General

General trading terminology and concepts.

25 terms in this category

B

Backtesting

Backtesting tests a trading strategy on historical data to see how it would have performed, helping validate ideas before risking capital.

Bear Market

A bear market is an extended period of falling prices, typically defined as a 20% or greater decline from recent highs.

Blue Chip

Blue chip stocks are shares of large, well-established companies with a history of stable earnings, strong financials, and reliable dividends.

Bull Market

A bull market is an extended period of rising prices, typically defined as a 20% or greater rise from recent lows.

C

Catalyst

Catalyst is a specific event or news item that triggers a meaningful price move in a security, distinct from ordinary market noise.

Correction

A correction is a 10-20% decline from recent highs, considered a normal and healthy part of market cycles.

Cost Basis

Cost basis is the original purchase price of a security — including commissions and fees — used by the IRS to calculate capital gains or losses at sale.

F

Funded Account

Funded account is capital provided by a prop firm to traders who pass a paid evaluation challenge, typically $25K–$200K with strict daily loss and max drawdown rules.

I

Intraday Trading

Intraday trading means buying and selling securities within the same trading day, with all positions closed before market close.

L

Long Position

A long position is buying an asset with the expectation that its price will rise, allowing you to sell later at a higher price for profit.

M

Market Capitalization

Market capitalization is a company's total market value, calculated by multiplying stock price by total shares outstanding.

N

Nifty 50

Nifty 50 is India's benchmark stock index tracking the 50 largest companies on the National Stock Exchange (NSE), representing market performance.

O

Overnight Position

An overnight position is any trade held after market close, exposing you to price gaps and events that occur when markets are closed.

P

Pattern Day Trader Rule (PDT Rule)

Pattern Day Trader is a FINRA designation for margin account holders who execute 4+ day trades in 5 business days with under $25,000 equity, triggering trading restrictions.

Penny Stock

Penny stocks are low-priced, small-cap stocks trading below ₹10-20, known for high volatility, low liquidity, and speculative nature.

Prop Firm

Prop firm is a proprietary trading company that provides traders firm capital in exchange for a profit split (70–90%), after passing a paid evaluation challenge.

R

Rally

A rally is a sustained increase in asset prices following a decline or consolidation, often driven by positive sentiment or news.

S

Sensex

Sensex (Sensitive Index) is India's oldest stock index tracking 30 large companies on the Bombay Stock Exchange (BSE).

Short Position

A short position profits from falling prices by selling borrowed shares first and buying them back later at a lower price.

Short Squeeze

A short squeeze occurs when a heavily shorted stock rises sharply, forcing shorts to cover by buying shares, which pushes prices even higher.

T

Tax-Loss Harvesting

Tax-loss harvesting is the practice of selling losing positions to realize capital losses that offset taxable gains, reducing a trader's year-end tax bill.

Trade Management

Trade management is all decisions made after entering a position — moving stops, taking partial profits, trailing exits, and cutting losses at planned levels.

V

Volatility

Volatility measures how much an asset's price fluctuates over time, indicating risk and potential reward from price movements.

W

Wash Sale Rule

Wash sale rule is an IRS regulation that disallows a capital loss deduction when a trader sells a security at a loss and rebuys the same or substantially identical security within 61 days.

Watchlist

Watchlist is a curated, pre-filtered list of securities a trader actively monitors for potential setups—distinct from a portfolio or full trading universe.