Trading styles and market hours

How long you hold a trade, and when the market is open, shape every other decision on this page.

Day Trading
Day trading means opening and closing every position within the same session, so you hold nothing overnight. Most day traders work on 1-minute to 1-hour charts during the regular session. Our guide to day trading for beginners covers a full daily routine.
Swing Trading
Swing trading means holding a position for several days to a few weeks to catch one larger move, usually planned on daily and 4-hour charts. Because positions stay open overnight, swing traders accept gap risk from news and earnings.
Scalping
Scalping is the shortest trading style: positions last from seconds to a few minutes and aim for small moves, sometimes a few cents a share. Spreads, commissions and slippage take a large bite out of each trade, so scalpers stick to the most liquid stocks.
Pattern Day Trader (PDT) Rule
The PDT rule was a FINRA margin rule: four or more day trades within five business days in a margin account required at least $25,000 in account equity. Amendments that took effect on June 4, 2026 replace the day-trade count and the $25,000 minimum with intraday margin requirements. Brokers have until October 20, 2027 to make the switch and may keep stricter rules of their own, so check your broker's current policy.
Regular Session
The regular session is the main trading day on the NYSE and Nasdaq: 9:30 a.m. to 4:00 p.m. Eastern Time (ET), Monday to Friday, outside market holidays. It has the most volume and the tightest spreads, which is why most day trading plans are built around it.
Pre-Market
Pre-market is trading before the 9:30 a.m. ET open, starting as early as 4:00 a.m. ET on the main electronic venues, though many brokers offer a shorter window. Volume is thin and spreads are wide, so prices can jump on small orders. See US stock market hours for every session in your time zone.
After-Hours
After-hours trading runs from the 4:00 p.m. ET close until 8:00 p.m. ET on the main electronic venues. Many companies release earnings in this window, so moves can be sharp while liquidity stays thin, and many brokers accept only limit orders then.

Order types and execution terms

These terms describe the price you see, the price you actually get, and the orders that sit between the two.

Bid
The bid is the highest price a buyer is currently willing to pay for a stock. If you sell with a market order, you usually get filled at or near the bid.
Ask (Offer)
The ask, also called the offer, is the lowest price a seller is currently willing to accept. If you buy with a market order, you usually pay the ask.
Bid-Ask Spread
The spread is the difference between the bid and the ask. Say the bid is $50.00 and the ask is $50.03: the spread is 3 cents, a cost you pay whenever you buy at the ask and sell at the bid. Liquid stocks often trade with a 1-cent spread, while thin ones can be much wider.
Market Order
A market order buys or sells right away at the best price available. It fills quickly in a liquid stock but gives you no control over the price, so in a fast market or a thin stock you can be filled well away from the last trade you saw.
Limit Order
A limit order buys or sells only at your price or better: a buy limit at $49.80 fills at $49.80 or lower. You control the price, but the order may never fill if price does not reach it.
Stop Order
A stop order waits until price trades at a level you set, then becomes a market order. Traders use a sell stop below the price to cap the loss on a long position, and a buy stop above it to enter a breakout. Because it fills as a market order, a fast move or a gap can fill it past your stop price.
Stop-Limit Order
A stop-limit order has two prices: the stop price triggers it, and the limit price sets the worst fill you will accept. Say you place a sell stop at $49.50 with a limit at $49.40, and the stock gaps to $49.20: the order does not fill and you are still in the trade.
Slippage
Slippage is the difference between the price you expected and the price you actually got. If your stop is at $49.50 and the fill comes at $49.42, you had 8 cents of slippage per share. It grows in fast markets, around news and in thinly traded stocks.
Liquidity
Liquidity is how easily you can buy or sell without moving the price. Highly liquid names such as SPY trade millions of shares a day with tight spreads, while illiquid stocks have wide spreads and can jump on a single order.

Chart and candlestick terms

Every chart reading starts here: what one candle shows, how much traded, and which timeframe you are looking at.

Candlestick
A candlestick shows four prices for one period: the open, high, low and close. The body spans the open to the close and is usually green when price closed higher and red when it closed lower. Our guide on how to read candlesticks covers the common patterns.
Wick (Shadow)
A wick, or shadow, is the thin line above or below a candle's body that marks the highest and lowest prices of the period. A long upper wick shows price was pushed up, then sold back down before the close.
Volume
Volume is the number of shares or contracts traded in a period, usually drawn as bars under the chart. A move on rising volume has more traders behind it than the same move on light volume.
Timeframe
The timeframe is the period each candle covers, such as 1 minute, 5 minutes, 1 hour or 1 day. Day traders often trade on a lower timeframe and check one or more higher timeframes for the trend.
Gap
A gap is a jump between one candle's close and the next candle's open, most often between yesterday's close and today's open after news or earnings. Say a stock closes at $100 and opens at $104: that is a $4 gap up.
Opening Range
The opening range is the high and low a stock sets in the first minutes after the 9:30 a.m. ET open, commonly the first 5, 15 or 30 minutes. Traders use it as a level for the rest of the day, and a close beyond it is called an opening range breakout.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn 5-minute chart labeled with this section's terms: yesterday's last candle closes at $100 and today opens at $104, a gap; a dashed box around today's first three candles marks the opening range; volume bars sit underneath; and a magnifier zooms into one candle with a long upper wick to label the wick and the body. A note at the top: each candle is 5 minutes.

Price action and setup terms

Price action terms describe what price itself is doing, before you add any indicator.

Trend
A trend is a sustained move in one direction. An uptrend makes higher highs and higher lows, and a downtrend makes lower highs and lower lows. Trading in the direction of the higher-timeframe trend is one of the most common filters traders use.
Range and Chop
A range is a sideways market where price moves between a ceiling and a floor without trending. Chop is a messy range of small, overlapping candles with no follow-through, the condition where trend and breakout setups tend to fail.
Support
Support is a price area where buying has stopped declines before, such as a prior swing low, yesterday's low or a round number. Treat it as a zone a few cents wide rather than an exact line, and expect it to break at some point.
Resistance
Resistance is a price area where selling has capped rallies before, such as a prior swing high or yesterday's high. Once price breaks above resistance and holds, that level often acts as support on a retest.
Breakout
A breakout is a close beyond support, resistance or the edge of a range, ideally on above-normal volume. Many traders wait for a candle to close beyond the level before acting, instead of reacting to the first tick through it.
False Breakout (Fakeout)
A false breakout is a move beyond a level that quickly falls back inside, trapping traders who bought or sold the break. Say resistance is at $50, price trades up to $50.20, then the candle closes at $49.85: that break has failed.
Pullback
A pullback is a short move against the trend before it continues, such as an uptrend dipping back toward VWAP or a moving average. Buying a pullback in an uptrend lets you use a tighter stop than buying at the high.
A+ Setup
An A+ setup is a trader's own label for their highest-quality trades: the ones that tick every item on their checklist, such as trend, level, volume and a clear stop and target. Many traders take only A+ setups and skip the rest. UpTickFlow, our TradingView indicator, scores each setup from 0 to 100 and shows only A+ setups.

Turn your phone sideways to read the drawing. Tap to close.

A hand-drawn chart labeled with this section's terms: a range between green support and red resistance at $50; a false breakout that trades up to $50.20 and closes at $49.85; a breakout that closes above $50; a retest where old resistance acts as support and the zone turns green; then a pullback and an uptrend of higher highs and higher lows.

Technical indicator terms

Indicators are calculations on price and volume that describe what has already happened, so they work best as filters around a plan.

Volume-Weighted Average Price (VWAP)
VWAP is the average price a stock has traded at during the session, weighted by the volume at each price, and it resets every day. Day traders read price above VWAP as buyers in control and below it as sellers in control. The VWAP trading strategy guide covers the main setups.
Exponential Moving Average (EMA)
An EMA is a moving average that gives more weight to recent prices, so it reacts faster than a simple moving average. Common lengths are 9 and 20 for the short-term trend and 50 or 200 for the bigger picture.
Simple Moving Average (SMA)
An SMA is the plain average of the last set number of closes: a 20-period SMA adds up the last 20 closes and divides by 20. It moves more slowly than an EMA of the same length, and the 200-day SMA is a widely watched long-term trend line.
Relative Strength Index (RSI)
RSI is a momentum oscillator from 0 to 100 that compares the size of recent gains with recent losses, over 14 periods by default. Readings above 70 are called overbought and below 30 oversold, but in a strong trend RSI can stay there for a long time.
Divergence
Divergence is when price and an oscillator such as RSI disagree: price makes a higher high while RSI makes a lower high (bearish), or price makes a lower low while RSI makes a higher low (bullish). It warns that momentum is fading but does not time an entry on its own. Our RSI divergence guide shows how to trade it.
Average True Range (ATR)
ATR measures volatility as the average size of a candle's full range, gaps included, over a set number of periods (14 by default). If a stock's 5-minute ATR is $0.40, a stop only $0.05 away sits inside normal noise. Traders use ATR to set stop distance and position size.
Average Directional Index (ADX)
ADX measures how strong a trend is, not which way it points, on a scale from 0 to 100. Many traders read values above about 25 as a trending market and below about 20 as a weak trend or a range.
Relative Volume (RVOL)
Relative volume compares current volume with the stock's normal volume, often for the same time of day. A reading of 2 means twice the usual activity, a sign that more traders than usual are involved in the move.

Risk management and position sizing terms

Risk terms decide what a losing trade costs you, and every trade carries a real chance of loss.

Stop Loss
A stop loss is the price at which you exit a losing trade, decided before you enter. Place it where your trade idea is proven wrong, such as just beyond the level you are trading, then size the position so hitting it costs a planned amount. Our guide to stop loss and take profit covers placement in detail.
Take Profit
A take profit is the price at which you plan to exit a winning trade, usually at the next support or resistance level. Setting it before entry keeps you from closing too early out of fear or holding too long out of hope.
Risk-Reward Ratio
The risk-reward ratio compares what you stand to lose with what you aim to gain. Buy at $100 with a stop at $98 and a target at $104, and you risk $2 to aim for $4, a 1:2 ratio. The ratio only helps if the target is realistic, with no strong level standing in the way.
R-Multiple
An R-multiple measures a trade's result in units of initial risk (R), the distance from entry to stop. If 1R is $2 and you exit $5 above entry, the result is +2.5R, while a full stop-out is -1R. It lets you compare trades on a $20 stock and a $400 stock on equal terms.
Position Size
Position size is how many shares you trade, set by your dollar risk divided by your risk per share. With $100 at risk and a stop $0.50 away, you buy 200 shares. The position size calculator does the math for any trade.
Drawdown
Drawdown is the drop from an account's peak to a later low, measured in dollars or percent. If an account grows to $10,000 and then falls to $9,200, the drawdown is 8%. Maximum drawdown is the deepest such drop over a period.

Options terms

These come up as soon as you look at an options chain for a US stock or ETF.

Option
An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a set price on or before a set date. A standard US stock or ETF option covers 100 shares. Start with our options trading for beginners guide.
Call Option
A call gives its buyer the right to buy the underlying at the strike price until expiration. Call buyers generally expect the price to rise. Our call vs put guide compares the two.
Put Option
A put gives its buyer the right to sell the underlying at the strike price until expiration. Put buyers generally expect the price to fall, or use puts to protect shares they already own.
Strike Price
The strike price is the price at which an option lets you buy (call) or sell (put) the underlying. How to pick one is covered in how to choose a strike price.
Premium
The premium is the price of an option, quoted per share. A premium of 2.50 on a standard 100-share contract costs $250. For a buyer, the premium paid is the most that can be lost.
Expiration Date
The expiration date is the last day an option can be traded or exercised. An option that is out of the money at expiration expires worthless.
In, At and Out of the Money (ITM, ATM, OTM)
A call is in the money when the stock is above the strike, and a put when the stock is below it. At the money means the strike is near the current price. Out of the money means the option has no intrinsic value yet.
Intrinsic Value and Time Value
Intrinsic value is what an option would be worth if exercised right now. Time value is the rest of the premium, and it shrinks as expiration gets closer.
Delta
Delta estimates how much an option's price changes when the underlying moves $1. A delta of 0.50 means about $0.50 per share, or $50 per contract. Our guide to the options Greeks covers delta, gamma, theta and vega.
Theta (Time Decay)
Theta estimates how much value an option loses per day as time passes, with everything else unchanged. The decay usually speeds up in the final weeks and days before expiration.
Implied Volatility (IV)
Implied volatility is the size of future moves that the market is pricing into an option. Higher IV makes options more expensive, and IV often drops after earnings, an effect called IV crush. See implied volatility.
0DTE Options
0DTE means zero days to expiration: options traded on the day they expire. Their prices react very quickly to moves in the underlying. Our 0DTE options guide explains the risks.
Assignment
Assignment is when an option seller must fulfill the contract after the buyer exercises it: deliver shares for a call, or buy shares for a put. American-style options can be exercised before expiration, so a seller can be assigned early.
Open Interest
Open interest is the number of option contracts still open for a given strike and expiration. More open interest and volume usually go with tighter bid-ask spreads.

Investing terms: funds, dividends and portfolios

These terms come up as soon as you invest for years rather than trade for minutes: the funds you can buy, the dividends they pay, and how you spread money across them.

Exchange-Traded Fund (ETF)
An ETF is a fund that holds a basket of assets, such as all the stocks in an index, and trades on an exchange like a single stock throughout the day. SPY and QQQ are well-known examples. Our guide to ETFs vs mutual funds compares the two structures.
Index Fund
An index fund is a mutual fund or ETF that aims to match the return of a market index, such as the S&P 500, by holding all of its stocks or a representative sample. Because no manager is picking stocks, its fees are usually lower than those of actively managed funds.
Mutual Fund
A mutual fund pools money from many investors into a portfolio of stocks, bonds or other assets run by a professional manager. You buy and sell its shares directly with the fund at its net asset value (NAV), usually calculated once per business day after the market closes, rather than at prices that change during the session.
Expense Ratio
The expense ratio is the annual cost of running a fund, expressed as a percentage of its assets and taken out of the fund rather than billed to you separately. An expense ratio of 0.10% costs about $10 a year for every $10,000 invested.
Dividend
A dividend is a payment a company makes to its shareholders, usually in cash and, for many US companies, every quarter. The board decides each payment and can raise, cut or suspend it at any time. Our guide to dividend investing covers how dividend stocks work.
Dividend Yield
Dividend yield is the annual dividend per share divided by the share price: a $50 stock paying $2 a year yields 4%. Because the price sits in the denominator, the yield rises when the price falls, so an unusually high yield can mean the market expects a cut.
Ex-Dividend Date
The ex-dividend date is the first day a stock trades without its next dividend: if you buy on or after it, the payment goes to the seller. With US stocks now settling one business day after the trade (T+1), the ex-date usually falls on the record date, so you need to buy at least one business day before it. The share price often opens lower that day by roughly the dividend amount.
Payout Ratio
The payout ratio is the share of a company's earnings paid out as dividends: dividends per share divided by earnings per share. A company that earns $4 a share and pays $1.60 has a 40% payout ratio. A ratio above 100% means it is paying out more than it earns, which cannot continue indefinitely.
Dollar-Cost Averaging (DCA)
Dollar-cost averaging means investing the same amount at regular intervals, such as $200 every month, whatever the price. Your fixed amount buys more shares when prices are low and fewer when they are high, but it does not prevent losses in a market that keeps falling. Our dollar-cost averaging guide shows the math.
Compound Interest
Compound interest is interest earned on both your original money and the interest it has already earned. At a hypothetical 5% a year, $1,000 grows to $1,050 after one year and $1,102.50 after two, because the second year also earns 5% on the first year's $50. Try your own numbers in the compound interest calculator.
Diversification
Diversification means spreading money across many holdings, sectors and asset types so that one bad holding does far less damage. It reduces the risk tied to a single company or sector, but not the risk of the whole market falling. See our guide to portfolio diversification.
Asset Allocation
Asset allocation is how a portfolio is divided among asset classes such as stocks, bonds and cash, for example 60% stocks and 40% bonds. The mix depends on your goals, time horizon and tolerance for risk, and rebalancing brings it back to target after markets move it.

Market terms: stocks, rates, forex and futures

These terms describe how the market moves as a whole, how stocks are valued, the company and economic events that move prices, and the leveraged world of forex and futures.

Bull Market
A bull market is a long stretch of rising prices, commonly dated from the point a broad index such as the S&P 500 has climbed 20% or more from a low. It usually comes with rising earnings and optimism, and it can last for years. Our guide to bull vs bear markets covers both phases.
Bear Market
A bear market is a sustained decline, commonly defined as a fall of 20% or more from a recent high in a broad index. It comes with widespread pessimism and can last from a few months to several years.
Correction
A correction is a decline of at least 10%, but less than 20%, from a recent high in a stock or an index. Corrections happen fairly often and are usually shorter than bear markets, though no one knows in advance which one will turn into a bear market.
Market Capitalization (Market Cap)
Market cap is the total stock market value of a company: the share price times the number of shares outstanding. A company with 500 million shares at $40 is valued at $20 billion. Stocks are grouped into large-cap, mid-cap and small-cap, with cutoffs that vary by source, as our market cap guide explains.
Price-to-Earnings Ratio (P/E)
The P/E ratio divides a stock's price by its earnings per share: a $50 stock earning $2.50 a share has a P/E of 20, meaning investors pay $20 for each dollar of annual earnings. Trailing P/E uses the last 12 months of reported earnings, while forward P/E uses analysts' estimates. See our guide to the P/E ratio.
Earnings per Share (EPS)
EPS is a company's net income, minus any preferred dividends, divided by its average number of common shares outstanding. Companies report basic EPS and diluted EPS, which also counts the shares that options and convertible securities could add. Our guide to financial statements shows where it sits on the income statement.
Earnings Season
Earnings season is the stretch of several weeks after each calendar quarter ends when most US-listed companies report their quarterly results. Stocks can gap sharply on the numbers and on guidance, and implied volatility in options often rises before a report and drops after it. Our earnings season guide covers what to watch.
Initial Public Offering (IPO)
An IPO is the first time a company sells its shares to the public and lists them on a stock exchange. The offer price is set with the underwriting banks before trading starts, and the first days of trading can be very volatile. Our IPO guide walks through the process.
Lock-Up Period
A lock-up period is a set time after an IPO during which insiders and early investors agree not to sell their shares. Terms vary and are disclosed in the prospectus, but many last 180 days, and the end of a lock-up can add a wave of shares available to sell.
Stock Split
A stock split gives shareholders more shares at a proportionally lower price, leaving the total value unchanged. In a 2-for-1 split, 100 shares at $200 become 200 shares at $100, still worth $20,000. See our guide to stock splits.
Reverse Stock Split
A reverse stock split combines shares into fewer, higher-priced ones without changing the total value: in a 1-for-10 reverse split, 1,000 shares at $0.80 become 100 shares at $8. Companies often do it to lift their share price back above an exchange's minimum listing price, such as $1.
Short Interest
Short interest is the number of a stock's shares that have been sold short and not yet bought back, often shown as a percentage of the float, the shares available to trade. FINRA collects it from brokers twice a month, so the published figure is already several days old. High short interest is one ingredient of a short squeeze.
Days to Cover
Days to cover, also called the short interest ratio, divides short interest by average daily trading volume. With 10 million shares sold short and 2 million shares traded a day, days to cover is 5, an estimate of how long short sellers would need to buy back their shares.
Momentum
Momentum is the tendency of stocks that have risen strongly to keep rising for a while, and of weak ones to keep falling. Investors often measure it over the past 3 to 12 months and traders over days or weeks, and sharp reversals are its main risk. Our momentum trading guide explains the approach.
Trend Following
Trend following is a strategy that buys markets in uptrends and sells or shorts them in downtrends without trying to predict tops or bottoms, then exits with a trailing stop when the trend ends. It accepts many small losses in choppy markets in exchange for staying in the few long trends. See our guide to trend following.
Federal Funds Rate
The federal funds rate is the interest rate at which US banks lend reserve balances to each other overnight. The Federal Reserve's Federal Open Market Committee (FOMC) sets a target range for it at eight scheduled meetings a year, and changes ripple into loan rates, bond yields and stock valuations. Our guide to Fed interest rates explains why markets watch every decision.
Inflation and the Consumer Price Index (CPI)
Inflation is the general rise in prices over time, so each dollar buys less. The most watched US measure is the Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics, which tracks the average change in prices urban consumers pay for a basket of goods and services. The Federal Reserve's 2% inflation goal is measured with a different index, the PCE price index.
Pip
A pip is the standard unit of price change in a currency pair: the fourth decimal place (0.0001) for most pairs and the second (0.01) for pairs quoted in Japanese yen. On a pair quoted to four decimals, a move from 1.1000 to 1.1025 is 25 pips. Start with our guide to forex trading for beginners.
Lot (Forex)
A lot is the unit of trade size in forex: a standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. On pairs where the US dollar is the quote currency, such as EUR/USD, one pip is worth $10 on a standard lot and $0.10 on a micro lot.
Leverage
Leverage means controlling a position larger than the cash you put up, using borrowed money or margin. At 50:1, $1,000 controls a $50,000 position, so a 1% move against you costs $500, half your deposit. Leverage magnifies losses as much as gains, as our guide to leverage and margin shows.
Margin Call
A margin call is a demand from your broker to add cash or securities when the equity in a margin account falls below the maintenance requirement. FINRA sets that minimum at 25% of the market value of stocks bought on margin, and many brokers require more. If you do not meet the call, the broker can sell your positions without contacting you first.
Futures Contract
A futures contract is a standardized, exchange-traded agreement to buy or sell a set amount of an asset, such as a stock index, crude oil, gold or a currency, at a price agreed today for a future date. You post margin instead of the full value, and gains and losses are credited to or debited from your account every day, so a small price move can change your balance a lot. Start with futures trading for beginners.
Contract Rollover
Rolling over means closing a futures position in the contract that is about to expire and opening the same position in a later month to stay in the trade. US equity index futures such as the E-mini S&P 500 run on a quarterly cycle (March, June, September and December), so traders roll in the days before each expiration, as volume shifts to the next contract.

TradingView terms

TradingView is where many retail traders chart, so its own vocabulary comes up constantly.

Pine Script
Pine Script is TradingView's own programming language for writing indicators and strategies that run on its charts. Most built-in and community indicators on TradingView are written in it.
Invite-Only Script
An invite-only script is a TradingView indicator whose code is hidden and that only accounts approved by its author can use. Once you are granted access, it appears under Indicators, in the Invite-only scripts section. Our step-by-step guide shows how to add an invite-only script.
Repainting
Repainting is when an indicator's past signals or values change after the fact, so its history on the chart looks better than what you would have seen live. It usually comes from using the still-forming candle, or higher-timeframe data that was not final yet. Our guide to TradingView repainting shows how to spot it.
TradingView Alert
A TradingView alert is a notification that fires when a condition you set is met, such as price crossing a level or an indicator printing a signal, and reaches you in the app, as a pop-up or by email. At the time of writing, the free Basic plan includes only a few price alerts, and alerts on indicators need a paid plan. Our TradingView alerts guide covers the limits.
Paper Trading
Paper trading means placing simulated trades with virtual money to practice without risking capital. TradingView includes paper trading on every plan, opened from the Trading Panel under the chart, which makes it a sensible place to test a plan before using real money.