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Stock market glossary
Every trading and investing term you’ll meet — explained in plain English, with no jargon. 76 definitions and counting.
A
- Algo ID
- In India, the unique identifier a stock exchange attaches to every algorithmic order, so each one can be traced to an approved algorithm and stopped if needed.
- Algorithmic trading
- Trading with a computer program that follows exact written rules for when to buy, sell, how much and when to stop.
- API
- Application programming interface: a broker's door for software, letting a program read prices and place orders without the app screen.
- Arbitrage
- Buying something where it is cheap and selling the same or an equivalent thing where it is dear, at the same time, to capture the gap.
- Ask
- The lowest price a seller will accept for a stock right now.
B
- Backtest
- Testing a trading rule on past price data to see how it would have behaved. Useful for learning; it does not predict future results.
- Bear market
- A sustained fall in prices, often defined as a 20%+ drop from recent highs, driven by pessimism.
- Bid
- The highest price a buyer is willing to pay right now.
- Black box algo
- A trading algorithm whose logic is hidden from the user and cannot be replicated. In India, SEBI requires providers of such algos to retail investors to be registered Research Analysts.
- Blue chip
- A large, well-established, financially sound company considered relatively stable.
- Breakout
- When price moves decisively through a support or resistance level, often on higher volume.
- Bull market
- A sustained rise in prices and optimism across the market.
C
- Candlestick
- A chart element showing the open, high, low and close of a period in one shape.
- Capital gain
- The profit made when you sell an asset for more than you paid.
- Circuit breaker
- An exchange rule that halts or limits trading after a large price move to curb panic.
- Co-location
- Renting server space inside or beside an exchange's data centre so orders travel metres, not kilometres. Used by high-frequency traders.
- Currency conversion
- Changing money from one currency to another at an exchange rate. On StockYatra your virtual coins are converted at a simulated rate when you trade a market priced in ₹ or $ — practice only, no real currency changes hands.
D
- Demat account
- An account that holds your shares electronically, like a bank account for stocks.
- Diversification
- Spreading investments across many assets or sectors to reduce risk.
- Dividend
- A share of a company’s profits paid to shareholders, usually in cash.
- Dividend yield
- Annual dividend divided by share price, expressed as a percentage.
E
- EPS
- Earnings per share — a company’s profit divided by its number of shares.
- ETF
- Exchange-traded fund — a basket of assets that trades like a single stock.
- Ex-dividend date
- Buy before this date to be eligible for the upcoming dividend.
- Exchange rate
- The price of one currency in another, e.g. how many Nepali rupees buy one US dollar. It moves every day and affects the value of foreign holdings.
F
- Forex
- Short for foreign exchange — the global market for trading currencies. In StockYatra, “Forex” is also the name of our US-stocks practice market, priced in dollars.
- Fundamental analysis
- Valuing a company by studying its business, earnings, debt and growth.
H
- HFT
- High-frequency trading: algorithmic trading at extreme speed, with positions often held for seconds or less, mostly market making and arbitrage.
I
- Iceberg order
- A large order shown to the market in small slices, so only the tip is visible in the order book at any time.
- Index
- A basket of stocks used to measure a whole market in one number, e.g. the NEPSE Index, the Nifty 50 or the S&P 500.
- IPO
- Initial Public Offering — a company’s first sale of shares to the public.
K
- Kill switch
- A control that stops all automated orders at once. Exchanges, brokers and every personal bot should have one.
L
- Latency
- The delay between an event and the reaction to it, e.g. from a price change to your order reaching the exchange. Measured in milli-, micro- or nanoseconds.
- Leverage
- Using borrowed money (margin) to control a larger position; it magnifies gains and losses.
- Limit order
- An order that executes only at your chosen price or better.
- Liquidity
- How easily an asset can be bought or sold without moving its price much.
- Long position
- Buying a stock expecting its price to rise.
- Look-ahead bias
- A backtesting mistake: using information that would not have been available at the time of the trade, which makes results look better than reality.
M
- MACD
- Moving Average Convergence Divergence — an indicator of momentum and trend shifts.
- Margin
- The deposit required to open a leveraged position.
- Margin call
- A demand to add funds when losses erode your margin below a required level.
- Market cap
- A company’s total value: share price times number of shares outstanding.
- Market hours
- The times an exchange is open for trading. NEPSE, NSE and US exchanges each keep their own hours in their local time zone, so the three markets open at different times of your day.
- Market maker
- A firm that quotes both a buy and a sell price, earning the spread between them and providing liquidity to other traders.
- Market order
- An order that executes immediately at the best available price.
- Max drawdown
- The largest fall from a peak to a later low in an account or backtest, in percent. A key measure of how painful a strategy is to hold.
- Moving average
- A line that smooths price over a period to reveal the trend.
N
- NASDAQ
- A US stock exchange known for technology companies such as Apple, Microsoft and Nvidia; also the name of its indices. Prices are in US dollars ($).
- NEPSE
- Nepal Stock Exchange — Nepal’s only stock exchange, in Kathmandu, and the name of its main index. Prices are in Nepali rupees (Rs.).
- NSE
- National Stock Exchange of India, in Mumbai — India’s largest exchange by trading volume and home of the Nifty 50 index. Prices are in Indian rupees (₹).
- NYSE
- New York Stock Exchange — the world’s largest stock exchange by the total value of its listed companies. Prices are in US dollars ($).
O
- Order book
- The live list of all waiting buy and sell orders for a stock at each price. The best bid and best ask sit at the top.
- Overfitting
- Tuning a strategy so closely to past data that it captures noise, not a real pattern. Looks great in a backtest, fails on new data.
P
- P/E ratio
- Price-to-earnings — share price divided by earnings per share; a basic valuation measure.
- Paper trading
- Practising trades with virtual money and real prices — zero financial risk.
- Paper trading bot
- An automated strategy that trades virtual money instead of real money, used to see how the rules behave live before risking anything.
- Portfolio
- The full collection of investments a person or fund holds.
Q
- Quant trading
- Quantitative trading: finding and running strategies with data, statistics and computer models, usually across many positions.
R
- Resistance
- A price ceiling where sellers repeatedly appear and cap a rise.
- Risk/reward ratio
- The reward you aim for versus the risk you take on a trade, e.g. 1:2.
- RSI
- Relative Strength Index — a 0–100 momentum gauge; above 70 overbought, below 30 oversold.
S
- Sharpe ratio
- Return above a risk-free rate divided by the volatility of returns. Higher means more return per unit of ups and downs.
- Short position
- Selling a borrowed stock expecting its price to fall, to buy it back cheaper.
- Slippage
- The difference between the expected price of a trade and the price it actually fills at.
- Stop-loss
- An order that exits a trade automatically to cap your loss.
- Support
- A price floor where buyers repeatedly step in and stop a fall.
- Swing trading
- Holding trades for days to weeks to capture a larger price swing.
T
- Technical analysis
- Studying price, volume and patterns on charts to time entries and exits.
- Trailing stop
- A stop-loss that follows price as a trade moves in your favour to lock in profit.
- TWAP
- Time-weighted average price: an execution algo that splits a big order into equal slices over a set time to reduce market impact.
V
- Volatility
- How much and how quickly a price moves; higher volatility means bigger swings.
- Volume
- The number of shares traded in a period; shows conviction behind a move.
- VWAP
- Volume-weighted average price: the average price of a day's trades weighted by volume. Also an execution algo that trades in line with volume.
W
- Webhook
- A message one app sends to another over the internet when something happens, such as a chart alert firing, often used to trigger automation.
- White box algo
- A trading algorithm whose rules are disclosed and can be replicated, such as an execution algo or a written-down strategy. The opposite of a black box algo.
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