Trading Glossary

After-Hours Trading

Stock trading that occurs outside of regular market hours (9:30am–4pm ET), typically from 4pm–8pm ET. Many earnings reports and corporate disclosures are released after the close.

ATS (Alternative Trading System)

A non-exchange trading venue that matches buyers and sellers, including dark pools and electronic communication networks (ECNs), regulated under SEC Regulation ATS.

Block Trade

A privately negotiated, large-volume securities transaction executed outside the public order book to minimize market impact.

ECN (Electronic Communication Network)

An automated system that directly matches buy and sell orders for securities without routing through a traditional market maker, displaying an electronic order book with visible bids and offers.

Float (Shares Available for Trading)

The number of a company's shares that are actually available for trading by the public, excluding locked-up insider and institutional holdings.

Implied Volatility (IV)

A forward-looking metric derived from options prices that reflects the market's expectation of future price movement magnitude.

Insider Buying

Open-market stock purchases by company executives, directors, or 10%+ shareholders, disclosed via SEC Form 4. Often read by investors as an indication of insider confidence in the company's prospects; it is not a forecast of the share price.

Level 2 Quotes

Order book data showing all bid and ask prices from market makers and ECNs, revealing the depth of supply and demand at each price level.

Liquidity

How easily a security can be bought or sold at a stable price. High liquidity means tight bid-ask spreads, large order book depth, and the ability to execute large orders without significantly moving the price.

Market Capitalization

The total market value of a company's outstanding shares. Market cap determines which "tier" a stock falls into (micro-cap, small-cap, mid-cap, large-cap) and drives liquidity and volatility characteristics.

Market Catalyst

An event or announcement that triggers a significant price movement in a stock.

Market Maker

A firm that continuously quotes both bid and ask prices for a security, standing ready to buy or sell at those prices, providing liquidity and facilitating price discovery.

Put/Call Ratio

A sentiment indicator calculated by dividing options put volume by call volume, used to gauge the balance between put and call activity in a stock or the broader market.

Relative Volume (RVOL)

Trading volume compared with a baseline average for the same security. Tools use different baselines, so RVOL figures are only comparable when the method is stated.

Short Squeeze

A rapid price increase triggered when short sellers are forced to cover their positions simultaneously, creating self-reinforcing buying pressure.

VWAP (Volume-Weighted Average Price)

The average price of a stock weighted by volume throughout the day. Used by institutions as a benchmark and by day traders as a key support and resistance reference.