Trading Terms

A
ASBA
Application Supported by Blocked Amount (ASBA) is an application developed by SEBI that allows investors to block money from your bank account while applying to IPOs (Initial Public Offerings), Rights issues, FPS, etc.
After Market Order
After Market Order allows investors to place an order during non-market hours i.e, either before or after the market hours and such orders will be triggered in the next trading session. Know more about Types of Orders here
Arbitrator
An arbitrator is an investor who is trying to capitalize on market inefficiencies such as market volatility, price, and dividends.
Ask
The lowest price at which someone is willing to sell the security.
B
Balanced Schemes
Balanced funds are also referred to as Balanced Schemes. They are a type of hybrid fund with a combination of equity and debt, which helps investors to diversify their portfolios.
Bear Market
A market in which stock prices are falling.
Bearer Stocks
These are the types of stocks owned by an individual or entity holding a physical certificate. The issuing authority will not register the stock owner and does not track ownership transfers.
Bearish View
A bearish view is a trend in the financial market that sees a downward trajectory in stock prices, foreseeing general loss.
Bid
The highest price a buyer is willing to pay for a stock.
Block Deal
Block trade is a trade that contains a quantity greater than or equal to 500,000 or a value greater than or equal to Rs. 5 crores and is executed through the Block Deal window. It is allowed for 35 minutes in trading hours between 9.15 am and 9.50 am.
Board Lot
A board lot is a standard number of shares used as a trading unit by the stock exchange.
Bonds
A bond is a negotiable certificate evidencing indebtedness. A debt security is generally issued by a company, municipality, or government agency. A bond investor lends money to the issuer and in exchange, the issuer promises to repay the loan amount on specified maturity date. The issuer usually pays the bondholder periodic interest payments over the life of the loan.
Bull Market
A market in which stock prices are rising.
Bullish View
A bullish view is a trend in the financial market that sees an upward trajectory in stock prices, foreseeing general gains.
C
Capital Market
A marketplace that acts as a channel between suppliers of capital and those who want that capital for the growth of their business is called the Capital Market. It comprises both primary and secondary markets. Stock market and bond market are the 2 most common capital markets.
Capital Protection Fund
Capital Protection Fund is a type of hybrid fund that consists of debt and equity, which helps investors to face economic downturns.
Cash/Equity Market
A cash market is a market where securities are purchased and received at the point of sale.
Certificate of Deposit
A Certificate of Deposit is an agreement between a depositor and a financial institution for a specific period that earns interest on invested money.
Churning
Churning is a practice of illegal and excessive trading to gain commission/profit in a customer’s account without considering their investment goals.
Closed Position
When you cancel or close an existing position in the market by taking the opposite position, it is called Closed Position.
Commodities
Commodities are tangible goods or services resulting from the process of production
Commodities Market
Commodities Market is a marketplace for investors who want to trade in precious metals, energy, natural gas, crude oil, spices and many others. Under the Forward Markets Commission, 22 commodity exchanges have been set up in India.
Contra Funds
An equity mutual fund where the fund manager invests majorly in companies that aren’t performing well in the short term. This is done with anticipation that these stocks will be profitable in the long run.
Currencies
Notes and coins that are the ‘current’ medium of exchange in a country are called Currencies.
Cyclical Stocks
Companies whose stocks are sharply impacted by the changes (ups and downs) in an economy are called Cyclical Stocks.
D
Dawn Raid
An act of purchasing a substantial number of shares of a company as soon as the trading day starts.
Day Order
An order that can be executed anytime during the market hours of the same day is known as a Day Order.
Debentures
Bonds issued by a company bearing a fixed rate of interest usually payable on specific dates and principal amount repayable on a particular date on redemption are called Debentures.
Debt Instruments
A debt instrument is an asset that entities use to raise capital or to generate investment income. It is a fixed-income asset to the investors where they get interest payments at regular intervals.
Debt Market
A marketplace in which debt market securities such as bonds, government bonds, certificates of deposits, debentures, commercial papers, etc. are bought and sold. It is also known as a Bond Market.
Defensive Stock
A series of investment coupons that offer stable income in the form of good dividends irrespective of the market conditions is known as Defensive Stock.
Demerger
It is a business strategy in which a corporation or a business is broken down or split into small businesses to operate on their own, sell, or be liquidated.
Derivatives Market
Financial market for financial instruments such as futures contracts or options whose value is derived from their underlying assets is known as the Derivatives Market. Only F&O are legally traded on exchanges and the others are traded on the Over-the-counter Market.
Discretionary Account
An account wherein the trader or the broker buys/sells securities from your account without informing you. However, this is possible only after you have signed up a discretionary disclosure document giving your consent for the same.
Diversified Debt Funds
As we all know, debt funds are fixed-income securities such as treasury bills, mutual funds, or bonds that offer good returns to investors. Investing into multiple streams of these debt funds or fixed-income securities is called a Diversified Debt Fund.
Diversified Equity Funds
A kind of fund that invests in companies regardless of their size and sector with an aim to maximize gains for investors is known as Diversified Equity Funds. For example - ULIPs and SIPs.
Domestic Institutional Investors
Indian investors who invest their money in the Indian financial markets are known as Domestic Institutional Investors (DIIs). For example - shareholders in the Indian stock market
E
Equity
Equity refers to the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debts were paid off.
Equity Index
It's a weighted average of the stocks used to measure how to perform the stocks are performing in the market.
Equity Investment
A type of investment where individuals and firms invest or trade in the equity markets with anticipation of receiving dividends and earning capital gains.
Exchange-Traded Fund (ETF)
An exchange-traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset and can be purchased or sold on a stock exchange the same way a regular stock can.
Exchange-traded Market
The marketplace from where all the market transactions pass through and that acts as the intermediary that connects the buyer and seller.
F
Funds Available
A sum of money available for an investor/trader in his account to invest/trade. Includes withdrawable funds and sale credit (Sell proceeds- Margin for sale)
Futures Market
A market in which futures contracts are bought and sold for delivery on a predetermined date is known as the Futures Market.
G
Gold ETFs
Gold ETFs (Exchange Traded Funds) is an investment tool that is based on the domestic price of physical gold. 1 unit of this ETF equals 1 gram of 99.5% pure gold. Like other ETFs, gold ETFs are listed in both NSE (National Stock Exchange of India Limited) and BSE (Bombay Stock Exchange) and can be bought and sold at market prices, just like any other regular stock.
Goods Till Triggered (GTT) Order
GTT orders are executed if the market price of the stock reaches the trigger price (predetermined limit price) before the expiry of the GTT order.
Government Securities
Government securities include investment products offered by a governmental body. They are government debt issuances that guarantee the full repayment of invested principal on the maturity of the security and periodic interest payments until then. They are also called G-secs or Gilt Funds.
I
Immediate or Cancel (IOC) Order
An IOC Order is the one in which an order to buy or sell a security must be executed immediately and if any portion of the order is not executed, then the order must be canceled.
L
Limit Order
An order where you set a price at which you want to buy/sell a security (limit price) is known as a Limit Order.
Long Position
A long position means that you are buying an asset speculating that the asset will increase in value
M
MF SIP
Mutual Fund SIP is an investment strategy wherein an investor needs to invest the same amount of money in a particular mutual fund at every stipulated time(weekly/monthly/quarterly,etc.)
Margin Pledge
Margin Pledge means using your existing securities in your Demat account as collateral to avail extra margin.
Market Order
An order to buy/sell a security at the prevailing market price is known as a Market Order.
Money Market
Financial instruments with a maturity of 1 year or less and high liquidity such as commercial papers and treasury bills are traded in the Money Market.
N
NFO (New Funds Offer)
An NFO is a new fund offering launched by an asset management company (AMC) to raise capital from the market to invest in securities. Click here to know more about NFO.
O
Open Position
Open Position is an established or entered trade that is yet to be closed with an opposing trade.
Order
An order is an instruction given by the investor to a broker or brokerage firm to buy or sell a security on his/her behalf.
Order Book
An order book is an electronic list that details the buy and sell orders of a specific security or any financial instrument. It includes executed, pending, canceled, and rejected orders.
Over-the-counter Market
It is a financial market where products are traded over the counter, which means the two parties enter into a contract and agree on how it will be settled in the future.
P
Position
A position is an expression of a market commitment, or exposure, held by a trader. It is the financial term for trade.
Primary Market
A segment of the capital market where new securities are issued and sold for the first time by a company is known as the Primary Market.
R
Robo Order
Robo Order is a multi-leg order in which securities automatically get bought or sold when the trigger price/target price is reached.
S
SIP
A systematic investment plan involves investing a consistent sum of money regularly into the same security or basket of securities.
Secondary Market
The Secondary Market, also known as the Aftermarket, is the financial market where previously issued financial instruments like stocks, bonds, futures and options are traded.
Security Holdings
Security Holdings are the securities held/traded till the previous trading day (T-1) within the portfolio of an investor for the delivery product.
Short Position
A short position is when you sell an asset by aiming to make a profit when an asset’s price decreases.
Sovereign Gold Bonds (SGB)
Sovereign Gold Bonds(SGB) is a form of securities provided and guaranteed by the Government of India and issued by the Reserve Bank of India. These bonds are issued in denominations of 1 gram onwards with 1 gm being the minimum and 4 kg being the maximum subscription limit for individual investors.
Stock SIP
Stock SIP is an investing method that enables investors to buy stocks (amount/quantity based), periodically (weekly, monthly, etc.) in a systematic manner.
Stop Loss Order
The order in which you buy/sell a stock once a specific price is reached, thus reducing your chances of loss on a security position is known as a Stop Loss Order. It is of 3 types - Stop Loss Market Order, Stop Loss Limit Order and Trailing Stop Loss Order.