Trading-Jargons

Here are the 10 terms you must know about intraday trading terminology

Intraday trading, often known as day trading, is the buying and selling of financial products on the same trading day. As you dive into intraday trading, understanding the specialized jargon traders and analysts use is crucial for making informed decisions. This comprehensive guide demystifies the Top 10 Intraday Trading Jargon, equipping you with the knowledge to navigate the fast-paced and dynamic intraday market confidently.

1. Bid-Ask Spread:

The difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for a particular stock or security. A narrower spread indicates higher liquidity.

2. Volume:

The number of shares or contracts traded in a security period. High volume suggests increased market interest and potential price movements.

3. Candlestick Chart:

A popular charting method that visually represents price movements during a trading session. Candlesticks show the opening, closing, high, and low prices, providing valuable insights into market sentiment.

4. Stop Loss:

An essential risk management tool used to limit losses. A stop-loss order is placed to automatically sell a security when it reaches a specified price, preventing further losses in case of adverse price movements.

5. Resistance and Support Levels:

Resistance levels are price levels at which a stock or index historically struggles to move above, while support levels are those at which it historically finds buying interest. Traders use these levels to identify potential price reversals.

6. Moving Averages:

A technical indicator that computes a security's average closing price over a given time frame. It assists in identifying trends and reducing price swings.

7. Short Selling:

A strategy where traders borrow and sell securities they don't own, anticipating a price decline. They later buy back the shares at a lower price to return to the lender, profiting from the price difference.

8. Volatility:

The degree of price fluctuations in security. High volatility implies rapid price movements, presenting opportunities and risks for day traders.

9. Margin Trading:

It is a practice where traders borrow funds from a broker to leverage their positions, increasing potential gains and magnifying potential losses.

10. Market Order and Limit Order:

A market order is an instruction to buy or sell a security at the current market price, while a limit order is an instruction to buy or sell at a specified price or better.

Conclusion:

Understanding the top 10 jargon terms is essential for successful decision-making as you venture into intraday trading. Incorporating these terms into your trading vocabulary will empower you to interpret market trends, manage risks, and execute trades effectively. Remember that intraday trading involves significant risks and requires a disciplined approach.