45 ESSENTIAL Stock Market Terms Every Trader Needs to Know

Part 1 of Our FREE ‘How to Trade Stocks‘-Guide

Let them sink in

There is a flood of stock market terms on the internet. We picked the essential ones and explained them as compact as possible. If you need further explanation, click on each market term.


A Bid is a price someone is willing to pay for a stock.


The Ask is a price someone has given to sell shares.


The spread is the price difference between the highest bid and the lowest ask.


A bull is someone who buys stocks expecting prices to go up.


A bear is someone who is short-selling stock expecting prices to go down.


Shares are units of ownership of a stock. Every share has a price that is set by the market.

Limit Order

A limit order is an order to buy or sell shares with a limit price.

Market Order

A market order is an order that you want to get executed immediately without a limit.

GTC Order

A Good Till Cancelled order means the order stays until you cancel it which could be after weeks.

Day Order

Day order means that your order is only valid for the day you place it.


Volatility is a statistical measurement that looks at how violent a stock moves (price movement and speed).


Liquidity refers to how easy shares can be bought without causing significant price moves.


Volume is the number of shares that a stock trades in a specific period.

Going Long

Another word for buying a stock expecting the price to go up.

Going Short

You are borrowing shares and sell them, expecting the price to go down and buy them back lower.

Averaging Down

When you bought the stock at a high price, and you want to buy more at a lower price to have a lower average price.


A portion of a company’s earnings that they pay to shareholders on a quarterly or annual basis.


The float is the number of shares of a particular stock that are available to the public for trading.


Initial Public Offering which happens when a private company becomes a publicly-traded company to raise money.


ETFs are exchange-traded funds. They are like stocks because you can buy and sell shares.


A person or company that buys or sells shares for you in exchange for a fee.


A margin account lets you borrow money (take out a loan) from a broker for an investment.


Leverage is the increased buying power that you get with a margin account.

Moving Average

A stock’s average price-per-share during a specific period.


A collection of investments owned by an investor.


Information on a stock’s latest trading price.

Level 2

Level 2 is a subscription service that offers market depth with bid and ask prices and sizes.

Day Trader

A trader that buys and sells stock the same day not holding overnight.

Swing Trader

A trader who is willingly holding a position overnight for several days/weeks/months.


A price level where a lot of buyers are. The price has a good chance to go UP at these levels.


A price level where a lot of sellers are. The price has a good chance to go DOWN at these levels.


Pattern Day Trader – A regulation for US citizens to not do more than 4 day trades in 5 days with a smaller-than $25k account.


Profit&Loss – The profit or loss for a specific position or your overall performance.

Short Squeeze

Rapid stock price increase because short sellers need to cover their positions.


A description for stocks where available shares to short are hard to get and have a borrowing fee.


When a stock reaches a higher price point than previously. Those price points can also be time constrained like a 30 day high, for example.


When a stock reaches a lower price point than previously. Those price points can also be time constrained like a 30-day low, for example.


A benchmark that is used as a reference to recognize market trends.


Refers to the time right after the market opens for trading where you can see some significant price moves.


Refers to the time right before the market closes where you can see some significant price moves.

Market Cap

Market capitalization – refers to the total value of all available company shares.

Penny Stocks

Companies that have a small market cap and where the stock price trades less than $5 per share.

Order Fill

When your order gets executed to buy or sell a particular amount of shares is also called “getting filled.”

Trading Halt

A trading halt occurs in the U.S. when a stock exchange stops trading on a stock for a specified period.


A contract for difference is a contract between a buyer and seller, stipulating that the seller will pay the buyer the difference between the current value and the value at contract time.


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