Day Trading 101: 50 Financial Terms You Need Before Your Next Trade

Core Financial Instruments (1–8)

  1. Stocks – Ownership shares in companies.
  2. Bonds – Loans to corporations/governments with interest payments.
  3. Treasury Bills (T-Bills) – Short-term government debt sold at a discount.
  4. Treasury Notes (T-Notes) – Medium-term government securities (2–10 years).
  5. Treasury Bonds (T-Bonds) – Long-term US government bonds (up to 30 years).
  6. Municipal Bonds (Munis) – Bonds issued by states/cities, often tax-advantaged.
  7. Corporate Bonds – Debt issued by companies, riskier than government bonds.
  8. Options – Right to buy/sell at a set price by a set date (calls/puts).

Key Economic Indicators (9–18)

  1. GDP (Gross Domestic Product) – Total value of goods/services produced.
  2. CPI (Consumer Price Index) – Measures inflation at the consumer level.
  3. PPI (Producer Price Index) – Measures inflation at the producer/wholesale level.
  4. Unemployment Rate – Measures joblessness in the economy.
  5. Non-Farm Payrolls (NFP) – US monthly job growth report.
  6. Retail Sales – Measures consumer spending.
  7. ISM Manufacturing Index – Economic activity in manufacturing.
  8. Durable Goods Orders – Measures new orders for long-lasting goods.
  9. Housing Starts – Number of new residential construction projects started.
  10. Consumer Confidence Index – Gauge of consumer optimism.

Monetary Policy and Interest Rates (19–28)

  1. Federal Funds Rate – Key short-term interest rate set by the Fed.
  2. Discount Rate – Rate the Fed charges banks for short-term loans.
  3. Open Market Operations – Buying/selling government securities to control money supply.
  4. Quantitative Easing (QE) – Central bank asset-buying program to stimulate economy.
  5. Tapering – Gradual reduction of QE.
  6. Yield Curve – Graph showing interest rates by maturity; steep or inverted curves matter.
  7. Inverted Yield Curve – Predictive sign of a potential recession.
  8. Interest Rate Hike – Fed raising rates to cool inflation.
  9. Interest Rate Cut – Fed lowering rates to stimulate economy.
  10. Monetary Policy Statement – Fed’s explanation of economic conditions and decisions.

Market Mechanics (29–38)

  1. Liquidity – How easily assets can be bought/sold.
  2. Volatility – Degree of asset price fluctuation.
  3. VIX (Volatility Index) – Measures expected 30-day volatility ("fear gauge").
  4. Bid Price – The price buyers are willing to pay.
  5. Ask Price – The price sellers want.
  6. Bid-Ask Spread – The difference between bid and ask prices.
  7. Volume – Number of shares/contracts traded.
  8. Open Interest – Total number of outstanding derivative contracts.
  9. Market Order – Buy/sell immediately at current price.
  10. Limit Order – Buy/sell only at a specific price or better.

Trading Strategies and Concepts (39–46)

  1. Support Level – A price level where a stock tends to stop falling.
  2. Resistance Level – A price level where a stock tends to stop rising.
  3. Breakout – When the price moves outside a defined support/resistance.
  4. Short Selling – Selling borrowed shares, aiming to buy back cheaper.
  5. Margin – Borrowing funds to trade.
  6. Leverage – Using margin to amplify gains/losses.
  7. Stop Loss Order – Automatically sell at a predefined loss level.
  8. Take Profit Order – Automatically sell when a target profit is hit.

Important Financial and Economic Concepts (47–50)

  1. Inflation – General rise in prices, reducing purchasing power.
  2. Deflation – General fall in prices, increasing purchasing power.
  3. Recession – Two consecutive quarters of GDP decline.
  4. Expansion – Period of economic growth following a recession.