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By: ShortMeTina

​How to become a successful trader!

Are you having a hard time making money in the stock market?  If you are, I suspect it's because you lack the 3 foundational principles to successful trading.  

I call it the 3 M's (by no means a unique concept). 

Methodology
Money Management
Mindset or Mental Discipline. 


Take a look at your trading.  Do you have a method?  Do you manage your money correctly and do you have the mental discipline to succeed?   

If you're not doing well in the stock market you're either lacking some or all of these. 

Don't overlook any, you need all to succeed and when I realized that; my trading took a turn for the best.  It's the reason I am up double digits YTD; while folks can't make sense of this market. 

If you're ready to win in the stock market, watch the video below; it explains the 3 M's in more detail.  

After you're done watching the video, make sure to let me know your thoughts on the subject matter.  

Does it make any sense to you?  If so, comment and let me know.  If it doesn't, comment and let me know. 

The 3 Pillars to Successful Trading - YouTube
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By: ShortMeTina

WHAT ARE PENNY STOCKS?
 
Contrary to popular belief; penny stocks aren’t just securities priced under $1.  The SEC (Securities and Exchange Commission) defines penny stocks as any stock trading under $5. 
 
As per the SEC’s Penny Stock Rules
 
The term "penny stock" generally refers to a security issued by a very small company that trades at less than $5 per share. Penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board (which is a facility of FINRA) or OTC Link LLC (which is owned by OTC Markets Group, Inc., formerly known as Pink OTC Markets Inc.); penny stocks may, however, also trade on securities exchanges, including foreign securities exchanges. In addition, the definition of penny stock can include the securities of certain private companies with no active trading market.

Trading at $5 dollars or less, penny stocks offer you the ability to buy large quantities of a stock for a very low price.  It is no wonder; new traders are drawn to the world of trading penny stocks.  On the surface, it makes sense why folks are more inclined to invest in these lower priced securities. I suspect, there is some ‘logic’ in believing it is far wiser to buy 10,000 shares of a stock that cost (.25 cents) than 100 shares of a stock that cost ($25 dollars).  Or maybe it’s more logical to think that it’s easier for a .25 cent stock to trade up to .50 vs a $100 stock doubling to $200.  Whatever the reason, penny stocks tends to attract a lot of new investors and for those reason; I feel it is our obligation to inform you all about penny stock trading.
 
In this article, I will do my very best to discuss what I think you need to know starting out as a penny stock trader.    

HOW TO BUY PENNY STOCKS (THINGS TO CONSIDER)
 
BEST PENNY STOCK BROKERS TO USE IN 2019
 
The very first thing you’re going to want to decide on is what’s the best online broker to use to buy penny stocks.  There’s a wealth of brokers to choose from but ultimately; the one you choose should be based on your personal needs and goals.  A few things to help you along your decision making process is:
 
Commission
How much will you be charged to execute each trade?

Trading Platform
Are you familiar with the broker’s trading platform?  Is it user friendly and easy to navigate?  I have used my fair share of trading platforms and all are not created equal.  Some are easier to navigate than others.  The last thing you want is to have to place an order on a platform that’s confusing.  This is often overlooked but an area I feel you should take some time on.  Again, make sure you’re comfortable with your broker's trading platform. 

Customer Service 
Make sure it's easy to access a customer service representative in the event something goes wrong.  I am aware that a lot of newsletter services advocate opening accounts offshore to get around certain “PDT” restrictions but I would be cautious in placing my monies in another country that I’ve never visited or reside in.  Again, make sure you can contact a customer service representative with ease.  
 
Taking the time out to get the right broker can go a long way. 
 
Find below Penny Stock Brokers (2019) and a summary of their fees:
​Please be aware that the above list is not an end all but a few of the popular online brokers.
FUNDAMENTAL ANALYSIS VS. TECHNICAL ANALYSIS
Once you’ve selected the best broker that fits your individual needs, the next step is deciding on how you’re going to approach the stock market.  Are you going to be a fundamental penny stock trader or a penny stock trader that uses technical analysis?  Find below the differences with each approach. 
 
FUNDAMENTAL ANALYSIS OF PENNY STOCKS
 
Traders who use fundamental analysis to inform their trading decisions are generally traders that examines a company’s fundamental picture and assesses the company for financial security.  This analysis includes examining a company’s revenues, earnings, future growth, return on equity, profit margins, and other metrics to determine a company's growth prospects and financial health.  In other words, fundamental analysis is looking at the company’s overall health and growth rate.  Is the company making money or at minimum, losing less money over time?  Does the company have a good product that’s about to hit the market or are they working on a revolutionary drug that can cure an ailment? 
If you use fundamental analysis to trade or invest in penny stocks, expect to spend a great deal of time doing the much-needed research.     
 
TECHNICAL ANALYSIS OF PENNY STOCKS
 
Technical analysis refers to the utilization of charts and chart patterns to determine where a stock price is going.  As a trader, if you decide on this approach, whether or not you decide to buy a stock will be dependent on your level of understanding of the stock chart. 
 
For up-to-date technical analysis; make sure to follow us on YouTube.  We do daily technical analysis recaps.  
TECHNICAL AND FUNDAMENTAL ANALYSIS
 
The best of both worlds!  While you are sure to find traders on the extreme end of each style; there’s plenty of us that enjoy the middle ground.  That is, you’ll find your fair share of investors who utilize both fundamental and technical analysis to inform their trading and investing decisions.  If you find that you’re equally committed to both styles of trading after reading this article; don’t feel pressured to commit to only one side. 
 
A wise [wo]man once said; ‘the best traders use fundamental analysis to determine what to buy and technical analysis to decide on when to buy’.   
 
 
DAY TRADING VS. SWING TRADING

If you’re new to the world of penny stock trading; I am fairly certain that you’ve heard the term ‘day trading’ or ‘day trader’.  These are very common terms in the trading world and can be viewed as synonymous with penny stock trading. 
 
I bring this up because once you’ve decided on your broker, decided on your approach (fundamental vs technical); your next step is deciding on time frame.  That is; are you going to ‘buy and hold’ penny stocks?  Day trade penny stocks?  Or swing trade penny stocks? 
 
Because of the inherent risks associated with investing in penny stocks, you’ll seldom find investors who ‘buy and hold’ these securities for an extended period (think over 5 years); because of this, I have decided to forego elaborating on what it means to be a buy and hold investor. 
 
In this section we will briefly discuss what it means to day trade penny stocks vs swing trading penny stocks.  
 
 
DAY TRADING PENNY STOCKS
 
What is Day Trading?
Day trade or Day trading refers to the buying and selling of stocks within the same day.  A day trader will enter and exit his position in a security within that day.    The objective of day trading (outside of making money) is to ensure that all positions are liquidated by the end of the day, thus, not assuming any potential overnight risks.  In order to engage in day trading, individuals must have at least $25,000 in their stock trading account.  Click HERE to see what the SEC has to say about day trading. 
 
Day trading penny stocks
If you decide on becoming a day trader, like the definition states; all your positions will be opened and closed on the same day. 
​SWING TRADING PENNY STOCKS


What is Swing Trading?
Swing Trading is a style of trading that looks to capitalize off a securities short-term price movement.  Your typical swing trader will hold a stock for a few days, up to a few weeks--no longer than a few months.  The objective of swing trading is to capture "the meat" of a stock's move in a short period of time.

Overall, swing traders look to long stocks in an advancing or bull market- -conversely, they seek to mainly short stocks in a bear or declining market. 
 
Swing trading penny stocks
If you decide on swing trading penny stocks, expect to hold your positions for a few days or a few weeks. 
 
WHAT STYLE IS BEST FOR TRADING PENNY STOCKS
 
As you should already know from our website; we prefer swing trading stocks within our community at shortmetina.com.  I can make, if pressed, a very compelling argument in favor of my style of trading but that would be unfair to you as an individual.  The objective of trading and investing is to make money.  With that said, it is ultimately up to YOU, the individual trader, to decide on what style of trading you feel more comfortable with. 
 
TIP: Try both styles for a few months and see which one resonates well with you. ​
WHERE TO BUY PENNY STOCKS
Penny stocks are traded on major exchanges and OTC/PINK SHEETS.
 
STOCK EXCHANGES
The New York Stock Exchange (NYSE)
NASDAQ
AMEX
BATS Global Markets
OTC Bulletin Board (OTCBB)
 
 
HOW CAN I FIGURE OUT THE BEST PENNY STOCKS TO BUY IN 2019?
There are a few ways to go about this; I will explore two. 
 
Option #1- DIY (DO IT YOURSELF) APPROACH
If you’re a ‘do it yourself’ type of person then you can simply start by visiting free financial websites such as: Yahoo!, Google, or Finviz and begin utilizing their free scanners.  You can filter the search by price, industry, sector and any other metric you deem relevant.  Once you’ve received the desired results in your scanner you can begin narrowing down your options. 
 
TIP: If you’re doing fundamental analysis then you may want to start by getting a quick snap shot of the company’s financials before digging deeper.  If you’re doing technical analysis then you can quickly insert the ticker in your preferred charting software and begin the process of narrowing down your options. 
 
 
FREE PENNY STOCK SCANNERS
FINVIZ
BENZINGA
YAHOO!
GOOGLE
BARCHART
 
 
Option #2- NEWSLETTER SUBSCRIPTION
You can hire us to do the searching for you by signing up to one of our paid subscription services
 
 
CAN YOU MAKE MONEY TRADING PENNY STOCKS?
The short answer is, yes.  Yes, you can make money trading penny stocks (refer to our Glu Mobile case study) but because of their inherent risky nature, it is best to exercise caution.  
GLUU MOBILE (GLUU) PENNY STOCK CASE STUDY
 
About Glu Mobile
Glu Mobile (NASDAQ: GLUU) is a leading creator of mobile games. Founded in 2001, Glu is headquartered in San Francisco with Bay Area studios in Burlingame and San Mateo, and international locations in Toronto and Hyderabad. With a history spanning over a decade, Glu’s culture is rooted in taking smart risks and fostering creativity to deliver world-class interactive experiences for our players. Glu’s diverse portfolio features top-grossing and award-winning original and licensed IP titles including, Cooking DASH, Covet Fashion, Deer Hunter, Design Home, MLB Tap Sports Baseball and Kim Kardashian: Hollywood available worldwide on various platforms including the App Store and Google Play.
 
 
The Trade
We have a good reputation for picking stocks that double, and sometimes triple within our community.  Glu Mobile proved to be one such trade; with the stock gaining a whopping 321% at its peak price. 
 
We entered the stock with an average price of $2.47.  The entry wasn’t based on a ‘whim’; hunch or any other emotions traders experience.  Our entry was based on a specific strategy we use to enter trades.  Once our signal presented itself, we entered the stock and managed to hold (based on our system) until our target was hit.  Providing our premium members with over 100% in stock market gains.  Refer to chart below to see the full picture. 
 
The Chart (Technical Analysis)
WHAT WE LOOK FOR
Our system is rather simple and is shared with our members.  If you’re ready to become a part of the ShortMeTina community; you can do so HERE
 
When we trade penny stocks we assume ALL inherent risks and ensure we are always following our trading system and plan.
 
With that said; as in the case with Glu Mobile and some of our other huge penny stock winners, we try our best to focus on quality companies and quality set-ups.
 
We don’t concern ourselves too much with pink sheet trading or questionable corporations.  We focus on companies with real products, or at minimum, a promising pipeline drug.  If you narrow your focus to only the best companies and the best trading set-ups, you should do relatively well in the long run. 
 
 
ONE OF THE BEST STRATEGIES TO USE TO TRADE PENNY STOCKS
 
"THE BREAK-OUT"
 
I am about to share with you a strategy that is relatively easy to spot and trade.  We call this strategy, ‘the break out’.  It is one of my all-time favorite techniques to deploy in ranging bull markets and a classic among traders.  
 
As the name suggests, you’re buying a stock when it breaks above a specific price point.   What do I mean by, buy the break out?  (refer to example below). 
 
TIP: For the most effectiveness:  Don’t buy the stock on the first break out, wait and buy the stock on the “pull back”.  The high, once acting as resistance, is now support (demonstrated below by the blue line). 
 
MISTAKES BEGINNERS MAKE WHEN INVESTING IN PENNY STOCKS (AVOID AT ALL COSTS)

​Top 4 mistakes beginners make when trading penny stocks
 
This goes without saying but if you’ve made any of the mistakes I am about to talk about in this article; consider them a rite of passage.  As a beginner, mistakes are almost inevitable.  Below are the 4 mistakes I think most novice traders make when they begin trading penny stocks.  Get familiar with them and do your best to avoid them at all costs! 


#1 “ALL-IN”

New traders come to the stock market with all their chips in one hand; betting a hefty portion of their investment capital on one trade.  The saying, “don’t put all your eggs in one basket” has passed the test of time for a reason.  You hear it time and time again because there’s some truth to the phrase.  Knowing this, don’t bet the farm folks.  In the stock market, you essentially have a 50/50 chance.  You’re either right on the trade or you’re wrong on the trade.  Considering you have a 50% chance of being wrong; betting all your capital on one trade is just asking for trouble. 

TIP:  Come up with a comfortable dollar amount or percentage to place on each trade.  ​
 

#2 NO TRADING PLAN
 
Trading without a trading plan is like trying to get a destination without a road map or a navigator.  It makes your job difficult and unnecessarily complex.  A plan can include, where you want to enter a trade, where you want to exit the trade, how many shares you want to buy, etc.

TIP: Come up with your trading plan BEFORE you place your trade.    



#3 OVERTRADING

Overtrading!  As a new trader, you shouldn’t trade 5-10 plus times a day.   Commission alone will eventually knock you out the game; if the seasoned traders don’t do it first.  
What you should be doing around this time is learning as much about the stock market as you possibly can.

TIP: Trade your BEST ideas.


#4 HOLDING ONTO LOSING TRADES
 
Investment billionaire, Paul Tudor stated “losers average losers”.  The quote doesn’t necessarily reference to cutting losers quickly but he’s speaking to this idea of holding on to a losing position.  I find new traders, for whatever reason, have a hard time cutting losses.  It serves you no good and will only keep you awake at nights holding on to a losing position. 

Take away: CUT LOSSES QUICKLY!!!
ARE THERE RISKS TO INVESTING IN PENNY STOCKS
You bet ya! Stocks trading for pennies on the dollar are doing so for very good reasons.  They aren’t the best companies. 
 
 
These are companies with drugs in the clinical stages of development.
 
Companies with a proof of concept but no real product.
 
Companies that are losing money hand over fist and the list goes on.
 
 
Point is, these companies aren’t the cream of the crop, most of them are crap companies and crap stocks.  Hence why it’s so important to do the much-needed research before putting your money behind a company that’s trading for under $5. 
 
It’s also important to watch out for bad actors in the stock market.  We’ve all heard of them before.  These bad actors in the stock market are snake oil salesmen trying to steal your hard-earned money from you. 
 
Have you seen the movie, “The Wolf of Wall Street”?  Without giving too much away; the main character, Jordan Belfort, was said bad actor pushing unscrupulous stocks to unsuspecting investors.  He made multi-millions defrauding investors in what is known as a ‘pump and dump’ scheme.  While much of his scheming occurred in the 1980s-1990s; pump and dump schemes continue to happen to new and unsuspecting traders.  

Need not worry my fellow trader; I have you covered and will go over pump and dumps and how to avoid them. 
PENNY STOCKS PUMP AND DUMP SCHEMES
 
 
What is a Pump and Dump?
As per the SEC (Security and Exchange Commissions):
 
“Pump-and-dump” schemes involve the touting of a company’s stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace. These false claims could be made on social media such as Facebook and Twitter, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have “inside” information about an impending development or to use an “infallible” combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is “pumped” up by the buying frenzy they create. Once these fraudsters “dump” their shares and stop hyping the stock, the price typically falls, and investors lose their money.
 
 
THE 4 STAGES OF A PENNY STOCK ‘PUMP AND DUMP’ SCHEME. 
 
I wrote a brief article a few years back essentially summing up how to spot these schemes; find a summary of the article below. 
 
Stage #1 Accumulation
This is..
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BY: ShortMeTina
TOP 10 TRADING RULES FOR SUCCESSFUL SWING TRADING

I have been involved in the stock market for over 15 years.  I invested, day traded, scalped and everything in between.  It’s been a very, very, very long road to say the least. Along my journey as a trader; I have ‘blown up’ a few accounts, went from losing A LOT, to losing a little, to break even and eventually profitable.  In this blog; I will share with you the top 10 trading rules you’ll need to implement right away to become successful at trading. 

I am a swing trader; so you will see the term, ‘swing trader’ or ‘swing trading’ often but these trading rules for success can be applied to any style of trading. 

Before we dive into our top 10 rules for successful swing trading; let’s briefly define what I mean by ‘swing trading’.  
WHAT IS SWING TRADING?
 
Swing Trading is a style of trading that looks to capitalize off of a securities short-term price movement.  Your typical swing trader will hold a stock for a few days, up to a few weeks--no longer than a few months.  The objective of swing trading is to capture "the meat" of a stock's move in a short period of time.
Overall, swing traders look to long stocks in an advancing or bull market- -conversely, they seek to mainly short stocks in a bear or declining market. 
 
Now that’s out the way, here are my top 10 trading rules for successful swing trading. 


​RULE 1: DEVELOP A TRADING SYSTEM


Develop a trading system.  I cringe when I reflect on my younger years (early 2000s) as a trader.  Short of a miracle- no, many miracles – I’ve survived to continue trading (specifically, swing trading).  You see way back then, I didn’t have a trading system in place when trading the stock market.  I would enter and exit trades based on a whim, hunch, and a whole host of other ridiculously absurd reasons.  It is a wonder my losses mounted almost immediately as a trader.  How could it not?  I was a fish in a sea of sharks operating without a system.
Today should be your day of declaration.  Don’t be like me swimming in a sea filled with sharks.  Declare today that going forward, you will start developing a back tested system that can make you money trading the stock market.  And once you’ve developed that trading system, begin trading it and never stop. 
Trading without a system can be the equivalent of buying a lottery ticket and hoping to win big.  Or going to the casino and spinning the dice.  You’re simply relying on chance and luck.  That is the opposite of what you want to do in the stock market.  You want to have a solid and robust swing trading system.
A system (back tested and proven) gives you a road map to operate within.  It gives you rules and a method to trade by. 
 
Do yourself a favor, and begin developing and trading with a system.  Don’t wait until tomorrow, start today. 
 

RULE 2: STOP OVER TRADING

Stop over trading!  Stop over trading!  One of the best things I did for my PnL was to reduce my trading by a significant amount.  If I took 30 trades a month; I halved the amount to 15.  This allowed me to ‘weed’ out the ‘okay’ set-ups and I began to focus and trade the ‘better’ or ‘best’ set-ups. 
Stop over trading, don’t just take a trade for the sake of taking a trade.  When you place a trade, ensure it’s a good one.  Again, stop over trading. 
 
 
RULE 3: HAVE A PLAN FOR EACH TRADE (TRADING METHODOLOGY)

Have a plan for each trade.  All new traders do it –I did it too-  they trade without a plan.  What new traders fail to realize is, planning and preparation is the key to succeeding with most things in life and trading isn’t any different.  When you put on a trade, make sure you have a plan.  Within our premium member community we have a plan for each trade idea.  We identify sizing, entry, stop-loss levels and target before we enter a trade.  Doing the above almost always takes emotion out of trading and it ensures you’re following your swing trading road map. 
RULE 4: AVOID HUGE LOSSES AND ACCOUNT DRAW DOWNS

Avoid huge losses and account draw downs.  This is a huge one and one that gets newer traders and any trader for that matter in tons of trouble.  The thing about draw downs is; once you dig yourself in a deep hole, it is extremely hard to get out of.  Trading losses in the stock markets are inevitable.  I experience them, ‘smart money’ experiences them; you will at some point experience them.  The key is to not let them get out of control.  As a new trader (swing trader) avoid huge losses and account draw downs, your account will thank you now and in the future.   

 
RULE 5: DEVELOP CONVICTION IN TRADING

Develop conviction in trading.  What do I mean by develop conviction.  It means to develop a strong sense of self and belief in your abilities as a trader.  Once you’ve learned and perfected your craft as a trader; you need to believe in yourself and your abilities to trade.  This may not make sense if you’re a new trader but older traders who’ve traded the stock market for more than 2 years know what I am speaking of.  If you have your trading system, have your trading plan, then you need to have the conviction to execute that trade when you see it.  Not sometimes but ALWAYS.  Develop conviction in your trading and believe in yourself.  

 
RULE 6: FIND A TRADING COACH

Find yourself a trading coach.  This goes without saying.  When you want to learn to drive, you’ll find yourself a driving instructor.  If you want to learn how to swim; you’ll find yourself a swimming coach.  If you want to learn how to play music, dance, etc; you would find yourself a coach.  This smart action of finding a coach to learn a new skill seems to somehow vanish when it comes to trading. 

Poof! 

Vanish! 

Gone! 

​Most new traders; enter the stock market and begin trading without a coach or an instructor. 

Can you learn the stock market on your own through trial and error?  Of course you can!  You can take the course that many traders have (including myself) and learn the stock market on your own for your first few trading years.  You can pay that stock market tuition through your losses (how much you pay is dependent on how fast of a learner you are).  I paid well over $50,000 in stock market tuition fees through trial and error.
 
Or you can be smart and find yourself a trading coach and speed up the learning curve. 
RULE 7: MANAGE RISK

Manage your risk in trading.  I have been involved in the stock market for north of two decades as I write this.  I started trading at a very young age and like most new traders; I did not pay attention to risk.  When I looked at a potential trade; the only thing I was concerned with was profit potential.  I didn’t take into account the risks in trading and I sure as hell didn’t manage it.  Many years later and thankfully, with a much better understanding of the stock market; I only think of risks when placing a swing trade. 

 
RULE 8: AVOID IMPULSE TRADING/REVENGE TRADING

Avoid revenge trading or impulse trading at all costs.  What is revenge trading?  Let’s say for example you take a trade in Apple (AAPL) stock and you somehow manage to take a huge loss on that trade (about a 30% drawn down on your account).  You’re rightfully upset and to ‘get even’ you want to jump into Apple again to make up for that loss.  While this is a very common occurrence; you shouldn’t act on revenge trading.  I find that when you approach the market from this standpoint; you’ve already lost the much needed control of trading.  At this point, you just want to take the trade without a well thought out plan or system.  And as we know from earlier in this article; trading without a plan or a system is a recipe for huge account draw downs and poor trading. 

If you’ve taken a huge loss on a trade, something went terribly wrong.  Instead of diving in head on to just make a trade; take a step back and analyze what went wrong in the first place.  Once you’ve realized what went wrong with the trade, do your best to avoid it at all cost going forward.  And do your best to avoid revenge trading or impulse trading. 
 ​

RULE 9: KEEP A TRADING JOURNAL

Keep a trading journal.  Similar to any other journal, a trading journal is a journal used to document your trades and trading journey.  The information recorded can be simple or detailed.  At minimum, a trading journal should record basic information such as: the trades made, allocation to each trade, profit or loss on each trade, etc.  Whatever you decide to record, the idea of it is to track your trades for improvement. 

 
WHY IS HAVING ONE IMPORTANT?

Simply put, it’s a way to record your trades.  And the only way to improve your trading performance is by analyzing it.  Find out more information about improving your trading performance here
 

RULE 10: DO YOUR HOMEWORK

Make sure to come to the stock market prepared at all times. That means doing your homework on a stock before you buy it.  Most new traders do the complete opposite.  They buy a stock and they have no clue about the stock or why they are even in the trade.  I believe it’s perfectly fine to get trade ideas from different sources but at the end of the day, before buying that stock; make sure you know what you’re buying and why you’re buying it.  
​I hope you’ve enjoyed my top 10 rules for successful swing trading.  If you’re inspired and want to begin learning our easy to learn and profitable trading system; then sign-up for our course: The ULTIMATE Swing Trader.  Find out more about our course HERE.  
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By: ShortMeTina
STOCK MARKET TERMS
 
A COMPLETE LIST OF STOCK MARKET TERMS FOR INVESTORS, SWING TRADERS AND DAY
TRADERS
 ​
***************
 
Our Goal: To build a POWERHOUSE of successful traders (and help you find more winners). 
If WE win, YOU win

 
***************

As a new trader, you’re going to come across these key stock market terms often and it will be helpful to your learning if you understood them.  To assist you in becoming a better trader; I have complied a very thorough list of stock market terms that are used by investors and traders across the world every day.   But before we get into that let’s get a few things out the way.  

APPROACH
There are many different ways in which you can approach the stock market.  You can invest, position trade, swing trade, day trade and scalp.  The most common approaches to trading the stock market is via investing, day trading and our go to method, swing trading.   Find below a brief explanation for each approach and why we prefer some more than others. 

STOCK MARKET TERMS
 
WHAT IS INVESTING?
 
Investing in the stock market is the act of using money to buy stock, options, bonds, etc
with the expectation of gaining a profit.  Investing in the stock market is synonymous with holding an asset for the longer term (think five years or more).  
 
WHAT IS DAY TRADING?
 
Day trade or Day trading refers to the buying and selling of stocks within the same day. A day trader will enter and exit his/her position in a security within that day.    The objective of day trading (outside of making money) is to ensure that all positions are liquidated by the end of the day, thus, not assuming any potential overnight risks.  In order to engage in day trading, individuals must have at least $25,000 in their stock trading account or a non-margin account.  Click HERE to see what the SEC has to say about day trading. 
 
 
WHAT IS SWING TRADING?
 
Swing Trading is a style of trading that looks to capitalize off of a securities short-term price movement.  Your typical swing trader will hold a stock for a few days, up to a few weeks--no longer than a few months.  The objective of swing trading is to capture "the meat" of a stock's move in a short period of time.
Overall, swing traders look to long stocks in an advancing or bull market- -conversely, they seek to mainly short stocks in a bear or declining market. 
 
Click HERE to find out why we prefer swing trading. 
A COMPLETE LIST OF STOCK MARKET TERMS
 


Analyst : A stock market analyst is an individual who analyzes a stock or commodity (via fundamental or technical analysis) and makes projections about the company’s future outlook.

Ask: The ask is a specific price in which a trader/investor is willing to sell their financial instrument (stock, FOREX, options, commodities, etc.) for. 

Bear Market:  A bear market is one where stocks have declined 20% or more from their previous highs.  During this time, overall market sentiment tends to be very bearish.   Find out more about Bear Markets HERE.

Bid/offer: The bid refers to a specific price a trader is willing to purchase shares of a company.

Breakout: A term often used among technicians to describe when the price of a security surpasses a previous resistance level.  Swing traders and day traders typically go long a stock after it breaks through resistance.   Find out more about trading breakouts HERE

Broker: A broker is an individual who buys and sells assets (stocks, FOREX, futures, commodities, options, etc) on your behalf.  There is generally a fee associated with the transaction(s).

Bull Market: A market in which the prices are generally moving up or ascending for months or years. TIP: It is often wise to be net long in an advancing or bull market.   

Buy and Hold: Buy and hold is a trading strategy where an individual purchases a financial instrument (eg: stock) with the intentions of holding it for a prolonged period of time.  Famed investor Warren Buffett is a proponent of the ‘buy and hold’ investment strategy.  If you’re thinking about becoming a ‘buy and hold’ investor; you might want to read an investment classic, ‘The Intelligent Investor’ by Benjamin Graham.  Or Peter Lynch’s ‘One Up on Wall Street’.  Purchase the book(s) HERE and HERE

Correction: A stock market correction refers to a decline in price of about 10%, lasting less than 3 months.  In contrast, a Bear Market is a decline in price of 20% lasting over 3 months.  Find out more about stock market corrections HERE.    

Day Trade or Day Trading: Day trade or Day trading refers to the buying and selling of stocks within the same day. A day trader will enter and exit his position in a security within that day.  The objective of day trading (outside of making money) is to ensure that all positions are liquidated by the end of the day, thus, not assuming any potential overnight risks.  In order to engage in day trading, individuals must have at least $25,000 in their stock trading account or a non-margin account.  Click HERE to see what the SEC has to say about day trading.
Meet Zack and his Brother Bob! - YouTube
STOCK MARKET TERMS
 
Day Trader: An individual who engages in day trading.  

Equity: Equity refers to how much money you have in your trading or investing account. 

Fundamental Analysis: Refers to analysis that examines a company’s fundamental picture and assesses the company for financial security.  Fundamental analysis includes examining a company’s revenues, earnings, future growth, return on equity, profit margins, and other metrics to determine a company's growth prospects and fiscal health.  

Fundamentalist:  An individual who trades or invest from a fundamental analysis perspective. 

Gap: A gap or ‘gap up’ occurs when a security’s opening price is higher than the previous day’s high. 
 
Illiquid: A market with an insufficient amount of volume or buyers to sell to.  
 
Investing: Investing in the stock market is the act of using money to buy stock, options, bonds, etc with the expectation of gaining a profit. 
 
IPO: An IPO is an initial public offering of a stock. When a company IPO’s it makes its shares available for purchase by the general public for the first time
 
Limit Order: A specified price you’re willing to sell or buy a security at.  If you’re new to stock trading, you should do your best to only place limit orders.  I have been involved in the stock market for over 15 years and use limit orders 99.99% of the times.  
STOCK MARKET TERMS
 
Liquid: A market with a sufficient amount of volume allowing for a trader to easily buy and sell a particular security.  A market is said to be liquid if you can enter and exit the market with ease and speed. 

Lock-up Period: A set time frame (typically 90 to 180 days) where majority of large shareholders are restricted from selling their shares.  Lock-up periods are set in place to help stabilize a company’s stock price when it trades on the stock market for the first time.

Margin: When you buy or trade a stock on margin; you’re essentially buying or trading that stock with borrowed money from your stock broker.  I have been involved in the stock market for over 15 years and seldom do I trade on margin.  I believe traders should be involved in the stock market for, at minimum, one year before they start trading on margin.   

Margin Call: A margin call occurs when your broker requires you to deposit more money into your online brokerage account to bring your account into maintenance.  Failure to deposit the required funds can result in the broker liquidating or selling your securities to bring your account into compliance.  
 
Market Order: Is an action, which tells your broker to buy or sell a particular security at its current price (whatever that may be).  Typically filled immediately. 
TIP: If you’re going to place a market order, ensure that the company’s daily trading volume is very high.  

Moving Average: The computed average of a stock’s price over a defined period of time.  (EXAMPLE: 10 days of trading prices –(10, 12, 10, 14, 16, 11, 14, 10, 12,10) / 10)
Open: The open refers to the first price a security trades at on an exchange. The New York stock exchange begins trading at 9:30am (eastern time).  The price of the first trade at 9:30am is considered the ‘open price’. 
 
Overbought: The share price of a stock has appreciated too much, too fast and generally is considered set for a pull-back.  This term is relative.  As a stock market veteran I have seen stocks that are considered ‘overbought’ continue to trend higher.  TIP: overbought can become ‘more’ overbought. 

Oversold: The opposite of overbought, if a stock is said to be oversold, it means that the stock has trended down too much, too fast and generally is considered set for a bounce or rise in share price.  As with a stock being overbought, I have witnessed stocks being considered ‘oversold’ go on to make lower lows.  TIP: oversold can become ‘more’ oversold.

Over-trading: Overtrading refers to the buying and selling of stocks for no reason other than the sake of being in a trade.  Make sure you are careful not to fall into the trap of overtrading.  Traders who tend to overtrade often find themselves in a losing position.   
STOCK MARKET TERMS
 
Pink Sheet: Pink sheet trading or OTC (Over The Counter) trading refers to stock trading that occurs outside of a major stock exchange (eg: The New York Stock Exchange (NYSE), NASDAQ, the London Stock Exchange (LSE), the Tokyo Stock Exchange (TSE).  Stocks trading on the OTC market has less stringent requirements than the ones traded on a major exchanged.  They are not required to meet requirements set by the SEC.  Because of this, stocks trading on Pink Sheets tend to be viewed as very risky stock investments. 
 
Portfolio: A portfolio is a basket of financial assets such as stocks, bonds, options, currencies, mutual funds, cash, cash equivalents, crypto-currencies, etc. that is managed personally by you or a fund manager.   

Quote: A stock quote refers to the current price (bid/offer) of a stock.  You can access stock quotes for free on popular sites such as Yahoo! and Google.  Most major brokers offer real-time stock quotes such as: TDameritrade, Robinhood and Etrade,  

Rally: A rally refers to a period where there’s a run up in the price of stocks, bonds, indexes, etc. 

Resistance: A price point that serves as a "wall".  When reached; profit takers begin to unload their position or sellers step in and short sell the stock.  These two actions generally lead to a decline in the stock price.   Find out more about short selling HERE.   

SEC: The SEC (Security and Exchange Commissions) is the governing body of the United States stock exchange.  Find out more about the SEC HERE.   

Sector: A subset or groups of different markets (eg: Technology or Pharmaceutical sector).  The S&P has 11 different sectors.  Find them below:  
 
Communication Services (XLC)
Consumer Discretionary (XLY)
Consumer Staples (XLP)
Energy (XLE)
Financials (XLF)
Health Care (XLV)
Industrials (XLI)
Materials (XLB)
Real Estate (XLRE)
Technology (XLK)
Utilities (XLU)
 
Sell-off :A steadfast decline in share price.  If you’re interested in learning how to make money when stocks decline, sign-up HERE.  We are now accepting enrollment in our stock market course: Go Short: Making Money when Stocks Decline.   

Short: When you short sell a stock you’re essentially, selling a stock you do not own; in hopes of repurchasing it at a lower price point.  If you’re interested in short selling stocks (aka making money when stocks decline); you can enroll in our short course HERE.  Find out more about short selling HERE

STOCK MARKET TERMS

Spread: The spread refers to the difference between the Bid and Ask.

Stock: When you own a company’s stock, you now have partial ownership in that company.  

Stock Split: A stock split refers to an action decided by a company’s board to issue new shares.  This action generally lowers the cost of the stock’s share price, all the while, increasing the number of shares you own.   

Stock Exchange : A stock exchange is a regulated marketplace where securities are bought and sold. 
 
Major Stock Exchanges around the world:
 
1.The New York Stock Exchange
2.NASDAQ
3.Hong Kong Stock Exchange
4.London Stock Exchange
5.TMX Group
6.National Stock Exchange of India
7.Korea Exchange
8.Nasdaq Nordic
9.SIX Swiss Exchange
10.Deutsche Borse
11.Bombay Stock Exchange
12.Shenzhen Stock Exchange
13.Euronext
14.Shanghai Stock Exchange
 

Stock Symbol: A stock symbol or ticker is a unique set of letters (usually 1-5 letters) assigned to each company being traded on the stock exchanges.  For example, Apple, Inc. is traded under the symbol, “AAPL”.  Facebook, Inc. is trader under the symbol/ticker, “FB”.
 
Stop-Loss: A specified price you’re willing to sell your security at to limit losses.  Trading in the stock market without a stop-loss can be akin to gambling, it’s considered to be a very risky move.  In our swing trading course: The ULTIMATE Swing Trader, we discuss the importance of stop-losses and how it fits into our methodology. 

Support: A price point that serves as "support".  When reached, buyers generally step-in and start buying up shares.  This move essentially ‘holds up’ the price of the stock and establishes a floor. 

Technical Analysis : Technical analysis refers to the utilization of charts to determine where a stock price will be in the future.   

Technician: A Technician refers to someone who specializes in using technical analysis to determine where a stock price might be headed in the future.   

Trading System: A trading system or methodology refers to a set of rules that an investor or trader utilizes consistently to trade the stock market.  Trading systems incorporate principles such as, entry and exit signals, money management or risk management, stop-loss, fundamental analysis, technical analysis, probability trades, etc.  All successful traders have a system or methodology in which they utilize to trade the stock market consistently.  Our trading system has a high success rate and we teach our system to students in our trading course: The ULTIMATE Swing Trader.   
If you’re interested in learning how to trade the stock market, we are now accepting enrollment in our swing trading course; go HERE to begin trading our profitable and easy to learn system. 
 
Volatility: Volatility in the stock market refers to the price changes (eg: fluctuations or swings) a stock experiences with a specified period of time.  Volatility in the stock market has also become synonymous with risk.  The more volatile the stock or the larger the swings; the more volatile the stock is said to be and vice versa. 
 
Volume: Volume in the stock market, refers to the number of shares bought and sold on a stock exchange during a trading day.  
STOCK MARKET TERMS
 
This concludes our list of stock market terms.  I hope you found this list useful and I encourage you to come back to this page weekly to begin familiarizing yourself with them. This will help you tremendously in your day to day conversations with other traders.  And knowing these stock market terms will assist you in understanding the material I blog, and talk about on
 
If you’re a new, intermediate, or seasoned trader that’s experiencing little to no success trading the stock market then you need to enroll in our trading course: The ULTIMATE Swing Trader (find out more about it HERE).  
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BY: ShortMeTina

All this stuff might come off a tad bit corny.  After all, isn’t this a website dedicated to stocks, trading, investing and candlesticks?

So a couple of things. Believe it or not; I too at some point concluded that having a “Daily Motivational” page is corny AF (azz *uck) but decided to go forth with it anyway.

As the main driving force behind this website, newsletter, 15th year confessions of a stock trader - whatever you want to call it - I’ve seen some things.

If you’ve taken a few minutes to peruse shortmetina.com, you’ll stumble on the fun fact that in my prior life I was a Therapist.   I spent over 7 years formally studying human behavior and have some bad ass looking 8 x 11s (Bachelor of Arts & Master of Science) vouching for my competency.
WHAT IT DO?
I do crack myself up sometimes. “what it do” wasn’t the best segue but I am sure at this point, you are looking for my point!  That is, my point in talking about daily motivations, stocks and my former life as a therapist.
WELL… HERE IT IS
I have realized - not that I ever tried to- I can’t run away from this innate passion that I have for understanding folks and why they do what they do.
Albeit, a bit older.. okay, much older... ...I am still that young curious girl that’s in a constant state of assessing. 
The foundational mechanics to conduct a thorough assessment have not changed, I always start with, a “WHY?” but the context have. That is, I am no longer assessing folks to see if they have a mental health diagnosis but I find myself…

...assessing the Markets, assessing the players in the Markets, assessing why traders make the same mistakes over and over again, etc.

And while the answers to those questions are in its infancy stages; I believe there’s a psychological component that plays into your success (or lack thereof) as a trader/investor.  This is super simplified and forgive me; as I am still in the infancy stage of finding out the “WHY’s”.   But one common ‘truth’ I have found to be true is:

there is a correlative relationship between cognitive conditioning and outcomes. 

Simply put, feed your mind with negative things (the minute I buy this stock it will crash), you’re bound to get negative outcomes (stock crashes).  Feed your mind with positive things (I am a good trader) and you’re sure to get positive outcomes (you’ll trade well). 
I present to you Daily Motivations (CLICK HERE). 
Stop here every single day, download positive software (via our daily motivations) and watch your outcomes improve. 

Don’t Believe Me?  Try it!
PSS:
If you want to pay it forward, fill out this really brief anonymous survey and help us, help our fellow traders in getting to the root of the WHYS!
Good, Bad or Ugly comment below
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