Swing Trading Glossary

The terms that come up in every scan, chart and trading book, defined in plain English. Where a term has its own scan or guide, the definition links to it.

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8-K filing

A report US companies file with the SEC to announce material events between quarterly reports — earnings releases, contracts, acquisitions, leadership changes. The episodic pivot scan reads 8-Ks to explain why a stock gapped. Read more

A

Accumulation/Distribution rating

A letter grade (A to E) for whether institutions appear to be buying or selling a stock, based on how price and volume behave on up days versus down days. Part of William O'Neil's CANSLIM ratings. Read more

ADR (average daily range)

The average percentage distance between a stock's daily high and low, usually over 20 days. Swing traders use it to filter for stocks that move enough to pay for a multi-day hold; the momentum scans require roughly 4% or more.

Advance/decline ratio

The number of stocks that closed up divided by the number that closed down on a given day. A breadth measure of how broadly a session was bought. Read more

ATR (average true range)

The average of each day's true range — the largest of high minus low, high minus prior close, and prior close minus low. Used to size stops and to measure how extended a stock is from its moving averages.

B

Base

A period of sideways price action after an advance, where a stock digests its gains before its next move. Bases are where breakout setups form. Read more

Breakout

A move above the top of a base or consolidation, ideally on expanding volume. The momentum breakout scan looks for tight bases after a large prior move. Read more

C

CANSLIM

William O'Neil's growth-stock method: Current earnings, Annual earnings, New highs or products, Supply and demand, Leader or laggard, Institutional sponsorship, and Market direction. Read more

Capitulation

A sharp, high-volume sell-off where remaining holders give up at once. Often marks a short-term low; the parabolic long scan looks for the first up day after one. Read more

Catalyst

The news behind a move: an earnings report, FDA decision, contract, or other event that changes how the market values a company. Read more

Consolidation

A stretch of narrowing price action where buyers and sellers are roughly balanced. Tight consolidations after a strong advance are the classic momentum setup.

D

Dollar volume

Shares traded multiplied by price. A better liquidity measure than share count alone, because it reflects how much money can move in and out of a position.

E

EMA (exponential moving average)

A moving average that weights recent prices more heavily than older ones, so it reacts faster than a simple average. The 10- and 20-day EMAs are common guides for momentum stocks.

Episodic pivot

A large gap on real news in a stock that had been going nowhere — the shape left when a catalyst genuinely re-rates a company. A setup popularised by Kristjan Kullamägi. Read more

F

Float

The number of shares available to trade publicly, excluding shares held by insiders and restricted holders. Smaller floats can move faster on the same buying.

G

Gap

An open well above or below the prior close, leaving a space on the chart. Gaps on heavy volume and real news matter more than gaps on nothing. Read more

M

Market breadth

Measures of how many stocks are participating in a move — the share above key moving averages, new highs versus new lows, advancers versus decliners. Read more

Market regime

An overall read of market conditions. SwingTradeScanner averages the percentage of stocks above their 50- and 200-day averages into a 0–100 score: Risk-On at 65+, Neutral from 45, Risk-Off below 45. Read more

Moving-average stacking

When shorter moving averages sit above longer ones — for example 50-day above 150-day above 200-day. It means every timeframe agrees the trend is up. Read more

N

Net new highs

The count of stocks making new 52-week highs minus the count making new 52-week lows. A healthy uptrend keeps producing new highs. Read more

P

Parabolic move

A near-vertical run where price rises (or falls) faster and faster over consecutive days. It rarely lasts; the parabolic short scan looks for exhaustion after one. Read more

Pivot point

The price level a setup must clear to trigger — usually the high of the final, tightest part of a base.

Premarket

Trading before the regular session opens at 9:30 ET, starting as early as 4:00 ET. Episodic pivots usually show up here first. Read more

R

Relative strength (RS) rank

A 1–99 percentile ranking of a stock's price performance against the rest of the market over recent months. An RS of 90 means the stock has outperformed 90% of stocks. Not the same as the RSI oscillator.

RS line

A stock's price divided by an index, plotted over time. A rising RS line means the stock is outperforming the market, even on days both fall.

S

SEPA

Specific Entry Point Analysis — Mark Minervini's method, which starts with his eight-point trend template and looks for a low-risk entry out of a tightening base. Read more

Sector rotation

The movement of money from one group of industries to another as conditions change. Leaders inside leading sectors have a tailwind a lone strong chart does not. Read more

Stage 2

The advancing phase in Stan Weinstein's four-stage model of a stock's cycle: price above rising moving averages, making higher highs. Where trend traders want to be long. Read more

T

Trend template

Mark Minervini's eight conditions a stock must meet to be in a confirmed uptrend, covering moving-average alignment, distance from the 52-week high and low, and relative strength. Read more

V

VCP (volatility contraction pattern)

A base in which each pullback is shallower than the last and volume dries up, showing sellers are running out of stock before a breakout. Read more

Volume dry-up

Volume falling well below average during a pullback or base. It suggests few holders are willing to sell at current prices.