gains $0.19, if implied volatility goes down 1% the call loses $0.19.
Buy to Open (BTO) When you buy a call / put to open a position in the stock.
Sell to Open (STO) When you write (sell) a call / put to open a position in the stock.
Buy to Close (BTC) When you buy a call / put to close a written contract.
Sell to Close (STC) When you sell a call / put to close a BTO contract.
Breakout occurs when the stock breaks a support or resistance line, or after a period of consolidation is broken by a large move. Can break up or down. Break up crossed resistance line upwards. Breakdown is the opposite direction
Candlestick a box and whisker graph. Each box represents the price movement for the time interval selected. If your chart has 5
Consolidation Period When people who bought the shares at an earlier price are selling shares of a stock to secure profits, but the stock is not going down because there are still buyers who want to purchase it.
Dead Cat Bounce (DCB) A temporary recovery or in a share price after a sharp decrease in price, the downward trend then continues after the temporary bounce.
Gap When there is a gap between the two candles on a chart due to a large price movement with little to no trading in between the gap.
Gap Down When a stock opens at a lower level than the previous candle’s lowest level.
Gap Up When a stock opens at a higher level than the previous candle’s highest level.
Resistance The price at where the stock is going to see pressure due to an increased number of sellers and the stock risks going down.
Support The price at where the stock is going to see assistance due to an increased number of buyers who want to buy the dip in price or believe it is a good spot to enter.
RHO represents how sensitive the price of an option is relative to interest rates.
Created by: cweikel1123
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