Buying more of a position as it falls, lowering your average price but increasing your total risk. Usually the fastest way to turn a small loss into a large one.
Ask
The lowest price someone is currently willing to sell at. You buy at the ask.
Bid
The highest price someone is currently willing to buy at. You sell at the bid.
Beta
How much a stock tends to move relative to the wider market. A beta above 1 means it usually swings more than the index.
Breakout
Price moving decisively through a level that previously held. Often used as an entry trigger, and frequently where FOMO entries happen.
Bull / bear market
A market in a sustained uptrend (bull) or downtrend (bear). Definitions vary; a common rule is 20% from the prior extreme.
Call option
A contract giving the right to buy an asset at a set price before a set date.
Candlestick
A single bar showing the open, high, low and close of a period. The body shows open-to-close; the wicks show the extremes.
Circuit breaker
A rule that stops trading when you hit a loss limit. Not a market mechanism here — your own rule.
Commission
The fee your broker charges per trade. Small per trade, enormous per year at high frequency.
Compound
Earning returns on your previous returns. The reason consistency matters more than the size of any single win.
Correlation
How much two positions move together. Four correlated positions are really one big position.
Cut losses
Closing a losing trade at a pre-defined point instead of hoping. The core of risk control.
Day trading
Opening and closing positions within the same session. High cost, high attention, high failure rate.
Dividend
A cash payment from a company to shareholders, usually quarterly.
Drawdown
The decline from a peak in account value to the following low. The number that decides whether you can keep trading your size.
Earnings
A company's quarterly report. Expectations are set in advance, so the reaction is often about guidance, not the headline number.
Edge
A repeatable statistical advantage. Without one, more trades simply mean more costs.
Entry
The price at which you open a position. Stops and size should be decided before the entry, not after.
ETF
Exchange-traded fund: a basket of assets that trades like a single stock.
Expectancy
Average result per trade: (win rate × average win) − (loss rate × average loss). The honest measure of a strategy.
Fill
The price at which your order actually executes, which may differ from the price you saw.
Float
The shares actually available to trade, excluding closely held ones. Small float means bigger moves.
Futures
Contracts to buy or sell an asset at a set date and price. Leveraged and unforgiving on sizing.
Gap
A price jump between one session's close and the next session's open, usually from overnight news.
Hedge
A position taken to offset risk in another position.
Implied volatility
The market's expectation of future movement, baked into option prices.
Index
A basket measuring a market, such as the S&P 500 or the TAIEX.
Liquidity
How easily you can trade without moving the price. Thin liquidity means wider spreads and worse fills.
Limit order
An order that only executes at your price or better. You get price control, not certainty of a fill.
Long
Owning an asset, betting it rises.
Loss limit
The maximum you allow yourself to lose in a day or week. A rule, not a prediction.
Margin
Borrowed money used to trade. It multiplies both directions of the outcome.
Market cap
Share price multiplied by shares outstanding — the market's total valuation of the company.
Market order
An order that executes immediately at the best available price. You get certainty, not price control.
Moving average
The average close over a rolling window, used to smooth price and define trend.
Open interest
The number of outstanding contracts in an option series. Combined with volume, it signals real activity versus noise.
Option
A contract giving the right — not the obligation — to buy or sell at a set price before a set date.
Overfitting
Building a strategy that fits the past perfectly and the future badly. The most common way backtests lie.
Position size
How many shares or contracts you hold. Arguably the single most important decision you make.
Pre-market
Trading before the regular session opens, typically thinner and more erratic.
Pullback
A temporary move against the trend. A common, calmer entry than chasing strength.
Put option
A contract giving the right to sell an asset at a set price before a set date.
R multiple
Profit or loss expressed in units of the risk taken. +2R means you made twice what you risked.
Resistance
A price level where selling has repeatedly appeared.
Retail investor
An individual trading their own money, as opposed to an institution.
Risk / reward
The distance to your target divided by the distance to your stop. Size and outcome depend on it.
Scalping
Taking very small profits on very short moves. Extremely sensitive to costs.
Sector
A group of companies in the same industry, such as technology or energy.
Slippage
The difference between the price you expected and the price you got, caused by movement and thin liquidity.
Spread
The gap between the bid and the ask. You pay it every time you enter and exit.
Stop-loss
A pre-set price at which you exit a losing position. The mechanism that makes risk measurable.
Support
A price level where buying has repeatedly appeared.
Swing trading
Holding positions for days to weeks, capturing larger moves with fewer trades.
Ticker
The short code identifying a security, such as AAPL or 2330.TW.
Trailing stop
A stop that follows price as it moves in your favour, locking in gains without capping them.
Trend
The prevailing direction of price over a meaningful period. Trading with it is generally easier than against it.
Volatility
How much a price moves, regardless of direction. It drives sizing and stop distance.
Volume
The number of shares traded in a period. It tells you how much conviction sits behind a move.
Watchlist
A short list of symbols you follow with defined levels, rather than reacting to whatever moves first.
Win rate
The share of trades that make money. Meaningless on its own — average win and average loss decide the outcome.
Yield
Income from an investment, usually dividends, expressed as a percentage of price.