Stock Market Glossary
A comprehensive glossary of 107 stock market terms, trading jargon, and financial definitions. Perfect for beginners and experienced traders alike.
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Bid Price
The highest price a buyer is willing to pay for a security.
Bid-Ask Spread
The difference between the bid price and ask price. A measure of market liquidity.
Bracket Order
A three-leg order with entry, target, and stop loss placed simultaneously.
Bull Market
A market condition where prices are rising or expected to rise.
Bear Market
A market condition where prices are falling or expected to fall, typically 20% or more decline.
Breakout
When price moves above resistance or below support with increased volume.
Breakdown
When price falls below a support level, often signaling further decline.
Book Value
The net asset value of a company - total assets minus total liabilities.
Bollinger Bands
Volatility bands placed above and below a moving average.
BSE
Bombay Stock Exchange - Asia's oldest stock exchange.
Bank Nifty
NSE index tracking the performance of banking sector stocks.
Bonus Shares
Free shares issued to existing shareholders from company reserves.
C
Cover Order
An intraday order with a compulsory stop loss, offering higher leverage.
Call Option
A contract giving the buyer the right to buy an asset at a specified price within a specific time.
Correction
A decline of 10% or more in the price of a security from its recent high.
Consolidation
A period when prices move sideways within a defined range.
Circuit Breaker
Trading halt triggered when an index or stock moves beyond specified limits.
Candlestick
A chart type showing open, high, low, and close prices for a period.
D
Delta
The rate of change of option price with respect to changes in the underlying asset's price.
Debt to Equity Ratio
Total debt divided by shareholder equity, measuring financial leverage.
Dividend Yield
Annual dividend per share divided by stock price, expressed as percentage.
Doji
A candlestick pattern where open and close prices are nearly equal, signaling indecision.
Demat Account
An account that holds securities in electronic form.
Drawdown
The peak-to-trough decline in account value before a new high is reached.
E
Expiry Date
The date on which an options or futures contract becomes void.
EPS
Earnings Per Share - company's profit divided by outstanding shares.
Engulfing Pattern
A two-candle reversal pattern where the second candle completely engulfs the first.
EMA
Exponential Moving Average - gives more weight to recent prices.
Ex-Date
The date on or after which a stock trades without the right to receive a dividend.
Expectancy
The average amount you can expect to win or lose per trade.
F
Futures Contract
A standardized agreement to buy or sell an asset at a predetermined price on a future date.
Face Value
The nominal value of a share as stated by the company, used for accounting.
Free Float
The portion of shares available for public trading, excluding promoter holdings.
FII/DII
Foreign Institutional Investors and Domestic Institutional Investors.
Fibonacci Retracement
Horizontal lines indicating potential support/resistance at key Fibonacci levels.
FPO
Follow-on Public Offering - additional shares issued by an already listed company.
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I
Intraday Trading
Buying and selling securities within the same trading day, closing all positions before market close.
Intrinsic Value
The difference between the current price of the underlying asset and the strike price of an option.
In The Money (ITM)
An option with intrinsic value - calls when price > strike, puts when price < strike.
Implied Volatility (IV)
The market's expectation of future volatility, derived from option prices.
IPO
Initial Public Offering - when a company first sells shares to the public.
L
Limit Order
An order to buy or sell a security at a specific price or better.
Long Position
Buying a security with the expectation that its price will rise.
Leverage
Using borrowed capital to increase the potential return of an investment.
Liquidity
The ease with which a security can be bought or sold without affecting its price.
Lot Size
The minimum quantity of shares in a futures or options contract.
Lower Circuit
The minimum price a stock can fall to in a single trading session.
LTCG
Long Term Capital Gains - profits from selling securities held for more than 12 months.
M
Market Order
An order to buy or sell a security immediately at the best available price.
Margin Trading
Trading with borrowed funds from the broker, using securities as collateral.
Mark to Market (MTM)
Daily settlement of gains and losses in futures positions based on closing prices.
Market Capitalization
The total market value of a company's outstanding shares (share price × shares outstanding).
Moving Average
An indicator that smooths price data by calculating the average over a specified period.
MACD
Moving Average Convergence Divergence - trend-following momentum indicator.
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P
Positional Trading
A trading style that holds positions for weeks to months based on longer-term trends.
Put Option
A contract giving the buyer the right to sell an asset at a specified price within a specific time.
Premium
The price paid by the option buyer to the option seller for the contract.
P/E Ratio
Price-to-Earnings ratio - stock price divided by earnings per share.
P/B Ratio
Price-to-Book ratio - stock price divided by book value per share.
Promoter Holding
The percentage of shares held by company promoters and founders.
Pivot Points
Support and resistance levels calculated from previous day's high, low, and close.
R
Rally
A period of sustained increases in stock prices.
ROE
Return on Equity - net income divided by shareholder equity, measuring profitability.
ROCE
Return on Capital Employed - measures how efficiently a company uses its capital.
Resistance Level
A price level where selling pressure is strong enough to prevent further rise.
RSI
Relative Strength Index - momentum indicator measuring speed and change of price movements.
Record Date
The date set by a company to determine which shareholders are eligible for dividends.
Risk Reward Ratio
The ratio between potential loss and potential profit on a trade.
S
Stop Loss
An order to sell a security when it reaches a certain price, used to limit losses.
Swing Trading
A trading style that holds positions for days to weeks to profit from price swings.
Scalping
A trading strategy that profits from small price changes, making many trades per day.
Short Selling
Selling borrowed securities hoping to buy them back at a lower price.
Strike Price
The price at which an option can be exercised to buy or sell the underlying asset.
Shooting Star
A bearish reversal candlestick with a small body and long upper shadow.
Support Level
A price level where buying interest is strong enough to prevent further decline.
SMA
Simple Moving Average - the arithmetic mean of prices over a specified period.
Supertrend
A trend-following indicator that uses ATR to plot support and resistance levels.
SEBI
Securities and Exchange Board of India - the regulatory body for securities markets.
Sensex
BSE's benchmark index comprising 30 large-cap stocks.
Stock Split
Dividing existing shares into multiple shares, reducing price proportionally.
STCG
Short Term Capital Gains - profits from selling securities held for less than 12 months.
STT
Securities Transaction Tax - tax levied on buying and selling securities.
Sharpe Ratio
Risk-adjusted return measuring excess return per unit of risk.
T
Trailing Stop
A stop order that moves with the price, maintaining a set distance from the market price.
Time Value
The portion of an option's premium that exceeds its intrinsic value, based on time until expiry.
Theta
The rate at which an option loses value as time passes, also known as time decay.
Trend Line
A line connecting successive highs or lows to identify trend direction.
Trading Account
An account used to buy and sell securities in the stock market.
T+1 Settlement
Trade settlement occurring one business day after the transaction date.
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V
Volatility
A measure of how much a security's price fluctuates over time.
Volume
The number of shares or contracts traded in a security during a given period.
Vega
The sensitivity of an option's price to changes in implied volatility.
VWAP
Volume Weighted Average Price - average price weighted by volume throughout the day.
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Why Learn Trading Terms?
Understanding trading terminology is the first step to becoming a successful trader. This glossary covers essential terms used in:
- Stock market trading (NSE, BSE)
- Derivatives (Futures & Options)
- Technical and fundamental analysis
- Risk management and position sizing
- Tax and regulatory compliance
How to Use This Glossary
Browse alphabetically or use the quick navigation at the top. Each term includes a clear definition and links to related terms for deeper learning. Bookmark this page for quick reference during your trading sessions.