Trading Glossary
Plain-language definitions of terms you'll hear in class and on the news — no jargon left unexplained.
Demat Account
Short for 'dematerialized account.' Holds your shares and other securities electronically instead of as physical certificates. Required to buy or sell listed securities in India.
P/E Ratio
Price-to-Earnings ratio — a stock's current price divided by its earnings per share. A common (though incomplete) measure of how expensive a stock is relative to its profits.
Strike Price
In an options contract, the fixed price at which the underlying asset can be bought (call option) or sold (put option) if the option is exercised.
Open Interest (OI)
The total number of outstanding derivative contracts (futures/options) that haven't yet been settled or closed. Rising OI alongside price often signals fresh money entering a trend.
Stop-Loss
A pre-set order to automatically sell (or buy, for a short position) if a security reaches a certain price, limiting potential loss on a trade.
Support & Resistance
Support is a price level where a falling stock has historically tended to stop falling and bounce; resistance is where a rising stock has tended to stall. Neither is guaranteed to hold.
Margin
Borrowed funds from a broker used to increase position size beyond what your own capital would allow. Increases both potential gains and potential losses.
Lot Size
The fixed number of units of an underlying asset in a single futures or options contract, set by the exchange. You can only trade in whole multiples of the lot size.
Delta (Options Greek)
Measures how much an option's price is expected to move for a ₹1 move in the underlying asset. A delta of 0.5 means the option price moves roughly ₹0.50 for every ₹1 move.
Mark-to-Market (MTM)
The daily process of revaluing open futures positions to the current market price, with gains or losses settled in cash each trading day.
Intraday Trading
Buying and selling a security within the same trading day, closing all positions before the market shuts — no overnight holding.
Swing Trading
Holding a position for several days to a few weeks to capture a expected price 'swing,' sitting between intraday trading and long-term investing in time horizon.
Hedging
Taking an offsetting position (often via derivatives) specifically to reduce the risk of an existing position, rather than to generate additional profit.
Volatility
A statistical measure of how much a security's price fluctuates over a given period. Higher volatility means larger, faster price swings in either direction.
NISM / NCFM
NISM (National Institute of Securities Markets) certifications are SEBI-regulated and mandatory for several market roles; NCFM is NSE's own certification program, widely recognized by broking and advisory firms.