50+ Day Trading Terms Every Trader Should Know (Beginner-Friendly Guide)

This glossary defines 60 day trading terms in plain English, grouped by what you use them for, with short examples in dollars. Learn the first group before you place a trade, since those terms decide what you pay and what you can lose.

Day trading basics

Day trade. A day trade means buying and selling the same security on the same day, so you hold no position overnight.

Bid. The bid is the highest price a buyer is currently offering.

Ask. The ask, also called the offer, is the lowest price a seller is currently accepting.

Spread. The spread is the gap between the bid and the ask. With a $10.00 bid and a $10.02 ask, the spread is $0.02, and that is a cost you pay on the way in or out.

Volume. Volume is the number of shares or contracts traded in a period.

Liquidity. A liquid market has many buyers and sellers, so you can trade without moving the price much.

Volatility. Volatility measures how much a price moves. A stock that often moves 5% in a day is more volatile than one that moves 0.5%.

Long. Going long means buying with the aim of selling higher.

Short. Going short means selling borrowed shares with the aim of buying them back lower.

Position. Your position is the amount of a security you currently hold, long or short.

Position size. Position size is the number of shares or contracts in a trade. The position size calculator works it out from your account and stop.

Ticker. A ticker is the short symbol for a security, such as a one-to-five letter code for a U.S. stock.

Market hours. The NYSE core session runs from 9:30 a.m. to 4:00 p.m. Eastern. See how many trading days are in a year for holidays.

Pre-market. Pre-market is trading before the regular open, often on thinner volume.

After-hours. After-hours is trading after the regular close, also often on thinner volume.

Broker. A broker is the firm that holds your account and sends your orders to the market.

Order types

Market order. A market order fills right away at the best available price.

Limit order. A limit order sets the worst price you will accept, so a buy limit at $10.00 will not fill above $10.00.

Stop order. A stop order becomes a market order once price reaches your stop level.

Stop-limit order. A stop-limit order becomes a limit order at your stop level, so it may not fill in a fast move.

Stop-loss. A stop-loss is an exit you set in advance to limit the loss on a trade.

Trailing stop. A trailing stop follows price by a set distance as the trade moves in your favor.

Take-profit order. A take-profit order closes the trade at your target price.

Bracket order. A bracket order places a stop-loss and a take-profit together, and it cancels one when the other fills.

Fill. A fill is the completed execution of your order.

Partial fill. A partial fill means that only part of your order was executed.

Slippage. Slippage is the difference between the price you expected and the price you got.

Accounts, margin and rules

Cash account. In a cash account, you pay for purchases in full with settled funds.

Margin account. In a margin account, you can borrow from your broker to trade.

Margin. Margin is the money you borrow to trade, along with the equity you must hold against it. Check an example in the margin calculator.

Leverage. Leverage means controlling a position larger than your own cash. With $5,000 of equity controlling $20,000 of stock, a 5% drop costs you $1,000, or 20% of your equity.

Margin call. A margin call is your broker's demand for more funds when your equity falls too low.

Settlement. Settlement is the final exchange of cash and shares. FINRA says most equity trades now settle on T+1, the next business day.

Pattern day trader. This was FINRA's label for margin accounts making four or more day trades in five business days, with a $25,000 minimum. FINRA replaced the rule on June 4, 2026, and firms can phase in the change through October 20, 2027.

Intraday margin deficit. This is the shortfall when your equity falls below what your open positions require during the day, and you must cover it as promptly as possible.

Wash sale. A wash sale means selling at a loss and buying substantially the same security within 30 days before or after. See our day trading tax guide.

Technical analysis terms

Candlestick. A candlestick shows the open, high, low and close for a period. See our guide to price charts.

Support. Support is a price area where buying has tended to stop a decline.

Resistance. Resistance is a price area where selling has tended to stop a rise.

Trend. A trend is the general direction of price, shown by higher highs and higher lows in an uptrend.

Breakout. A breakout is a move through a support or resistance level.

Moving average. A moving average is the average price over a set number of periods. The 50-day and 200-day averages are widely watched.

VWAP. VWAP stands for volume-weighted average price, which is the average price paid during the session, weighted by volume. Read more in what is VWAP.

RSI. The Relative Strength Index is a momentum reading from 0 to 100, where above 70 is commonly called overbought and below 30 oversold.

MACD. Moving Average Convergence Divergence compares two moving averages to show changes in momentum.

ATR. Average True Range measures how much a security typically moves per period. Read our guide to ATR.

Gap. A gap is a jump in price between one session's close and the next session's open.

Level 2. Level 2 shows the orders waiting at each price, beyond the best bid and ask. Read how to read Level 2 data.

Time and sales. Time and sales, also called the tape, is the live record of completed trades.

Float. Float is the number of shares available for the public to trade.

Short interest. Short interest shows the percentage of shares that are being sold short.

Risk and performance terms

Risk-reward ratio. This ratio compares what you stand to gain with what you stand to lose. Risking $100 to make $200 is a 2 to 1 ratio. Test it in the risk-reward calculator.

Win rate. Win rate is the share of your trades that make money. A 40% win rate means 40 winners in 100 trades.

Expectancy. Expectancy is the average you make or lose per trade. A 40% win rate, $200 winners and $100 losers give (0.4 × $200) − (0.6 × $100), or $20 per trade. Try the expectancy calculator.

Drawdown. Drawdown is the fall from an account's peak to its low. A drop from $10,000 to $8,000 is a 20% drawdown. See the drawdown calculator.

Scalping. Scalping means making many very short trades for small price moves.

Momentum trading. Momentum trading means buying what is rising, or shorting what is falling, while the move continues.

Paper trading. Paper trading means practicing with simulated money.

FOMO. FOMO stands for fear of missing out, which pushes traders to chase moves. Read how to control FOMO.

Revenge trading. Revenge trading means taking impulsive trades to win back a recent loss.

Frequently asked questions