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Market Basics & Instruments

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Market Basics & Instruments

Scalping

Trading for very small price increments many times a day, holding each position for seconds to minutes.

Net Profit per Trade = Gross Price Movement Captured - Round-Trip Transaction Costs ₹ Market Basics & Instruments

Secondary Market

The market in which already-issued securities are traded between investors, with no money flowing to the issuer.

Test: both counterparties are investors and the issuer is not a party to the trade qualitative Market Basics & Instruments

Security

A tradable financial instrument representing ownership, a creditor relationship, or a right relating to either.

Test: the instrument is transferable, is issued in standardised units, and represents ownership, debt, or a right over one of these qualitative Market Basics & Instruments

Share

A single unit of ownership in a company, giving its holder a proportional claim on the company's profits and on whatever is left over if…

Ownership fraction = Shares Held / Total Shares Outstanding shares Market Basics & Instruments

Shareholder

A person or institution that owns shares in a company and therefore holds part of its ownership.

Test: the holder's name appears in the register of members, or in a depository account holding the shares, as of the relevant record date qualitative Market Basics & Instruments

Short Position

A position created by selling a security one does not own, which gains when the price falls and loses when it rises.

Profit or Loss = (Entry Price - Exit Price) x Quantity ₹ Market Basics & Instruments

Short Selling

Selling a security that is not owned, in the expectation of buying it back later at a lower price.

Test: the sale is executed without holding the security in the seller's demat account at the time of sale qualitative Market Basics & Instruments

Small-Cap Stock

A share of a company ranked 251st or lower by market capitalisation under India's classification.

Rank all listed companies by average market capitalisation; rank 251 onwards is small-cap qualitative Market Basics & Instruments

Stock Exchange

A regulated marketplace that matches buy and sell orders in listed securities and publishes the resulting prices.

Test: the venue is recognised by the regulator, operates an order-matching system and publishes executed prices qualitative Market Basics & Instruments

Swing Trading

Holding a position for several days to a few weeks in order to capture one directional move in the price.

Test: holding period spans multiple sessions but well under a year, with the exit defined by a price target or stop rather than by a valuation view qualitative