Education
Trading terms, explained simply
No jargon left unexplained. A plain-English glossary of the terms and indicators you'll run into while building strategies on AlgoBites.
Stock Trading Basics
The everyday vocabulary you'll hear around any stock trade.
Ticker Symbol
A short code, like AAPL for Apple, used to identify a stock on an exchange.
Bid & Ask
The bid is the highest price a buyer will pay. The ask is the lowest price a seller will accept. The gap between them is the “spread.”
Market Order
An order to buy or sell immediately at the best available price.
Limit Order
An order that only fills at a price you set or better — more control, but no guarantee it executes.
Stop-Loss Order
An order that automatically sells a position once it drops to a set price, helping cap your losses.
Bull Market / Bear Market
A bull market is a sustained stretch of rising prices. A bear market is a sustained stretch of falling prices.
Volume
The number of shares traded over a period — a rough gauge of how much interest a stock is getting.
Liquidity
How easily an asset can be bought or sold without moving its price. High liquidity means tighter spreads and faster fills.
Long / Short
Going “long” means buying, expecting the price to rise. Going “short” means selling borrowed shares, betting the price falls.
Volatility
How much and how fast a price swings up and down. Higher volatility means bigger, quicker moves.
Market Capitalization
A company's total value on the market: share price multiplied by total shares outstanding.
Dividend
A portion of a company's profits paid out to shareholders, usually on a regular schedule.
Options Trading Basics
The building blocks of options contracts and strategies.
Call Option
A contract giving you the right, but not the obligation, to buy a stock at a set price before a certain date.
Put Option
A contract giving you the right, but not the obligation, to sell a stock at a set price before a certain date.
Strike Price
The fixed price at which an option lets you buy (call) or sell (put) the underlying stock.
Expiration Date
The date an options contract stops existing. After that, it's exercised, assigned, or expires worthless.
Premium
The price you pay to buy an options contract, set by supply and demand in the market.
In / Out of the Money
“In the money” means an option has real value right now. “Out of the money” means it doesn't — yet.
Exercise & Assignment
Exercising is using your right to buy or sell at the strike price. Assignment is when the option seller is required to fulfill that trade.
Implied Volatility (IV)
The market's forecast of how much a stock might move — the bigger the expected move, the pricier the premium.
The Greeks
Numbers that describe how an option's price reacts to change. Delta tracks price sensitivity, Theta tracks time decay, Vega tracks volatility, and Gamma tracks how fast Delta itself moves.
Covered Call
Selling a call option against stock you already own, collecting premium in exchange for capping your upside.
Spread
A strategy that combines buying and selling multiple options at once to limit both risk and cost.
Technical Indicators
Common tools traders layer onto a chart to read price action.
Moving Average (SMA / EMA)
A line that smooths out price data over a chosen period, making trends easier to spot. An EMA reacts faster to recent prices than an SMA.
Relative Strength Index (RSI)
A 0–100 scale that measures how fast and how far a price has moved, often used to flag “overbought” or “oversold” conditions.
MACD
Short for Moving Average Convergence Divergence — compares two moving averages to highlight momentum shifts and potential trend changes.
Bollinger Bands
Bands plotted above and below a moving average that widen and narrow with volatility, often used to spot breakouts or reversals.
Support & Resistance
Price levels where a stock has historically struggled to fall below (support) or rise above (resistance).
Stochastic Oscillator
Compares a stock's closing price to its recent trading range, helping identify potential turning points.
Average True Range (ATR)
A measure of how much a stock typically moves in a day, often used to size positions or set stop-losses.
Fibonacci Retracement
Horizontal lines based on key ratios that traders use to estimate where a price pullback might pause or reverse.
Popular Strategy Examples
A look at how the terms and indicators above come together in real, widely-used strategies.
Stock Trading Strategies
Golden Cross / Death Cross
A classic trend-following signal. When a stock's 50-day moving average crosses above its 200-day moving average (a “golden cross”), it's read as bullish. The reverse crossover — a “death cross” — is read as bearish.
RSI Mean Reversion
Bets that a stock has moved too far, too fast, and is due to snap back. Traders look to buy when RSI drops below 30 (oversold) and take profits when RSI climbs above 70 (overbought).
MACD Momentum Crossover
Uses the MACD line crossing above its signal line as a cue that upward momentum is building, and a cross below as a cue that it's fading — a simple way to ride trends instead of guessing tops and bottoms.
Bollinger Band Breakout
Watches for a stock's price to squeeze into a tight range and then break out above the upper band on a surge in volume — a setup traders use to catch the start of a new move.
Options Trading Strategies
Covered Call
You own the stock, then sell a call option against it near a resistance level to collect premium income. If the stock stays below the strike, you keep the premium; if it's called away, you sell at a price you were already comfortable with.
Cash-Secured Put
You sell a put option at a strike near a support level where you'd be happy to own the stock. If it's assigned, you buy at a discount; if not, you keep the premium and try again.
Iron Condor
Sells an out-of-the-money call spread and an out-of-the-money put spread at the same time, betting the stock stays range-bound through expiration — a popular way to collect premium when volatility is high but a big move isn't expected.
Long Straddle
Buys a call and a put at the same strike and expiration, positioning for a big move in either direction — often used ahead of earnings or other events where the outcome, not the direction, is the sure thing.
Note: This glossary and the strategy examples above are for general education only and aren't investment advice. Every strategy carries risk — see our full Risk Disclosure in the footer before trading.