Stock-market glossary: the 30 terms you'll actually use

Bid/Ask spread: the gap between the highest price a buyer will pay and the lowest price a seller will take. Tighter is more liquid.

Liquidity: how easily you can buy or sell without moving the price.

Market cap: shares outstanding × share price. Categorised loosely as large/mid/small/micro.

Free float: the portion of shares actually available to trade (excluding promoter/locked holdings).

EPS (Earnings per Share): net income divided by shares outstanding.

Dividend yield: dividend per share divided by share price.

Buyback: company purchases its own shares from the market, returning cash to shareholders.

Promoter holding: equity held by founders/promoter group (Indian context).

FII / DII: foreign / domestic institutional investors.

Demat: dematerialised shares held electronically.

Circuit breaker: a daily price band beyond which trading is halted to prevent disorderly moves.

Short selling: borrowing shares to sell, hoping to buy back lower.

Margin: using borrowed funds to amplify position size — amplifies gains AND losses.

Beta: how much a stock moves relative to the market (β=1 moves with the index).

Volatility: typical magnitude of price movement; usually annualised.

Drawdown: peak-to-trough decline in portfolio or stock value.

Sharpe ratio: risk-adjusted return — return divided by standard deviation.

Index fund / ETF: a fund that passively tracks an index. Low-fee, broad-exposure.

P/E: price-to-earnings ratio.

P/B: price-to-book ratio.

ROE: return on equity.

FCF: free cash flow.

MACD: a popular trend-momentum indicator.

RSI: relative strength index, 0–100 momentum gauge.

SMA / EMA: simple / exponential moving averages.

Bull / Bear market: prolonged uptrend / downtrend (often defined as ≥20% move).

Correction: shorter, milder decline — often 10–15%.

SEBI: India's securities regulator.

T+1: trade settles on the next business day.

Educational only — not investment advice.