The random definitions are listed to help prospective traders gain familiarity with the language and terms used in the industry. The trading world has a very large vocabulary, and we will be adding to this page on a regular basis.
Day Trader: one who trades short term, as in the cash market only, liquidating all positions prior to market close. Day traders look for situations that allow entry and exit quickly, with a profit. They normally make numerous trades in a single day, and do not hold positions overnight.
CME/CME Group: The world’s largest futures and commodity exchange, formed by the merger of the Chicago Mercantile Exchange, (CME), the Chicago Board of Trade,(CBOT), and the New York Mercantile Exchange, (NYMEX). It is the home of the S&P 500, and the S&P e-mini index.
Markets:
Cash Market: Opens daily, at 09:30, closes at 16:15, Eastern Time.
Overnight: Opens daily, at 16:30, closes at 03:00, Eastern Time.
Premarket: Opens daily at 03:00, closes at 09:30 Eastern Time.
The S&P 500 e-mini electronic index can be traded Sunday to Friday, except Holidays, in all three of these markets.
Long: traders see buy signals that indicate the market is heading up, so we anticipate an increase in price. If we enter a long order at a price of 840.00, we expect the market to go to 841.00/842.00 or beyond. Traders go long on the expectation of higher prices.
Short: traders expect the market to go down. Signals give an indication of weakness, so we sell the market. If we enter a short position at 840.00, we expect the price to go down to 839.00/838.00 or beyond. We have “gone short” on this trade.
Points: a measure of increase or decrease in position, relative to entry. Each point on the S&P 500 e-mini is divided into four parts called ticks. Four ticks equal one point which has a value of $50.00 USD. On our long example above, when price reaches 841.00, it will have advanced 1 point or 4 ticks in our favour. Each tick is worth $12.50 USD., so if price moved up to 841.50, we would be up 6 ticks, or 1.5 points. Our trade profit, not including commissions, would be 6 X $12.50, or $75.00 USD.
