“Blue chip” stocks are shares of large and established companies with a long operating history and an established client base. Usually, they have substantial market capitalisation and a history of…
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Exotic currency pairs combine one major currency with the currency of an emerging or smaller economy. Some common exotic forex pairs examples are: USD/INR: U.S. Dollar / Indian Rupee USD/TRY:…
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FAANG stocks are a commonly used term for five major US technology companies: F - Facebook, now Meta A - Amazon A - Apple N - Netflix G - Google,…
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A fractional share represents less than one whole share of a company. For example, instead of purchasing one complete US stock priced at $500, an investor may be able to…
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The terms In The Money (ITM), Out of The Money (OTM), and At The Money (ATM) describe an option's position relative to the current price of its underlying asset. Let’s…
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Option Greeks are used to assess how an option's price may respond to changes in factors such as the: Underlying asset price Time remaining until expiry, and Volatility. As per…
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Market intermediaries are entities that facilitate transactions between investors, companies, exchanges, and other participants in financial markets. In India, stock market intermediaries operate under the supervision and oversight of SEBI…
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A 3-in-1 trading account combines three accounts or services: “Bank Account” to hold and transfer funds. “Trading account”, which is used to place orders for securities. “Demat account”, which holds…
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A “52-week high” is the highest market price at which a stock has traded during the preceding 52 weeks. In contrast, a “52-week low” is the lowest traded price during…
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A cash flow statement reports the movement of cash + cash equivalents during an accounting period. It shows where cash came from and where it was used. Generally, cash flows…
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A “covered call” is an options strategy in which an investor: Owns shares of a stock and Sells a call option on those shares. The investor receives the option premium…
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A demo account is a “simulated” trading account that allows users to practise in the financial markets without using actual money. It generally uses virtual funds and replicates market prices…
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A Doji is a candlestick in which the opening and closing prices are similar (or very close). It usually has a small or negligible real body, while the length of…
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A market order is an instruction to buy or sell an asset “immediately” at the best available price in the market. It prioritises execution rather than a specific price. While…
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A pip is a standard unit used to measure a change in the exchange rate of a currency pair. For most currency pairs, 1 pip is the fourth decimal place.…
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A put option gives the buyer the right, but not the obligation, to “sell” the underlying asset at a predetermined strike price on or before expiry. For example, suppose a…
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A rights issue allows an existing company's shareholders to purchase additional shares, generally in a specified proportion and at a price determined under the issue terms. Usually, a company’s launch…
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A stock split divides existing shares into a larger number of shares by reducing the face value of each share proportionately. For example, Suppose a stock trades at ₹1,000 before…
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A UPI trading account in India refers to a trading account where UPI can be used as a payment method for adding funds, subject to the platform and applicable payment…
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The Average Directional Index (ADX) is a technical indicator used to measure the strength of a price trend. It is commonly calculated using a 14-period setting and is accompanied by…
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An economic moat is a durable competitive advantage that may potentially protect a company’s market position and profitability from its competitors. As per general market understanding, some common sources of…
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A share buyback is a transaction in which a company purchases its own shares from existing shareholders, subject to applicable laws and regulations. The company may buy back shares through…
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Cryptocurrency trading in India involves buying and selling digital assets such as Bitcoin and Ethereum through cryptocurrency platforms. Unlike shares traded on Indian stock exchanges, cryptocurrencies are not shares of…
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Delivery trading refers to buying shares with the intention of holding them beyond the trading day. Usually, the purchased shares are settled and credited to the investor's demat account. Currently,…
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Delta measures how much an option's premium is expected to change when the price of the underlying asset changes by one unit (assuming other factors remain unchanged). Several traders use…
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The Dow Jones Industrial Average (DJIA), commonly called the Dow Jones, is a US stock-market index comprising 30 major US companies. It is a “price-weighted” index in which companies with…
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FINNIFTY, or Nifty Financial Services Index, represents the financial services sector of India. It tracks companies operating as banks, financial institutions, insurance companies, and other financial services businesses. The index…
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Futures rollover means closing an existing futures position in the “current” expiry contract and taking a similar position in a “later” expiry contract. For example: Suppose a trader holds a…
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Gamma measures how much an option's delta changes when the price of the underlying asset changes by one unit. It is a “second-order” option Greek that indicates how sensitive an…
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Hedging is the technique of opening a “strategic position” to reduce the risk from another position or exposure. To understand the concept better, let’s study an example related to a…
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Offer for Sale (OFS) is a process through which “existing” shareholders can sell their shares to investors through the stock exchange platform. Unlike an IPO, an OFS does not normally…
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The option premium is the price paid by the buyer to purchase an options contract. It is also the amount received by the option seller when the option is sold.…
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Slippage is the difference between the price at which a trader expects an order to execute and the actual execution price. Generally, it occurs because markets can move between the…
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Technical analysis is a method of studying “historical price + volume” data to identify patterns, trends, and potential market behaviour. It is based on the idea that price and volume…
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Book value shows the value of a company's net assets after deducting all its liabilities. It indicates how much of the company's accounting value remains available for equity shareholders after…
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The US Dollar Index (DXY) measures the value of the US dollar against a basket of six major foreign currencies. As per general market understanding, the basket consists of: Euro…
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The Ichimoku Cloud is a technical analysis system that combines trend, momentum, support, and resistance information on a single chart. It consists of five components: Tenkan-sen (Conversion Line): Shorter-term price…
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The risk-reward ratio in trading compares the potential loss on a trade with its potential profit. Mathematically, it can be calculated using the following formula: Risk-Reward Ratio = Potential LossPotential…
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Ethereum is a decentralised blockchain system offering “Ether” as the native cryptocurrency. To buy Ether, an investor generally needs to select a cryptocurrency platform that supports Ethereum trading in India. …
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Investing in US stocks refers to buying shares of companies listed on US stock exchanges, such as Apple, Microsoft, Tesla, or Amazon. To buy US stocks from India online, investors…
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An annual report is a company's yearly report containing: Financial statements Management commentary Business information Corporate governance details, and Other disclosures, as required under applicable regulations. To perform an annual…
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To execute the withdrawal process, a trader is required to transfer available funds from the trading account to a linked bank account or another supported withdrawal method. As per general…
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Trade246 is a premier multi-asset trading platform offering access to seven different market segments, namely, NSE, NFO, Forex, Commodities, Crypto, US Stocks, and Indices (both domestic + international). We are…
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Solana (SOL) is the native cryptocurrency of the “Solana blockchain”. For those unaware, it is a network designed to process transactions and support applications such as: Decentralised finance (Defi) Digital…
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Bollinger Bands are a volatility-based technical indicator consisting of a middle moving average and two outer bands. The outer bands expand or contract according to the asset's price volatility. The…
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A candlestick chart displays an asset's price movement over a specific period. Each candle shows four key prices: Open: The price at which the candle’s time period begins. High: The…
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Contango and backwardation describe the relationship between an asset's “spot price” and its “futures prices” across different expiries. Let’s understand Contango vs Backwardation in detail: A) Contango A market is…
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Dividend stocks are shares of companies that distribute a portion of their profits to shareholders as dividends. Usually, these are companies that have a history of distributing dividends to shareholders.…
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Major currency pairs are the most “actively traded” forex pairs. Primarily, they include the U.S. dollar (USD) and one of the other major currencies. As per general industry understanding, some…
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Minor currency pairs (also called “cross-currency” pairs) are a type of currency pair that do not include the U.S. dollar. They usually involve currencies such as the Euro, British pound,…
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Order types are instructions that determine how a trader wants to buy or sell an asset. They are submitted with a broker and specify the “quantity” as well as “price”…
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Penny stocks in India generally refer to shares trading at ultra-low prices. Usually, they are issued by companies with relatively small market capitalisation, limited liquidity, or weaker financial profiles. Note…
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Segregated client accounts in trading refer to arrangements where client funds are maintained separately from the trading platform or broker's own operational funds, subject to the applicable regulations. This separation…
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Support and resistance are price levels or zones where buying and selling activity has previously influenced price movement. Note that: “Support” is an area where selling pressure has previously weakened,…
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TradingView charts are interactive price charts that traders and investors use to study market movements. For market analysis, they provide various tools, such as: Different chart types Timeframes Technical indicators…
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Two-factor authentication (2FA) is an additional layer of security that adds a “second verification” step when accessing a trading account. Instead of relying only on a password, the account may…
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Overtrading represents a situation when a trader enters more trades, takes larger positions, or trades more frequently than is justified by the trading plan or the available opportunities. It can…
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20 Market Depth refers to a “market-depth display”. It shows multiple levels of buy and sell orders for a security. Generally, a 20 market-depth screen displays the top 20 bid…
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A circuit breaker is a market-safety process that “temporarily halts or restricts” trading when a stock or market index moves beyond a predetermined limit during a trading session. The purpose…
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A bear market is a period in which market prices experience a “sustained decline”, with selling pressure generally dominating buying activity. As per SEBI, a bear market is a weak…
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A bonus share is an “additional share” issued by a company to its existing eligible shareholders without requiring them to pay an additional amount. The shares are generally issued by…
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In a breakout trading strategy, traders regularly monitor a stock or index and identify/spot when its price moves beyond a previously established level: Trading range Support level Resistance level Trendline,…
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A brokerage calculator estimates the brokerage and other applicable trading charges associated with a transaction. It can help traders estimate the cost of executing a trade before placing the order. …
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A bull call spread strategy is an “options strategy” used when a trader expects the underlying asset to rise, but within a specified range. Generally, it involves: Buying a call…
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A bull market is a sustained period in which asset prices generally move “upward” due to potentially high demand and positive market sentiment. Such bull markets can be influenced by…
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A call option gives the buyer the right, but not the obligation, to “buy” the underlying asset at a predetermined strike price on or before expiry. For example, suppose a…
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A “carry trade” (or carry trade interest rate strategy) is a technique in which a trader seeks to benefit from a difference in interest rates between two currencies. The basic…
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A central bank is a country's monetary authority responsible for several functions, such as: Setting or influencing interest rates Managing monetary policy, and Maintaining financial and monetary stability In India,…
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A crypto wallet is a tool used to manage the private keys that provide access to cryptocurrency held on a blockchain. Note that the cryptocurrency itself is not stored inside…
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A currency pair shows the exchange rate between two currencies. It shows how much of one currency is needed to buy one unit of another currency. Note that a currency…
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A Demat account is used to hold securities in electronic form. "Demat" is short for dematerialised, which represents that physical securities are held electronically instead of as “paper certificates”. When…
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A dividend is a distribution of a company's profits or accumulated reserves to eligible shareholders. Generally, a company declares dividends as a fixed amount per share. For example, Suppose a…
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A forex margin calculator estimates the amount of funds required to open a leveraged trading position. Particularly, it is used in situations when the full notional value of a position…
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A forex market session refers to a period when the major financial centres in a particular region are active in the foreign exchange market. The commonly recognised forex sessions and…
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“Forex scalping” is a trading approach/ style in which traders try to take advantage of minor price movements. Usually, they hold positions for ultra-short periods (from a few seconds to…
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A forex forward contract is a “private agreement” between two parties to exchange a specified amount of one currency for another at a predetermined exchange rate on a specified future…
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A futures contract is a standardised agreement to buy or sell an underlying asset at a “predetermined price” on a specified future date. Generally, futures contracts are traded on an…
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A limit order is an instruction to buy or sell an asset at a specified price or a more favourable price. It gives greater control over the execution price but…
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A margin call occurs when a trader's account no longer has enough available equity to meet the broker's required margin level. To better understand how does margin work in trading,…
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A pip calculator in forex is a pre-trade planning tool that estimates the monetary value of a pip movement for a particular currency pair and position size. For those unaware,…
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A Profit and Loss (P&L) statement, also called an income statement, reports a company's revenue, expenses, and profit or loss for a specific accounting period. Mathematically, a company’s profit can…
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Rollover is the process of carrying an open forex position from one trading day to the next. When a position remains open after the broker's daily rollover time, the broker…
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A stop-loss is an instruction placed with the broker to automatically close the trade at a pre-determined price. Usually, this price is less favourable to the trader. For example, A…
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In a strangle options strategy, a trader may buy or sell an out-of-the-money call (OTM) and an out-of-the-money put with the same expiry. As per general market understanding, there are…
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A trailing stop loss is a type of stop-loss order that adjusts the stop level as the market moves in the trader's favour. For a long position, The stop level…
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USD/INR is a currency pair that represents the exchange rate between the U.S. dollar (USD) and the Indian rupee (INR). In this pair, USD is the base currency, and INR…
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Algorithmic trading refers to the use of computer programs to execute trades based on predefined rules. These rules can include price, volume, timing, technical indicators, market conditions, and order parameters. …
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The term “altcoin” combines “alternative” and “coin” and generally refers to cryptocurrencies other than Bitcoin. The category includes assets such as Ethereum (ETH), Solana (SOL), Cardano (ADA), and XRP, among…
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An economic calendar for forex is a schedule of upcoming economic events and data releases that may influence currency markets. Generally, it lists important economic indicators that are “scheduled to…
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An Engulfing Pattern is a two-candlestick reversal pattern in which the second candle's real body completely covers the real body of the first candle. It can indicate a change in…
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An ETF (Exchange Traded Fund) is a financial product (or investment vehicle) that tracks/ replicates an index, commodity, or any other specified underlying asset, depending on its investment objective. Usually,…
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An IPO (Initial Public Offering) is the process through which a company offers its shares to the public for the “first time” and gets its shares listed on a stock…
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An option payoff diagram is a graphical representation of the profit or loss from an option position at different underlying prices, usually at expiry. For a long call option: Payoff…
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An options contract gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a “predetermined price”. This right can be exercised within or…
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An order book is a real-time list of buy and sell orders available for a particular security or derivative at different prices. It generally displays: Bid Price: Price at which…
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A balance sheet shows a company's financial position at a specific date. It reports assets, liabilities, and shareholders' equity. The fundamental accounting equation is: Assets = Liabilities + Shareholders' Equity…
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In Bank Nifty options trading, you buy or sell call (CE) and put (PE) options based on the Nifty Bank index. These index options are traded on NSE and are…
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Basis is the difference between the spot price of an underlying asset and its futures price. Generally, When the futures price is above the spot price, the basis is “negative”.…
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Bitcoin trading in India refers to buying, selling, or exchanging Bitcoin through platforms that offer cryptocurrency services. For those unaware, Bitcoin is a digital asset operating through blockchain technology. Generally,…
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A blockchain is a digital “record-keeping” system that stores transactions in a series of connected blocks. Instead of keeping the record on one central server, a blockchain can distribute copies…
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A Stock CFD (Contract for Difference) is a derivative that allows a trader to speculate on the price movement of a stock without directly owning the underlying shares. CFD Trading…
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Commodity trading in India refers to buying and selling commodity-based futures contracts (derivatives) through recognised commodity exchanges, such as Multi-Commodity Exchange of India (MCX) and National Commodity & Derivatives Exchange…
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Copy trading allows an investor's trades to be automatically replicated in another investor's account. The copied account generally follows the “selected parameters,” such as trade size or proportional allocation. If…
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Crude oil trading in India refers to buying and selling “crude-oil derivative contracts” on commodity exchanges, such as Multi-Commodity Exchange (MCX). These contracts allow market participants to take positions based…
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Just like every financial asset, fluctuations in the prices of cryptocurrencies are represented by the term “volatility”. As per general market understanding, crypto prices can be highly volatile as they…
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As per the provisions of the Income Tax Act, 1961, cryptocurrency is classified as “Virtual Digital Asset (VDA)”. Post-amendments introduced in the Finance Act, 2022 (applicable from AY 2023–24), gains…
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Currency correlation measures the statistical relationship between the movements of two currency pairs. As per general market understanding, the correlation coefficient generally ranges from -1 to +1. Let’s understand what…
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The Debt-to-Equity (D/E) ratio measures a company's debt relative to shareholders' equity. It is commonly used to assess the company's financial leverage. Generally, the D/E ratio is calculates uding the…
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Divergence in trading occurs when the price of an asset and a technical indicator move in different directions. For example, Suppose a stock makes a “higher high” while an oscillator…
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The “Dow Theory” is used to analyse market trends and serves as the foundation of traditional technical analysis. It is based on the principles developed from the writings of Charles…
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Drawdown measures the decline in the value of a trading account or investment from a previous peak to a subsequent low. It shows how much capital was lost during a…
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Earnings Per Share (EPS) represents the portion of a company's profit attributable to each outstanding equity share. A commonly used basic EPS formula is: EPS = Profit Attributable to Equity…
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F&O lot size in NSE is the fixed number of units of an underlying asset contained in one futures or options contract traded on the NSE. For example, Suppose an…
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Fibonacci retracement is a technical analysis method. It is used to identify potential price levels where a market may experience a pause, pullback, or reversal after a significant price movement.…
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In trading, FOMO represents the “fear of missing out” on a potentially profitable market move. It is the psychological pressure that forces traders to enter a position “impulsively”, believing they…
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Forex news trading is an approach in which currency positions are established around economic, monetary policy, and geopolitical events that can affect exchange rates. Some common “market-moving” events considered while…
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“Forex” stands for “foreign exchange”. Forex trading is the process of buying one currency and selling another currency simultaneously. Such a trading take place in “pairs” where one currency is…
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A Follow-on Public Offer (FPO) is a public offering of shares by a company that is already listed on a stock exchange. Generally, in an FPO, a company issues “new…
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Free Cash Flow (FCF) is the cash a company generates from its operations after accounting for capital expenditure required to maintain or expand its business. Generally, FCF is calculated using…
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Fundamental analysis is the process of determining a security’s “true value”. It involves evaluating a company's financial performance and business model by studying the company's fundamentals. As per general market…
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A “price gap” occurs when a stock opens at a price that is significantly above or below the previous session's trading range, leaving a gap on the price chart. In…
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Gold trading in India refers to buying and selling “gold-related” financial contracts (instead of physical gold). In India, investors and traders can trade gold through commodity derivatives (via gold futures…
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Implied volatility (IV) represents the market's expectation of how much the underlying asset may fluctuate over a period. Its effect is reflected in the current option price. As per general…
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In trading, an index tracks the performance of a selected group of stocks representing a particular market, sector, or segment. Instead of representing one company, an index combines multiple stocks.…
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Intraday trading is the process of buying and selling a security within the “same” trading day (without carrying the position to the next trading day). For example, Suppose an investor…
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KYC (Know Your Customer) is the process through which a financial institution verifies a customer's identity and other required details before providing financial services. As per SEBI guidelines, KYC is…
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Leverage in forex trading allows a trader to control a position that is larger than the amount of capital set aside as margin. For example, With “10:1” leverage, a trader…
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Liquidity refers to how easily an asset can be bought or sold without causing a significant change in its market price. A “highly liquid market” generally has many active buyers…
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Long and short in trading describe two different ways of taking a market position based on the expected direction of price movement. Position TypeExplanationExampleLongA “long position” involves buying an asset…
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Lot size in forex refers to the amount of currency represented by a forex trade. As per general industry understanding, some common lot sizes in forex are: Lot TypeUnits of…
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Margin is the amount of money a trader must set aside with a broker to open and maintain a leveraged forex position. For example, Suppose a trader opens a ₹100,000…
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Margin of safety is the difference between an investment's estimated intrinsic value and its market price. The concept is associated with buying an asset at a price below its estimated…
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Mark to Market (MTM) is the process of valuing an open position at its current market price and recording the resulting gain or loss. In futures trading, the contract is…
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Market capitalisation (or market cap) is the total market value of a company's outstanding equity shares. Mathematically, it is calculated using the following formula: Market Capitalisation = Current Share Price…
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Market depth shows the quantity of buy and sell orders available at multiple price levels beyond the best bid and best ask. For example, a market-depth screen may show: Buy…
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Max Pain is an options-market concept that identifies the strike price at which the combined intrinsic value of outstanding call and put options would be lowest at expiry. In other…
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MCX trading refers to buying and selling commodity derivative contracts listed on the Multi-Commodity Exchange of India (MCX). The exchange provides contracts linked to commodities such as gold, silver, crude…
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MTF (Margin Trading Facility) allows investors to buy shares by paying only a portion of the total purchase value, while the broker funds the remaining amount. For example, Suppose an…
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The term “NASDAQ” can refer to the stock exchange itself or represent the two major market indices associated with it. Note that “NASDAQ Stock Market” is a marketplace where securities…
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Natural gas trading on MCX refers to trading natural gas derivative contracts listed on the Multi-Commodity Exchange of India (MCX). Traders can take positions based on expected changes in natural…
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NIFTY 50 is a stock market index of the National Stock Exchange of India (NSE). It tracks the performance of the 50 largest companies (in terms of full market capitalisation)…
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Non-Farm Payroll (NFP) is a major US employment indicator released as part of the monthly Employment Situation report by the US Bureau of Labor Statistics. The NFP report measures the…
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Open Interest (OI) is the total number of outstanding options contracts that have not been closed, exercised, or expired. For example, Suppose 1,000 new option contracts are created and remain…
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Option chain analysis is the study of available call and put options across different strike prices and expiry dates. An option chain usually shows information, such as: Open interest Change…
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In “Options Buying”, a trader pays a premium to acquire the right, but not the obligation, to buy or sell the underlying asset at the strike price. The maximum loss…
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Physical settlement (in F&O) means that an eligible derivative contract is settled through the “actual delivery” or receipt of the underlying security, rather than settling only the difference in cash. …
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Position sizing refers to determining how much capital or how many units of an asset should be involved in a particular trade. It is an important part of risk management…
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Pre-market trading (more popularly known as the “pre-open session”) is a 15-minute session conducted before regular equity-market trading begins. On stock exchanges, such as NSE and BSE, it helps in…
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The Price-to-Book (P/B) ratio compares a company's market value with its book value. Mathematically, the P/B ratio can be calculated as follows: P/B Ratio = Market Price Per ShareBook Value…
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RBI monetary policy represents the measures taken by the Reserve Bank of India (RBI) to regulate interest rates, liquidity, and credit conditions in the Indian economy. These changes can influence…
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Return on Equity (ROE) measures the profit generated by a company relative to shareholders' equity. It indicates how much profit the company generates for each rupee of equity capital. Generally,…
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Risk management in trading is an approach to protect capital, control losses, and ensure long-term survival in the markets. The primary objective is NOT to eliminate losses, which is not…
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The Relative Strength Index (RSI) is a “momentum indicator” that measures the magnitude of recent price gains and losses. It produces a value between 0 and 100 and is commonly…
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SEBI (Securities and Exchange Board of India) is the “statutory regulator” of India's securities market. Primarily, it regulates market intermediaries (such as stockbrokers and mutual funds) and works toward investor…
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SENSEX (or Sensitive Index) is the benchmark stock market index of BSE (BSE Ltd.). It tracks the 30 largest, established, and financially sound companies listed on BSE, subject to the…
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Short selling is a trading strategy in which a trader sells a security with the intention of buying it back at a lower price. Generally, the trader seeks to profit…
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Silver trading in India involves buying and selling silver through financial instruments such as futures and options on commodity exchanges, such as Multi-Commodity Exchange (MCX). On MCX, silver contracts derive…
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Spot trading involves buying or selling an asset at its “current market price” (CMP). In contrast, in futures trading, a “futures contract" is traded to buy or sell an underlying…
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The spread is the difference between the bid price and the ask price of a currency pair. For example, Suppose the bid price is 1.1050 and the ask price is…
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STT (Securities Transaction Tax) in India is a “direct tax” imposed on the purchase and sale of securities, such as: Stocks/ Equity shares Derivatives, and Mutual fund units STT was…
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Swap (or swap charges) in forex trading are the overnight/ rollover fees you “pay” or “earn” for keeping a position open overnight. It happens because every forex trade involves two…
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“T+1” settlement indicates that a securities transaction is settled one business day after the trade date. Here, “T” represents the day on which the trade is executed, while “+1” represents…
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A “take-profit” is an instruction placed with a broker to automatically close the trade when the price reaches the “target profit”. For example, Suppose a trader buys EUR/USD at 1.1000.…
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The minimum investment to start trading is the smallest amount a trading platform requires to be added to an account before trading can begin. This amount varies across platforms and…
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The Average True Range (ATR) is a technical indicator that measures the average range of price movement over a specified number of periods. It measures volatility (not price direction) by…
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The bid price is the price at which a trader can sell the base currency. In contrast, the ask price is the price at which a trader can buy the…
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The Central Pivot Range (CPR) is a technical indicator that uses the previous trading session's high, low, and closing prices to calculate three different price levels: Price Level I: Pivot…
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“Clearing and settlement” is the process through which obligations from a stock market trade are determined, and the securities and funds are transferred between the buyer and seller. In the…
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Discounted Cash Flow (DCF) valuation is a method used to estimate the “present value” (PV) of a company's future cash flows. The method assumes that a company's value depends on…
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A Hammer is a single-candle pattern that usually appears after a price decline. It has a: A small real body near the upper part of the candle, and Long lower…
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Interest rates prevailing in the economy can influence forex markets because they affect the relative attractiveness of holding one currency versus another. When a central bank raises interest rates, investments…
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Intrinsic value is an estimate of what a stock may be worth based on the company's underlying financial and economic characteristics (rather than its current market price). Depending on the…
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An iron condor is an options strategy that combines four different options contracts. These are “two call options + two put options” with different strike prices but the same expiry.…
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MACD (Moving Average Convergence Divergence) is a momentum + trend-following indicator. Using it, traders can compare two exponential moving averages (EMAs) to examine changes in price momentum. As per general…
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A “Marubozu” is a candlestick pattern with little or no shadow. It indicates that the opening and closing prices are near the session's high and low. Generally, there are two…
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MCX commodity lot size is the “standard quantity” of a commodity represented by one futures or options contract on the Multi-Commodity Exchange of India (MCX). The lot size differs from…
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Moneyness describes the relationship between an option's strike price and the current price of the underlying asset. The three primary categories of Moneyness are In the Money (ITM), At the…
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The Morning Star and Evening Star are three-candlestick reversal patterns. The Morning Star is associated with a potential “bullish reversal” after a decline, while the Evening Star is associated with…
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A moving average is a technical indicator that calculates the average price of an asset over a specific number of periods. As each new period is added, the oldest price…
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NSE (National Stock Exchange of India) is a stock exchange where securities such as equity shares, equity derivatives, ETFs, and other permitted assets are traded. NSE began operations in the…
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The options expiry date is the date on which an options contract reaches the end of its validity. After expiry, the contract is settled according to the exchange's rules, and…
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The P/E ratio (Price-to-Earnings ratio) compares a company's share price with its earnings per share (EPS). Mathematically, this relation can be expressed using the following formula: P/E Ratio = Market…
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Parabolic SAR (Stop and Reverse) is a “trend-following” indicator that places a series of dots above or below the price. As per general market understanding: Dots Below PriceDots Above PricePotentially…
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The Put-Call Ratio (PCR) compares put activity with call activity. It is commonly calculated using either open interest or trading volume. Mathematically, an open-interest-based PCR can be calculated as follows:…
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The S&P 500 is a stock market index that tracks around 500 large publicly listed companies in the United States. It covers companies across sectors such as: Technology Healthcare Financial…
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A straddle involves buying or selling a call option and a put option with the same strike price and expiry on the same underlying asset. Generally, a straddle is of…
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The strike price is the predetermined price at which the buyer of an option has the right to buy or sell the underlying asset (depending on whether it is a…
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The VIX Index, or Volatility Index, is a market indicator that measures the market’s expectations of short-term volatility in the S&P 500. It is commonly called the “fear gauge” or…
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Theta measures the effect of the passage of time on an option's premium. It is commonly associated with “time decay”. As an option approaches expiry, the time available for a…
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Trading psychology refers to the mental and emotional factors that influence trading decisions. Fear, greed, overconfidence, impatience, and the desire to recover losses are some common emotions that can influence…
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Vega measures an “option's sensitivity” to changes in implied volatility (IV). It indicates the approximate change in an option's price for a one-percentage-point change in implied volatility, with other variables…
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Volatility measures how significantly and frequently the price of an asset changes over a given period. Higher volatility means prices are experiencing larger or more frequent movements, while lower volatility…
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A “volatility smile” occurs when Implied Volatility (IV) differs across option strike prices for options with the same underlying asset and expiry. When IV is plotted against strike price, the…
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Volume analysis examines the number of shares or contracts traded during a specified period. It is used alongside “price data” to assess the level of market activity behind a price…
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Zero brokerage indicates that a broker does not charge a “brokerage fee” from its registered users. This benefit may apply to a specific market segment or extend across all segments.…
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