Trading Basics Flashcards
7 cards from real Day Trading practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Trading Basics flashcards as text
What is a 'gap up' in day trading?
Answer: When a stock's price jumps higher at open compared to the previous close
A gap up occurs when a stock opens significantly higher than its previous closing price, often due to overnight news or earnings.
What is 'scalping' as a day trading strategy?
Answer: Making many small, quick trades to capture tiny price movements
Scalping involves making dozens or hundreds of trades per day to capture small price increments, relying on high volume and tight spreads.
How does short selling generate a profit?
Answer: By borrowing shares to sell high, then repurchasing them at a lower price
In short selling, a trader borrows shares and sells them at the current price, then buys them back later at a lower price to return to the lender, pocketing the difference.
What is the significance of the 'opening range' in day trading?
Answer: It defines the price range established in the first few minutes of trading used to plan entries
The opening range (typically the first 15–30 minutes) establishes a key price channel that traders use to identify breakout or breakdown levels for the rest of the session.
What does it mean when a stock is 'halted' during regular trading hours?
Answer: Trading in the stock is temporarily suspended by an exchange
A trading halt temporarily suspends all buying and selling in a stock, typically due to a pending news announcement, regulatory review, or unusual price volatility.
Which factor most directly determines whether a day trade is considered a 'round trip'?
Answer: Both the opening and closing of a position occur within the same trading day
A round trip (also called a day trade) occurs when a security is both bought and sold within the same trading session on the same day.
What is the difference between a stock's 'intrinsic value' and its 'market price'?
Answer: Intrinsic value is an estimate of what a stock is fundamentally worth; market price is what it currently trades for
Intrinsic value is a calculated estimate of a stock's true worth based on fundamentals, while market price is the actual price determined by supply and demand in the market.