Clear, jargon-free definitions of every trading term you need to know. From stop-loss to gamma exposure — explained simply.
A momentum oscillator measuring the speed and magnitude of recent price changes on a scale of 0-100.
A trend-following momentum indicator showing the relationship between two moving averages of a stock's price.
The average price of a stock over a specific period, smoothing out short-term fluctuations to reveal the underlying trend.
A volatility indicator measuring the average range between high and low prices over a specified period, accounting for gaps.
Price levels where buying pressure (support) or selling pressure (resistance) has historically been strong enough to halt or reverse price movement.
A volatility indicator consisting of a moving average and two bands set at standard deviations above and below, showing when price is statistically extreme.
When a stock's price moves above a resistance level or below a support level, often signaling the start of a new trend.
The number of shares traded during a given period. Volume confirms price moves — high volume validates direction, low volume suggests weakness.
The rate of acceleration of a stock's price — a measure of how quickly and strongly the price is moving in a given direction.
The average price of a stock weighted by volume throughout the trading day, acting as a benchmark for institutional execution quality.
The market's expectation of future price movement, derived from options prices. Higher IV = larger expected moves.
A percentile measure (0-100) showing where current implied volatility sits relative to its range over the past year.
The rapid decline in implied volatility — and therefore option premiums — after a major event like earnings.
The aggregate gamma positioning of options market makers, which influences how they hedge and whether they amplify or dampen stock price moves.
A set of risk measures (Delta, Gamma, Theta, Vega, Rho) that describe how an option's price changes relative to various factors.
A neutral options strategy combining a bull put spread and bear call spread to profit from low volatility and time decay.
An options strategy involving buying both a call and a put at the same strike price, profiting from a large move in either direction.
The strike price at which the total value of all outstanding options (puts and calls) would expire worthless, causing maximum loss to option holders.
The rate at which an option loses value each day due to the passage of time, all else being equal.
The measure of how much an option's price changes for every 1% change in implied volatility.
An options strategy that sells a higher-premium option and buys a lower-premium option at a different strike, collecting net credit upfront.
A predetermined price level at which a trade is automatically closed to limit losses.
The ratio of potential loss (risk) to potential gain (reward) on a trade, expressed as R:R.
Determining how much capital to allocate to each trade based on risk tolerance, account size, and trade-specific factors.
A predetermined price level at which a profitable trade is closed to lock in gains.
A dynamic stop-loss that moves up with the stock price, locking in profits as the trade moves in your favor while still protecting against reversals.
The probability-weighted average outcome of a trade over many repetitions: EV = (Win% × Avg Win) - (Loss% × Avg Loss).
A FINRA regulation requiring traders who execute 4 or more day trades in 5 business days to maintain a minimum $25,000 account balance.
A private exchange where large institutional orders are executed without being visible to the public market before the trade is complete.
The CBOE Volatility Index measuring the market's expectation of 30-day forward-looking volatility, derived from S&P 500 options prices.
A composite sentiment indicator (0-100) measuring market emotions from extreme fear to extreme greed across seven factors.
The current dominant state of the market — trending (bull/bear), range-bound, or high-volatility — that determines which trading strategies work best.
A mathematical formula for determining the optimal bet size based on edge (win probability and payoff ratio) to maximize long-term growth.
A statistical relationship where two time series share a long-run equilibrium — even if they wander apart short-term, they tend to revert to a stable relationship.
Tradewink uses every concept in this glossary to generate AI-powered trading signals. See how theory becomes practice.
Explore Signals