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stock_trading.md

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Terminologies

Trading and and data analytic terminlogies that I came across when developing this program.


Data Analytic

  • Dataframe: Two-dimentional grouping of data of any type. Can be compares to Excel sheet or SQL data tables

  • Window function: Window functions enable to perform calculations against partitions(subgroups or sections) of result, typically a table

Trading

  • Leg: This is a single position taken in trading. There can be multi-leg in option trading for long call, short call; short put and long put.

  • Orders

    • Market Order: This is an order to buy and sell security immediately.
    • Limit Order: This is an order to buy and sell at a specific price. eg: submit limit order to buy ABC stock for no more $10.
    • Stop Order or Stop Loss Order: An order to buy or sell a stock once the price of stock reaches specific price. When the stop price is reached, a stop order becomes a market order.
    • Buy Stop Order: Order is entered at the Stop Price above the current market price.
    • Sell Stop Order: Order is entered at the Stop Price below the current market price.
  • Stock Purchase & Sales

Indicators

  • Technial calculations on data that are used to predict and indicate trends and signals.

    • Leading Indictor: This predict future price movement
    • Lagging Indicators: Look past trends and indiciate momentum (next move)
  • Signals: This are specific recommendation on financial assets to be executed at a predetermined time and price

  • Relative Strength Index (RSI): This is momentum indicator used in technical analysis that measures the magnitude (speed) and change of price movement to evaluate overbought or oversold conditions in the price of a stock or other asset.

  • Technical Analysis of Stocks and Trends: Technical analysis of stocks and trends is the study of historical market data, including price and volume, to predict future market behavior.

Portfolio


HOW TO TRADE STOCKS


  • Don’t risk more than 2% of your account balance on a single trade
  • Start small, trading just 1 or two stocks until you gain experience
  • Avoid penny stocks (AvaTrade only offers the best large-cap stocks)
  • Use limit orders for the best entries
  • Protect your trades with stop-loss orders
  • Don’t get greedy
  • Stick to your trading plan