Trading & Technical Analysis
61 Trading & Technical Analysis terms, defined in plain English — part of the 1345-term Finicade finance glossary. Each one has its own page, and links to the free game that teaches it.
- After-Hours Trading
- After-hours and pre-market sessions let trading continue outside normal exchange hours, which is when most earnings and major news are released.
- Algorithmic Trading
- Algorithmic trading executes rules automatically, from simple order-slicing to fully systematic strategies.
- Best Execution
- Best execution is a broker obligation to seek the most favourable terms reasonably available — price, speed, likelihood of execution and size.
- Bollinger Bands
- Bollinger Bands plot a moving average with bands two standard deviations above and below, so they widen in volatile markets and contract in calm ones.
- Breakout
- A breakout is price moving decisively beyond a defined level of support or resistance, taken as the start of a new move.
- Candlestick Chart
- A candlestick shows four prices for a period — open, high, low, close — as a body between open and close with wicks to the extremes.
- Chart Patterns
- Chart patterns are recognisable price formations — triangles, flags, wedges, channels — treated as continuation or reversal signals.
- Circuit Breaker
- A circuit breaker pauses trading after a sharp move, giving participants time to assess and letting the order book rebuild.
- Contract for Difference (CFD)
- A CFD is a derivative that pays the change in an asset's price without owning it, offered with high leverage by retail brokers.
- Dark Pool
- A dark pool is a private venue where large orders trade without displaying to the public book, so institutions can build positions without signalling.
- Day Trading
- Day trading opens and closes positions within a single session, holding nothing overnight.
- Divergence
- Divergence is price making a new extreme while an indicator does not, read as momentum fading beneath the surface.
- Double Top
- A double top forms when price reaches a level twice and fails to break it, with the second failure read as exhaustion; a double bottom is the mirror image.
- Expectancy
- Expectancy is the average profit or loss per trade, combining win rate with average win and average loss.
- Fibonacci Retracement
- Fibonacci retracement marks levels at 23.6%, 38.2%, 50% and 61.8% of a prior move as candidate turning points for a pullback.
- Fundamental Analysis
- Fundamental analysis values a security from the underlying business — earnings, cash flow, balance sheet, competitive position — versus its price.
- Golden Cross
- A golden cross is the 50-day moving average crossing above the 200-day, read as a bullish trend confirmation; the death cross is the reverse.
- Head and Shoulders Pattern
- The head and shoulders is a three-peak reversal pattern with a higher middle peak, where breaking the neckline is read as confirming a downtrend.
- High-Frequency Trading
- High-frequency trading uses speed — microseconds — to capture tiny edges across enormous volumes, mostly through market making and cross-venue arbitrage.
- Level 2 Data
- Level 2 data shows the order book beyond the best bid and offer, with sizes at each price level.
- Lot Size
- Lot size is the standardised quantity a trade is denominated in — 100,000 units for a standard FX lot, 10,000 for a mini, 1,000 for a micro.
- MACD
- MACD subtracts a longer moving average from a shorter one and plots the result against a signal line, with crossovers read as momentum shifts.
- Market Breadth
- Market breadth measures how many stocks participate in a move, through advance-decline lines or the share trading above a moving average.
- Market Manipulation
- Market manipulation is trading designed to create a false impression of price or activity rather than to take a genuine position.
- Market Order
- A market order executes immediately at whatever price is available, guaranteeing a fill but not a price.
- Meme Stock
- A meme stock rises on coordinated retail enthusiasm rather than on fundamentals, amplified by social media and option-driven dealer hedging.
- Moving Average
- A moving average smooths price by averaging the last N periods, filtering noise to reveal direction.
- Order Book
- The order book lists all resting buy and sell orders by price, showing where liquidity sits above and below the current price.
- Order Duration
- Order duration sets how long an unfilled order stays live: a day order expires at the close, good-til-canceled persists, immediate-or-cancel does not wait.
- Overbought and Oversold
- Overbought and oversold describe an indicator reading at an extreme, implying a move has gone too far too fast.
- Pairs Trading
- Pairs trading goes long one security and short a related one when their historical relationship stretches, betting it reverts.
- Paper Trading
- Paper trading tests a strategy with simulated money in live markets.
- Payment for Order Flow
- Payment for order flow is a wholesale market maker paying a broker to route retail orders to it rather than to an exchange.
- Penny Stock
- A penny stock trades at a very low price, usually over the counter rather than on a major exchange, with minimal disclosure requirements.
- Pip
- A pip is the standard smallest price move in a currency pair — 0.0001 for most, 0.01 for yen pairs.
- Position Sizing
- Position sizing decides how much capital goes into a trade, and it matters more than entry selection.
- Price Gap
- A gap is a jump between one session's close and the next session's open with no trading in between, usually caused by news released outside market hours.
- Proprietary Trading
- Proprietary trading is a firm trading its own capital rather than clients'.
- Pullback
- A pullback is a temporary move against the prevailing trend before it resumes — the setup behind buying the dip.
- Pump and Dump
- A pump and dump inflates the price of a thinly traded asset with promotion and hype, then sells into the buying it generated.
- Relative Strength Index (RSI)
- RSI measures the size of recent gains against recent losses on a 0–100 scale, conventionally flagging above 70 as overbought and below 30 as oversold.
- Risk-Reward Ratio
- The risk-reward ratio compares the distance to your stop with the distance to your target.
- Scalping
- Scalping takes many tiny profits from very short holding periods, sometimes seconds.
- Short Interest
- Short interest is the number of shares sold short and not yet covered, usually shown as a percentage of free float or as days to cover.
- Slippage
- Slippage is the difference between the price you expected and the price you got.
- Spoofing
- Spoofing places large orders with no intention of executing them, to create a false impression of supply or demand, then cancels once the price moves.
- Statistical Arbitrage
- Statistical arbitrage exploits small statistically identified pricing relationships across many securities, held market-neutral so direction does not matter.
- Stochastic Oscillator
- The stochastic oscillator compares the close to the high-low range over a lookback period, since closes cluster near highs in uptrends.
- Stop-Limit Order
- A stop-limit order triggers at the stop price and then works as a limit order rather than a market order.
- Support and Resistance
- Support is a price level where buying has repeatedly stopped a fall; resistance is where selling has stopped a rise.
- Swing Trading
- Swing trading holds positions for days to weeks, aiming to capture one move within a larger trend.
- Technical Analysis
- Technical analysis studies price and volume history to forecast future prices, on the premise that patterns of behaviour repeat.
- Trading Journal
- A trading journal records every trade with its reasoning, size, outcome and the state you were in when you took it.
- Trading Volume
- Volume is the number of shares or contracts traded in a period, and it's the conviction check on any price move.
- Trailing Stop
- A trailing stop follows the price up by a set distance or percentage and never moves down, locking in gains while leaving room for the trend to continue.
- Transaction Cost Analysis
- Transaction cost analysis measures what execution actually cost against a benchmark, decomposing the gap into spread, market impact, delay and opportunity cost.
- Trend Following
- Trend following buys what's rising and sells what's falling across many markets, with no view on value.
- Trend Line
- A trend line connects successive highs or lows to define the direction and slope of a move, with a break of the line read as a possible reversal.
- TWAP
- TWAP splits an order evenly across a time window regardless of volume, aiming for the simple average price.
- VWAP
- VWAP is the average price weighted by volume over a period, and it's both an execution algorithm and the benchmark institutional traders are graded against.
- Wash Trading
- Wash trading is buying and selling the same asset with yourself to manufacture the appearance of volume.