Glossary
Market terms in plain words
29 terms, each with the course that teaches it.
- Ask
- The lowest price at which a seller is currently willing to sell.
- Example: If the ask is ₹500.10, buying at market costs about ₹500.10.
- Learn it in a course →
- ATR (Average True Range)
- A measure of how much an instrument typically moves in a period, used to compare volatility and to set a stop distance.
- Learn it in a course →
- Circuit limit
- A limit on how far a price can move in one day before trading in it is paused or restricted.
- Learn it in a course →
- Contract note
- The record your broker issues for the day's trades, listing every trade and every charge.
- Learn it in a course →
- Delta
- How much an option's price is expected to change for a one-unit move in the underlying price.
- Learn it in a course →
- Demat account
- The account at a depository where your shares are held electronically.
- Learn it in a course →
- Drawdown
- The fall from a peak in account value to a later low, usually shown as a percentage.
- Example: Falling from ₹1,00,000 to ₹80,000 is a 20% drawdown.
- Learn it in a course →
- Expectancy
- The average result per trade, often in R. Expectancy = hit rate × average reward − miss rate × average risk.
- Learn it in a course →
- Implied volatility
- The market's estimate of future volatility, inferred from option prices.
- Learn it in a course →
- Leverage
- Controlling a larger position than your own money by using a deposit (margin). It magnifies results in both directions.
- Learn it in a course →
- Limit order
- An order to buy or sell at a set price or better. It may not be filled.
- Learn it in a course →
- Margin
- A deposit held against a leveraged position. It is not a fee, and the amount at risk can exceed it in some products.
- Learn it in a course →
- Mark-to-market (MTM)
- Daily settlement of price differences on open futures positions.
- Learn it in a course →
- Open interest
- The number of outstanding derivative contracts that have not been closed or settled.
- Learn it in a course →
- Position sizing
- Deciding how many units to trade so that a stopped-out trade costs only the amount you chose to risk.
- Learn it in a course →
- R-multiple
- A trade's result divided by the amount risked on it. A 2R result is twice the amount risked.
- Learn it in a course →
- Slippage
- The difference between the price you expected and the price you actually got.
- Learn it in a course →
- Stop-loss
- An order or plan that closes a position at a set price level. It limits risk but does not remove it: a gap can fill worse.
- Learn it in a course →
- Strike price
- The fixed price at which an option's holder may buy (call) or sell (put) the underlying.
- Learn it in a course →
- STT (Securities Transaction Tax)
- A tax levied by the government on certain securities transactions.
- Learn it in a course →
- Support and resistance
- Zones where price has previously stopped falling (support) or rising (resistance).
- Learn it in a course →
- Theta
- How much an option's price is expected to fall as time passes, all else equal. Also called time decay.
- Learn it in a course →
- Vega
- How much an option's price is expected to change when implied volatility changes.
- Learn it in a course →