Share trading Definition

Share trading Definition by

A slang term used to describe an advanced trading strategy based purely on momentum. In a momo play, the trader is not interested in the company’s fundamentals, only in the short-term direction of a security’s price movement. As such, momo plays are used solely by day traders, not by buy-and-hold investors. Definition by

The rate of acceleration of a security’s price or volume. The idea of momentum in securities is that their price is more likely to keep moving in the same direction than to change directions. In technical analysis, momentum is considered an oscillator and is used to help identify trendlines. Definition by

Refers to stocks with a relatively small market capitalization. The small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion. Definition by

A publicly traded company in the United States that has a market capitalization between approximately $50 million and $300 million. Micro-cap companies have greater market capitalization than nano caps, and less than small, mid, large and mega-cap corporations. Companies with larger market capitalization do not automatically have stock prices that are higher than those companies with smaller market capitalizations. Generally, the larger the market capitalization, the less risky the investment and smaller the potential returns. The smaller the market capitalization, the riskier the investment and the greater the potential returns. Definition by

The sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit. Short selling may be prompted by speculation, or by the desire to hedge the downside risk of a long position in the same security or a related one. Since the risk of loss on a short sale is theoretically infinite, short selling should only be used by experienced traders who are familiar with its risks. Definition by

A situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock. A short squeeze implies that short sellers are being squeezed out of their short positions, usually at a loss. A short squeeze is generally triggered by a positive development that suggests the stock may be embarking on a turnaround. Although the turnaround in the stock’s fortunes may only prove to be temporary, few short sellers can afford to risk runaway losses on their short positions and may prefer to close them out even if it means taking a substantial loss. Definition by

Buying back borrowed securities in order to close an open short position. Short covering refers to the purchase of the exact same security that was initially sold short, since the short-sale process involved borrowing the security and selling it in the market. For example, assume you sold short 100 shares of XYZ at $20 per share, based on your view that the shares were headed lower. When XYZ declines to $15, you buy back 100 shares of XYZ in the market to cover your short position (and pocket a gross profit of $500 from your short trade). This process is known as short covering. Definition by

1. The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.

2. In the context of options, the buying of an options contract.

Opposite of “short” (or short position). Definition by

A price movement through an identified level of support or resistance, which is usually followed by heavy volume and increased volatility. Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support. Definition by

A price movement through an identified level of support, which is usually followed by heavy volume and sharp declines. Technical traders will short sell the underlying asset when the price of the security breaks below a support level because it is a clear indication that the bears are in control and that additional selling pressure is likely to follow. Definition by

Another way of saying “within the day”. Intraday price movements are particularly important to short-term traders looking to make many trades over the course of a single trading session. The term intraday is occasionally used to describe securities that trade on the markets during regular business hours, such as stocks and ETFs, as opposed to mutual funds, which must be bought from a dealer. Definition by

A investor who attempts to profit by making rapid trades intraday. A day trader often closes out all trades before the market close and does not hold any open positions overnight. Some day traders use leverage to magnify the returns generated from small stock price movements. Definition by

A person trading in the equities or options and futures market who holds a position for a very short period of time in an attempt to profit from the bid-ask spread.

A person who buys large quantities of in-demand items, such as new electronics or event tickets, at regular price, hoping that the items will sell out. The scalper will then resell the items at a higher price. Such transactions often occur on the black market. This type of scalping is illegal under certain conditions. Definition by

The difference between the bid and the ask price of a security or asset. Definition by

The price a buyer is willing to pay for a security. This is one part of the bid with the other being the bid size, which details the amount of shares the investor is willing to purchase at the bid price. The opposite of the bid is the ask price, which is the price a seller is looking to get for his or her shares. Definition by

An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit an investor’s loss on a position in a security. Although most investors associate a stop-loss order only with a long position, it can also be used for a short position, in which case the security would be bought if it trades above a defined price. A stop-loss order takes the emotion out of trading decisions and can be especially handy when one is on vacation or cannot watch his/her position. However, execution is not guaranteed, particularly in situations where trading in the stock is halted or gaps down (or up) in price. Also known as a “stop order” or “stop-market order.” Definition by

An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Because the limit order is not a market order, it may not be executed if the price set by the investor cannot be met during the period of time in which the order is left open. Limit orders also allow an investor to limit the length of time an order can be outstanding before being canceled. Definition by

An order that an investor makes through a broker or brokerage service to buy or sell an investment immediately at the best available current price. A market order is the default option and is likely to be executed because it does not contain restrictions on the buy/sell price or the timeframe in which the order can be executed.

A market order is also sometimes referred to as an “unrestricted order.” Definition by

A stop order that can be set at a defined percentage away from a security’s current market price. A trailing stop for a long position would be set below the security’s current market price; for a short position, it would be set above the current price. A trailing stop is designed to protect gains by enabling a trade to remain open and continue to profit as long as the price is moving in the right direction, but closing the trade if the price changes direction by a specified percentage. A trailing stop can also specify a dollar amount instead of a percentage. Also known as a “chandelier stop.” Definition by


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