# Trading terms/concepts GLOSSARY

At some point, we don’t realize how many trading-related abbreviations we use in our communication on a day-to-day basis. It’s only when new folks beginning in this business ask me what X or Y terms mean that I realize how confusing these terms could be to new folks.

So, with this article, I want to create a reference document containing all the **TERMS**, **ABBREVIATIONS,** and **CONCEPTS** I use in my daily letters & education articles.

Enjoy! ✌️

***

### GENERAL TERMS GLOSSARY

**10/21c** **-** 10dma/21dma cloud

**72/89c** **-** 72dma/89dma cloud

**AVWAP** **-** Anchored Volume-Weighted Average Price

**AH** **-** After Hours

**B/O** **-** breakout

**DMA** **-** Daily Moving Average

**DT -** Downtrend

**DTL -** Down Trend Line

**EC -** Equity Curve

**EMA -** Exponential Moving Average

**EOD -** End of Day

**ER -** Earnings Report

**ES/SPX/SPY -** S\&P500

**FL -** FocusList

**FOMO -** Fear of missing out

**H\&S -** Head & Shoulder

**HOD -** High of Day (nHOD = new high of day)

**IMO -** In My Opinion

**KMA’s -** Key Moving Averages

**LOD -** Low of Day (nLOD = new low of the day)

**LT -** Long-Term

**MC -** Mental Capital

**MT -** Mid-Term

**NNH -** Net New High

**NQ/NDX/QQQ -** Nasdaq

**OSC -** Oscillator

**P\&L -** Profit & Loss

**PB -** Pullback

**PEG -** Power Earnings Gap

**PF -** Portfolio

**Pre -** Pre-market trades

**R/R -** Risk/Reward

**RS -** Relative Strength

**RTY/RUT/IWM -** Russel 2k

**S/R -** Support/Resistance

**SHP -** Swing High Pivot

**SLP -** Swing Low Pivot

**SMA -** Simple Moving Average

**ST -** Short-Term

**U\&R** **-** Undercut & Rally

**VWAP** **-** Volume-Weighted Average Price

**WMA -** Weekly Moving Average

***

### ALEX’S TECHNICAL SETUPS ACRONYMS

**WB -** Wedge break

**WBPB -** Wedge break pullback

**BORS -** Breakout Retest Short

**BORL -** Breakout Retest Long

**BO10PB -** Breakout 10ema PB

**BO21PB -** Breakout 21ema PB

**BO72PB -** Breakout 72/89ema PB

***

### TRADING CONCEPTS

### **Area**

Two levels define a support/resistance area. Think of them as an area or even an **elastic** zone where the price can penetrate and overshoot but eventually find support or resistance.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2Fapa12yTqvYljbCLPRepe%2F8c8b26fd-bdae-4cce-b622-c82a822aace3_1564x899.webp?alt=media&#x26;token=901d4d50-492f-4f1c-a5bc-3f8837786066" alt=""><figcaption></figcaption></figure>

### **Base area**

The base area is either the **TOP** or **BOTTOM** area that conceals the multi-week or month consolidation. When the price goes at that top base area, it finds resistance, and when it goes at that bottom base area, it finds support.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2Fa1eRbJU865lTmTrAf5a0%2F99612ce8-81f8-4ff5-b4c5-8fac0295f613_1564x899.webp?alt=media&#x26;token=3bc2bcc4-d0de-41f0-ba86-fbc1a3b8c034" alt=""><figcaption></figcaption></figure>

### **Bounce**

The term BOUNCE refers to the action of the price of a stock reversing, usually with momentum at a specific place (area, level, moving average, etc.).

**e.g., Stock XYZ has bounced from the 10dma.**

### **Breakdown**

BREAKDOWN refers to a stock’s action to break below, usually on momentum/strength, a critical level/area/kma.

**e.g., Stock XYZ has a breakdown from the base top level.**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FQHkc3EOdHogL02SDAQUa%2Fcb053c7e-a8a6-42fe-9a6a-d34e81c3c59f_1564x899.webp?alt=media&#x26;token=1e57c3b1-5545-42e0-8a21-1206b6830c41" alt=""><figcaption></figcaption></figure>

### **Breakeven**

BREAKEVEN is when the price of a stock you are trading returns to your purchasing price.

**e.g., My trade on XYZ is back to breakeven**

### **Breakout**

A BREAKOUT is when a stock finally **exits a consolidation area** and makes a new higher high.

**e.g., Stock XYZ breakout of its multi-month base**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2Fj80RN1a9Kaa07G4d8phD%2F5baa87f6-cf44-486b-9b84-5e6f6e0fb5ca_1564x899.webp?alt=media&#x26;token=c20d2fb3-2147-4f38-9c34-0c9579e9a025" alt=""><figcaption></figcaption></figure>

### **Consolidation**

After a price appreciation, A CONSOLIDATION is when a stock **stays within a range** or pullback over multiple weeks or months. It can be sideways or with a small declining action back to a critical level or kma.

**e.g., Stock XYZ breakout of its multi-month base**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FTMTev0ZKKGZVvkcMOgnu%2Fab472bae-9528-4226-a4ce-d77e59608dec_1564x899.webp?alt=media&#x26;token=290bf57f-35bd-4e2d-91d9-edc786a18d15" alt=""><figcaption></figcaption></figure>

### **Divergence**

When two instruments or metrics are used to move in the same direction and **suddenly move in the opposite direction**, then we say this is a DIVERGENCE.

### **Down Trend Line (DTL)**

A DTL is a down-slopping line that encloses most of the highs and most of the price action during a pullback/consolidation.

**e.g., Stock XYZ breakout of the DTL**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FJyW2x64yQ3ON4NjyLTrE%2F7d8c654f-4d6f-4d1f-8dc9-8f196f00769f_1564x899.webp?alt=media&#x26;token=1887c2fc-75a1-41a7-a0a5-b1127eeb9f06" alt=""><figcaption></figcaption></figure>

### **Failed breakout**

A failed breakout occurs when the stock breakout from a pivot or an important level/area only to find resistance and finally close back below that entry pivot.

**e.g., Stock XYZ failed his breakout and closed back below the entry pivot**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2F3we4LYRVZkevx9Z5V0XW%2F9ee41f7d-a216-4f13-b6e1-1462483d438f_1564x899.webp?alt=media&#x26;token=54baba33-061d-4f55-a5ca-84c9d3e809be" alt=""><figcaption></figcaption></figure>

### **Follow-through**

When a breakout occurs, one significant action we want to see is a **continuing upside action on the following day**. Seeing a higher volume on the second day (follow-through) is also a characteristic we want to see, as it confirms the interest and the buying of the stock out of the setup.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FptHXRK33Pvl5grdsnAd6%2F8f9d5d52-83a5-4444-8221-adc88d96f047_1564x899.webp?alt=media&#x26;token=8afe1e11-44ec-4299-afef-3c40429758c6" alt=""><figcaption></figcaption></figure>

### **Gap-down**

A gap-down is when a stock **opens lower than where it closed the day prior**. This happens when news, report, or any information affects the business's valuation. This is my worst nightmare… :)

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FAZ3rcPFiqDvTzkVjTSxT%2Ff0e4fff6-c319-4148-9e70-23fa882310a0_1564x899.webp?alt=media&#x26;token=ee01687a-32ed-4996-ad0d-6fcfcee2684e" alt=""><figcaption></figcaption></figure>

### **Gap-up**

A gap-up is when a stock opens **higher than where it closed the day prior**. This happens when news, report, or any information affects the business's valuation.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FfujuFspg2SMR0JBsPsI5%2F7d4703da-0280-4eff-8e8a-0101e669ef87_1564x899.webp?alt=media&#x26;token=e1e532b6-6907-474b-8152-0733e7bb19d0" alt=""><figcaption></figcaption></figure>

### **Higher High (HH)**

If the stock breakout above our most recent swing high, which was the last LOWER HIGH (**LH**) in our pullback structure, THEN our next swing will create a new HIGHER HIGH (**HH**).

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FBpnmdukOSdlP33RMIBOp%2Fe13cccc9-8ebe-47ea-8e3b-5d510a40e983_1633x919.webp?alt=media&#x26;token=60896887-5811-4481-bb27-2126c42ca23d" alt=""><figcaption></figcaption></figure>

### **Inside day**

An inside day is when the price action (high-low) is **contained inside the previous day’s price action** (high-low).

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2F7zrQ7LzQIes5PkVrouip%2F159ee625-263f-420d-85c2-227b346f4bf0_1564x899.webp?alt=media&#x26;token=472b1c6a-e484-4a20-90e6-b2e4bbf8fae6" alt=""><figcaption></figcaption></figure>

### **Lower High (LH)**

When the stock starts to pull back and then rally but can’t return to the previous swing high, we say that this new high is “lower.” Hence a Lower High (LH).

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FQA2eI3mVWeuAYSl1L1q2%2Faa281c2c-5b2c-42eb-80ef-743ae5f16b89_1633x919.webp?alt=media&#x26;token=b9e76e8c-6b35-4a06-ab09-572f7039295b" alt=""><figcaption></figcaption></figure>

### **Lower Low (LL)**

When a pullback occurs, and the price makes a new low below the previous low in the structure, then we say that this unique point is a Lower Low (LL)

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FprBsm1y7PUD0UZMZNosf%2F28092e66-b0f6-47f0-8da4-e335b4696b15_1633x919.webp?alt=media&#x26;token=e5aae9eb-487d-4da6-89bc-98684453af67" alt=""><figcaption></figcaption></figure>

### **Measured Move**

The market loves to move in equal distance moves. Something to look for during a correction or pullback is a **down leg #1 being of equal distance as the down leg #2**… typically when we get in this area, we see a bounce.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2F7oTuBE0Ud3KsvTqZhsG4%2F8ebd8975-3f42-4f25-adee-1431c34eef82_1564x899.webp?alt=media&#x26;token=12077bd1-5c98-4030-81cb-ea9d0b9c25db" alt=""><figcaption></figcaption></figure>

### **New High**

A new high is when a stock price goes **higher than the previous highest price** of any past period. It could be the highest price for the last month, 6 months, or 52 weeks.

**e.g., Stock XYZ made a new 52w high**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2Fploh0SCgFrjXptby4bmk%2F7d4703da-0280-4eff-8e8a-0101e669ef87_1564x899.webp?alt=media&#x26;token=d3d726bd-e2a6-4d2c-a16a-11e7dd411b78" alt=""><figcaption></figcaption></figure>

### **New Low**

A new low is when a stock price goes **lower than the previous lowest price** of any past period. It could be the highest price for the last month, 6 months, or 52 weeks.

**e.g., Stock XYZ made a new 52w low**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FwSWCUBAtza1n53v7V3VR%2F6d2d5fbe-3663-4ae5-bd3e-5270fc22102d_2166x1558.webp?alt=media&#x26;token=58ae3b9e-b333-4811-b42f-a65b6faec62c" alt=""><figcaption></figcaption></figure>

### **Pivot**

{% content-ref url="education-articles/market-structure-and-pivots" %}
[market-structure-and-pivots](https://traderslab.gitbook.io/primetrading/education-articles/market-structure-and-pivots)
{% endcontent-ref %}

### **Reclaim**

Once a stock broke below a pivot, level, or area and **came right back above** it, we say that it “reclaimed” that level.

**e.g., Stock XYZ reclaimed its base support area**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FXjqKzAYEYjMCmV0uizG3%2F6c3033e3-86d1-4b37-899d-45207311c1c2_1564x899.webp?alt=media&#x26;token=fed9cfe8-4ab5-4152-9f1f-254111b0e35b" alt=""><figcaption></figcaption></figure>

### **Rejected**

When a stock breaks an important S/R area and **cannot reclaim it, and instead gets rejected** by it on that retest…we say that it has been rejected.

**e.g., Stock XYZ got rejected at its base area**

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FQBiT7SprKWxzeCSFSeJN%2Fb8cc0c0b-1507-4eb5-be99-32d6a59e6b75_1564x899.webp?alt=media&#x26;token=12622cd1-06a1-477f-8e14-3c9f2e9c468a" alt=""><figcaption></figcaption></figure>

### **Relative Strength (RS)**

Relative Strength (Not the Relative Strength Index RSI) is the **individual performance of a group of assets compared to a benchmark**, usually the S\&P500 (SPY). For example, we use this metric to know which assets hold and held the best during a market correction.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FgQGrIeK8K4BlohpNLi3k%2F93360fd2-8bd6-4994-8f92-d13526b93129_1564x899.webp?alt=media&#x26;token=ff90a936-e199-4b5c-a537-9db873ad7c09" alt=""><figcaption></figcaption></figure>

### **Resistance**

Resistance is a level or area where the **selling pressure becomes more important than the buying** and acts as a “resistance” to push the stock price back down. We are looking for reversal & rejection in these areas unless they reclaim it.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FsetAnPvOLKWZ7OI1jXhJ%2Fb1636e7f-54ae-478d-9e96-187b1f4aeb7a_2166x1558.webp?alt=media&#x26;token=2574d9b2-de99-4202-a8db-fb2aa874bec0" alt=""><figcaption></figcaption></figure>

### **Retest**

Once an area has been breached (from either side) we normally see the **price coming back to “retest” that area**. If we get rejected, then that’s when this area will flip from support to resistance or vice versa. This offers a great low-risk entry as we gain confirmation from that particular action.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FFVFTEE66AuMqRKPePn9x%2F218289b1-96f7-499d-97f2-2bbde9c2edcd_2166x1558.webp?alt=media&#x26;token=d7eae81c-d78e-4b25-a90d-b2b5bc782d39" alt=""><figcaption></figcaption></figure>

### **Scale-in**

“Scaling-in” a position means that we begin with a small initial position, and we **add additional shares as the stock increase** in price over time. Building a bigger position as we get confirmation that the stock is going up.

**e.g., I’m scaling in my stock XYZ trade**

### **Scale-out**

“Scaling-out” of a position means that we **sell parts of a position as a stock increases** in price over time.

**e.g., I’m scaling out of my stock XYZ trade**

### **Support**

Support is a level or area where the **buying pressure becomes more important than the selling** and acts as a “support” to push the stock price back up. We are looking for reversal & bounce in these areas unless they break and can’t bounce.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2F3e1gs1czf9jBWq69Q1uX%2F559cb311-db09-419d-8b51-30d75cf21eed_2166x1558.webp?alt=media&#x26;token=6aacf27f-3908-4a99-b9f2-a48db48fe5fc" alt=""><figcaption></figcaption></figure>

### **Swing high**

A swing high is the highest price of a price thrust upward (leg up). They can be either a Higher High (HH) or Lower High (LH).

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FGX9i9KSLsoJVPyWdM7AO%2F7f32016e-9b13-4b09-b021-d47bbd4f46cb_1635x1304.webp?alt=media&#x26;token=7276aa50-e649-4ba7-b6e9-da0c4767a17d" alt=""><figcaption></figcaption></figure>

### **Swing low**

A swing low is the lowest price of a price thrust downward (leg down). They can be either a Higher Low (HL) or Lower Low (LL).

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FBpchZmiYiUtRG7pnWFvz%2F2962cae3-b70e-4bae-95a9-c052a91a11a9_1635x1304.webp?alt=media&#x26;token=95bc29bc-9ad2-4e09-9d0f-162819dcbfc5" alt=""><figcaption></figcaption></figure>

### **Trend**

A trend is the action of a stock to have a **sustained and prolonged move up, or down**. When a stock is showing this type of action, we say that this is “trending”.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FsLHbfEdnwinfKYNY3Mqq%2Fec069656-72e6-48e9-bc68-40ce409020df_2166x1558.webp?alt=media&#x26;token=f2c9136f-14b5-49a6-b2c7-aaad2a8e0cf9" alt=""><figcaption></figcaption></figure>

### **Up Trend Line (UTL)**

A UTL is a **up-slopping line that encloses most of the lows** and most of the price action during a rally/bounce or even a trend.

<figure><img src="https://3366034562-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FDi2vUjK9poNdLXgFiQZK%2Fuploads%2FWa0tPYjEPGMFQTN2KcLn%2Fc34ffbf5-f29b-47e3-965b-a980e008bd09_1564x899.webp?alt=media&#x26;token=afe775ed-9f55-4118-a3f7-f993cf26977e" alt=""><figcaption></figcaption></figure>

\\
