Swing Trading Vocabulary: Words From Entry Trigger to Exit

Two traders can look at the same chart and disagree only because one calls a dip a pullback and the other calls it a breakdown. Words decide actions. If your plan says “buy the pullback” and you have never pinned down what a pullback is, the rule can’t be followed the same way twice, and a journal full of trades taken under a vague rule tells you nothing about whether the rule works.

The terms below are grouped in the order a trade happens. Each definition is short enough to paste into a plan.

Price structure

Structure is the shape of the swings. Read it before any indicator.

Term	What it means
Swing high	A bar whose high is above the highs of the bars on either side of it, marking a point where buyers ran out of push.
Swing low	The mirror image: a bar whose low sits below the lows around it.
Higher highs and higher lows	Each swing high tops the last, and each swing low holds above the last. That is an uptrend.
Trend	The direction swings are stepping in. Lower highs and lower lows make a downtrend.
Range	Price moving sideways between a ceiling and a floor, with no new highs or lows beyond them.
Pullback	A move against the trend that keeps the structure intact, so an uptrend’s pullback ends above the prior swing low.

Levels

Term	What it means
Support	A price zone where buying has stopped declines before.
Resistance	A price zone where selling has stopped advances before.
Breakout	A close beyond resistance or support, ideally on higher volume than usual.
Retracement	How much of the last swing a pullback gives back, often measured with Fibonacci ratios such as 38.2%, 50% and 61.8%.
Extension	A projected target beyond the last swing, measured as a ratio of that swing.

Levels are zones. Treat a price as a band a little wider than one day’s normal movement.

Indicators

Every indicator here is a calculation on price or volume. The best swing trading indicators page covers which of them earn a place on a swing chart.

Term	What it means
Moving average	The average closing price over the last N bars, recalculated each bar. A simple average weights every bar equally.
EMA	An exponential moving average, weighting recent bars more. Its smoothing factor is k = 2 / (N + 1).
RSI	J. Welles Wilder’s relative strength index, RSI = 100 - 100 / (1 + RS), where RS is average gain over average loss. It runs from 0 to 100.
MACD	The gap between two EMAs of price (commonly 12 and 26 bars), with a signal line that is an EMA of that gap.
ATR	Average true range, also from Wilder: the typical size of a bar including gaps. Traders use it to set stop distance.
Bollinger Bands	John Bollinger’s bands, drawn a set number of standard deviations (commonly two) above and below a moving average.
Volume	Shares traded in the bar. Rising volume on a breakout suggests participation.

Orders and risk

These terms decide what a mistake costs.

Term	What it means
Stop order	An order that becomes a market order once price touches the stop. It gets you out, at whatever the next price is.
Stop-limit order	A stop that becomes a limit order when triggered, so it controls price and may not fill at all.
Limit order	An order to buy at or below, or sell at or above, a stated price.
R-multiple	The result of a trade divided by the amount risked. Lose what you planned and the trade is -1R.
Position size	How many shares you buy, set by dividing the dollars you are willing to lose by the distance to the stop.
Gap	An open well above or below the prior close, often after news, which can skip straight past a stop.
Time stop	An exit because the trade has done nothing for a set number of days, whatever the price.

A worked trade ties several of these together.

If the stock reaches $56, the trade books 3R, or $300. If it hits the stop, the loss is 1R, or $100, as long as it does not gap below $48. Should the stock sit between $49 and $52 for two weeks, a time stop might close it for a small gain or loss, freeing the money for a setup that is moving. The position size calculator does the share count for any entry and stop.

Account terms

Term	What it means
Cash account	An account where every purchase is paid for with settled cash. No borrowing and no short selling.
Margin account	An account that lets you borrow from the broker against your holdings, and is required for short sales.
Settlement	The day a trade is final and cash and shares change hands. Under the SEC’s rule, most US stock trades settle one business day after the trade date, known as T+1.
Pattern day trader rule	A FINRA rule that places extra requirements on margin accounts that day trade frequently.

For how these terms work in practice, swing trading ETFs first walks through entries and stops on index funds, which gap less on single-company news than individual stocks do.