The key concepts explained simply, to better understand what your alerts mean
The opening range is the gap between the highest and lowest prices reached in the first minutes after the market opens (often 5, 15 or 30 minutes). This period usually concentrates the most volume and volatility of the day, because it reflects investors' immediate reaction to news released before the open. A breakout occurs when the price leaves this range: many traders see it as confirmation of the direction the stock will take for the rest of the session.
The VWAP is the average price at which a stock has traded since the start of the session, weighted by the volume at each price. Unlike a simple price average, it gives more weight to large trades. Traders use it as an intraday "fair value" benchmark: a price above the VWAP suggests dominant buying pressure, a price below it suggests selling pressure. Institutional managers also use it to assess whether their own executions are favorable.
The high and low of the day are the price extremes reached since the open. A break of these levels (up or down) is closely watched because it often means a stock is entering uncharted territory for the session, which can draw other traders' attention and amplify the move (follow-through effect).
Key levels are the highs and lows of reference periods that most day traders draw before the open: today's pre-market (PMH / PML, Pre-Market High / Low), the previous day (PDH / PDL, Previous Day High / Low) and the previous week (PWH / PWL, Previous Week High / Low). Many orders sit around them: price often bounces off them, and a clean break can trigger acceleration in the direction of the break.
Volume measures the number of shares traded over a given period. Abnormally high volume compared to a stock's usual average often signals that something important is happening (news, rumor, institutional interest). Traders use it to tell a "significant" price move apart from simple market noise.
RVOL (Relative Volume) compares the volume a stock has traded with its usual volume. Measured "by time of day", it compares the cumulative volume since the open with the volume normally reached at the same time in previous sessions: at 10 AM, an RVOL of 3 means the stock has already traded three times more than it usually has by 10 AM. Day traders use it to spot the day's "in play" stocks, where a breakout is most likely to follow through, and to set aside moves with little participation.
Momentum refers to the speed and strength of a price move in a given direction. A sudden acceleration over a very short period (such as a single one-minute candle) can indicate a massive, rapid influx of buyers or sellers, a dynamic often sought by scalpers.
A reversal happens when a stock abruptly changes direction after moving one way for some time. Spotting a reversal early lets you either exit a position before it turns against you, or enter the new direction as it begins — but it is also one of the hardest signals to read correctly, because false reversals ("fake-outs") are common.
A backtest replays a trading strategy on historical data to see how it would have performed in the past, without risking real capital. It is an essential step before trading with real money: it lets you validate or adjust your assumptions, but it has its limits — past performance, even simulated, never guarantees future results.
This glossary is provided for educational purposes only. It does not constitute financial advice or an investment recommendation. Trading involves a significant risk of capital loss. Consult a qualified financial advisor before making any decision.