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How to Use This Swing Trading Glossary
Trading has its own language, and a single unfamiliar word can make a good explanation hard to follow. Terms are grouped alphabetically below. Where a word has a full guide, the definition links to it, so you can move from a quick meaning to a complete explanation in one click. If a term you need is missing, tell us and we will add it.
Swing Trading Terms A–C
- ATR (Average True Range)
- A volatility measure developed by J. Welles Wilder that shows how far a stock typically moves in one period. Swing traders use it to set stops beyond normal noise.
- Base
- A sideways or rounded area where a stock consolidates before its next move. Tight, quiet bases often precede strong breakouts.
- Breakout
- A move above a clear resistance level or pattern pivot, ideally on rising volume. A breakout that falls back into the base is a failed breakout.
- Bull Flag
- A short, tight pause after a sharp advance that drifts slightly lower or sideways before the trend continues.
- Bullish
- Expecting or showing rising prices. HUMBLE BULLS focuses on bullish, long-only stock trades.
- Candlestick
- A chart bar that shows a period's open, high, low and close. Its body and wicks reveal the balance between buyers and sellers.
- Consolidation
- A period when price moves sideways in a range while the market digests a previous move.
- Cup and Handle
- A rounded base followed by a small, shallow pullback (the handle) before a breakout above the handle high.
Swing Trading Terms D–H
- Drawdown
- The fall in account value from a peak to a low. Controlling drawdowns is the core goal of risk management.
- Earnings Gap
- A large jump in price between sessions after a company reports results. Gaps can jump straight past a stop loss.
- EMA (Exponential Moving Average)
- A moving average that gives more weight to recent prices, so it reacts faster than a simple moving average.
- Entry
- The planned price at which a trade is opened, usually a trigger level such as a breakout pivot or a pullback to support.
- Higher High and Higher Low
- The building blocks of an uptrend: each rally peaks above the last, and each pullback stops above the last.
- Holding Period
- How long a position stays open. Swing trades typically last from a few days to a few weeks.
Swing Trading Terms I–M
- Invalidation
- The price at which a trade idea is clearly wrong. A good stop loss sits at or just beyond the invalidation level.
- Liquidity
- How easily a stock can be bought or sold without moving its price. Higher average volume usually means better liquidity and smaller slippage.
- MACD
- Moving Average Convergence Divergence, an indicator created by Gerald Appel that tracks the gap between two moving averages to show changes in momentum.
- Market Context
- The condition of the broad market and sectors around a trade. Bullish setups work best when the overall market is healthy.
- Momentum
- The strength and persistence of a price move. Momentum stocks are those already rising faster than the market.
- Moving Average
- The average price over a set number of periods, used to smooth price and show trend direction.
Swing Trading Terms P–R
- Pivot
- The specific price level that confirms a pattern, such as the high of a handle or the top of a flat base.
- Position Size
- The number of shares in a trade, calculated from account size, risk per trade and the distance to the stop.
- Pullback
- A temporary dip within an uptrend. Buying pullbacks to support is a common lower-risk swing entry.
- R Multiple
- A trade result expressed in units of initial risk. Risking $100 and making $300 is a 3R win.
- Relative Strength
- How a stock performs compared with the market or its sector. Leaders show strong relative strength.
- Resistance
- A price area where selling has repeatedly stopped advances. A clean break above resistance can start a new leg up.
- Reward-to-Risk Ratio
- The potential gain to the first target divided by the potential loss to the stop. Many swing traders look for at least 2 : 1.
- Risk per Trade
- The percentage of the account you accept to lose if the stop is hit, commonly kept between 0.5% and 1%.
- RSI (Relative Strength Index)
- A momentum oscillator by J. Welles Wilder that measures the speed of recent price changes on a scale of 0 to 100. Not the same as relative strength versus the market.
Swing Trading Terms S–Z
- Screener
- Software that filters thousands of stocks by rules such as price, volume and trend to produce a short list of candidates.
- Sector Rotation
- The movement of money between industry groups. Strong sectors tend to carry their leading stocks higher.
- Slippage
- The difference between the expected price of an order and the price actually filled.
- Stop Loss
- A pre-planned exit that limits the loss if the trade moves against you. It should be decided before entry.
- Support
- A price area where buying has repeatedly stopped declines. Pullbacks that hold support keep an uptrend intact.
- Swing High and Swing Low
- The turning points of price: a peak before a pullback and a trough before a rally.
- Swing Trading
- A style that aims to capture price moves lasting days to weeks, between the speed of day trading and the patience of investing.
- Timeframe
- The period each bar or candle represents, such as daily or weekly. Swing traders usually plan on the daily chart.
- Trading Journal
- A record of every trade: reasons, levels, size, result and emotions. The journal is how a trader learns from their own history.
- Trailing Stop
- A stop that is raised as price rises, for example below each new higher low, to protect gains without capping the trend.
- Uptrend
- A series of higher highs and higher lows, usually with price above rising moving averages.
- Volume
- The number of shares traded in a period. Rising volume on breakouts and falling volume on pullbacks are healthy signs.
- VWAP (Volume-Weighted Average Price)
- The average price weighted by volume during a session, often used as an intraday reference for entries.
- Watchlist
- A short list of stocks that meet your criteria and are waiting for a planned trigger.
From Words to a Working Process
Knowing the vocabulary is the first step; using it in order is the next. Follow the learning path from the basics of swing trading through momentum stocks, chart analysis and risk, and come back to this glossary whenever a term needs a refresher.