Trading Terminology
Your complete glossary for stock market abbreviations, chart patterns, indicators, and trading strategies.
Chart Basics
Bar Chart
A price chart that uses bars to show open, high, low, and close for each time period.
Candlestick
A chart style that shows open, high, low, and close using candle bodies and wicks.
Close
The last traded price at the end of a time period (e.g., day, hour).
High
The highest traded price during a time period.
Line Chart
A chart that connects closing prices over time with a single line.
Low
The lowest traded price during a time period.
OHLC
Open-High-Low-Close data used to describe price movement in a time period.
Open
The first traded price at the start of a time period.
Timeframe
The interval each candle/bar represents (e.g., 1 min, 15 min, daily, weekly).
Volume
The number of shares/contracts traded during a time period.
Support & Resistance
Breakout
A move above resistance or below support, often with increased volume.
Fakeout
A breakout that quickly fails and reverses back into the prior range.
Resistance
A price level where selling pressure tends to appear, limiting upside.
Support
A price level where buying pressure tends to appear, limiting downside.
Trendline
A line drawn on a chart to connect swing highs or lows and show direction.
Trends & Price Action
Bearish
A market view expecting prices to fall.
Bullish
A market view expecting prices to rise.
Consolidation
A sideways phase where price trades in a range before the next move.
Higher High (HH)
A peak that is higher than the previous peak, common in uptrends.
Higher Low (HL)
A trough that is higher than the previous trough, common in uptrends.
Lower High (LH)
A peak that is lower than the previous peak, common in downtrends.
Lower Low (LL)
A trough that is lower than the previous trough, common in downtrends.
Pullback
A temporary move against the main trend, often followed by continuation.
Reversal
A change in trend direction from up to down or down to up.
Sideways Market
A market with no clear trend; price moves within a range.
Trend
The general direction of price movement (uptrend, downtrend, range).
Volatility
The degree of price fluctuation over time; higher volatility means bigger swings.
Moving Averages
EMA (Exponential Moving Average)
A moving average that gives more weight to recent prices.
MA (Moving Average)
An average of price over a set period used to smooth out noise.
SMA (Simple Moving Average)
A moving average that weights all prices equally over the period.
WMA (Weighted Moving Average)
A moving average that assigns higher weight to recent prices (varies by method).
Momentum & Oscillators
ADX (Average Directional Index)
Measures trend strength (not direction); higher values indicate stronger trends.
Divergence
When price and an indicator move in opposite directions, suggesting weakening momentum.
MACD
A momentum indicator based on the relationship between two EMAs and a signal line.
Overbought
A condition where price may be extended upward and due for a pullback (often RSI > 70).
Oversold
A condition where price may be extended downward and due for a bounce (often RSI < 30).
RSI (Relative Strength Index)
A momentum oscillator (0–100) used to spot overbought/oversold conditions.
Stochastic Oscillator
Compares the close to the price range over a period to gauge momentum.
Volatility Indicators
ATR (Average True Range)
Measures average volatility by calculating the typical price range over time.
Bollinger Bands
Bands around a moving average that expand/contract with volatility.
Volume Indicators
OBV (On-Balance Volume)
Cumulative volume indicator that adds volume on up days and subtracts on down days.
Volume Spike
A sudden jump in volume that can confirm breakouts or reversals.
VWAP
Average price weighted by volume; often used as an intraday benchmark.
Levels & Tools
Fibonacci Extension
Projects potential future targets using Fibonacci ratios after a move.
Fibonacci Retracement
Uses Fibonacci ratios (e.g., 38.2%, 50%, 61.8%) to identify pullback levels.
Pivot Points
Pre-calculated support/resistance levels derived from prior period prices.
Candlestick Patterns
Doji
A candle where open and close are nearly the same, showing indecision.
Engulfing
A candle that fully covers the prior candle's body, suggesting reversal potential.
Hammer
A candle with a small body and long lower wick, showing rejection of lower prices.
Hanging Man
A hammer-like candle after an uptrend, sometimes signaling weakness.
Piercing Line
A bullish two-candle pattern where price closes above the midpoint of the prior down candle.
Shooting Star
A candle with a small body and long upper wick, often signaling reversal after an uptrend.
Chart Patterns
Cup and Handle
A bullish continuation pattern shaped like a cup followed by a small pullback (handle).
Double Bottom
A reversal pattern with two lows at similar levels, suggesting support holding.
Double Top
A reversal pattern with two highs at similar levels, suggesting resistance holding.
Flag
A continuation pattern where price consolidates in a small channel after a sharp move.
Head and Shoulders
A reversal pattern with three peaks; middle peak highest (bearish when broken).
Inverse Head and Shoulders
A bullish reversal pattern with three troughs; middle trough lowest.
Pennant
A continuation pattern shaped like a small symmetrical triangle after a strong move.
Rectangle
A consolidation pattern where price moves between horizontal support and resistance.
Symmetrical Triangle
A pattern with converging trendlines, often leading to a breakout.
Gaps
Gap Down
When price opens significantly below the prior close, leaving a blank area on the chart.
Gap Up
When price opens significantly above the prior close, leaving a blank area on the chart.
Risk & Trade Management
Entry
The price level where a trader opens a position.
Exit
The price level where a trader closes a position.
Risk-Reward Ratio
The potential profit compared to potential loss in a trade (e.g., 2:1).
Stop Loss
A pre-set level to limit losses if price moves against the trade.
Target
A pre-defined price level where profit is taken.