Glossary

Accumulation/Distribution Line

The Accumulation/Distribution Line (A/D Line) is a technical analysis indicator that measures the cumulative flow of money into and out of a security. It tries to show whether a security is being bought or sold by tracking both price and volume over time.

Alpha

Alpha measures an investment’s performance relative to a benchmark, showing how well a fund or portfolio manager outperforms the market.

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.

Arbitrageurs

An arbitrageur is a stock market participant who tries to take advantage of the price difference of the same asset in different markets. Arbitrageurs earn risk-free returns. By buying low in one market and selling high in another, arbitrageurs also help to increase market efficiency by correcting market mispricings.

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.

Assets

Assets are essential components held by businesses or individuals with the expectation that they will generate economic value over time.

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.

BSE (Bombay Stock Exchange)

The Bombay Stock Exchange Limited (BSE), established in 1875 and headquartered in Mumbai, is Asia's oldest stock exchange and features the highest number of listed companies globally.

Backwardation

Backwardation is a market condition where the spot price of the underlying asset is higher than its futures price. It typically occurs when there is greater demand for the asset in the present compared to contracts expiring in the future.

Bear Call Spread

A Bear Call Spread, also known as a Short Call Spread or Call Credit Spread, is an options strategy that profits when the underlying asset's price declines or remains below the short call's strike price.

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.

Bid-Ask Spread

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for a security.

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.

Bull Calendar Spread

A bull calendar spread is an options trading strategy that involves buying and selling call options with the same strike price but different expiration dates, where the longer-dated option is purchased, and the shorter-dated option is sold.

Candlestick Patterns

Candlestick patterns are formations created by one or more candlesticks that help traders understand market behaviour and predict possible price movements. These patterns are formed using the open, close, high, and low prices over a specific period.

Candlestick Timeframe

A candlestick timeframe refers to the duration or time interval that each individual candlestick on a chart represents. It defines how much market price action is displayed in each candle.

Candlesticks

Candlesticks are a type of chart used in trading that show the price movement of a stock or asset over a specific time period, such as 1 minute, 1 hour, or 1 day. Each candlestick displays the opening, closing, highest, and lowest prices, helping traders understand price action and market sentiment.