Trading Glossary
207+ trading terms explained
A
Absolute Return
Absolute return is the total gain or loss of an investment expressed as a percentage, without comparison to any benchmark.
Accumulation/Distribution
Accumulation/Distribution is a volume-based indicator measuring cumulative money flow, showing whether a stock is being accumulated or distributed.
ADX (Average Directional Index)
ADX measures trend strength on a scale of 0-100, without indicating direction. Higher ADX means stronger trend; lower means weak or no trend.
Alpha
Alpha measures the excess return of an investment relative to its benchmark, representing the value added by active management or skill.
Analysis Paralysis
Analysis paralysis is the inability to execute a valid trade setup because fear-driven over-research produces conflicting signals that delay action until the opportunity is gone.
Anchoring Bias
Anchoring bias is the tendency to rely too heavily on the first piece of information encountered, like an entry price, when making decisions.
Arbitrage
Arbitrage is a strategy that exploits price differences of the same asset across different markets or forms, capturing risk-free profit.
At The Money (ATM)
An option is at the money when the strike price equals or is very close to the current stock price, having zero intrinsic value.
ATR (Average True Range)
ATR measures average price volatility over a period, showing how much an asset typically moves, used for stop loss placement and position sizing.
Average Loss
Average loss is the mean loss amount across all losing trades, calculated by dividing total losses by the number of losing trades.
Average Win
Average win is the mean profit amount across all winning trades, calculated by dividing total profits by the number of winning trades.
Averaging Down
Averaging down is buying more shares of a losing position to lower the average cost basis, a controversial strategy that can compound losses.
B
Backtesting
Backtesting tests a trading strategy on historical data to see how it would have performed, helping validate ideas before risking capital.
Batting Average
Batting average in trading is the percentage of trades that result in gains, equivalent to win rate or hit rate.
Bear Market
A bear market is an extended period of falling prices, typically defined as a 20% or greater decline from recent highs.
Beta
Beta measures a security's volatility relative to the overall market, where beta of 1 indicates movement in line with the market.
Bid-Ask Spread
The bid-ask spread is the difference between the highest price buyers will pay (bid) and the lowest price sellers will accept (ask).
Blue Chip
Blue chip stocks are shares of large, well-established companies with a history of stable earnings, strong financials, and reliable dividends.
Bollinger Bands
Bollinger Bands is a volatility indicator with three lines: a 20-period SMA flanked by upper and lower bands set at ±2 standard deviations from that average.
Book Value
Book value is a company's net asset value calculated as total assets minus total liabilities, representing shareholder equity on the balance sheet.
Bracket Order
A bracket order automatically places a stop loss and take profit order around an entry, creating a complete trade setup in one order.
Breakout
Breakout is when price closes above resistance or below support with above-average volume, signaling a potential new trend direction.
Breakout Trading
Breakout trading is a strategy that enters positions when price breaks above resistance or below support, anticipating continuation of the move.
BSE (Bombay Stock Exchange)
BSE is Asia's oldest stock exchange, located in Mumbai, and home to the Sensex index tracking 30 major Indian companies.
Bull Market
A bull market is an extended period of rising prices, typically defined as a 20% or greater rise from recent lows.
C
CAGR
Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified time period longer than one year.
Call Option
A call option gives the buyer the right, but not obligation, to buy an asset at a specific price before expiration.
Calmar Ratio
Calmar ratio is a risk-adjusted performance metric calculated as CAGR divided by maximum drawdown, measuring return per unit of drawdown risk.
Candlestick
A candlestick is a price chart element showing open, high, low, and close for a period, with body color revealing whether price closed higher or lower than it opened.
CCI (Commodity Channel Index)
CCI measures price deviation from its average, oscillating typically between +100 and -100 to identify overbought and oversold conditions.
Chaikin Money Flow
Chaikin Money Flow is a volume-weighted indicator measuring buying and selling pressure over a period, oscillating between -1 and +1.
Circuit Breaker
Circuit breakers are automatic trading halts triggered when market indices fall by preset percentages, designed to prevent panic selling.
Confirmation Bias
Confirmation bias is the tendency to favor information that confirms existing beliefs while ignoring contradictory evidence, leading to poor trading decisions.
Correction
A correction is a 10-20% decline from recent highs, considered a normal and healthy part of market cycles.
Correlation
Correlation measures how closely two assets move together, ranging from +1 (perfect positive) to -1 (perfect negative), crucial for portfolio diversification.
Cover Order
A cover order is an intraday order with a mandatory stop loss attached, providing higher leverage in exchange for limited risk exposure.
Covered Call
A covered call involves owning stock and selling call options against it, collecting premium income while capping upside potential.
Credit Spread
A credit spread involves selling one option and buying another at a different strike for a net credit, with defined risk and profit.
Cup and Handle
Cup and handle is a bullish continuation pattern resembling a tea cup, with a rounded bottom followed by a small pullback before breakout.
D
Dark Pool
A dark pool is a private exchange where large institutional orders are executed anonymously, hidden from public markets until after completion.
Day Trading
Day trading is a strategy where all positions are opened and closed within the same trading day, avoiding overnight risk and margin requirements.
Death Cross
A Death Cross occurs when the 50-day moving average crosses below the 200-day moving average, signaling a potential bearish trend.
Debit Spread
A debit spread involves buying one option and selling another at a different strike for a net debit, with defined risk and profit.
Debt-to-Equity Ratio
Debt-to-Equity ratio compares a company's total debt to shareholders' equity, measuring financial leverage and risk.
Delta
Delta measures how much an option's price changes for every $1 move in the underlying stock, ranging from 0 to 1 for calls and 0 to -1 for puts.
Demat Account
A demat (dematerialized) account holds your shares and securities in electronic form, replacing physical share certificates.
Divergence
Divergence is a technical signal where price moves opposite to a momentum indicator, flagging momentum exhaustion and a potential trend reversal or continuation.
Diversification
Diversification spreads investments across different assets, sectors, or strategies to reduce the impact of any single position's loss on the portfolio.
Dividend Yield
Dividend yield is the annual dividend payment divided by stock price, expressed as a percentage showing income return on investment.
Donchian Channel
Donchian Channel plots the highest high and lowest low over a period, creating a channel that identifies breakout levels.
Double Bottom
Double Bottom is a bullish reversal pattern formed when price tests a support level twice, bouncing up both times, resembling the letter W on a chart.
Double Top
A double top is a bearish reversal pattern formed when price reaches a resistance level twice without breaking through, resembling the letter M.
Drawdown
Drawdown is the decline from a portfolio's peak value to its lowest point, expressed as a percentage of the peak.
E
Earnings Per Share (EPS)
Earnings Per Share divides a company's net profit by outstanding shares, showing how much profit each share represents.
EBITDA
EBITDA is earnings before interest, taxes, depreciation, and amortization — a proxy for operating cash flow used to compare company profitability across capital structures.
EMA (Exponential Moving Average)
EMA gives more weight to recent prices than older prices, making it faster to respond to price changes than SMA.
Equity Curve
Equity curve is a line chart of cumulative account value over time, showing whether a trading strategy produces consistent gains or erratic, luck-driven results.
Expectancy
Trading expectancy is the average amount a trader expects to win or lose per trade, calculated as (Win Rate × Avg Win) - (Loss Rate × Avg Loss).
Expiration
Expiration is the date when an option contract ends and must be exercised, sold, or allowed to expire worthless.
F
Fair Value Gap
A fair value gap (FVG) is a three-candle price imbalance where the middle candle's body extends beyond the wicks of the surrounding candles, leaving an unfilled zone that price tends to revisit.
Fear and Greed Index
Fear and Greed Index measures market sentiment on a scale from extreme fear to extreme greed, used as a contrarian indicator for timing.
Fibonacci Retracement
Fibonacci retracement uses horizontal lines at key ratios (23.6%, 38.2%, 50%, 61.8%) to identify potential support and resistance levels.
Flag Pattern
Flag pattern is a short-term continuation pattern with a sharp move (pole) followed by a rectangular consolidation (flag) before continuation.
FOMO
Fear Of Missing Out (FOMO) is an emotional state that drives traders to enter positions impulsively when seeing others profit, often at unfavorable prices.
Free Cash Flow
Free Cash Flow is cash generated by operations minus capital expenditures, representing cash available to shareholders and debt holders.
Futures Contract
A futures contract is an agreement to buy or sell an asset at a predetermined price on a specific future date, with both parties obligated.
G
Gambler's Fallacy
Gambler's Fallacy is the mistaken belief that past independent outcomes influence future ones — causing traders to oversize after losing streaks expecting a reversal.
Gamma
Gamma measures how much delta changes for every $1 move in the underlying stock, showing the rate of change of directional exposure.
Gap
A gap is an area on a chart where no trading occurred, created when price opens significantly above or below the previous close.
Gap Trading
Gap trading is a strategy that takes positions based on price gaps, either trading the gap fill (reversal) or gap continuation (momentum).
Golden Cross
A Golden Cross occurs when the 50-day moving average crosses above the 200-day moving average, signaling a potential bullish trend.
Greeks
The Greeks are risk measures showing how option prices change with underlying price (delta), time (theta), volatility (vega), and rate of change (gamma).
GTT Order
Good Till Triggered (GTT) orders remain active until the trigger price is reached or the order expires, available on Indian brokers like Zerodha.
H
Head and Shoulders
Head and shoulders is a reversal chart pattern with three peaks where the middle peak (head) is higher than the two surrounding peaks (shoulders), signaling a trend reversal.
Hedging
Hedging is a risk management strategy that takes offsetting positions to protect against adverse price movements in existing holdings.
I
Iceberg Order
An iceberg order hides the total order size by displaying only a small visible portion, used by institutions to minimize market impact.
Ichimoku Cloud
Ichimoku Cloud is an all-in-one indicator showing support, resistance, trend direction, and momentum using five calculated lines.
Implied Volatility
Implied volatility is the market's expectation of future price movement, reflected in option prices. Higher IV means more expensive options.
In The Money (ITM)
An option is in the money when exercising it would be profitable—calls when stock exceeds strike, puts when stock is below strike.
Information Ratio
Information ratio measures a portfolio's risk-adjusted excess returns against a benchmark, calculated as active return divided by tracking error.
Inside Bar
Inside bar is a candlestick pattern where the current candle's high and low are completely within the previous candle's range.
Intraday Trading
Intraday trading means buying and selling securities within the same trading day, with all positions closed before market close.
Intrinsic Value
Intrinsic value is the amount by which an option is in the money—the difference between stock price and strike price if profitable.
IPO (Initial Public Offering)
IPO (Initial Public Offering) is the process by which a private company sells shares to the public for the first time on a stock exchange.
Iron Condor
An iron condor is a neutral options strategy using four options to profit from low volatility within a defined price range.
IV Crush
IV crush is the sharp decline in implied volatility after an event like earnings, causing option prices to drop even if the stock moves your way.
K
Kelly Criterion
Kelly criterion is a mathematical formula that determines the optimal position size to maximize long-term growth while managing risk of ruin.
Keltner Channel
Keltner Channel is a volatility-based indicator with bands plotted around an EMA, using ATR for band width instead of standard deviation.
L
Leverage
Leverage allows traders to control larger positions with less capital, amplifying both potential profits and losses from price movements.
Limit Order
A limit order executes only at a specified price or better, guaranteeing price but not execution if the market doesn't reach that level.
Liquidity
Liquidity measures how easily an asset can be bought or sold without significantly affecting its price.
Long Position
A long position is buying an asset with the expectation that its price will rise, allowing you to sell later at a higher price for profit.
Loss Aversion
Loss aversion is the psychological tendency where losses feel twice as painful as equivalent gains feel pleasurable, causing traders to hold losers too long.
Lot Size
Lot size is the standardized number of units of the underlying asset in one derivatives contract, determining minimum trade size.
Lower Circuit
Lower circuit is the maximum price a stock can fall in a single trading day, set as a percentage band from the previous close.
M
MACD
MACD (Moving Average Convergence Divergence) is a momentum indicator showing the relationship between two moving averages of price.
Margin
Margin is borrowed money from a broker used to increase buying power, requiring traders to maintain a minimum equity percentage in their account.
Margin Call
A margin call occurs when account equity falls below the minimum maintenance requirement, requiring the trader to deposit more funds or close positions.
Market Capitalization
Market capitalization is a company's total market value, calculated by multiplying stock price by total shares outstanding.
Market Maker
A market maker is a firm that provides liquidity by continuously quoting buy and sell prices, profiting from the bid-ask spread.
Market Order
A market order executes immediately at the best available price, guaranteeing execution but not the exact price in fast-moving markets.
Maximum Adverse Excursion (MAE)
Maximum Adverse Excursion (MAE) is the largest unrealized loss a trade experiences at any point before closing, used to set data-driven stop-loss levels.
Maximum Drawdown
Maximum drawdown (MDD) is the largest peak-to-trough decline in portfolio value before a new peak is reached, measuring worst-case loss.
Maximum Favorable Excursion (MFE)
Maximum Favorable Excursion (MFE) is the highest unrealized profit a trade reaches before it is closed — the peak paper gain during the trade's lifetime.
Mean Reversion
Mean reversion is a strategy based on the theory that prices tend to return to their average over time, buying oversold and selling overbought conditions.
MFI (Money Flow Index)
Money Flow Index is a volume-weighted RSI that measures buying and selling pressure, oscillating between 0 and 100.
Momentum Trading
Momentum trading is a strategy that buys securities showing upward price trends and sells those showing downward trends, riding the market momentum.
Moving Average
Moving Average is a continuously recalculated average of a security's price over a defined lookback period, used to smooth noise and identify trend direction.
N
News Trading
News trading is a strategy that takes positions based on market-moving news events, capitalizing on the volatility and price movements they cause.
Nifty 50
Nifty 50 is India's benchmark stock index tracking the 50 largest companies on the National Stock Exchange (NSE), representing market performance.
NSE (National Stock Exchange)
NSE is India's largest stock exchange by trading volume, headquartered in Mumbai, and home to the benchmark Nifty 50 index.
O
OCO Order
One-Cancels-Other (OCO) order pairs two orders where execution of one automatically cancels the other, used for stop loss and take profit combinations.
Open Interest
Open interest is the total number of outstanding option contracts that have not been closed, exercised, or expired.
Opening Range
Opening range is the high and low price established in the first 5, 15, or 30 minutes of a trading session, used to identify breakout entry points.
Order Book
An order book displays all outstanding buy and sell orders for a security, showing market depth at different price levels.
Out of The Money (OTM)
An option is out of the money when exercising it would not be profitable—calls when stock is below strike, puts when stock exceeds strike.
Overbought
Overbought describes a condition where price has risen too quickly and may be due for a pullback or reversal.
Overconfidence Bias
Overconfidence bias is an inflated belief in one's trading abilities, often leading to excessive risk-taking and underestimating potential losses.
Overnight Position
An overnight position is any trade held after market close, exposing you to price gaps and events that occur when markets are closed.
Oversold
Oversold describes a condition where price has fallen too quickly and may be due for a bounce or reversal.
Overtrading
Overtrading is excessive trading beyond what a strategy requires, often driven by boredom, FOMO, or the desire to recover losses.
P
P/B Ratio
Price-to-Book ratio compares a stock's market price to its book value per share, showing what you pay for the company's net assets.
P/E Ratio
Price-to-Earnings ratio measures a stock's price relative to its earnings per share, indicating how much investors pay for each rupee of profit.
Pairs Trading
Pairs trading is a market-neutral strategy that goes long on one security and short on a correlated security when their price relationship diverges.
Paper Trading
Paper trading is simulated trading with virtual money, letting you practice strategies and build skills risk-free. JournalPlus can track paper trades alongside live trades so you can compare.
Parabolic SAR
Parabolic SAR is a trend-following indicator that places dots above or below price, providing potential stop levels and trend direction.
Pattern Day Trader Rule (PDT Rule)
Pattern Day Trader is a FINRA designation for margin account holders who execute 4+ day trades in 5 business days with under $25,000 equity, triggering trading restrictions.
Payoff Ratio
Payoff ratio is the average winning trade divided by the average losing trade, measuring the relative size of wins to losses.
PEG Ratio
PEG Ratio is the Price/Earnings ratio divided by annual EPS growth rate, revealing whether a stock's valuation is justified by its expected earnings growth.
Penny Stock
Penny stocks are low-priced, small-cap stocks trading below ₹10-20, known for high volatility, low liquidity, and speculative nature.
Pivot Points
Pivot points are calculated support and resistance levels based on previous day's high, low, and close prices.
Position Sizing
Position sizing determines how much capital to allocate to each trade based on account size, risk tolerance, and stop loss distance.
Position Trading
Position trading is a long-term strategy where traders hold positions for weeks to months, focusing on major trends rather than short-term fluctuations.
Premium (Options)
Premium is the price paid to buy an option, consisting of intrinsic value plus time value. It's what option buyers pay and sellers receive.
Price Action
Price action is a trading methodology that uses raw candlestick data, chart patterns, and structural levels to identify supply and demand imbalances without indicators.
Profit Factor
Profit factor is the ratio of gross profits to gross losses, calculated as Total Winning Amount / Total Losing Amount.
Protective Put
A protective put involves owning stock and buying put options as insurance, limiting downside risk while keeping upside potential.
Pullback Trading
Pullback trading involves entering a trend after a temporary price reversal, buying dips in uptrends or selling rallies in downtrends.
Put Option
A put option gives the buyer the right, but not obligation, to sell an asset at a specific price before expiration.
Put-Call Ratio
Put-Call Ratio is the volume of put options divided by call options, used to gauge market sentiment — readings above 1.0 signal fear, below 0.5 signal speculative excess.
Pyramiding
Pyramiding is adding to a winning position as the trade moves in your favor, increasing exposure to a profitable trend while managing risk.
R
R-Multiple
R-multiple expresses a trade's profit or loss as a multiple of the initial risk (R), where 1R equals the amount risked on the trade.
Rally
A rally is a sustained increase in asset prices following a decline or consolidation, often driven by positive sentiment or news.
Range Trading
Range trading is a strategy that buys at support and sells at resistance within a defined price range, profiting from sideways market movement.
Recency Bias
Recency bias is the tendency to overweight recent events when making decisions, causing traders to extrapolate short-term trends into the future.
Recovery Factor
Recovery factor measures how quickly a trading strategy recovers from drawdowns, calculated as net profit divided by maximum drawdown.
Relative Volume (RVOL)
Relative Volume (RVOL) is the ratio of current trading volume to the average volume for the same intraday time window, revealing whether unusual activity is driving price.
Resistance
Resistance is a price level where selling interest is strong enough to prevent further advance, causing price to reverse or consolidate.
Return on Capital Employed (ROCE)
ROCE measures how efficiently a company generates profits from all capital (equity + debt), showing overall business efficiency.
Return on Equity (ROE)
Return on Equity measures how efficiently a company generates profits from shareholders' equity, expressed as a percentage.
Revenge Trading
Revenge trading is impulsive trading after a loss, attempting to recover money quickly through larger positions or more trades, usually resulting in bigger losses.
Risk of Ruin
Risk of ruin is the probability of losing a predetermined percentage of trading capital given a strategy's win rate and risk parameters.
Risk Per Trade
Risk per trade is the maximum amount of capital a trader is willing to lose on any single trade, typically 1-2% of total account value.
Risk-Reward Ratio
Risk-reward ratio compares the potential loss (risk) to the potential gain (reward) of a trade, expressed as a ratio like 1:2 or 1:3.
Risk-Reward Setup
A risk-reward setup defines the entry, stop loss, and target levels of a trade, ensuring the potential reward justifies the risk before entering.
ROC (Rate of Change)
Rate of Change is a momentum indicator measuring the percentage change in price over a specified period, showing speed of price movement.
ROI
Return on Investment (ROI) measures the gain or loss generated on an investment relative to its cost, expressed as a percentage.
Rollover
Rollover is closing a position in an expiring contract and opening the same position in a later-dated contract to maintain exposure.
RSI (Relative Strength Index)
RSI is a momentum oscillator measuring speed and change of price movements on a scale of 0-100, indicating overbought or oversold conditions.
S
Scaling In
Scaling in is gradually building a position over multiple entries rather than taking the full size at once, reducing timing risk.
Scaling Out
Scaling out is gradually exiting a position in portions at different price levels to lock in profits while letting remaining shares run.
Scalping
Scalping is an ultra-short-term trading strategy that aims to profit from small price movements, often holding positions for seconds to minutes.
Sensex
Sensex (Sensitive Index) is India's oldest stock index tracking 30 large companies on the Bombay Stock Exchange (BSE).
Settlement
Settlement is the process of transferring shares to buyer and money to seller after a trade, completed T+1 days after the trade in India.
Sharpe Ratio
Sharpe ratio measures risk-adjusted returns by dividing excess return over risk-free rate by standard deviation of returns.
Shooting Star Candlestick Pattern
Shooting Star is a single-candle bearish reversal pattern with a small real body near the low, upper shadow at least 2× the body, and minimal lower shadow — signaling seller rejection at highs.
Short Position
A short position profits from falling prices by selling borrowed shares first and buying them back later at a lower price.
Short Squeeze
A short squeeze occurs when a heavily shorted stock rises sharply, forcing shorts to cover by buying shares, which pushes prices even higher.
Slippage
Slippage is the difference between the expected price of a trade and the actual price at which it executes.
SMA
SMA is the arithmetic mean of closing prices over a set period, recalculated each bar by adding the newest close and dropping the oldest.
Sortino Ratio
Sortino ratio is a risk-adjusted return metric that only penalizes downside volatility, calculated as excess return divided by downside deviation.
Stock Float
Stock Float is the number of shares available for public trading, calculated as total shares outstanding minus restricted insider and locked-up shares.
Stock Split
Stock Split is a corporate action that increases shares outstanding by issuing additional shares proportionally, reducing the per-share price without changing market cap.
Stop Loss
A stop loss is a predetermined price level at which a trade is automatically closed to limit potential losses on a position.
Stop Order
A stop order becomes a market order when price reaches a specified trigger level, used for entering breakouts or exiting losing positions.
Stop-Limit Order
A stop-limit order combines stop and limit features, triggering a limit order when the stop price is reached, offering price control but risking non-execution.
Straddle
A straddle involves buying a call and put at the same strike and expiration, profiting from big moves in either direction.
Strangle
A strangle involves buying OTM call and put options at different strikes, profiting from very large moves in either direction.
Strike Price
Strike price is the predetermined price at which an option holder can buy (call) or sell (put) the underlying asset.
Sunk Cost Fallacy
Sunk cost fallacy is the irrational tendency to hold losing positions because of past investment, rather than evaluating current probability of recovery.
Support
Support is a price level where buying interest is strong enough to prevent further decline, causing price to bounce or consolidate.
Swing Trading
Swing trading is a strategy that holds positions for days to weeks, aiming to capture price swings within a larger trend.
T
Take Profit
A take profit order automatically closes a position when price reaches a predetermined profit target, securing gains without manual intervention.
The 2% Rule
The 2% Rule is a position-sizing guideline that limits risk to no more than 2% of total account equity on any single trade.
Theta
Theta measures how much an option loses in value each day due to time decay, expressed as dollars lost per day.
Tilt
Tilt is an emotional state where frustration or anger impairs trading judgment, leading to irrational decisions and deviation from the trading plan.
Time Value
Time value is the portion of an option's premium above its intrinsic value, reflecting the probability of favorable movement before expiration.
Trade Frequency
Trade frequency is the number of trades executed over a given period, affecting commission costs, tax implications, and strategy effectiveness.
Trade Setup
A trade setup is a specific combination of conditions from a trading plan that signals a potential entry opportunity with defined risk and reward.
Trading Discipline
Trading discipline is the ability to consistently follow a trading plan and rules, managing emotions and avoiding impulsive decisions.
Trading Edge
A trading edge is a statistical advantage that allows a trader to profit over time, derived from a strategy with positive expectancy.
Trading Journal
A trading journal is a systematic record of every trade — entries, exits, position sizes, rationale, emotions, and outcomes — used to identify patterns, fix mistakes, and develop a consistent.
Trading Plan
A trading plan is a written document outlining entry/exit rules, risk management, and position sizing to guide consistent trading decisions.
Trading Psychology
Trading psychology is the study of how emotions, biases, and mental states distort trading decisions, causing behavioral failures that research links to the majority of retail losses.
Trailing Stop
A trailing stop is a stop loss that moves with price in the direction of the trade, locking in profits while still allowing the trade room to run.
Trend Following
Trend following is a strategy that identifies and trades in the direction of established market trends using technical indicators and price action.
Trendline
A trendline is a diagonal line connecting two or more swing highs or lows to identify trend direction and dynamic support or resistance on a price chart.
V
Value at Risk (VaR)
Value at Risk (VaR) is the maximum expected portfolio loss over a given time period at a specified confidence level, such as a 1-day 95% VaR of $1,200.
Vega
Vega measures how much an option's price changes for every 1% change in implied volatility of the underlying asset.
Volatility
Volatility measures how much an asset's price fluctuates over time, indicating risk and potential reward from price movements.
Volume
Volume is the total number of shares or contracts traded during a specific period, used to confirm price movements and gauge conviction behind a trend.
VWAP
VWAP (Volume Weighted Average Price) is the average price weighted by volume, showing the true average price traders paid during a session.
W
Wash Sale Rule
Wash sale rule is an IRS regulation that disallows a capital loss deduction when a trader sells a security at a loss and rebuys the same or substantially identical security within 61 days.
Wedge Pattern
Wedge pattern is a converging trendline pattern where both support and resistance slope in the same direction, signaling potential reversal.
Wick (Shadow)
A wick (shadow) is the thin line above or below a candlestick body, showing the high and low prices reached during that period.
Williams %R
Williams %R is a momentum indicator measuring overbought/oversold conditions, ranging from 0 to -100, similar to an inverted Stochastic.