A trading platform is the software, usually provided by the brokerage, that allows clients (traders and investors) to perform trades and monitor their accounts. Platforms differ from the usual browser based online website access. Platforms are a standalone piece of...
Day Trading Encyclopedia
Day Trading Encyclopedia
Supply and Demand
Supply and Demand The level 2 window usually displays the level 1 information at the top portion including last price, level 1 inside bid and ask, last trade and intra-day high and low. Just below the window is split into two parts. The left side of the level 2 window...
Pivot Points
While originally developed by floor traders to indicate static support and resistance price levels based on the prior day’s trading range, pivot points are also regularly used with intra-day trading of stocks. Using the prior day’s open, high, low and close as the...
Stock Volume
What is Volume in Stocks? Volume is counted as the total number of shares that are actually traded (bought and sold) during the trading day or specified set period of time. It is a measure of the total turnover of shares. Each ticket represents a trade and counted...
Trading Platform Features
Features of Trading Platforms Some of the most sophisticated day trading platforms are built by third-party software companies and licensed to online brokers, who then provide them to clients. Direct-access brokers may offer a selection of different trading platforms...
Bid, Ask, and Spread
Bid Definition: A stock's bid is the price a buyer is willing to pay for a stock. Often times, the term "bid" refers to the highest bidder at the time. Ask Definition: The ask price is the price a seller is willing to sell his/her shares for. Often times, the term...
Stock Market Terms
Day traders tend to use a lot of acronyms to make communication more efficient. Making sense of trading terminology should be one of the easier parts of day trading, so make sure you are familiar with the terms below. HOD - High of Day (nHOD = new high of day) LOD -...
Technical Analysis
What is Technical Analysis? Technical analysis is the interpretation of the price action of a company’s underlying stock (or any tradable financial instrument). It utilizes various charts and statistical indicators to determine price support/resistance, range and...
Introduction to Stock Charts
What Are Stock Charts? Charts are the primary tools for technical analysis. Charts conveniently visualize the price action by plotting the historical market data of the underlying financial instrument on a graph. This visual representation allows for easier...
Market Makers
Market makers are licensed broker-dealers that work for firms to mitigate client orders in the open market. They compete with other market makers by posting the required bid and ask price and size quotes for every stock they make a market in. Market makers get order...
Registration Statements
What it is These are documents filed by prospective private companies that are seeking to proceed with an initial public offering (IPO) to get listed on a public exchange and offer shares to the public. The documents include the prospectus, which is the selling...
Fundamental Analysis
What is Fundamental Analysis? While technical analysis evaluates the share price action of a stock, fundamental analysis evaluates the actual business operations to determine the financial health of the company, project future growth prospects and determine current...
Price and Volume
The price of an executed trade and the volume of that trade are the two independent pieces of market participant data collected to develop charts and various indicators and study tools. Time is another variable central to indicators but is not an input derived from...
Moving Averages
A moving average is the average price for a set time period of trade transactions. As each time period ends, the average price of the prior closing trades are calculated to derive the overall average price for the specified number of periods, which is then plotted on...
Form 10-K
What it is This is the annual report filed by public traded companies to the SEC. Companies with more than $10 million in assets and 500 shareholders are required to file this form. This is not to be confused with the annual report to the shareholders usually mailed...
Momentum Trading
What is Momentum Trading? Why do bank robbers rob banks? Because, that’s where the money is. Momentum traders go where the action is. Momentum trading seeks to capture profits in stocks that are making significant price moves (up or down) on heavy volume often in...
Types of Charts
Types of Stock Charts How the information is displayed is a function of the type of chart. Charts plot historical data based on a combination of price, volume and or time intervals. These are the three most commonly used charts for day trading. Line Charts Line charts...
Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum oscillator used to gauge the current overbought or oversold condition of a financial instrument on a scale of 0 to 100. Prices are considered oversold when the RSI falls under 30 and overbought when RSI rises above the...
Form 10-Q
What it is This is the quarterly earnings report filed by all public companies to better inform investors of business operations. The 10-Q is filed every three months and provides same quarter year over year and subsequent quarter comparison of the financials. The...
Stock Market Futures
What Are Market Futures? Stock market futures, also called market futures or equity index futures, are futures contracts that track a specific benchmark index like the S&P 500. While commodity futures require delivery of the underlying goods (IE: corn, sugar,...
