Glossary

Arbitrage

An arbitrage is a trading strategy that involves buying and selling similar assets in different markets to take advantage of the price difference. It involves buying an asset in one market at a lower price and simultaneously selling it in another market at a higher price.

Asset Management Companies (AMCs)

Asset management companies are those financial institutions that pool the money and then manage investments for individuals and institutions.

Asset Under Management

AUM is the total market value of all the investments that a financial institution, mutual fund, or portfolio manager manages on behalf of clients. It represents the size and financial strength of a fund or firm.

Average Directional Index (ADX)

The average directional index is a technical indicator that measures the strength of the ongoing trend, and it is applicable for all asset classes, stocks, forex, and commodities.

Average True Range (ATR)

ATR (Average True Range) is a technical indicator that measures how much a stock or asset moves on average during a set period, usually 14 days. It helps traders understand market volatility.

Bearish Engulfing Pattern

A Bearish Engulfing Pattern is a two-candle candlestick reversal pattern that appears at the end of an uptrend, signalling a potential shift from bullish to bearish momentum. It is considered one of technical analysis' most reliable bearish reversal signals.

Beta in Stocks Trading

Beta is a measure of a stock’s volatility in relation to the overall market. Beta is measured in value and compared with overall market volatility. Beta helps with risk management and portfolio diversification.

Bollinger Bands

Bollinger Bands are technical analysis indicators consisting of a middle band (a simple moving average) and two outer bands (standard deviations above and below the moving average). They measure price volatility and identify potential overbought or oversold conditions.

Capital Gains Tax

Capital Gains Tax is a tax levied on the profit earned from the sale of a capital asset, such as stocks, real estate, bonds, or mutual funds, when the selling price exceeds the original purchase price.

Certificate of Deposit

A certificate of deposit (CDs in short) is a financial instrument issued by banks that offers fixed interest for a specific term and discourages premature withdrawals through penalties.

Chart Patterns

Chart patterns are visual formations created by the price movements of a stock (or any other asset) on a chart. Traders and technical analysts use these patterns to predict future price movements based on historical behaviour.

Counterparty Risk

Counterparty risk is the risk that the other person or party in a financial deal might not keep their promise, like not paying or not delivering what they agreed to.

Daily Margin Statement

A Daily Margin Statement is a report issued by brokers to traders detailing margin requirements, available balance, utilised margin, and any shortfalls in their trading account for a given trading day. It helps traders track their margin status and ensures compliance with regulatory requirements.

Dark Cloud Cover Pattern

The Dark Cloud Cover pattern is a bearish reversal candlestick pattern that typically appears at the top of an uptrend. It signals that the upward momentum might be slowing down and that a potential trend reversal to the downside could be coming.

Death Cross

A death cross is a chart pattern that shows the price of an asset is weakening. It happens when a short-term moving average crosses below a long-term moving average. This crossover signals that momentum has shifted, and traders who were previously optimistic may now have a bearish outlook.

Delta Neutral

Delta neutral is a portfolio or trading strategy where the overall delta of the position is zero, meaning the portfolio's value does not change with small movements in the underlying asset's price.

Demand-Pull Inflation

Demand-Pull Inflation refers to a rise in the general price level of goods and services that occurs when overall demand in an economy outpaces its ability to produce goods and services.

Demat Account

A Demat account is an electronic account that stores your shares and other investments in digital form, making it easy to buy, sell, and manage them without physical paperwork.

Derivative Markets

Derivative Markets are financial markets where derivative instruments, such as futures, options, swaps, and forwards, are traded. These instruments derive their value from an underlying asset, such as stocks, commodities, currencies, interest rates, or indices.

Displaced Moving Average (DMA)

Displaced Moving Average (DMA) is a type of moving average that shifts a simple or exponential moving average (SMA or EMA) forward or backwards in time by a specified number of periods.