Before learning the basics of Intraday trading, it is essential for one to familiarize with the basic terms often used in daytrading.
In long trades also called long postions, you buy stocks first with the intention of selling it later if the market goes up.
As opposed to long trade, short trade or short position means selling the stocks first with the intention of buying it later when the stock price comes down.
Closing the position to book profit by selling shares at higher price in long trades and by buying shares at lower price in short trades.
Closing the position by taking opposite action. For eg, selling the shares in long trade and buying the shares in short positions. Squaring off may be booking profit or loss or breakeven.
Long trend or Rally:
It refers to the increase in the price of shares or the rise in overall stock market continuously .
This refers to the decrease in the price of shares or the fall in the overall stock market continuously.
This refers to the movement of market or share prices side ways without taking any direction.
Stoploss refers to the counter order placed below the entry price in long position or the order placed above the entry level in short position in order to limit the loss of existing position in case the market goes against the position. Stop loss is very important in daytrading .
Support and Resistance:
Support is the price region where buyers are dominant and hence the market does not fall below it so easily. But if the support level is broken, the fall may be enormous.
Resistance is the price region where sellers are dominant and hence the market does not go above it so easily. But if the resistance is broken, the market may rally up.
This refers to the pretermined price above the entry level in case of long trade and the predetermined price below the entry price in case of short position where the order is already placed so that the position is automatically squared off to book profit when the market direction favors our position.
It is forecasting method of market using the past price of the stock using graphs and charts. Technical analysis is used both by day traders and position traders.
It refers to the method of trading in the market where the trader enters the market and comes out of the market on the same day without carrying over the position to the next day.
It refers to the method of trading where the trader takes position and carry it to the next few days or weeks or months.
It refers to the position trading but the days they hold position are often very less ranging from few days to a week.
Trend line is the straight line drawn connecting consecutive lows or consecutive highs in the charts used in the technical analysis of a stock.