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Day Trading Basics
Important Terminology
Day Trading Terminology
Term
Definition
1
Day trading
Buying and selling financial instruments within the same trading day
2
Scalping
A short-term trading strategy that involves making multiple trades in a short period of time to profit from small price movements
3
Stop loss
An order to sell a security when it reaches a certain price, intended to limit losses
4
Limit order
An order to buy or sell a security at a specific price or better
5
Market order
An order to buy or sell a security at the best available price
6
Spread
The difference between the bid and ask prices of a security
7
Volatility
The degree of variation of a security's price over time
8
Liquidity
The ease with which a security can be bought or sold in the market
9
Margin
Borrowed funds used to purchase securities
10
Day trading margin
The amount of margin required to day trade a particular security
11
Long / Short Trading
When trading, "long” refers to buying a security with the expectation that its value will increase, while "short” refers to selling a security with the expectation that its value will decrease.
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