Stock Market Terminologies

Fundamental Analysis

1. Intrinsic Value – A stock’s true worth based on fundamentals.
2. Discounted Cash Flow (DCF) – Valuing a company based on future cash flows.
3. P/E Ratio – Price-to-Earnings ratio (share price ÷ earnings per share).
4. EPS – Earnings Per Share (net profit ÷ total shares).
5. Dividend Yield – Annual dividend ÷ share price.
6. ROE (Return on Equity) – Profitability metric (net income ÷ shareholder equity).
7. Debt-to-Equity Ratio – Debt compared to shareholder equity.
8. Book Value – Net asset value of a company.
9. Margin of Safety – Buying below intrinsic value (Benjamin Graham’s principle).
10. Moats – Competitive advantages (Warren Buffett’s term).

Technical Analysis

11. RSI (Relative Strength Index) – Momentum indicator (overbought/oversold).
12. MACD (Moving Average Convergence Divergence) – Trend-following indicator.
13. Moving Averages (SMA/EMA) – Smoothing price trends over time.
14. Bollinger Bands – Volatility indicator around a moving average.
15. Support/Resistance – Price levels where buying/selling intensifies.
16. Head and Shoulders – Reversal pattern signaling trend change.
17. Candlestick Patterns – Visual price charts (e.g., Doji, Hammer).
18. Volume – Number of shares traded (confirms trends).
19. Breakout – Price moves beyond a key level.
20. Fibonacci Retracement – Predicts pullback levels (38.2%, 50%, 61.8%).

Investment Strategies

21. Value Investing – Buying undervalued stocks (Graham/Buffett).
22. Growth Investing – Targeting high-growth companies (Peter Lynch).
23. Dividend Investing – Focus on high-dividend stocks.
24. Index Investing – Passive investing in indices (e.g., S&P 500).
25. Dollar-Cost Averaging (DCA) – Investing fixed amounts regularly.
26. Contrarian Investing – Betting against market sentiment.
27. Swing Trading – Holding stocks for days/weeks to capture trends.
28. Momentum Trading – Riding upward-trending stocks.
29. Arbitrage – Exploiting price differences across markets.
30. Buy and Hold – Long-term investing (Warren Buffett).

Behavioral Economics

31. FOMO (Fear of Missing Out) – Emotional buying due to hype.
32. Herd Mentality – Following crowd behavior.
33. Anchoring Bias – Relying too much on initial information.
34. Confirmation Bias – Seeking data that supports existing beliefs.
35. Loss Aversion – Preferring to avoid losses over gains.
36. Recency Bias – Overweighting recent events.
37. Overconfidence – Overestimating one’s investing skills.
38. Panic Selling – Dumping stocks during market crashes.

Risk Management

39. Stop-Loss – Automatic sell order at a predefined price.
40. Diversification – Spreading investments across assets.
41. Asset Allocation – Dividing portfolio into stocks, bonds, cash.
42. Hedging – Reducing risk with derivatives (e.g., options).
43. Position Sizing – Limiting exposure to a single asset.
44. Sharpe Ratio – Risk-adjusted return metric.
45. Beta – Stock’s volatility compared to the market.
46. Drawdown – Peak-to-trough decline in portfolio value.
47. Risk-Reward Ratio – Potential profit vs. potential loss.

Market Concepts

48. Bull Market – Rising prices.
49. Bear Market – Falling prices.
50. Volatility – Price fluctuations (measured by VIX).
51. Liquidity – Ease of buying/selling without price impact.
52. Market Capitalization – Total value of a company’s shares.
53. Blue-Chip Stocks – Large, stable companies (e.g., Apple).
54. Penny Stocks – Low-priced, high-risk shares.
55. IPO (Initial Public Offering) – The First sale of shares to the public.
56. Secondary Offering – Additional shares issued post-IPO.
57. Short Selling – Profiting from price declines.
58. Leverage – Using borrowed money to amplify returns.

Famous Investor Strategies

59. Circle of Competence – Invest in industries you understand (Buffett).
60. The 8-Filter Stock Screen – Joel Greenblatt’s magic formula (ROIC + Earnings Yield).
61. CAN SLIM – William O’Neil’s growth stock strategy.
62. Dogs of the Dow – Invest in high-dividend Dow stocks.
63. The Intelligent Investor – Benjamin Graham’s value investing bible.
64. GARP (Growth at a Reasonable Price) – Blend of growth and value.
65. Tenbagger – Peter Lynch’s term for a 10x return stock.
66. Thematic Investing – Betting on long-term trends (e.g., AI, green energy).
67. Scuttlebutt Method – Phil Fisher’s approach of researching companies firsthand.
68. Portfolio Rebalancing – Adjusting holdings to maintain target allocation.

Technical Tools

69. Elliott Wave Theory – Predicting price movements via wave patterns.
70. Ichimoku Cloud – Japanese trend indicator.
71. Parabolic SAR – Stop-and-reversal trend indicator.
72. On-Balance Volume (OBV) – Volume-based momentum indicator.
73. ADR (American Depository Receipt) – Foreign stock traded in the U.S.
74. PEG Ratio – P/E ratio ÷ earnings growth rate.
75. EV/EBITDA – Enterprise value to earnings before interest, taxes, etc.

Advanced Concepts

76. Black Swan – Unpredictable, high-impact events (Nassim Taleb).
77. Alpha – Excess return compared to a benchmark.
78. Beta – Measure of market risk.
79. Gamma – Sensitivity of an option’s delta to price changes.
80. Quantitative Easing – Central banks injecting money into the economy.
81. Secular Trend – Long-term market direction (e.g., 10+ years).
82. Cyclical Stocks – Companies tied to economic cycles (e.g., autos).
83. Defensive Stocks – Stable during downturns (e.g., utilities).
84. Dead Cat Bounce – Temporary recovery in a falling market.
85. Golden Cross – 50-day MA crosses above 200-day MA (bullish).
86. Death Cross – 50-day MA crosses below 200-day MA (bearish).

Trading Instruments

87. Options – Contracts to buy/sell assets at a set price.
88. Futures – Agreements to trade assets at a future date/price.
89. ETFs (Exchange-Traded Funds) – Baskets of stocks traded like shares.
90. REITs (Real Estate Investment Trusts) – Property-focused investments.
91. Derivatives – Financial instruments derived from underlying assets.
92. Forex – Foreign exchange trading.
93. Commodities – Physical goods (gold, oil) as investments.

Psychology & Discipline

94. FIRE Movement – Financial Independence, Retire Early.
95. Trading Journal – Logging trades to improve discipline.
96. Compounding – Reinvesting profits for exponential growth.
97. Patience – Waiting for the right opportunity (Buffett).
98. Emotional Detachment – Avoiding impulsive decisions.
99. Backtesting – Testing strategies on historical data.

100.  Sunk Cost Fallacy – Holding losing investments due to past costs.

Pro Tips: Self-Reading

• Warren Buffett: “Be fearful when others are greedy, and greedy when others are fearful.”
• Peter Lynch: “Invest in what you know.”
• Ray Dalio: “Diversify across uncorrelated assets.”

These terms and strategies are foundational for mastering markets. Study classics like The Intelligent Investor (Graham) or One Up on Wall Street (Lynch) to dive deeper!

 

Key Terms Pertaining to Nepal's Stock Exchange

1. NEPSE (Nepal Stock Exchange)

• Meaning: The only stock exchange in Nepal where shares are bought and sold.

 2. DMAT Account

• Meaning: A digital account to hold shares electronically (like a bank account for stocks).

3. CASBA (Centralized Application Supported by Blocked Amount)

• Meaning: A system to apply for IPOs by temporarily blocking funds in your bank account.

4. IPO (Initial Public Offering)

• Meaning: The first sale of a company’s shares to the public.

5. Kitta

• Meaning: The unit of shares (e.g., 1 kitta = 1 share).

6. Meroshare

• Meaning: An online platform to apply for IPOs and manage shares (requires DMAT).

7. Broker

• Meaning: Licensed intermediaries (e.g., Agrawal Securities) who execute buy/sell orders.

8. Circuit Lock

• Meaning: A price limit (e.g., ±10%) beyond which a stock cannot trade in a day.

9. LTP (Last Traded Price)

• Meaning: The most recent price at which a stock was traded.

10. SEBON (Securities Board of Nepal)

• Meaning: Regulatory body overseeing Nepal’s stock market.

11. Bonus Share

• Meaning: Free shares given to existing shareholders from company profits.

12. Right Share

• Meaning: Shares offered to existing shareholders at a discounted price.

13. Floorsheet

• Meaning: A public record of daily stock transactions on NEPSE.

14. EPS (Earnings Per Share)

• Meaning: Profit per share (Net Profit ÷ Total Shares). Higher EPS = Better profitability.

15. P/E Ratio (Price-to-Earnings Ratio)

• Meaning: Share price divided by EPS. Lower P/E = Potentially undervalued stock.

16. Dividend Yield

• Meaning: Annual dividend per share ÷ Share price. Shows return on investment.

17. RSI (Relative Strength Index)

• Meaning: A technical indicator (0–100) showing if a stock is overbought (>70) or oversold (<30).

18. Pump and Dump

• Meaning: A scam where stock prices are artificially inflated and then crashed.

19. Penny Stocks

• Meaning: Very low-priced shares (e.g., <Rs. 200) with high risk.

20. Book Closure

• Meaning: A date when a company finalizes its shareholder list for dividends/bonuses.

21. Liquidity Risk

• Meaning: Difficulty selling shares quickly due to low trading volume.

22. Circuit Breaker

• Meaning: A temporary halt in trading if NEPSE index fluctuates sharply.

23. Blue-Chip Stocks

• Meaning: Shares of large, stable companies (e.g., NABIL, NICA).

24. Margin Trading

• Meaning: Borrowing money from brokers to buy more shares (high risk).

25. Primary Market

• Meaning: Where IPOs are issued (buying directly from the company).

26. Secondary Market

• Meaning: Where existing shares are traded (e.g., NEPSE).

27. Sector Rotation

• Meaning: Shifting investments between sectors (e.g., hydropower to banking) based on trends.

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