Financial Terms, Simplified

Alpha Figure is a significant financial metric that measures the performance of an asset relative to a market index or benchmark. It reflects the additional return that an investment generates over wh...

After-hours trading refers to trading activity that occurs after the official closing bell of a stock exchange. It's an extension of the regular trading session, allowing investors to buy and sell sec...

An adaptive digital filter automatically modifies its parameters in direct response to the input signal. Simply put, an adaptive filter attempts to optimise its performance in real-time by addressing ...

Arbitrage selling is a mode of making profit by – buying a commodity in one market where it is priced lower and selling it in another market where it is priced higher. This price differential al...

Automatic Reinvestment is the strategy of putting proceeds from the investment, such as dividends or capital gains, back into the same fund by buying additional units. This approach is ideal for long ...

The average number of shares or securities traded each day represents the  Average Daily Volume (ADV). Higher average daily volume indicates more market liquidity, enabling smoother stock transactions...

Asset allocation is a way of disseminating assets across distinct investment types. This method seeks to neutralise risk and bonus according to the risk toleration, monetary goals, and asset horizon o...

Alpha Figure is a significant financial metric that measures the performance of an asset relative to a market index or benchmark. It reflects the additional return that an investment generates over wh...

"Ask" or "Offer" in the financial markets means a price at which an individual can sell a security. Else, it can also be called the Ask Price, i.e., the price at which an asset is ready to be sold by ...

Ask Size is the amount of security that is offered for sale at the asking price in the market. It is the number of shares, contracts, or units of an asset that the sellers will sell at a particular pr...

An annual report is a comprehensive report that provides a summary of a company's financial performance and principal activities of the preceding year. It is an effective guide for investors, sharehol...

An Abridged Prospectus is a key document in the financial and corporate sector, meant to give the investor vital information regarding a company's public issue. Section 2(1) of the Companies Act 2013 ...

An All-or-none (AON) order is a buy or sell order that either has to be executed entirely or not executed at all. In contrast to a regular order, where partial execution is possible, an AON order requ...

The Add-On Method is an interest calculation method for loans in which the total interest is calculated upfront based on the initial principal and divided throughout the loan. The interest amount unde...

ABC Wave Theory, being one of the important aspects of Elliott Wave Theory, explains a three-wave countertrend price action. It consists of three distinct waves: Wave A: The first wave moves contrary ...

Anchoring bias describes the human tendency to rely too heavily on the first piece of information encountered (the "anchor") when making decisions, even if that information is irrelevant. Subsequent a...

The final price at which a security is traded at the close of business during a regular trading session is the closing price. Investors and analysts consider this price important because it shows the ...

"At the Open" typically refers to those few moments of stock trading when the stock market opens in the morning. This period is particularly important as it creates the mood of market sentiment and di...

Annual sales change is one of the most important measures that companies use to measure their performance over the year. It expresses the variation in the sales revenue relative to the preceding year....

An Automatic Investment Plan (AIP) is a financial strategy where an investor automatically invests a fixed amount of money into a specific investment or portfolio on a regular schedule, such as weekly...

Accrued expenses are liabilities arising because a corporation realises expenses it has not paid. These expenses arise according to the matching principle of accounting, wherein expenses are recorded ...

Autoregressive  (AR) models predict future numerical values based on historical data numbers within time. These models learn from the patterns in the history of a data series to get what comes next. A...

The acid test ratio, or quick ratio, is a widely used measure that helps to assess the company's capacity to cover its short-term liabilities with cash, marketable securities and accounts receivable. ...

An Annual General Meeting (AGM) is where shareholders and other interested parties meet with the company's management to discuss performance, adopt financial statements, elect directors, and address a...

The Abandoned Baby Pattern is a rare yet powerful candlestick reversal pattern that signals a potential change in market direction. It consists of three candlesticks and can appear in bullish and bear...

Acceptance Credit – sometimes known as Trade Credit – is a tool that allows financial investors to control their cash flow and manage risks associated with international trade. It is a sec...

Option traders know that “At the Money” is when the strike price of an option is equal to the market price of an underlying stock. This means the strike price equals the market price and the option ho...

An advance payment guarantee, also understood as an "Advance Payment Bond", stands out as a deal to confirm the return of the advanced amounts when the receiving party fails to satisfy the contractual...

Adverse Excursion is the movement of an asset in the opposite direction to that in which the trader is long after the deal. The maximum adverse Excursion (MAE) specifies the greatest unfavourable pric...

An add-on offering means the listing company issuing additional shares in an effort to raise money. It is usually aimed at raising funds to continue operations, undertake business growth activities, o...

A SEBI-registered Asset Management Company manages pooled investments from clients, primarily through mutual funds. AMCs make investment decisions, manage the funds' portfolios, and charge fees for th...

The annual net profit margin measures a company's profitability by calculating the percentage of net profit earned from total revenue over a fiscal year. Itis calculated as (Net Profit / Total Revenue...

Authorized capital, also known as authorized share capital, represents the maximum amount of equity capital a company is legally permitted to issue to shareholders. It's a key figure in a company's fi...

The Accumulation Distribution Line (ADL) is a tool that helps investors understand if people are mostly buying (accumulating) or selling (distributing) a stock. It does this by looking at the stock’s ...

The Accumulation Distribution Line (ADL) is a tool that helps investors understand if people are mostly buying (accumulating) or selling (distributing) a stock. It does this by looking at the stock’s ...

The Average True Range (ATR) is a technical analysis indicator that helps traders assess market volatility. Developed by J. Welles Wilder, ATR provides insights into the intensity of price movements o...

The Average True Range (ATR) is an important indicator in trading markets. It serves an important purpose, such as technical analysis of the markets traded financially, e.g., stocks or foreign currenc...

Overview The advance Decline Line (AD Line) is one of the most straightforward ways of knowing if the stock market is advancing or declining. It is determined by merely the subtraction of the number o...

Assets are things a business owns that increase the value of its business. They can be anything from money, buildings, and machinery to shares and even names. Assets are valuable because they enable b...

Overview An Asset Management Company (AMC) can help investors grow their money by managing a group of funds and investing in many different financial securities. These companies aim to match the finan...

Overview Ask price is the lowest price at which the seller is ready to sell a security. It is also known as the buying price as this is the price at which the buyers purchase the security. Understandi...

Overview Algorithmic trading is the automatic method of purchasing and selling shares. It is carried out by a computer program. It is carried out following previously established instructions dependin...

Overview Accrued interest is the interest that has been earned through a loan or a bond but has not been paid to the lender yet. It builds up over time and it is usually settled on some specific payme...

Earnings Per Share Ratio is one of the most preferred indicators used in establishing an investor's judgment that a company's respective piece of stock is fairly priced, overpriced, or underpriced. It...

An auction in stocks is a process where shares are bought and sold depending on demand and supply. It helps determine the fair price of a stock. The auction system is a guarantee of transparency and e...

The adjusted futures price refers to the modified price of a futures contract after changes such as dividends, stock splits, or other corporate actions. This adjustment ensures traders do not face une...

What is Algo Trading? In the fast-paced world of stock trading, quick decisions are key. Algorithmic trading uses computer programs, known as algorithms, to make trades automatically. These algorithms...