Domain Glossary - Stock market

1. Stock.................................................................................................................................................................... 4
2. Forward Contract................................................................................................................................................4
3. Futures................................................................................................................................................................4
4. Options................................................................................................................................................................5
5. Call option...........................................................................................................................................................5
6. Put option...........................................................................................................................................................5
7. Derivatives..........................................................................................................................................................6
8. Mutual Funds......................................................................................................................................................6
9. Exchange-Traded Funds......................................................................................................................................7
10. Stock market...................................................................................................................................................7
11. Over the counter.............................................................................................................................................7
12. Bull market......................................................................................................................................................7
13. Bear market....................................................................................................................................................8
14. Order...............................................................................................................................................................8
15. Open order......................................................................................................................................................9
16. Market order...................................................................................................................................................9
17. Limit order......................................................................................................................................................9
18. Stop order.....................................................................................................................................................10
19. Buy Limit order (Limit)..................................................................................................................................10
20. Buy Stop order (Stop)...................................................................................................................................10
21. Stop Loss order.............................................................................................................................................10
22. Stop Limit order............................................................................................................................................11
23. Take Profit order (Limit)...............................................................................................................................11
24. Execution.......................................................................................................................................................12
25. Time in Force.................................................................................................................................................12
26. Day order......................................................................................................................................................12
27. Good Til Cancelled (GTC)..............................................................................................................................13
28. Immediate or Cancel order...........................................................................................................................13
29. Fill or Kill (FOK)..............................................................................................................................................13
30. Market-On-Open Order (MOO)....................................................................................................................13
31. Market-On-Close Order (MOC).....................................................................................................................14
32. Trailing Stop..................................................................................................................................................14
33. Conditional order..........................................................................................................................................14
34. Contingent order...........................................................................................................................................15
35. One-Cancels-the-Other Order (OCO)............................................................................................................15
36. Iceberg Order................................................................................................................................................15
37. Bid................................................................................................................................................................. 16
38. Ask.................................................................................................................................................................16
39. Bid-ask spread...............................................................................................................................................16
40. Liquidity........................................................................................................................................................16
41. Volatility........................................................................................................................................................17
42. Going long.....................................................................................................................................................17
43. Trading volume.............................................................................................................................................17
44. IPO.................................................................................................................................................................18
45. FPO................................................................................................................................................................18
46. Rights Issue...................................................................................................................................................18
47. Market Capitalization...................................................................................................................................18
48. Portfolio........................................................................................................................................................18
49. Intra-day trading...........................................................................................................................................19
50. Dividends......................................................................................................................................................19
51. Beta...............................................................................................................................................................19
52. Face value.....................................................................................................................................................20
53. Delta..............................................................................................................................................................20
54. Quote............................................................................................................................................................20
55. Rally...............................................................................................................................................................21
56. Yield..............................................................................................................................................................21
57. Margin...........................................................................................................................................................21
58. Large Cap.......................................................................................................................................................22
59. Mid Cap.........................................................................................................................................................22
60. Small Cap.......................................................................................................................................................22
61. Preferred.......................................................................................................................................................22
62. Multibagger...................................................................................................................................................23
63. Insider trading...............................................................................................................................................23
64. Leverage........................................................................................................................................................23
65. Arbitrage.......................................................................................................................................................23
66. Gamma..........................................................................................................................................................24
67. Bullish Marubozu..........................................................................................................................................24
68. Bearish Marubozu.........................................................................................................................................25
69. Spinning Top.................................................................................................................................................25
70. Spinning tops in a downtrend.......................................................................................................................26
71. Spinning tops in an uptrend.........................................................................................................................26
72. Doji................................................................................................................................................................27
73. Paper Umbrella.............................................................................................................................................27
74. Shooting star.................................................................................................................................................28
75. The Bullish Engulfing.....................................................................................................................................29
76. Bearish engulfing..........................................................................................................................................29
77. Piercing Pattern.............................................................................................................................................30
78. Dark Cloud Cover..........................................................................................................................................30
79. Bullish Harami...............................................................................................................................................31
80. Bearish harami..............................................................................................................................................32
81. Gaps..............................................................................................................................................................33
82. Morning Star.................................................................................................................................................33
83. Evening star...................................................................................................................................................34
84. Support & Resistance....................................................................................................................................34
1. Stock
 A stock (also known as equity) is a security that represents the ownership of
a fraction of a corporation.
 How much owner owns the company depends on proportion of the
corporation's assets and profits equal to how much stock they own.
 Units of stock are called "shares."
 For example, if a company has total 1,000 shares and one person owns 100
shares, that person would own and have claim to 10% of the company's
assets and earnings.
 Broadly speaking there are two main types of stocks, common and preferred.
 Common stock usually entitles the owner to vote at shareholders' meetings
and to receive any dividends paid out by the corporation.
 Preferred stockholders generally do not have voting rights, though they have
a higher claim on assets and earnings than the common stockholders.

2. Forward Contract
 Forward contracts are contractual agreement between two parties to buy or
sell an underlying asset at a certain future date for a particular price that is
decided on the date of contract.
 Since forwards are negotiated between two parties, the terms and conditions
of contracts are customized. These are Over-the-counter (OTC) contracts.
 These contracts carry counterparty risk if either of the parties in the trade
fails to honour his side of the contract.
 The forward markets are based on mutual trust and are functional despite
the risks involved.

3. Futures
 Futures are standardized exchange traded forward contracts.
 As these contracts are traded and settled on a stock exchange and the
clearing corporation provides settlement guarantee.
 These contracts have expiration dates and traders to lock in the price of the
underlying asset or commodity by paying a premium which is known as
upfront.
 Futures are used to hedge the price movement of the underlying asset.
 When corporations invest in the futures market, it is usually because they are
attempting to lock in a more favourable price in advance of a transaction.
 If a corporation knows that it has to purchase a specific item in the future, it
may decide to take a long position in a futures contract.
 A long position is the buying of a stock, commodity, or currency with the
expectation that it will rise in value in the future.

4. Options
 An Option is a contract that gives the right, but not an obligation, to buy or
sell the underlying asset on or before a stated date and at a stated price.
 The buyer or holder of the option pays the premium and buys the right, the
writer or seller of the option receives the premium with the obligation to sell
or buy the underlying asset, if the buyer exercises his right.

5. Call option
 Call options allow the holder to buy the asset at a stated price within a
specific timeframe.
 Example - Arvind buys a call option on the Nifty 50 index from Salim, to buy
the Nifty 50 at a value of 11000, three months from today. Arvind is buyer of
the call option. Arvind pays Salim Rs.100 as the upfront payment. This is
called the option premium or price of the option.

6. Put option
 https://www.youtube.com/watch?v=0MtOy76D0jc
 Put options allow the holder to sell the asset at a stated price within a
specific timeframe.
 The buyer of a put option believes that the underlying stock will drop below
the exercise price before the expiration date.
 Example – If an investor purchases one put option contract on ABC company
for $100. The exercise price of the shares is $10, and the current ABC share
price is $12. Disregarding commissions, the profit for this position is $200, or
100 x ($10 - $8).

7. Derivatives
 https://www.youtube.com/watch?v=4vns9LEbEj0
 A derivative is a financial security with a value that is reliant upon or derived
from, an underlying asset.
 The most common underlying assets for derivatives are stocks, bonds,
commodities, currencies, interest rates, and market indexes.
 Common derivatives include futures contracts, forwards, options, and swaps.
 They provide a way to lock in prices, hedge against unfavourable movements
in rates.
 Derivative itself has no intrinsic value—its value comes only from the
underlying asset—it is vulnerable to market sentiment and market risk.
 It is possible for supply and demand factors to cause a derivative's price and
its liquidity to rise and fall, regardless of what is happening with the price of
the underlying asset.

8. Mutual Funds
 Mutual Funds (MFs) are investment vehicles that pool together the money
contributed by investors which the fund invests in a portfolio of securities
that reflect the common investment objectives of the investors.
 The value of the units, called the Net Asset Value (NAV)
 MF schemes can be classified as open-ended or close-ended.
 An open-ended scheme offers the investors an option to buy units from the
fund at any time and sell the units back to the fund at any time. These
schemes do not have any fixed maturity period. The units can be bought and
sold anytime at the NAV linked prices.
 The unit capital of closed-ended funds is fixed, and they sell a specific
number of units. Units of closed-ended funds can be bought or sold in the
Stock Market where they are mandatorily listed.
 Mutual funds give small or individual investors access to diversified,
professionally managed portfolios at a low price.

9. Exchange-Traded Funds
 Exchange Traded Fund (ETF) is an investment vehicle that invests funds
pooled by investors.
 It tracks an index, sector, commodity, or other asset, but which can be
purchased or sold on a stock exchange the same as a regular stock.
 Mutual funds are actively managed, and ETFs are passively managed
investment options.
 ETFs provide the diversification benefits of an index fund as well as the
facility to sell or buy at real-time prices, even one unit of the fund.
 Example – Gold ETFs.

10. Stock market

 The stock market refers to the collection of exchanges where regular
activities of buying, selling, and issuance of shares of publicly-held companies
take place.
 While both terms - stock market and stock exchange - are used
interchangeably, the latter term is generally a subset of the former.

11. Over the counter

 OTC markets are the markets where trades are directly negotiated between
two or more counterparties.
 Forward contracts are OTC contracts.
 There is no clearing corporation, which guarantees the settlement of the
trades.
 As there is no guarantee contracts carry counterparty risk if either of the
parties in the trade fails to honour his side of the contract.
 OTC markets are based on mutual trust and are functional despite the risks
involved.

12. Bull market

 A bull market is when buyers are willing to pay higher and higher prices, as
the overall optimism for better future performance of stocks is high.
 This happens when businesses are expanding, growing at an above average
rate, face favourable and growing demand for their products and services,
and are able to price them profitably or this could just be a change in
perception or excessive liquidity in the system.
 But a bull market can overdo its excitement. As buyers pay higher and higher
prices for stocks, prices move beyond what can be justified by the underlying
intrinsic values.
 Input costs for raw materials and labour and interest costs for capital
increase as the bull market reaches its peak.

13. Bear market

 The bull market paves way to a bear market when stock prices fall and
correct themselves.
 A downturn in economic cycles can lead to stress for several businesses,
when they face lower demand for their products and services, higher input
and labour costs, lower ability to raise capital, and in many cases risks of
survival.
 Sellers quit in despair, accepting a lower price and a loss on their stocks.
 As prices may fall well below intrinsic values, buyers who find the valuation
attractive will start coming into stocks that now are priced reasonably, or
lower.
 Central bankers reduce the interest rates to give push to consumption and
investments and slowly the bear cycle gives way to the next bull cycle.

14. Order
 An order consists of instructions to a broker or brokerage firm to purchase or
sell a security on an investor's behalf.
 Orders are typically placed over the phone or online through a trading
platform.
 Orders broadly fall into different categories which allow investors to place
restrictions on their orders affecting the price and time at which the order
can be executed.
 These conditional order instructions can dictate a particular price level (limit)
at which the order must be executed, how long the order can remain in
force, or whether an order gets triggered or cancelled based on another
order, among others.
15. Open order
 An open order is an un-filled or working order that is to be executed when
an, as yet unmet requirement has been met before it is cancelled by the
customer or expires.
 Because they are often conditional, many open orders are subject to delayed
executions since they are not market orders.
 Sometimes, a lack of market liquidity for a particular security could also cause
an order to remain open.

16. Market order

 A market order is an instruction by an investor to a broker to buy or sell stock
shares, bonds, or other assets at the best available price in the current
financial market.
 If the asset is a large-cap stock or a popular exchange-traded fund (ETF),
there will be plenty of willing buyers and sellers out there.
 That means that a market order will be completed nearly instantaneously at
a price very close to the latest posted price that the investor can see.

17. Limit order

 A limit order is a type of order to purchase or sell a security at a specified
price or better.
 For buy limit orders, the order will be executed only at the limit price or a
lower one, while for sell limit orders, the order will be executed only at the
limit price or a higher one.
 Limit orders set the maximum or minimum price at which you are willing to
complete the transaction, whether it be a buy or sell.
 By using a buy limit order the investor is guaranteed to pay the buy limit
order price or better, but it is not guaranteed that the order will be filled.
 A limit order gives a trader more control over the execution price of a
security, especially if they are fearful of using a market order during periods
of heightened volatility.
 The order will remain open until the stock reaches the limit or the order is
cancelled.

 Types of limit order are:

  Buy Limit
 Sell Limit

18. Stop order

 A stop order is an order to buy or sell a security when its price moves past a
particular point, ensuring a higher probability of achieving a predetermined
entry or exit price.
 Stop orders are of various types: buy stop orders and sell stop orders, stop
market, and stop-limit.
 Traders often enter stop orders to limit losses or to capture profits on price
swings.

19. Buy Limit order (Limit)

 A buy limit order is an order to purchase an asset at or below a specified
price, allowing traders to control how much they pay.
 A buy limit, however, is not guaranteed to be filled if the price does not reach
the limit price or moves too quickly through the price.
 Buy limits control costs but can result in missed opportunities in fast moving
market conditions.

20. Buy Stop order (Stop)

 A buy stop order instructs a broker to purchase a security when it reaches a
pre-specified price. Once the price hits that level, the buy stop becomes
either a limit or a market order.
 It is a strategy to profit from an upward movement in a stock’s price by
placing an order in advance.
 Buy stop orders can also be used to protect against unlimited losses of an
uncovered short position.

21. Stop Loss order

 A stop-loss order is an order placed with a broker to buy or sell a security
when it reaches a certain price.
 Once the stop price is met, the stop order becomes a market order and is
executed at the next available opportunity.
 A trader buys 100 shares of XYZ for $100 and sets a stop loss order at $90.
The stock declines over the next few weeks and falls below $90. The traders
stop order gets executed and the position is sold at $89.95.
 A stop-limit order triggers once the price falls below the stop price; however,
the order may not be executed due to the value of the limit portion of the
order.
 A sell stop order refers to when a customer requests that a broker sell a
security if it moves below a specified stop price. In a buy stop order, the stop
price is set above the current market price.

22. Stop Limit order

 Stop-limit orders are a conditional trade that combine the features of a stop
loss with those of a limit order to mitigate risk.
 A stop-limit order requires the setting of two price points.
Stop: The start of the specified target price for the trade.
Limit: The outside of the price target for the trade.
 The primary benefit of a stop-limit order is that the trader has precise control
over when the order should be filled.
 For example, assume that Apple Inc. (AAPL) is trading at $170.00, and an
investor wants to buy the stock once it begins to show some serious upward
momentum. The investor has put in a stop-limit order to buy with the stop
price at $180.00 and the limit price at $185.00. If the price of AAPL moves
above the $180.00 stop price, the order is activated and turns into a limit
order. As long as the order can be filled under $185.00, which is the limit
price, the trade will be filled. If the stock gaps above $185.00, the order will
not be filled.

23. Take Profit order (Limit)

 A take-profit order (T/P) is a type of limit order that specifies the exact price
at which to close out an open position for a profit. If the price of the security
does not reach the limit price, the take-profit order does not get filled.
 A portfolio manager wants to buy Tesla Inc's (TSLA) stock but believes its
current valuation at $325 per share is too high and would like to buy the
stock should it fall to a specific price.
 The PM instructs his traders to buy 10,000 shares of Tesla should the price
fall below $250, good 'til cancelled. The trader then places an order to buy
 10,000 shares with a $250 limit. Should the stock fall below that price the
trader can begin buying the stock. The order will remain open until the stock
reaches the PM’s limit or the PM cancels the order.

24. Execution
 Execution is the completion of a buy or sell order for a security.

25. Time in Force

 Time in force is a special instruction used when placing a trade to indicate
how long an order will remain active before it is executed or expires.
 These options are especially important for active traders and allow them to
be more specific about the time parameters.
 By setting time parameters, they don’t have to remember to cancel old
trades.
 Example - John believes that the price of stock ABC, which is currently trading
at $10, will rise but it will take time, approximately three months. He
purchases ABC call options with a strike price of $15 and places a Good 'Til
Cancelled (GTC) order. To avoid having the order remain on hold indefinitely,
he places a limit of three months on the order. After three months, stock
ABC's price is still struggling to break past the $12 mark. John's order is
cancelled automatically.
 Types:
 Day orders -
 Good-Til-Cancelled (GTC) -
 Fill-or-Kill (FOK) orders

26. Day order

 Day orders are a popular type of time in force order. They are cancelled if the
trade does not execute by the close of the trading day. These are often the
default order type for brokerage accounts.

27. Good Til Cancelled (GTC)

 Good ’til canceled (GTC) describes a type of order that an investor may place
to buy or sell a security that remains active until either the order is filled or
the investor cancels it.
 Brokerages will typically limit the maximum time you can keep a GTC order
open (active) to 90 days.

28. Immediate or Cancel order

 An immediate or cancel order (IOC) is an order to buy or sell a security that
attempts to execute all, or part immediately and then cancels any unfilled
portion of the order.

29. Fill or Kill (FOK)

 Fill or kill (FOK) is a conditional type of time-in-force order used in securities
trading that instructs a brokerage to execute a transaction immediately and
completely or not at all.
 This type of order is most often used by active traders and is usually for a
large quantity of stock.
 The order must be filled in its entirety or else cancelled (killed).

30. Market-On-Open Order (MOO)

 A Market-On-Open (MOO) order is an order to be executed at the day's
opening price.
 Market-On-Open (MOO) orders can only be executed when the market
opens or very shortly thereafter but must provide the first printed price of
the day.
 Traders and investors use MOO orders when they believe market conditions
warrant buying or selling shares at the open.
 For example, during earnings season—the period when companies report
their quarterly results—most companies report results after markets close.
Significant price movement typically follows on the next trading day. The
MOO order does not specify a limit price

31. Market-On-Close Order (MOC)

 A market-on-close (MOC) order is a non-limit market order, which traders
execute as near to the closing price as they can—either exactly at, or slightly
after the market close.
 Traders generally would place a MOC order in anticipation of a stock's
movement the next day.
 MOC orders can also be convenient when an investor knows that they're not
going to be available to execute an essential transaction, like exiting a
position, at the end of the day.

32. Trailing Stop

 A trailing stop is a modification of a typical stop order that can be set at a
defined percentage or dollar amount away from a security's current market
price.
 A trailing stop is designed to protect gains by enabling a trade to remain open
and continue to profit as long as the price is moving in the investor’s favour.
 The order closes the trade if the price changes direction by a specified
percentage or dollar amount.
 A trailing stop is a stop order and has the additional option of being a limit
order or a market order.
 If a 10% trailing stop loss is added to a long position, a sell trade will be issued
if the price drops 10% from its peak price after purchase.
 The trailing stop only moves up once a new peak has been established. Once
the trailing stop has moved up, it cannot move back down.

33. Conditional order

 Conditional orders are those which will only be executed or activated in the
market if certain criteria are met.
 Limit, stop, stop-limit, and contingent orders are all examples of conditional
orders.
 The most common type of conditional order is a limit order, which specifies a
fixed price above (or below) which a purchase (or sale) cannot take place,
although other conditions can exist aside from price, such as how long an
order is enforced (known as time-in-force), or if another order must be
completed first before the new order is triggered.

34. Contingent order

 A contingent order is an order that is linked to, and requires, the execution of
another event. The contingent order becomes live, or is executed, when the
event occurs.
 An example is a stop loss order.
 Orders can be contingent on each other, such as when two or more orders
need to be executed at the same time.
 Contingent orders are useful because they allow a trader to implement a
strategy, or multiple positions once the initial event occurs.

35. One-Cancels-the-Other Order (OCO)

 A one-cancels-the-other order (OCO) is a pair of conditional orders stipulating
that if one order executes, then the other order is automatically cancelled.
 Suppose an investor owns 1,000 shares of a volatile stock that is trading at
$10. The investor expects this stock to trade in a wide range in the near term,
and has a target of $13; for risk mitigation, they do not want to lose more
than $2 per share.
 The investor could, therefore, place an OCO order, which would consist of a
stop-loss order to sell 1,000 shares at $8, and a simultaneous limit order to
sell 1,000 shares at $13, whichever occurs first.

36. Iceberg Order

 Iceberg orders are large single orders that have been divided into smaller
limit orders, usually through the use of an automated program, for the
purpose of hiding the actual order quantity.
 The term "iceberg" comes from the fact that the visible lots are just the "tip
of the iceberg" given the greater number of limit orders ready to be placed.
 They are typically placed by large institutional investors to avoid disrupting
trading markets with a single, large order.
 Traders looking to capitalize on these dynamics might step in and buy shares
just above these levels, knowing that there's strong support from the iceberg
order, creating an opportunity for scalping profits.
 In other words, the iceberg order(s) may serve as reliable areas of support
and resistance that can be considered in the context of other technical
indicators.

37. Bid
 A bid is an offer made by an investor, trader, or dealer in an effort to buy a
security, commodity, or currency.
 A bid stipulates the price the potential buyer is willing to pay, as well as the
quantity they will purchase, for that proposed price.
38. Ask
 The ask is the price a seller is willing to accept for a security, which is often
referred to as the offer price. A bid price is always lower than the ask price.
The difference between a bid price and ask price is called the spread.

39. Bid-ask spread

 A bid-ask spread is the amount by which the ask price exceeds the bid price
for an asset in the market.
 The bid-ask spread is essentially the difference between the highest price
that a buyer is willing to pay for an asset and the lowest price that a seller is
willing to accept.
 A bid-ask spread is the amount by which the ask price exceeds the bid price
for an asset in the market.
 The bid-ask spread is essentially the difference between the highest price
that a buyer is willing to pay for an asset and the lowest price that a  is willing
to accept.
 The bid-ask spread can be considered a measure of the supply and demand
for a particular asset. Because the bid can be said to represent demand and
the ask to represent the supply for an asset, it would be true that when these
two prices expand further apart the price action reflects a change in supply
and demand.

40. Liquidity
 A stock's liquidity generally refers to how rapidly shares of a stock can be
bought or sold without substantially impacting the stock price.
 Stocks with low liquidity may be difficult to sell and may cause you to take a
bigger loss if you cannot sell the shares when you want to.
 How quickly you can convert that stock into money.

41. Volatility
 Volatility represents how large an asset's prices swing around the mean price.
 Volatility is a statistical measure of the dispersion of returns for a given
security or market index.
 Dispersion is a statistical term that describes the size of the distribution of
values expected for a particular variable
 The higher the volatility, the riskier the security. Volatility is often measured
as either the standard deviation or variance between returns from that same
security or market index.
 A standard deviation is a statistic that measures the dispersion of a dataset
relative to its mean.
 The term variance refers to a statistical measurement of the spread between
numbers in a data set. More specifically, variance measures how far each
number in the set is from the mean.

42. Going long

 Going long on a stock or bond is the more conventional investing practice in
the capital markets, especially for retail investors.
 With a long-position investment, the investor purchases an asset and owns it
with the expectation that the price is going to rise.
 This investor normally has no plan to sell the security in the near future.
 Holding a long position is a bullish view.

43. Trading volume

 Volume of trade is the total quantity of shares or contracts traded for a
specified security.
 Volume is the amount of an asset or security that changes hands over some
period of time, often over the course of a day.
 Generally, securities with more daily volume are more liquid than those
without since they are more "active".
 Volume is an important indicator in technical analysis because it is used to
measure the relative significance of a market move.
 The higher the volume during a price move, the more significant the move
and the lower the volume during a price move, the less significant the move.

44. IPO
 An initial public offering (IPO) refers to the process of offering shares of a
private corporation to the public for the first time.
 IPOs provide companies with an opportunity to obtain capital by offering
shares through the primary market.
45. FPO
 A follow-on public offering (FPO) is the issuance of shares to investors by a
company listed on a stock exchange.
 A follow-on offering is an issuance of additional shares made by a company
after an initial public offering (IPO). Follow-on offerings are also known as
secondary offerings.

46. Rights Issue

 A rights issue is an invitation to existing shareholders to purchase additional
new shares in the company.
 In a rights offering, each shareholder receives the right to purchase additional
shares at a specific price and within a specific period (usually 16 to 30 days).
 Shareholders are not obligated to exercise this right.

47. Market Capitalization

 Market capitalization refers to how much a company is worth as determined
by the stock market. It is defined as the total market value of all outstanding
shares.
 To calculate a company's market cap, multiply the number of outstanding
shares by the current market value of one share.
 Companies are typically divided according to market capitalization: large-cap
($10 billion or more), mid-cap ($2 billion to $10 billion), and small-cap ($300
million to $2 billion).

48. Portfolio
 A portfolio is a collection of financial investments like stocks, bonds,
commodities, cash, and cash equivalents.
 Cash equivalents include bank accounts and marketable securities such as
commercial paper and short-term government bonds.
 Diversification is a key concept in portfolio management.

49. Intra-day trading

 Day trading usually refers to the practice of purchasing and selling a security
within a single trading day.
 Day trading is often characterized by technical analysis and requires a high
degree of self-discipline and objectivity.
50. Dividends
 A dividend is the distribution of some of a company's earnings to its
shareholders.
 Dividends are payments made by publicly-listed companies as a reward to
investors for putting their money into the venture.
 Announcements of dividend pay-outs are generally accompanied by a
proportional increase or decrease in a company's stock price.
 Ex-Dividend - For example, Walmart (WMT) paid $0.53 per share dividend on
January 2, 2020. The payment went to shareholders who had purchased
Walmart stock prior to the ex-date of December 5, 2019. The company had
previously declared the dividend on February 19, 2019, and the record date
was set as December 6, 2019.2 Only shareholders who had purchased
Walmart stock prior to the ex-date were entitled to the cash payment.

51. Beta
 Beta is a measure of the volatility or systematic risk of a security or portfolio
compared to the market as a whole.
 If a stock has a beta of 1.0, it indicates that its price activity is strongly
correlated with the market.
 A beta < 1.0 means that the security is theoretically less volatile than the
market.
 A beta > 1.0 indicates that the security's price is theoretically more volatile
than the market.
 A beta of -1.0 means that the stock is inversely correlated to the market
benchmark.
 Beta is calculated using historical data points, it becomes less meaningful for
investors looking to predict a stock's future movements. Beta is also less
useful for long-term investments since a stock's volatility can change
significantly from year to year, depending upon the company's growth stage
and other factors.

52. Face value

 Face value is a financial term used to describe the nominal (very small far
below the real value or cost) of a security, as stated by its issuer.
 For stocks, the face value is the original cost of the stock, as listed on the
certificate.
 The dividend is always declared by the company on the face value (FV) of a
share irrespective of its market value.
 The rate of dividend is expressed as a percentage of the face value of a share
per annum.

53. Delta
 Delta is the ratio that compares the change in the price of an asset, usually
marketable securities, to the corresponding change in the price of its
derivative.
 For example, if a stock option has a delta value of 0.65, this means that if the
underlying stock increases in price by $1 per share, the option on it will rise
by $0.65 per share, all else being equal.
 Delta spread is an options trading strategy in which the trader initially
establishes a delta neutral position by simultaneously buying and selling
options in proportion to the neutral ratio.

54. Quote
 A quote is the last price at which an asset traded; it is the most recent price
that a buyer and seller agreed upon and at which some amount of the asset
was transacted.
 A quote is also referred to as an asset's "quoted price."
 The bid quote is the most current price and quantity at which a share can be
bought.
 The ask quote shows what a current participant is willing to sell the shares
for.

55. Rally
 A rally is a period of sustained increases in the prices of stocks, bonds, or
related indexes.
 A rally usually involves rapid or substantial upside moves over a relatively
short period of time.
 This type of price movement can happen during either a bull or a bear
market, when it is known as either a bull market rally or a bear market rally,
respectively.
 A rally is a short-term and often sharp upward move in prices.
 In general, a rally is cause by positive surprises or economic policies that
make asset prices more attracting in the near term.

56. Yield
 Yield is a return measure for an investment over a set period of time,
expressed as a percentage.
 Yield = Net Realized Return / Principal Amount
 For example, the gains and return on stock investments can come in two
forms. First, it can be in terms of price rise, where an investor purchases a
stock at $100 per share and after a year they sell it for $120. Second, the
stock may pay a dividend, say of $2 per share, during the year. The yield
would be the appreciation in the share price plus any dividends paid, divided
by the original price of the stock. The yield for the example would be:
($20 + $2) / $100 = 0.22, or 22%

57. Margin
 Margin is the money borrowed from a broker to purchase an investment and
is the difference between the total value of investment and the loan amount.
 Margin trading refers to the practice of using borrowed funds from a broker
to trade a financial asset, which forms the collateral for the loan from the
broker.

58. Large Cap

 Large cap refers to a company with a market capitalization value of more
than $10 billion. Large cap is a shortened version of the term "large market
capitalization.
 These stocks are also often included in broad market indices such as NIFTY
and SENSEX, primarily because they command a very strong market
presence.
59. Mid Cap
 Mid-cap (or mid-capitalization) is the term that is used to designate
companies with a market cap (capitalization)—or market value—between $2
and $10 billion.
 As the name implies, a mid-cap company falls in the middle between large-
cap (or big-cap) and small-cap companies.
 Classifications, such as large-cap, mid-cap, and small-cap are approximations
of a company's current value; as such, they may change over time.

60. Small Cap

 The term small cap describes companies with a relatively small market
capitalization.
 A small cap is generally a company with a market capitalization of between
$300 million and $2 billion.
 small cap companies offer investors more room for growth but also confer
greater risk and volatility than large cap companies.

61. Preferred
 Preference shares, more commonly referred to as preferred stock, are shares
of a company’s stock with dividends that are paid out to shareholders before
common stock dividends are issued.
 Most preference shares have a fixed dividend, while common stocks
generally do not.
 Preferred stock shareholders also typically do not hold any voting rights, but
common shareholders usually do.

62. Multibagger
 Multibagger are stocks whose prices have risen multiple times their initial
investment values.
 Stocks that give returns that are several times their costs are called
multibaggers.

63. Insider trading

 Insider trading is the buying or selling of a publicly traded company's stock by
someone who has non-public, material information about that stock.
 This form of insider trading is illegal and comes with stern penalties including
both potential fines and jail time.
 Material information is any information that could substantially impact an
investor's decision to buy or sell the security. Non-public information is
information that is not legally available to the public.

64. Leverage
 Leverage refers to the use of debt (borrowed funds) to amplify returns from
an investment or project.
 Leverage is used to generate returns on risk capital.
 Risk capital refers to funds allocated to speculative activity and used for high-
risk, high-reward investments. Any money or assets that are exposed to a
possible loss in value is considered risk capital.
 Investors use leverage to multiply their buying power in the market.
 Companies use leverage to finance their assets—instead of issuing stock to
raise capital, companies can use debt to invest in business operations in an
attempt to increase shareholder value.

65. Arbitrage
 Arbitrage is the simultaneous purchase and sale of the same asset in different
markets in order to profit from tiny differences in the asset's listed price.
 Arbitrage exists as a result of market inefficiencies.
 Market inefficiencies exist due to information asymmetries, transaction costs,
market psychology, and human emotion, among other reasons.
 As a result, some assets may be over- or under-valued in the market, creating
opportunities for excess profits.

66. Gamma
 https://www.cmegroup.com/education/courses/option-greeks/options-
gamma-the-greeks.html#
 Gamma measures delta's rate of change over time, as well as the rate of
change in the underlying asset. Gamma helps forecast price moves in the
underlying asset.
 Delta is how much the option price changes in respect to a change in the
underlying asset's price.
 Gamma is an important measure of the convexity of a derivative's value, in
relation to the underlying.
 Convexity demonstrates how the duration of a bond changes as the interest
rate changes.
 Example - Suppose a stock is trading at $10 and its option has a delta of 0.5
and a gamma of 0.1. Then, for every 10 percent move in the stock’s price, the
delta will be adjusted by a corresponding 10 percent. This means that a $1
increase will mean that the option’s delta will increase to 0.6. Likewise, a 10
percent decrease will result in corresponding decline in delta to 0.4.

67. Bullish Marubozu

 A bullish marubozu indicates that there is so much buying interest in the
stock that the market participants were willing to buy the stock at every price
point during the day, so much so that the stock closed near its high point for
the day.
 There is a sudden change in sentiment, and we see a surge of bullishness.
Hence whenever the Open = Low and High = close, a bullish marubozu is
formed.

68. Bearish Marubozu

 A bearish marubozu indicates that there is so much selling pressure in the
stock that the market participants actually sold at every price point during
the day, so much so that the stock closed near its low point of the day. Open
= High, and Close = Low.
69. Spinning Top
 Unlike the Marubozu, it does not give the trader a trading signal with specific
entry or an exit point. However, the spinning top gives out useful information
concerning the current situation in the market.
 Two things are quite prominent…
 The candles have a small real body.
 The upper and lower shadow is almost equal.

70. Spinning tops in a downtrend

 In a downtrend, the bears are in absolute control as they manage to grind the
prices lower.
 With the spinning top in the downtrend, the bears could be consolidating
their position before resuming another bout of selling.
 The bulls have also attempted to arrest the price fall and have tried to hold
on to their position, though not successfully.
71. Spinning tops in an uptrend
 An obvious observation is that there is an uptrend in the market, which
implies the bulls have been in absolute control over the last few trading
sessions. However, with the occurrence of the recent spinning tops, the
situation is a bit tricky:
 The bulls are no longer in control; spinning tops would not be formed on
the charts if they were.
 With the formation of spinning tops, the bears have made an entry to the
markets. Though not successful, the emphasis is on the fact that the bulls
gave some freedom to bears.

72. Doji
 The Doji’s are very similar to the spinning tops, except that it does not have a
real body. This means the open and close prices are equal.
 When a Doji occurs, it indicates that there could be a trend reversal. If there
is a red candle behind a doji then bears have exhausted and now bulls can
enter the market and vice a versa.
 If the next candle to Doji crosses the Upper limit of Doji then that is an
indicator of trend reversal.

73. Paper Umbrella

 The paper umbrella is a single candlestick pattern which helps traders in
setting up directional trades.
 A paper umbrella is characterized by a long lower shadow with a small upper
body.

 A paper umbrella consists of two trend reversal patterns:

 Hanging man
 If the paper umbrella appears at the top end of an uptrend rally, it is
called the ‘Hanging Man’.

 Hammer
  The bullish hammer is a significant candlestick pattern that occurs at the
bottom of the trend.
 A hammer consists of a small real body at the upper end of the trading
range with a long lower shadow.
 The longer, the lower shadow, the more bullish the pattern.

74. Shooting star

 Unlike a paper umbrella, the shooting star does not have a long lower
shadow. Instead, it has a long upper shadow where the shadow’s length is at
least twice the length of the real body.
 The shooting star is a bearish pattern; hence the prior trend should be
bullish.

75. The Bullish Engulfing

 The bullish engulfing pattern is a two candlestick pattern which appears at
the bottom of the downtrend. As the name suggests, this is a bullish pattern
which prompts the trader to go long.
 The prerequisites for the pattern are as follows:
 The prior trend should be a downtrend
 The first day of the pattern (P1) should be a red candle reconfirming the
bearishness in the market.
  The candle on the 2nd day of the pattern (P2) should be Green, long
enough to engulf the red candle.

76. Bearish engulfing

 The bearish engulfing pattern is a two candlestick pattern that appears at the
top end of the trend, making it a bearish pattern.
 The bearish engulfing pattern suggests a short trade.
 Red candle completely engulfs the green candle.

77. Piercing Pattern

 A piercing pattern is a two-day, candlestick price pattern that marks a
potential short-term reversal from a downward trend to an upward trend.
 In a bullish engulfing pattern, the P2’s blue candle engulfs P1’s red candle.
However, in a piercing pattern P2’s blue candle partially engulfs P1’s red
candle. However, engulfing should be between 50% and less than 100%.
78. Dark Cloud Cover
 The dark cloud cover is very similar to the bearish engulfing pattern with a
minor variation.
 In a bearish engulfing pattern, the red candle on P2 engulfs P1’s blue candle.
However, in a dark cloud cover, the red candle on P2 engulfs about 50 to
100% of P1’s blue candle.
 Dark Cloud Cover is a candlestick pattern that shows a shift in momentum to
the downside following a price rise.

79. Bullish Harami

 The bullish harami is a bullish pattern appearing at the bottom end of the
chart.
 The Harami that means “pregnant” in Japanese is a multiple candlestick
pattern is considered a reversal pattern.
 The first candlestick is referred to as the “mother” with a large real body that
embodies the smaller second candlestick, and thus creating the visual of a
pregnant mother.
 The market is in a downtrend pushing the prices lower, giving the bears
absolute control over the markets.
 On day 1 of the pattern (P1), a red candle with a new low is formed,
reinforcing the bear’s position in the market.
 On day 2 of the pattern (P2), the market opens at a price higher than the
previous day’s close. On seeing a high opening price, the bears panic, as they
would have otherwise expected a lower opening price.

What is difference between harami and engulfing?

80. Bearish harami

 The bearish harami pattern appears at the top end of an uptrend, allowing
the trader to initiate a short trade.
 The market is in an uptrend, placing the bulls in absolute control.
 On P1, the market trades higher and makes a new high and closes positively
forming a blue candle day. The trading action reconfirms bull’s dominance in
the market.
 On P2 the market unexpectedly opens lower, displaces the bulls, and sets in a
bit of panic to bulls.
 Two conditions must be satisfied:
 The open price of P2 should be lower than the close price of P1.
 The close price of P2 should be greater than the open price of P1.

81. Gaps
 A gap up opening indicates buyer’s enthusiasm. Buyers/Sellers are willing to
buy/sell stocks at a price higher/lower than the previous day’s close.
 Hence, the stock (or the index) opens directly above the previous day’s close
because of the enthusiastic buyer’s outlook.

82. Morning Star

 The morning star is a bullish candlestick pattern which evolves over a three
day period. It is a downtrend reversal pattern.
 The pattern is formed by combining 3 consecutive candlesticks.
 The morning star appears at the bottom end of a downtrend.
 On day 1 of the pattern (P1), as expected, the market makes a new low and
forms a long red candle. The large red candle shows selling acceleration.
 On day 2 of the pattern (P2), the bears show dominance with a gap down
opening resulting in either a doji or a spinning top.
 On the third day of the pattern (P3), the market/stock opens with a gap,
followed by a blue candle that manages to close above P1’s red candle
opening.

83. Evening star

 The evening star appears at the top end of an uptrend. Like the morning star,
the evening star is a three candle formation and evolves over three trading
sessions.
 On the first day of the pattern (P1), as expected, the market opens high,
makes a new high, and closes near the day’s high point. The long blue candle
formed on day 1 (P1) shows buying acceleration
 On the 2nd day of the pattern (P2), the market opens with a gap reconfirming
the bull’s stance in the market. However, after the encouraging open, the
market/stock does not move and closes by forming a doji/spinning top. The
closing on P2 sets in a bit of panic for bulls
 On the 3rd day of the pattern (P3), the market opens gap down and
progresses into a red candle. The long red candle indicates that the sellers
are taking control. The price action on P3 sets the bulls in panic
84. Support & Resistance
 Support –
 The support level is a price point on the chart where the trader expects
maximum demand (in terms of buying) coming into the stock/index.
 Whenever the price falls to the support line, it is likely to bounce back.
The support level is always below the current market price.
 The support is one of the critical technical level market participants look
for in a falling market.
 The support often acts as a trigger to buy.
 Resistance –
 The resistance level is a price point on the chart where traders expect
maximum supply (in terms of selling) for the stock/index.
 The resistance level is always above the current market price.
 The resistance is one of the critical technical analysis tools which market
participants look at in a rising market.
 The resistance often acts as a trigger to sell.