Trading penny stocks is a lot of fun but also dangerous, like any form of trading. Here’s 25 key terms we use in the Weekly Watchlist and Lightning Alerts to help you understand our daily conversations and trade ideas.
Day Trading
It’s when stock traders buy and sell stock positions in a single trading day. These stock trades are based on short-term price movements and news events, rather than long-term investments. Day trading requires quick decision-making, discipline, knowledge of the stock market, and an ability to take risks. It can be very lucrative but it also carries a high risk of losses. For that reason, day trading is not for everyone and requires a lot of hard work and dedication to succeed. If you’re willing to put in the effort, stock trading can be highly rewarding. Just remember: always do your research and never invest more than you can afford to lose.
Scalp Trading
Well, stock trading can be a risky business. But with scalp trading, you can find ways to mitigate that risk. Scalp trading is when you open multiple stock trades at once and exit them quickly after they move in the intended direction. By doing this, you’re able to increase your chances of making a profit from stock market movement without having to gamble with big stock trades. Sure, there’s potential for big payouts if the stock market moves in your favor—but scalp trading can provide a steady, low-risk way to turn a profit without requiring a huge risk. If you’re looking for an easier way to trade stock and make money, then scalp trading might be the way to go. Have a look around and see if this method of stock trading is right for you.
Swing Trading
It’s a stock trading style that allows you to take advantage of short term stock market moves. Swing traders look for stocks that are likely to make big moves over a few days or weeks, and then try to capitalize on these opportunities. This type of stock trading requires an understanding of the stock market, so it’s important to do your research before getting involved. However, it can be incredibly rewarding if done correctly. So if you’re looking to make some money in the stock market and have an understanding of stock trading, swing trading could be the way to go.
Long-term Trading
It’s a stock trading strategy that involves holding stock for an extended period of time, usually over the course of multiple weeks or months. The idea behind long-term trading is to buy stock in companies you believe have strong fundamentals and the potential to grow in value over time. This type of stock investing allows investors to weather short-term market volatility while potentially reaping higher rewards in the long run. It’s not without risk, however, so investors should do their due diligence before purchasing stock with a long-term view. The stock market is always unpredictable and stock prices can go up or down at any time, so it pays to stay informed and use your best judgment when investing for the long haul.
Small Cap
Small cap stock is a stock that trades for a relatively low market capitalization, usually less than $2 billion. These stocks are considered more volatile than their larger-cap counterparts, but they can also offer greater returns if you’re willing to take on risk.
Micro Cap
Micro cap stocks are stocks of companies that have a stock market capitalization of less than $300 million. To put it simply, these are the smallest publicly traded companies out there. They’re often riskier investments, but they can also offer larger returns if you make the right move in the stock market.
Nano Cap
Nano caps are stocks with market capitalizations or stock values of between $50 million to $300 million. This stock is typically too small to attract the attention of institutional investors, but it’s also not so tiny that its liquidity is limited. These companies tend to be in their early stages and are often subject to extreme price volatility and risk due to their lack of visibility. The stock market can be a scary place and nano caps can be especially volatile, so it’s always important to do your research before investing in these types of stocks. It’s also worth noting that stock prices for nano cap companies are often not as transparent or accessible as those of other stock companies due to the limited availability of stock data. So, if you’re looking to dip your toe into stock trading and want to experience the thrill of high risk/high reward stock investments, then nano caps may be just what you’re looking for!
Technical Analysis
Technical analysis involves studying stock prices and trends as well as other market indicators, such as volume and open interest. It looks for patterns in stock price movements that can be used to predict future stock prices. Technical analysts rely upon charts, technical indicators, and other tools to identify these patterns. They use this information to make decisions about when to buy or sell.
Fibonacci Retracement
Fibonacci retracement is a technical analysis tool that uses horizontal lines to identify possible support and resistance levels. The Fibonacci retracement levels are based on the theory of the stock market, which states that stock prices tend to move in trends and repeat themselves over time. By using Fibonacci ratios, stock traders can determine potential areas where stock prices may reverse course. These levels can be used to enter, exit or manage stock trades. When buying stock, traders typically look for Fibonacci retracement levels to provide support in the stock price. Similarly, when selling stock, traders will seek out these levels as potential points of resistance that could indicate a trend reversal and profits from stock trading. Fibonacci retracement levels are an important tool to stock traders when making buy and sell decisions. The accuracy of the results depends on using good stock data with reliable stock charting capabilities.
Relative Strength Index
Relative strength index, or RSI for short, is a technical analysis oscillator that measures the speed and change of stock prices. It’s essentially a momentum indicator that compares recent gains to recent losses to determine if stock prices are overbought or oversold. These readings can help traders identify potential buying and selling opportunities in the stock market.
Keltner Channels
Keltner Channels are a type of technical indicator that helps stock traders to identify potential regimes of stock price movement. They consist of three lines: an upper line, a middle line, and a lower line. The upper and lower lines measure volatility by using the average of recent highs and lows plus or minus a multiplier. The middle line is typically a simple moving average of stock prices. By looking at the distance between these lines, stock traders can identify trends and opportunities in stock trading. Keltner Channels are also useful for setting protective stop-loss orders as they help to define potential support and resistance levels. Ultimately, they can provide stock traders with an edge when it comes to stock trading.
Bull Flag
A bull flag is an incredibly useful pattern that traders should know and understand. It’s a short-term trend within an overall uptrend, and signals a stock’s potential to continue in the same direction. A bull flag typically forms after a stock has made a sharp move up, followed by a period of consolidation or range bound trading. This smaller move often takes the shape of a rectangle or flag, hence the name. Once this stock begins to break above the resistance line of its flag pattern, it could be a signal that the stock will continue to climb in price. This is why traders watch for and recognize this type of stock chart pattern. It’s an indication that the stock may have some momentum to continue its move in the direction of the trend. But it’s important to remember that stock prices don’t always behave logically and this pattern doesn’t guarantee stock price performance. It is just a valuable tool that traders can use to make educated decisions with their stock trading strategies.
Bull Pennant
A bull pennant is a chart pattern that forms when stock prices consolidate in a symmetrical triangle after an uptrend. This pattern typically indicates the continuation of an existing stock market trend, and traders often use it as a signal to buy. So if you see this pattern on your stock charts, then it could be time to get bullish! Keep in mind though that this pattern isn’t foolproof, so it’s important to do your own research before entering a stock trade.
Oversold
An oversold stock occurs when stock prices have been declining for a sustained period of time and have fallen below their expected value. This means that investors believe that the stock price will continue to decrease and there’s an opportunity to buy at a low price before the stock rebounds. When a stock is deemed oversold, experienced traders may recognize it as an opportunity to buy and invest in the stock at a bargain price before the stock recovers.
Continuation
This is a chart pattern where stock prices move in a specific direction, before they reverse and continue moving in that same direction. You know you’ve got a continuation pattern when stock prices break out of a short-term trendline or resistance level and then return back to the original trendline or support level, only to break it again and continue the trend. Now, this type of stock trading pattern can be seen in all types of stock markets – whether short-term or long-term – so you should always keep an eye out for them.
Breakout
A stock breakout is when the stock price moves significantly higher or lower than it has been in the recent past. It usually happens after a period of consolidation and can be an indicator that the stock is likely to continue its movements in the same direction as it breaks out from its range. This can be an opportunity for traders to capitalize on a stock’s momentum and make a profitable trade. However, stock breakouts can also be false signals, so it’s important to do your research and understand the stock’s historical trends before trading on a stock breakout.
Scanner
Stock trading involves a lot of research and analysis. Scanning through financial data to spot trends and opportunities can be a time consuming process. With stock scanners, traders can run multiple scans quickly and easily, allowing them to identify stocks that fit their criteria in no time at all. This makes stock trading much more efficient and allows traders to react quickly to changing market conditions. Of course, stock scanners can also help traders identify stocks that are overbought or undervalued, giving them an edge in the stock market.
Level II
Level II stock trading is a bit more sophisticated than the typical stock market game. It’s a step up from what you might think of when you hear the words stock trading. Level two stock trading involves having access to real-time quotes and orders that are out there in the market. Now, not everyone can access level two stock trading, but if you’re a savvy stock trader, then it can provide you with better information and make you more successful. It can also help you to make better decisions during volatile times as you’ll have access to the bids and asks of other traders in the market. That said, it’s important to remember that stock trading is always risky and it’s not a get-rich-quick scheme.
Low Float
A low float stock is a stock that has a small number of shares available for trading on the market. In other words, there are fewer shares available to buy and sell relative to other stocks. This can create huge price swings in the stock due to intense buying pressure.
Reverse Split
A corporate action taken in stock trading where a company reduces the number of their outstanding shares. Basically, when you have a reverse stock split, each stockholder receives fewer shares but those shares increase in value proportionately. For example taking a 1-for-2 stock split means that each shareholder would get one share for every two they previously owned, but the stock price would double. This can be done to make stock appear more valuable and attract larger investors. It also allows companies to stay listed on stock exchanges when their stock falls below certain thresholds. It’s important to note that a reverse stock split does not increase the value of the company itself or any of its underlying assets, but it can increase the stock price.
Dilution
Stock dilution, also known as stock offering, is an event that occurs when a company issues additional stock shares to the public. This can happen for a variety of reasons, such as raising capital or increasing liquidity for shareholders. When this happens, the stock price usually decreases due to increased supply and decreased demand. This means that existing shareholders will own a smaller percentage of the stock, leading to stock dilution. It can be beneficial for certain types of companies, as it allows them to raise money and expand quickly, but stock dilution can also create an oversupply in the stock market and make it more difficult for investors to make money.
Short Interest
Short interest is when a stock trader sells borrowed stock and hopes to buy it back at a lower price in the near future. It’s an aggressive strategy that can be very profitable, but also carries considerable risk. As stock traders seek to take advantage of shorting opportunities, understanding how short interest works can be beneficial.
Short Squeeze
A short squeeze happens when a stock that is heavily shorted suddenly jumps in price. That jump then forces traders who have sold the stock short to purchase it back at a higher cost. This creates additional buying pressure, and further increases the stock price – creating even more of a squeeze for those short traders. In some cases, stock prices can double or even triple in a matter of days as the stock’s price continues to climb. The key thing to remember here is that stock trading isn’t just about buying low and selling high – it’s also about understanding when to stay away from stocks that are heavily shorted.
Catalyst
A stock trading catalyst is an event or occurrence that can cause a stock to increase in value. It could be anything from a company announcement of new products, stock splits, earnings releases, mergers and acquisitions, insider buying, or even something as simple as positive news coverage. All of these can act as catalysts for stock prices to increase. Of course, stock prices can also fall as a result of negative news. It’s important to stay informed and monitor stock catalysts if you want to be successful in stock trading. The stock market is always changing and stock catalysts are an essential part of successful stock trading. Keep an eye out for them and be sure to act when the time is right.
OTCBB
It’s an electronic stock trading system that provides stock quotes and trading information for over-the-counter securities. OTCBB stocks are issued by companies not listed on the stock exchange, which means they can be more volatile than those listed on major stock exchanges. That makes them a great option for investors looking to make some big gains – but also a risky one. If you play your cards right and make informed decisions, stock trading on OTCBB can be incredibly rewarding. Just remember – always do your research! Don’t let the potential for rewards blind you to the risks involved.
