Trading Skills

Trading is different from investing, usually focused on more short-term movements in markets. Learn the essentials you'll need to know to be a successful trader.

Frequently Asked Questions
  • What is a stock?

    A stock is a security that represents the ownership of a part of a company; it is also commonly referred to as a share, or equity, in the company. Stocks can be bought and sold on the open market via stock exchanges, and those transactions are governed by various regulations meant to protect the investing public.

  • What is Volume-Weighted Average Price (VWAP)?

    Also known as the VWAP, the Volume-Weighted Average Price is a trading benchmark that is used by traders to see the average price that a security has traded through the day, in both volume and prices of trades.

  • What is a limit order?

    A limit order is a kind of order that an investor makes when he or she wants to buy or sell a stock at a specific price. The two types of such orders are a buy limit order, whereby the order will be placed at the limit price or lower, and the sell limit order, where the order will be executed at the limit price or higher.

  • What is the risk/reward ratio?

    The risk/reward ratio is used by investors to measure the prospects of reward for their investments over the potential risk of losing that capital. The ratio helps assess the expected return and risk of a given trade.

Key Terms
Asset management/Stethoscope on money
Money Management: Definition and Top Money Managers by Assets
Funds Management: Definition, Responsibilities, and Industries
a digital line graph
Absolute Return vs. Relative Return: What's the difference?
Bidder
Businessmen are analyzing the investment.
Retrocession
close up of man hand analyzing stock market chart
Exit Strategies: A Key Look
Portfolio Margin
close up of man hand analyzing stock market chart
Fill
Midsection Businessmen Analyzing Charts On Laptop In Office
Futures Prices Converge Upon Spot Prices
Woman Checking Stocks and Shares Data With Smartphone in City
Batting Average
Free Tools To Help You Manage Your Money
Futures Trading
Are Micro E-Mini Futures 'The Next Big Thing'?
Ultimate Trading Guide
Ultimate Trading Guide: Options, Futures, and Technical Analysis
Hero
What Is a Trader and What Do Traders Do?
Signatory
Endorser
Offer
Left Hand Side (LHS)
Options Trading Courses
Best Options Trading Courses
Buying Power (Excess Equity): Definition in Trading and Example
Illiquid
Smiling trader at his desk in his office surrounded by laptops and monitors showing financial graphs
What Does an Investor Do? What Are the Different Types?
Understanding Liquidity and How to Measure It
Understanding Notional Value and How It Works
Person at a desk looking at a smartphone with trading information on the laptop screen nearby
Short Squeeze Definition
Speculation: Trading With High Risks, High Potential Rewards
Trading in the Pre- and Post-Market Sessions
Spot Rate: What It Is, How It Works, Example
Spot Market: Definition, How They Work, and Example
Know Your Shareholder Rights
Average Daily Trading Volume (ADTV): Definition, How To Use It
Break Even Point
Break-Even Point: Definition, Examples, and How to Calculate
What Is Clearing? Definition, How It Works, and Example
Proprietary Trading
looking up at the skyscrapers in london's financial district
Shareholder Activist
Short Covering: Definition, Meaning, How It Works, and Examples
Tick Size: Definition in Trading, Requirements, and Examples
Underlying Asset (Derivatives)—Definition, How It Works, Examples
woman at desktop looking at financial charts
Drawdown in Banking vs. Drawdown in Trading: What's the difference?
Cross Trade
Delivered Ex Ship (DES): Definition, Vs. DAT and DAP
Slippage: What It Means in Finance, With Examples
Close Position: Definition, How It Works in Trading, and Example
Sinking Fund Method
Upside
What Is a Trade Signal? How Traders Analyze, Uses, and Example
How to Pick a Stock: Basic Best Practices for New Investors
Notional Principal Amount
What Is Price Discovery? Definition, Process, and Vs. Valuation
Midsection Businessmen Analyzing Charts On Laptop In Office
An Introduction to Securities Market Structures
Break Even Price: Definition, Examples, and How To Calculate It
The Myth of Profit/Loss Ratios
A businessman pointing a monitor with 3D charts and graphs.
Schaff Trend: A Faster and More Accurate Indicator
Ex-Ante: Definition, How It's Used by Investors, and Example
What Are Speculators? Definition, Types, and Impact on the Market
Spot Price: Definition, Spot Prices vs. Futures Prices, Examples
What Is a Tick in Securities Trading and How Does It Work?
Close up of pen, calculator and financial pages
What Is a Central Counterparty Clearing House (CCP) in Trading?
Thinly Traded
Coin stacks stepping down graph with red arrow and percent icon.
What Is Stock Dilution?
Long-Term Charts
Alternative Trading System (ATS) Definition, Regulation