Reference

Glossary

Plain-English definitions of every term used in the course · links go to where each term is taught

Each entry gives a short definition, in the same terms the chapters use, and ends with links (→) to the sections where the idea is taught in full. Related terms share an entry, so SL-M lives under Order types and contango under Basis: type a word in the box to find it. Figures and rules are as of October 2026; check the chapter for the current details.

Find a term 215 terms

0–9

52-week high and low: The highest and lowest prices of the past year (about 252 sessions). At a new 52-week high nobody who bought in the past year is losing, so there is no overhead supply; at a new 52-week low every recent buyer is underwater. The playbook's Setup 2 buys breakouts to 52-week highs on volume. → Ch 3 §12 · Ch 5 §10
200-DMA (200-day moving average): The average of the last 200 closes, about ten months. The playbook treats the Nifty above a rising 200-DMA as risk-on, and takes long setups only in stocks above their own. It is a slow filter: it describes the weather and does not predict tomorrow. → Ch 4 §5 · Ch 5 §4

A

Active fund, passive fund and index fund: An active fund pays a manager to try to beat a benchmark. A passive fund (an index fund or ETF) holds the benchmark's stocks in its weights for a small fee. Over 10 years most active large-cap funds in India lagged their benchmark. → Ch 14 §9 · Ch 14 §10
Advance tax: If your tax for the year after TDS is ₹10,000 or more, you pay it in instalments: 15% by 15 June, 45% by 15 September, 75% by 15 December and 100% by 15 March. Shortfalls attract interest of 1% a month. Tax on capital gains and dividends can be paid in the instalments after they arise without that interest; F&O business income has to be estimated in advance. → Ch 13 §12
ADX and DMI (Average Directional Index, Directional Movement Index): Wilder's trend-strength system. +DI measures upward pressure, −DI downward pressure, and ADX is a smoothed measure of how far apart they are. ADX tells you how strong a trend is, not which way it runs: below 20 means little or no trend, above 25 a strong one, with the direction read from whichever DI line is on top. → Ch 4 §11
AIS and Form 26AS (Annual Information Statement): Statements on the income-tax e-filing portal that show the redemptions, IDCW and other income reported about you, and the TDS deducted. Reconcile them with your broker's and the registrars' capital-gains statements before filing. → Ch 15 §16
Anti-avoidance rules (GAAR, bonus and dividend stripping): India has no wash-sale rule, but a transaction whose only purpose is to avoid tax can be disregarded. GAAR applies only where the year's tax benefit exceeds ₹3 crore. Bonus stripping and dividend stripping ignore a loss on fund units bought within 3 months before a record date and sold within 9 months after it, in narrow cases that are rare today. → Ch 15 §11
Arbitrage fund: An equity-oriented fund that buys shares and sells their futures, earning the small gap between the two. Returns are close to a liquid fund's, but the gains get equity taxation: 20% within 12 months and 12.5% after. Returns dip when futures premiums shrink, and many charge an exit load within 30 days. → Ch 14 §11 · Ch 15 §14
Asset allocation and asset class: An asset class is a group of investments driven by the same things: Indian shares, foreign shares, bonds, gold, property, cash. Asset allocation is how you split your money between them, for example 60/30/10 equity/debt/gold. A strategic allocation is the long-term target you keep; tactical allocation moves away from it for a while on a view, such as valuations. → Ch 16 §1 · Ch 16 §5 · Ch 16 §8 · Ch 16 §9
ATR (Average True Range): Wilder's measure of how far a stock typically moves in a day, overnight gaps included. True range is the largest of high − low, |high − previous close| and |low − previous close|, and ATR is its 14-day Wilder average. The course uses it to place stops (often 1.5–3 × ATR from entry) and to size positions. → Ch 4 §10

B

Backtest: Running a fixed set of trading rules over historical data, with realistic fills, costs and slippage, to see how they would have performed. The course fills each signal at the next day's open. A backtest shows what happened, not what will happen, so it must also pass out-of-sample tests and paper trading. → Ch 12 §3 · Ch 12 §4
Bank metrics (NII, NIM, CASA, NPA): Banks need their own numbers. Net interest income (NII) is interest earned minus interest paid, and NIM is that as a percentage of interest-earning assets. The CASA ratio is low-cost current and savings deposits ÷ total deposits. An NPA (non-performing asset) is a loan overdue by more than 90 days; gross and net NPA % measure asset quality. → Ch 6 §9 · Ch 7 §9
Basis, contango and backwardation: Basis = futures price − spot price. Futures above spot (contango, or a premium) is the normal state, because the futures price includes the cost of carry. Futures below spot (backwardation, or a discount) usually means a dividend is due before expiry, or heavy short demand. The basis shrinks as expiry nears and is zero at expiry: on 30 Sep 2026 Nifty October futures at 22,707.30 against spot at 22,620.45 gave a basis of +86.85 points. → Ch 9 §3 · Ch 9 §11
Beta: How much a stock tends to move when the market moves: the covariance of its returns with the index's, divided by the index's variance. A beta of 1.2 means a 1% Nifty move has, on average, come with a 1.2% move in the stock. It feeds the cost of equity (CAPM) and the size of index hedges, and it changes with the window you measure. → Ch 8 §6 · Ch 9 §15 · Ch 14 §7
Bid, ask, spread and market depth: The bid is the best price a buyer is offering and the ask (or offer) the best price a seller wants; the gap between them is the spread, a cost you pay every time you cross it with a market order. Market depth shows the best five (or twenty) bids and offers with their quantities. A large market order eats through several levels and pays more as it goes. → Ch 1 §13
Bollinger Bands: A 20-day SMA with bands 2 standard deviations above and below it. %B shows where price sits inside the bands (0 = lower band, 1 = upper band). Bandwidth shows how wide they are, and a multi-month low in bandwidth is a "squeeze" that often comes before a big move in either direction. Fading the bands works in ranges and fails when price walks the band in a strong trend. → Ch 4 §8
Bonus issue and stock split: Both give you more shares at a proportionally lower price, so the value of your holding is unchanged. A bonus hands out free shares from reserves in a ratio such as 1:1 and leaves face value alone: HDFC Bank's 1:1 bonus in Aug 2025 turned 100 shares at ₹1,964.10 into 200 at about ₹982.05. A split divides each share and cuts the face value, as in Kotak Mahindra Bank's 5-for-1 split in Jan 2026 (₹5 → ₹1). → Ch 1 §15
Book value and net worth: Net worth (shareholders' equity) is share capital plus reserves and surplus: what belongs to shareholders on the balance sheet. Each year's retained profit adds to reserves, and dividends take away from them. Book value per share is net worth ÷ number of shares, and the P/B ratio compares the share price with it. → Ch 6 §6 · Ch 1 §16
Breakout and false breakout: A breakout is a close beyond a well-established resistance (or below support). Varsity's two tests for a real one are well-above-average volume and follow-through over the next 3–4 sessions. A false breakout, or bull trap, closes back inside the range, which is why every breakout trade needs a stop. → Ch 3 §6
Bull call spread and bear put spread: Cheaper directional option positions with defined risk. A bull call spread buys a call and sells a higher-strike call; a bear put spread buys a put and sells a lower-strike put. The sold leg caps the profit but cuts the cost, theta and vega. A bear put spread is a cheap hedge against a moderate fall, not a crash. → Ch 10 §10
Bull market, bear market and correction: A bull market is a sustained rise. A bear market is commonly defined as a fall of 20% or more from the peak, and a fall of 10–20% is called a correction. → Ch 1 §9
Buyback: A company buying back its own shares, usually through a tender offer at a premium, and cancelling them. Holders of shares worth up to ₹2 lakh on the record date get a reserved small-shareholder quota. From 1 Apr 2026 ordinary shareholders are taxed only on the gain, as a capital gain; from 1 Oct 2024 to 31 Mar 2026 the whole amount was taxed as dividend. → Ch 1 §15 · Ch 13 §10

C

CAGR, absolute return and real return (Compound Annual Growth Rate): Absolute return is the plain percentage gain, however long it took. CAGR is the constant yearly rate that turns the start value into the end value: (end ÷ start)^(1/years) − 1. The Nifty rose 28.39% in the five years to Sep 2026, which is only 5.13% a year. Varsity uses absolute return for holdings of up to a year and CAGR beyond. Real return takes out inflation: (1 + return) ÷ (1 + inflation) − 1. → Ch 1 §3 · Ch 1 §2 · Ch 16 §3
Call option: The right, but not the obligation, to buy the underlying at the strike price. The buyer pays a premium and can lose at most that. The seller (writer) collects the premium and faces an unlimited loss if the price keeps rising. Breakeven at expiry = strike + premium. → Ch 10 §2 · Ch 10 §5
Candlestick: A chart bar that draws the open-to-close range as a filled real body, coloured by direction, with thin shadows (wicks) up to the high and down to the low. The body makes the contest between buyers and sellers visible at a glance, which is why candles are everyone's default chart. → Ch 2 §6 · Ch 2 §8
CAPM and cost of equity (Capital Asset Pricing Model): The return shareholders require: risk-free rate + beta × equity risk premium. With the 10-year G-sec at 7.18%, a 7% equity risk premium and Pidilite's beta of 0.84, the cost of equity is about 13.06%. It is the discount rate for cash flows to equity and one part of WACC. → Ch 8 §6
CAS and MF Central (Consolidated Account Statement): The CAS is one statement of all your fund holdings across fund houses (and demat), sent monthly when you transact and half-yearly otherwise; it shows the commission paid on regular plans. MF Central is the CAMS–KFintech platform for viewing and servicing all your folios in one place, including capital-gains statements. → Ch 14 §15 · Ch 15 §16
Cash flow statement (CFO, CFI, CFF): Shows where cash really came from and went. CFO is cash from operating activities, CFI from investing (capex, acquisitions, investments) and CFF from financing (borrowing, repayments, dividends, buybacks). Operating cash flow that persistently trails profit is a warning that reported profits are not turning into cash. → Ch 6 §7
Circuit limits and market-wide circuit breakers: A stock's circuit limit (price band) caps its daily move: fixed bands of 2%, 5%, 10% or 20% for stocks outside F&O, and dynamic bands (initially about 10%) for F&O stocks. At the upper circuit there are only buyers, so you may not be able to sell that day. A market-wide circuit breaker halts all equity trading when the Nifty 50 or Sensex moves 10%, 15% or 20%; the 10% breaker hit twice in March 2020. → Ch 1 §14
Clearing corporation: The body that steps in between buyer and seller (novation) and guarantees settlement: NSE Clearing for NSE and Indian Clearing Corporation for BSE. It also runs the margin and daily mark-to-market system for F&O. → Ch 1 §4 · Ch 9 §3
Clubbing of income: The rule (s.99, old s.64) that adds to your income any income from assets you gift to your spouse (or son's wife) without adequate consideration, and most income of your minor child. Gifts to adult children and to parents are not clubbed, so gains in their names use their own exemption and slab. → Ch 13 §14 · Ch 15 §15 · Ch 16 §14
Collar and covered call: A covered call is owning shares and selling an out-of-the-money call against them: you collect the premium but give up gains above the strike, and almost all the downside remains, so it is not a hedge. A collar adds a long out-of-the-money put, so the call premium pays for a floor on losses in exchange for a cap on gains. → Ch 10 §10
Consolidated and standalone statements: Standalone statements cover the parent company alone. Consolidated statements add every subsidiary it controls, with the outsiders' share shown as non-controlling (minority) interest. Use consolidated by default; a bank with insurance subsidiaries, such as HDFC Bank, reads more clearly standalone. → Ch 6 §4
Core-satellite: Keeping most of your money (the core) in a low-cost, diversified, rebalanced allocation or long-term holdings, and a small, capped part (the satellite) for active ideas such as stock picks or swing trades, so a failed satellite cannot hurt a goal. → Ch 6 §2 · Ch 16 §8 · Ch 17 §3
Corporate action: A board- and shareholder-approved event that changes what you hold or receive: dividends, bonus issues, splits, rights issues, buybacks and demergers (a business spun off into a separately listed company). They distort raw price data, so check for one before trusting any big one-day move in a chart or a backtest. → Ch 1 §15
Correlation: How closely two return series move together, from +1 (lock-step) through 0 (no linear relation) to −1 (opposite directions). Diversification works on correlation, not on the number of names: two IT stocks with a correlation near 0.75 are close to one bet. Correlations jump in sell-offs. → Ch 11 §3 · Ch 11 §14 · Ch 16 §4
Cost of carry and cash-and-carry arbitrage (futures fair value): Why futures normally trade above spot. Fair value ≈ spot × (1 + r × days ÷ 365) − expected dividends, where r is a short-term rate such as the 91-day T-bill yield: 22,712.82 for Nifty on 30 Sep 2026 against a spot of 22,620.45. If futures trade above fair value, arbitrageurs buy the stock and sell the futures to lock in the gap. That keeps prices in line, but after costs it rarely pays a retail trader. → Ch 9 §11
Creation units, authorised participants and market makers: Large participants deliver a basket of the index stocks (or cash) to the fund house in big blocks, called creation units, to create ETF units, or redeem them in reverse. This arbitrage keeps an ETF's price close to its NAV. Dealing directly with the fund house is limited to them and to orders above about ₹25 crore. → Ch 14 §10
Cut-off time and applicable NAV: The deadline by which your order and your money must reach the fund for you to get that day's NAV: 3:00 pm for most funds, 1:30 pm for liquid and overnight fund purchases. Miss it and you get the next business day's NAV. → Ch 14 §3

D

DCF (Discounted Cash Flow): Valuing a business as the present value of the free cash flow it will produce: forecast 5–10 years, add a terminal value, discount everything at WACC to get enterprise value, then subtract net debt and divide by the number of shares. Small changes in growth or the discount rate move the answer a lot. → Ch 8 §4 · Ch 8 §8
Debt-to-equity (D/E): Total borrowings ÷ shareholders' equity. Above 1 means lenders fund more of the company than its owners. Debt magnifies returns on the way up and losses on the way down, and matters most in cyclical businesses. It is not meaningful for banks, whose deposits are technically debt. → Ch 6 §6 · Ch 7 §5
Delta: How much an option's premium moves per 1-point move in the underlying. Call deltas run from 0 to 1 and put deltas from 0 to −1; ATM options sit near ±0.5. A call delta of 0.56 means a 100-point Nifty rise adds about 56 points to the premium. The deltas of a position's legs add up. → Ch 10 §7
Demat account: The account that holds your shares electronically, kept at a depository (NSDL or CDSL) and opened through a depository participant (DP), usually your broker. It works alongside your trading account (with the broker) and your bank account. → Ch 1 §4 · Ch 14 §15
Depreciation and amortisation (D&A): Spreading the cost of a long-lived asset over its useful life instead of expensing it on day one: depreciation for tangible assets, amortisation for intangibles. A ₹12 crore machine lasting 8 years costs ₹1.5 crore a year in the P&L. It is a non-cash expense, so it is added back when computing operating cash flow. → Ch 6 §5
Direct plan and regular plan: Two versions of the same scheme with the same portfolio. The regular plan pays a yearly trail commission to a distributor through a higher TER, so its NAV grows more slowly; on real flexi-cap funds the gap was about 0.8–0.9% a year. Switching from regular to direct is a redemption, so it is taxable. → Ch 14 §5 · Ch 15 §6
Divergence: Price and a momentum indicator disagreeing. A bullish divergence is a lower low in price with a higher low in RSI or MACD; a bearish divergence is a higher high in price with a lower high in the indicator. It warns that momentum is fading but is not an entry signal on its own. → Ch 4 §6 · Ch 4 §7
Dividend and dividend yield: A cash payment per share out of profits: interim, final or special. On the ex-date the price drops by about the dividend, so you are no richer on the day. Dividend yield = annual dividend ÷ price (ITC's ₹8 on ₹301.65 was 2.65%). Dividends are taxed at your slab rate, with 10% TDS if one company pays you more than ₹10,000 in a tax year. → Ch 1 §15 · Ch 13 §10 · Ch 15 §7
Doji and spinning top: Indecision candles. A doji has virtually no body: open ≈ close (this course uses body ≤ 10% of the range). A spinning top has a small body with upper and lower shadows of roughly equal length. Neither is a buy or sell signal; wait for the next candle to show which side won. → Ch 2 §11
Donchian channel: The highest high and lowest low of the last n days. A close above the prior 20-day high is a breakout. The "Turtle" traders used 20- and 55-day versions, and the course's System B uses a 55-day breakout with a 20-day-low exit. → Ch 4 §14 · Ch 12 §7
Double top and double bottom: Price tests the same high twice and fails, or the same low twice and holds. Varsity wants the two tests at least about two weeks apart. The pattern is confirmed only when price closes beyond the neckline (the low between the tops, or the high between the bottoms). A triple top or bottom has three tests. → Ch 3 §9
Dow Theory: Charles Dow's ideas from around 1900, the foundation of trend analysis. Three trends run at once (primary, secondary and minor). The primary trend moves through accumulation (quiet buying after a long fall), markup, distribution (selling to latecomers near the top) and markdown. Related indices and volume should confirm the trend, the close matters most, and a trend stays in force until it clearly reverses. → Ch 3 §8
Drawdown and equity curve: The equity curve is the value of your account or system over time. A drawdown is its percentage fall from the highest value reached so far, and the maximum drawdown is the deepest such fall: −38.44% for the Nifty in the COVID crash (14 Jan → 23 Mar 2020). Losses and gains are not symmetric: after a 50% drawdown you need +100% to get back. → Ch 1 §9 · Ch 11 §7 · Ch 12 §5 · Ch 16 §3
DuPont analysis: Splitting ROE into net margin × asset turnover (sales ÷ average total assets) × equity multiplier (average assets ÷ average equity) to see where the return comes from. A rising ROE driven by margin or turnover is healthy; one driven only by more leverage should worry you. → Ch 7 §4

E

EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation): Profit from the core business before financing and accounting choices; EBITDA ÷ revenue is the EBITDA margin. Useful for comparing operations across companies with different debt levels and asset ages, but never a stand-in for cash: it ignores capex, working capital and interest. → Ch 6 §5 · Ch 7 §3
ELSS (equity-linked savings scheme): An equity fund with a 3-year lock-in on each instalment, whose investment counts towards the ₹1.5 lakh deduction under s.123 (old s.80C). The deduction exists only in the old tax regime. On redemption ELSS is taxed like any equity fund. → Ch 15 §13
Emergency fund: Money for job loss, repairs or hospital deposits that you can reach within a day, commonly 3 to 12 months of expenses, kept in a savings account and a liquid fund. It sits outside your allocation and is never put into equity or gold. → Ch 16 §6 · Ch 17 §3
Engulfing, piercing and dark cloud cover: Two-candle reversals. In an engulfing pattern the second candle's body is the opposite colour and completely covers the first's: bullish after a downtrend, bearish after an uptrend. Piercing (bullish) and dark cloud cover (bearish) are partial versions, where the second candle takes back more than half, but not all, of the first candle's body. The stop goes at the pattern's lowest low for a long, or highest high for a short. → Ch 2 §14 · Ch 2 §15
Enterprise value and EV/EBITDA (EV): Enterprise value = market cap + debt − cash: what it would cost to buy the whole business, lenders included. EV/EBITDA compares that with operating profit, which makes it fairer than P/E when comparing a borrower with a cash-rich peer. → Ch 7 §8 · Ch 8 §12
EPS (Earnings Per Share): Profit attributable to shareholders ÷ weighted average shares outstanding. Diluted EPS also counts shares that ESOPs, warrants or convertibles may create, so it is never higher than basic EPS. Asian Paints' FY26 EPS was ₹45.09. → Ch 6 §5
Equity models (core, total and reduced total equity): Three ways to define the capital you size trades on. Core equity is starting capital minus money committed to open trades. Total equity adds the open profit or loss on those trades. Reduced total equity is core equity plus only the profit already locked in by trailing stops. Beginners should use core or reduced total equity. → Ch 5 §7 · Ch 11 §8
ETF (exchange-traded fund): A fund whose units are listed and traded on the exchange at live prices through a demat account, in whole units, settling T+1. Examples: NIFTYBEES, GOLDBEES, LIQUIDBEES. Trades pay the usual share-trading charges and the bid-ask spread, but no exit load. → Ch 14 §10 · Ch 15 §8
ETF premium and discount: (Market price − NAV) ÷ NAV. Liquid Nifty ETFs stay within a fraction of a percent. An ETF whose creation is blocked, such as an international ETF when funds hit the overseas-investment limit, can trade 20% or more above its NAV. → Ch 14 §10
Exceptional items: Large, unusual gains or losses such as impairments, restructuring costs or profit on selling a business. Judge the ongoing business on profit before exceptional items, and be wary of a company that has them every year. Screener.in folds them into "Other income". → Ch 6 §5
Ex-date and record date: The record date is when a company takes a snapshot of its shareholder register; the ex-date is the first day the stock trades without the benefit. Under T+1 settlement they fall on the same day, so to get a dividend or bonus you must own the shares at the close of the previous trading day. → Ch 1 §15
Exit load: A fee for redeeming units early, taken from the redemption value and credited back to the scheme; typically 1% within 12 months for equity funds and often nil for index funds. Each SIP instalment has its own exit-load clock. ETFs have none, but you pay the bid-ask spread. → Ch 14 §4 · Ch 15 §8 · Ch 16 §14
Expectancy and break-even win rate: Expectancy is the average profit per trade in R: win rate × average win − loss rate × average loss. The course's Setup 4 earned +0.295R over 2017–2026, about ₹1,477 a trade when 1R is ₹5,000. The break-even win rate is the win rate that makes expectancy zero, 1 ÷ (1 + reward:risk) when losses are 1R: 33.3% at 2:1 and 50% at 1:1. → Ch 11 §11
Expiry: The last day a futures or options contract lives. NSE's monthly index and stock F&O contracts expire on the last Tuesday of the month, and Nifty weekly options every Tuesday (moved from Thursday on 1 Sep 2025). If the Tuesday is a holiday, expiry moves to the previous trading day. → Ch 9 §4 · Ch 10 §3

F

Face value: The nominal value per share in the company's books (₹1, ₹2, ₹10 and so on). It is an accounting unit, not what the share is worth, though dividends are often announced as a percentage of it. A split reduces face value; a bonus issue does not. → Ch 1 §6 · Ch 1 §16
Fibonacci retracement: Levels at 23.6%, 38.2%, 50%, 61.8% and 78.6% of a prior swing, where traders watch for a pullback to end. Nobody has proved why they work; the likeliest reason is that so many people watch them. Use them with support, resistance and a confirming candle, and keep a stop beyond the level. → Ch 3 §11
FIFO (first in, first out): The rule that a sale comes from your oldest units first, for demat shares and for units within a fund folio. You cannot pick lots. FIFO decides each unit's holding period, so a SIP becomes long-term one instalment at a time, and recent lots in loss can be stuck behind older lots in gain. → Ch 13 §7 · Ch 15 §5 · Ch 15 §11
F&O (futures and options): The derivatives segment, where contracts take their value from an underlying index or stock. Futures are covered in Chapter 9 and options in Chapter 10. SEBI's studies found that about 9 in 10 individual F&O traders lose money. → Ch 1 §4 · Ch 9 §3
Free cash flow (FCF, FCFF, FCFE): Cash left after the investment needed to run and grow the business. Simple FCF = CFO − capex. FCFF (free cash flow to the firm) = EBIT × (1 − tax) + D&A − change in working capital − capex, and is discounted at WACC in a DCF. FCFE (to equity) is what is left for shareholders after after-tax interest and net borrowing. → Ch 6 §7 · Ch 8 §5
Free-float market cap: The market value of only the shares available to trade, leaving out promoter, government and other strategic holdings (through the Investible Weight Factor, IWF). The Nifty weights stocks by it, so Coal India, 61% government-owned, counts for far less than its total market cap suggests. → Ch 1 §8
Fund of funds (FoF): A scheme that invests at least 95% in other funds, such as a gold ETF or an overseas fund, so you can invest without a demat account at the cost of a second layer of expenses. Unlisted, so a gold or international FoF needs more than 24 months to become long-term. → Ch 14 §11 · Ch 15 §3
Fund tax classes (equity-oriented, specified mutual fund, other): For tax year 2026-27 every fund unit falls into one of three classes. Equity-oriented (at least 65% in listed Indian equity, including arbitrage funds, equity ETFs and ELSS): taxed like shares. Specified mutual fund (more than 65% in debt and money-market instruments), units bought from 1 Apr 2023: every gain at slab rate, however long held. Other (gold, silver and international funds and ETFs, 35–65% equity hybrids, debt units bought before Apr 2023): long-term after 12 months if listed or 24 months if not, then 12.5% with no indexation; short-term at slab. → Ch 15 §3 · Ch 13 §15 · Ch 14 §13
Futures contract: An exchange-traded agreement to buy or sell a standard lot of an underlying at a price fixed today, for a set expiry: a standardised version of a private forward contract, with the clearing corporation guaranteeing both sides. You can square off (take the opposite trade) at any time. The payoff is linear, ₹65 per Nifty point per lot, and it is a zero-sum game before costs. → Ch 9 §2 · Ch 9 §3 · Ch 9 §5

G

Gambler's fallacy: Believing a win is "due" after a run of losses. If trades are independent, the odds on the next one are unchanged: a system with a 38% win rate still has a 62% chance of losing after eight losses in a row. Raising size after losses puts your biggest bets in your worst stretches. → Ch 11 §7
Gap: A price range where no trading happened between two sessions: a gap up when today's low is above yesterday's high, a gap down when today's high is below yesterday's low. The types are common, breakaway, runaway and exhaustion gaps, plus the island reversal. In India gaps form in the pre-open auction, and they can jump straight over your stop. → Ch 3 §10 · Ch 2 §17
Glide path: A schedule that lowers equity and raises debt as a goal approaches, so a crash just before you need the money cannot wreck the goal. Life cycle funds follow one for you. → Ch 16 §7 · Ch 16 §8
Goal-based investing: Keeping one bucket per goal, each with an allocation suited to its deadline: under 3 years in liquid or short-duration debt, 3 to 7 years mostly debt, over 7 years mostly equity with a glide path. Inflate today's cost to the goal date, FV = PV × (1 + inflation)^years, then find the SIP that reaches it. → Ch 16 §7
Golden cross and death cross: The 50-day SMA crossing above (golden cross) or below (death cross) the 200-day SMA. It is a slow regime label rather than a timing signal: on the Nifty only 2 of 6 golden crosses in 2017–2026 were profitable by the next death cross. → Ch 4 §4
Grandfathering (shares bought by 31 Jan 2018): For listed shares bought on or before 31 Jan 2018, the cost used for long-term capital gains is stepped up to that day's highest quoted price (capped at the sale price), so gains made before the tax returned are never taxed. For equity-fund units the value used is the NAV on 31 Jan 2018. It can remove a gain but cannot create a loss. → Ch 13 §8 · Ch 15 §4
Greeks: The sensitivities of an option's premium to its inputs: delta (the underlying's price), gamma (how fast delta changes; highest at the money and spiking near expiry), theta (time) and vega (volatility). A premium moves on all of them at once: in the course's one-day example, delta explained only half the move. → Ch 10 §7
Growth and IDCW options (income distribution cum capital withdrawal): In the growth option, income stays in the fund and raises the NAV. The IDCW option (the old 'dividend' option) pays out cash that comes out of your own capital and is taxed in full at your slab rate, with 10% TDS above ₹10,000 a year per fund house. Growth plus an SWP is usually more tax-efficient. → Ch 14 §13 · Ch 15 §7 · Ch 16 §18
GTT (Good Till Triggered): A broker-side trigger, valid for up to a year at Zerodha, that sends a limit (or protected market) order to the exchange when the last traded price crosses your level. Ideal for swing-trade stops and targets. An OCO (one-cancels-other) GTT holds a stop and a target together. It is not guaranteed by the exchange. → Ch 1 §11 · Ch 5 §15

H

Hammer and hanging man: The same "paper umbrella" candle, named by what came before it: a small body near the high, a lower shadow at least twice the body and little or no upper shadow. After a downtrend it is a bullish hammer; after an uptrend, a bearish hanging man. Varsity trusts the hanging man less, and the course's 10-year test agrees. → Ch 2 §12
Harami: A two-candle pattern in which a small candle's body sits inside the previous long candle's body, in the opposite colour ("harami" is Japanese for pregnant). A bullish harami follows a downtrend; a bearish one follows an uptrend. → Ch 2 §16
Head and shoulders: A reversal pattern with three peaks, the middle one (the head) highest, and a neckline joining the troughs between them. It is confirmed only by a close below the neckline; the target is the neckline minus the head-to-neckline height. The inverse pattern marks bottoms. → Ch 3 §9
Hedge: A position that gains when your main position loses, so the combination swings less: for example short Nifty futures or Nifty puts against a stock portfolio. Index hedges remove market (systematic) risk only, not company-specific risk. For a portfolio, the hedge value is about portfolio beta × portfolio value. → Ch 9 §15 · Ch 10 §10
Hybrid funds: Schemes that hold more than one asset class inside a SEBI-set range: conservative (10–25% equity), balanced (40–60%), aggressive (65–80%), balanced advantage (managed dynamically), multi-asset (at least 10% in each of three classes) and equity savings. Their internal rebalancing creates no tax for you; how you are taxed depends on whether the fund keeps at least 65% in Indian equity. → Ch 14 §6 · Ch 15 §3 · Ch 16 §10

I

Impact cost: How far your execution price is from the midpoint of the best bid and ask, as a percentage. It measures liquidity: tiny for Nifty futures, far larger in thin stocks. NSE requires an average impact cost of 0.50% or less for a stock to join the Nifty 50. → Ch 1 §13 · Ch 9 §10
Implied volatility and Black-Scholes (IV): Black-Scholes links a European option's price to spot, strike, time to expiry, interest rate and volatility. Only volatility is unknown, so running the formula backwards from the market price gives implied volatility: what the market is charging for expected movement (12.85% for the Nifty 22600 call on 30 Sep 2026). Higher IV makes both calls and puts dearer. → Ch 10 §6
In the money, at the money, out of the money (ITM, ATM, OTM): An in-the-money option has intrinsic value: a call with its strike below spot, or a put with its strike above. At the money is the strike closest to spot (22600 when Nifty was at 22,620.45). An out-of-the-money option has no intrinsic value, so its whole premium is time value that decays to zero unless the market moves past the strike in time. → Ch 10 §4
iNAV (indicative NAV): A live estimate of an ETF unit's value, published during market hours by the fund house and the exchange. Compare the market price with it before you trade, and use a limit order. → Ch 14 §10
India VIX: NSE's index of the 30-day volatility implied by Nifty option prices, often called the fear index. A VIX of 13 implies typical daily Nifty moves of about 13 ÷ √252 ≈ 0.8%. The swing playbook uses it as a size dial and halves risk when VIX is above about 18. → Ch 5 §4 · Ch 10 §8
Interest coverage: EBIT ÷ interest: how many times operating profit covers the interest bill. Below about 2–3×, one bad year can threaten solvency. Tata Steel's fell to 0.85× in FY24, so operating profit did not cover interest that year. → Ch 6 §6 · Ch 7 §5
Intrinsic value and time value (options): Intrinsic value is what an option would be worth if it expired now: max(0, spot − strike) for a call, max(0, strike − spot) for a put. Time value is the rest of the premium, the price of the chance that it ends deeper in the money; it is largest at the money and shrinks to zero by expiry. Premium = intrinsic value + time value. → Ch 10 §4
Investment Policy Statement (IPS): A one-page document, written and signed in advance, that records your goals, emergency fund, target allocation, glide path, funds, contributions, rebalancing rule and tax habits, so that in a fall you follow the page and not the news. Review it every April. → Ch 16 §17
IPO (Initial Public Offering): A company offering shares to the public for the first time, in the primary market. It files a draft prospectus (DRHP) with SEBI, investors bid within a price band for about 3 working days through ASBA/UPI (money is blocked, not debited), and shares list T+3 working days after the issue closes. In an Offer for Sale (OFS) the money goes to the selling shareholders, not the company. → Ch 1 §6
ITR forms (Income Tax Return): The form you file depends on your income. ITR-2 covers capital gains with no business income (due 31 July). ITR-3 is needed for any F&O or intraday trading, or delivery trading treated as business (due 31 August for non-audit cases in tax year 2026-27). File by the due date, or you lose the right to carry losses forward. → Ch 13 §13 · Ch 15 §16

K

Kelly criterion: The bet size that maximises long-run growth for a given edge: win rate − (1 − win rate) ÷ reward:risk. Full Kelly brings near-certain deep drawdowns, and past edges shrink, so treat it as an upper bound; a practical cap is the smaller of 1–2% and a quarter of Kelly. A negative Kelly means the right size is zero. → Ch 11 §12

L

Leading and lagging indicators: Leading indicators, usually oscillators bounded between fixed levels (RSI and Stochastic run from 0 to 100), try to warn of turns early and work best in ranges. Lagging, trend-following ones (moving averages, MACD, Supertrend, ADX, Donchian) confirm trends late but keep you in them, and suffer whipsaws (runs of small losses) in sideways markets. → Ch 4 §2
Leverage: Controlling a position bigger than your cash: contract value ÷ margin. One Nifty lot worth ₹14.76 lakh on about ₹1.67 lakh of margin was 8.8× leverage, so a 1% Nifty move was 8.8% of the margin. Leverage doesn't change the odds of a trade; it multiplies the result. → Ch 9 §7
Life cycle fund: A target-date fund category created by SEBI in Feb 2026, with a maturity year 5 to 30 years away in its name and a glide path from mostly equity to mostly debt as that date approaches. Exit loads are 3%, 2% and 1% in years 1–3. Its internal shifts are not taxable for you. → Ch 14 §6 · Ch 16 §8
Liquid and overnight funds: Debt funds that hold instruments maturing within 91 days (liquid) or one day (overnight). They are the usual home for an emergency fund or cash waiting to be invested. Their gains are taxed at slab rate as a specified mutual fund. Many liquid funds allow instant redemption of up to ₹50,000 (or 90% of the holding, if lower) a day. → Ch 14 §8 · Ch 15 §14 · Ch 16 §6
Look-ahead bias: A backtest decision that uses information not yet available at the time: trading at today's open on today's close, or using quarterly results before their release. It is often caused by one missing shift in the code, and it makes results look far better than anything you could actually trade. → Ch 12 §10
Loss aversion and the disposition effect: A loss hurts roughly twice as much as an equal gain pleases. In trading it shows up as the disposition effect: selling winners too early and holding losers too long, the exact opposite of what a trend-following edge needs. → Ch 11 §15
Lot size: The fixed quantity in one F&O contract. Nifty is 65 units and Bank Nifty 30 (since the January 2026 series); stock lots vary (RELIANCE 500, HDFCBANK 650). Index contracts must be worth at least ₹15 lakh when lot sizes are set, and the exchanges revise lots periodically. → Ch 9 §4
LTCG (Long-Term Capital Gain): Gain on listed shares or equity funds held for more than 12 months. Taxed at 12.5% on the amount above ₹1.25 lakh a year, plus 4% cess, for sales from 23 Jul 2024. The ₹1.25 lakh exemption is per person per tax year and cannot be carried over. STT cannot be deducted. → Ch 13 §7 · Ch 15 §3 · Ch 15 §4

M

Macaulay and modified duration: Macaulay duration is the weighted average time to a bond's cash flows. Modified duration (Macaulay ÷ (1 + y/2) for half-yearly coupons) estimates price sensitivity: % price change ≈ −modified duration × change in yield. Longer duration means bigger gains and losses when rates move. → Ch 14 §8
MACD (Moving Average Convergence Divergence): The 12-day EMA minus the 26-day EMA, plotted with a 9-day EMA of itself as the signal line; the histogram is the gap between the two. Signals are signal-line crossovers, zero-line crossovers and divergences. It works in trends and whipsaws in sideways markets. → Ch 4 §7
Margin of safety and intrinsic value (MOS): Intrinsic value is what a business is worth to an owner, based on the cash it is expected to produce, as opposed to the price on the screen. Because that estimate is uncertain, you buy well below it: buy price = value × (1 − margin of safety). Varsity builds a ±10% band around the DCF value; stricter investors use 25–40%, and more for cyclicals, high debt or governance doubts. → Ch 8 §2 · Ch 8 §9 · Ch 8 §15
Market cap and size categories: Market cap = share price × total shares outstanding. SEBI's categories rank listed companies by average market cap: large cap = top 100, mid cap = 101–250, small cap = 251 and below. In the July 2026 list the large-cap cut-off was about ₹1,06,300 crore. → Ch 1 §16 · Ch 14 §6
Market regime and breadth: The playbook's first gate for new swing trades, judged from the Nifty versus its 200-DMA, breadth (the share of stocks above their own 200-day average) and India VIX. Risk-on allows the full 1% risk per trade; mixed, half; risk-off, no new trend setups, or 0.25–0.5% at most. VIX above 18 halves whatever is allowed. On 30 Sep 2026 only 7 of the 37 course stocks were above their 200-DMA: risk-off. → Ch 5 §4
Mark-to-market (MTM or M2M): Daily settlement of futures gains and losses at each day's settlement price: gains are credited, losses debited, and the reference price resets for the next day. It stops losses piling up and makes the clearing guarantee credible. The daily MTMs add up to your total P&L. → Ch 9 §8
Marubozu: A candle with (almost) no shadows: all body, "bald" in Japanese. The course requires the body to be at least 90% of the range. A bullish marubozu shows buyers in control all session. Varsity says it is the one pattern that needs no prior trend, and it is most useful as a breakout candle. → Ch 2 §10
Mean reversion: The idea that a stretched price tends to snap back towards its average. Mean-reversion tools (Bollinger fades, RSI(2), support bounces) work in ranges and fail in strong trends. The course's System C had a real but tiny edge that costs wiped out. → Ch 4 §8 · Ch 12 §8
Moat (economic moat): A durable advantage that protects a company's profits from competitors: a brand, a distribution network, switching costs, a cost advantage or a licence. Sustained ROCE well above the cost of capital is the numerical evidence. Moats erode, so re-test them every year. → Ch 7 §11
Morning star and evening star: Three-candle reversals. A morning star (after a downtrend) is a long red candle, then a doji or spinning top that gaps down, then a green candle that gaps up and closes above the first candle's open. The evening star is the mirror image at a top. Both are rare in liquid Indian large caps. → Ch 2 §17
Moving averages (SMA and EMA): A simple moving average (SMA) is the average of the last n closes, recalculated every day: a smooth line that shows direction at the cost of lag. An exponential moving average (EMA) weights recent closes more (α = 2 ÷ (n + 1)), so it turns earlier. Common lengths are 20 days for swing trading and 50 and 200 days for the bigger trend; the pullback setup uses the 20 EMA. → Ch 4 §3
Multi-timeframe analysis: Using a higher timeframe for direction and a lower one for timing: weekly trend and daily entry for swing trades, monthly and weekly for investing. The weekly chart sets the odds; the daily chart sets the risk. → Ch 3 §13
Mutual fund (AMC, trustee, custodian, RTA): A trust that pools many investors' money into one portfolio with a stated objective. The asset management company (AMC) manages it, a custodian holds the securities, trustees supervise on behalf of unitholders, and a registrar and transfer agent (CAMS or KFintech) keeps the unitholder records. The fund's own gains are not taxed; you pay tax when you redeem units or receive an IDCW. → Ch 14 §2 · Ch 15 §2

N

NAV (net asset value): The value of one unit of a fund: (market value of holdings + cash + accrued income − liabilities and accrued expenses) ÷ units outstanding. It is computed once a day, after expenses. A low or high NAV says nothing about whether a fund is cheap; only percentage changes matter. → Ch 14 §3
New tax regime: The default income-tax regime since FY 2023-24. Slab rates run from nil up to ₹4 lakh to 30% above ₹24 lakh, with 4% cess. A rebate cancels the slab tax when total income is up to ₹12 lakh, but it cannot be used against tax on STCG or LTCG. Business income (F&O, intraday) and dividends are taxed at slab rates. → Ch 13 §5 · Ch 15 §13
NFO (new fund offer): The launch of a new scheme, usually at ₹10 a unit. The low NAV is not a bargain, because returns depend only on percentage changes, and a new fund has no track record to judge. → Ch 14 §3
Nifty 50 and TRI (Total Return Index): NSE's headline index of 50 large, liquid stocks, weighted by free-float market cap (base value 1,000 in Nov 1995) and reviewed every six months. The quoted index ignores dividends; the TRI reinvests them (5-year CAGR to Sep 2026: 5.13% on price, 6.38% on total return). Compare a portfolio with the TRI. → Ch 1 §8 · Ch 1 §2 · Ch 14 §10
NPV and present value (Net Present Value): Present value moves a future amount back to today: PV = FV ÷ (1 + r)^n. ₹100 due in 10 years is worth about ₹50 today at 7.18%, but only ₹24.7 at 15%. NPV is the sum of the present values of a stream of cash flows: the most you should rationally pay for it. → Ch 8 §3

O

OBV (On-Balance Volume): A running total that adds the day's volume on up-closes and subtracts it on down-closes. Only its direction matters: rising OBV with rising price confirms the trend, while new price highs without new OBV highs are a warning. → Ch 4 §13
OHLC (Open, High, Low, Close): The four prices that summarise a trading period (with volume, OHLCV). The close matters most: it tells you who won the session. NSE's official close is computed, from a closing auction or the last half-hour's VWAP, not simply taken from the last trade. → Ch 2 §5
OI buildup (long buildup, short buildup, short covering, long unwinding): Reading price and open interest together. Price up with OI up is a long buildup; price down with OI up, a short buildup; price up with OI down, short covering; price down with OI down, long unwinding. In the course's test, daily buildup lists did not predict the next day's move. → Ch 9 §13
Open interest (OI): The number of F&O contracts currently open: entered and not yet closed or expired. Every contract has one long and one short, so OI counts pairs. Volume restarts every day; OI carries forward. On its own it says nothing about direction. → Ch 9 §13 · Ch 10 §9
Order types (market, limit, SL, SL-M, AMO): A market order fills at once at the best available price (with your broker's market protection); a limit order fills only at your price or better, and may not fill. A stop-loss order activates when the last traded price touches a trigger: SL becomes a limit order, which can stay unfilled if price gaps through it, and SL-M a market order. An AMO is placed after hours for the next open. A stop sets a trigger, not a guaranteed exit price. → Ch 1 §11
Overfitting, out-of-sample and walk-forward testing: Overfitting is tuning rules until they match past noise: of 100 moving-average pairs tested on the Nifty, the best one over 2009–2017 ranked 76th over 2018–2026. The defences are out-of-sample testing (develop on one period, then test once on data you never looked at) and walk-forward testing (pick parameters on past data, trade them forward, repeat). → Ch 12 §10

P

Pair trading: Going long one stock and short a closely related one, betting that the gap between them will revert. Varsity's second method regresses one price on the other and trades the residual's z-score (how many standard deviations it sits from its mean), but only if an ADF test shows the residual is stationary, meaning the pair is cointegrated. In India the short leg needs stock futures, and relationships can break. → Ch 12 §11 · Ch 12 §12
Paper trading: Recording every signal in real time, exactly as your rules say, but without real money, for one to three months before going live. It catches problems a backtest cannot: missed orders, gaps at the open, late data and your own reluctance to take a trade. → Ch 12 §16
Pass-through (fund taxation): A SEBI-registered mutual fund's own income and gains are exempt, so the trading inside a fund is invisible to your tax return. You are taxed only when you redeem units or receive an IDCW. Gains compound untaxed until then, and the fund's tax class, not what it holds on a given day, sets your rate. → Ch 15 §2
PAT (Profit After Tax): The bottom line: profit after every expense, including interest, depreciation and tax. PAT ÷ revenue is the PAT (net) margin. The minority interest's share is then deducted to get the profit attributable to the company's shareholders, which drives EPS. → Ch 6 §5 · Ch 7 §3
P/B (Price to Book): Share price ÷ book value per share. It is most useful for banks and asset-heavy businesses, and a high P/B is justified only by a high ROE. → Ch 7 §8 · Ch 8 §12
PCR and max pain (Put-Call Ratio): PCR = total put open interest ÷ total call open interest; Varsity reads it as contrarian, with about 1.3 or more meaning extreme pessimism and 0.5 or less complacency. Max pain is the expiry level at which option writers as a group would pay out least, and the idea that the market drifts there has little support. Both describe positioning, not direction. → Ch 10 §9
P/E, earnings yield and PEG (Price to Earnings): P/E = price ÷ EPS: rupees paid for one rupee of annual profit (trailing P/E uses the last 12 months). Earnings yield is its inverse, comparable with a bond yield, and PEG divides P/E by EPS growth. A P/E band chart shows where a stock sits in its own history. A low P/E is a reason to research, not to buy: cyclicals look cheapest at peak earnings, and a stock whose prospects keep shrinking is a value trap. → Ch 7 §8 · Ch 8 §12 · Ch 8 §13 · Ch 8 §14
Physical settlement: Since October 2019, stock futures, and stock options that finish in the money, settle by delivery: longs pay the full value and receive shares, shorts must deliver them. Index F&O is cash-settled. Square off or roll stock positions 2–3 trading days before expiry, because brokers also raise margins near expiry. → Ch 9 §14 · Ch 10 §12
Piotroski F-score: Nine yes/no tests of profitability, cash flow, leverage, liquidity and efficiency, scoring 0 to 9. It measures improvement in financial health, not absolute quality, so it suits value and turnaround screens: Tata Steel scored 8 for FY26 and Asian Paints 7. → Ch 7 §10
Portfolio heat: Total open risk: the sum, over all open positions, of quantity × (entry − current stop), counting a stop at or above entry as zero, as a percentage of equity. It is how much of your capital you would lose if every stop were hit at once (open profit you could give back is tracked separately). Typical caps are about 4–6% for swing traders, less in a weak market; a position with its stop at breakeven adds no heat. → Ch 5 §7 · Ch 11 §14
Portfolio overlap: The share of two funds' portfolios held in common: the sum, over the stocks they share, of the smaller of the two weights. Large-cap funds overlap each other by about half and a Nifty 50 index fund by half to 70%, so several of them add cost, not diversification. → Ch 14 §14
Position sizing (fixed-fractional risk): Choosing the quantity so that a stopped-out trade loses a fixed percentage of capital: shares = capital × risk% ÷ (entry − stop). With ₹5 lakh, 1% risk and a ₹110.55 stop distance that is 45 shares, then capped so no single stock takes too large a share of the account. → Ch 5 §7 · Ch 11 §9
PPF, EPF, NPS and SSY: Government-backed long-term savings schemes. PPF (7.1% for Oct–Dec 2026, 15-year term, ₹1.5 lakh a year) and SSY (8.2%, for a daughter under 10) are tax-free. EPF interest is exempt except on your own contributions above ₹2.5 lakh a year. The employer's NPS contribution, up to 14% of basic pay plus DA, is deductible even in the new regime. → Ch 15 §13 · Ch 16 §2
Premium (options): The price of an option, quoted per unit of the underlying; the buyer pays premium × lot size. It is intrinsic value plus time value, and depends on spot, strike, time to expiry, interest rate and volatility. → Ch 10 §3 · Ch 10 §4
Pre-open and closing auction: Auctions that set NSE's opening and closing prices. The 9:00–9:15 am pre-open collects orders and matches them at the single price that clears the most quantity; overnight gaps appear here. Since 3 Aug 2026, F&O stocks stop continuous trading at 3:15 pm and a closing auction until 3:35 pm sets their official close. Other stocks close at 3:30 pm on the last half-hour's volume-weighted average price. → Ch 1 §14
Product types (CNC, MIS, NRML, MTF): Tell your broker how a position is held and funded (Zerodha's names). CNC: delivery, paid in full and held in demat as long as you like, which is what swing traders and investors use. MIS: intraday with leverage, squared off automatically before the close. NRML: F&O positions carried overnight with full margin. MTF: the broker funds part of a delivery buy for daily interest (0.04% a day at Zerodha). Beginners should stick to CNC. → Ch 1 §12
Promoter pledging: Promoters borrowing against their own shares. A price fall can trigger forced selling by the lenders, a downward spiral, and rising pledges also signal that promoters need cash. Check the quarterly shareholding pattern. → Ch 6 §10 · Ch 7 §11
Protective put: Owning an asset and buying a put on it. Below the strike, every rupee the asset loses is paid back by the put, like insurance with a deductible (price minus strike) and a premium. Maximum loss = (price − strike) + premium. Buy it when implied volatility is calm. → Ch 10 §10
Put option: The right, but not the obligation, to sell the underlying at the strike price. A put buyer profits when the price falls and can lose only the premium, which is why puts work as insurance. The seller faces a very large loss if the price collapses. Breakeven at expiry = strike − premium. → Ch 10 §2 · Ch 10 §5

R

Rebalancing and drift: Drift is an asset's current weight minus its target. Rebalancing trades back to the target: by calendar (for example once a year), by bands (only when an asset is outside, say, ±5 points or ±25% of its target, whichever is tighter) or by cash flow (new money goes to what is underweight, with no sale). Its main job is to keep the risk you chose. → Ch 16 §11 · Ch 16 §12 · Ch 16 §13
Related-party transactions and contingent liabilities: Related-party transactions are dealings with entities owned by the promoters or their relatives; large loans or advances to them are a classic red flag. Contingent liabilities are obligations that might become real, such as disputed tax demands, legal claims or guarantees, kept in the notes rather than on the balance sheet. Compare them with net worth. → Ch 6 §4
Relative strength (RS line, Mansfield RS): The stock's price ÷ the Nifty: the line rises when the stock outperforms, even if both are falling. Mansfield RS compares that line with its own 52-week average, and above zero means the stock is beating its usual relationship with the index. A stock-selection tool; not the same thing as RSI. → Ch 4 §15 · Ch 5 §6
Reverse DCF: Taking the market price as given and solving for the growth rate a DCF needs to justify it. Then you judge whether that growth is believable against the company's history and its industry. → Ch 8 §10
Reward-to-risk ratio (RRR): The expected reward ÷ the risk on a trade, or average win ÷ average loss for a system. Varsity wants at least 1.5 before taking a trade. The lower your win rate, the higher the ratio you need: at a 40% win rate, anything below 1.5:1 loses money. → Ch 3 §6 · Ch 11 §11
Rights issue: New shares offered only to existing holders, in proportion to their holding and usually at a discount. Unlike a bonus you pay for them, so subscribe only if you would buy the stock at that price anyway. The theoretical ex-rights price (TERP) is the weighted average of the old price and the rights price. → Ch 1 §15
Risk capacity, tolerance and need: Capacity is how big a loss your finances can absorb without derailing a goal; tolerance is how big a fall you can watch without selling in panic; need is how much return your goals require. Your equity share should respect the lowest of the three. → Ch 16 §6
Risk of ruin: The probability that a run of losses takes your account to a level from which you cannot or will not carry on. The course estimated it with a Monte Carlo simulation, resampling a real setup's trades thousands of times. Defining ruin as a 50% drawdown, it was about 0% at 1% risk per trade, 9% at 2%, 38% at 3% and 86% at 5%. → Ch 11 §13
Riskometer and Potential Risk Class (PRC): SEBI's six-level risk label on every scheme, from Low to Very High, reassessed monthly from the portfolio. Debt funds also show a PRC cell that combines credit risk (A lowest to C) with interest-rate risk (I lowest to III). A sanity check, not a forecast. → Ch 14 §7
R-multiple: A trade's result measured in units of its initial risk, where 1R is what you stood to lose if the stop was hit. A trade that made twice that is +2R; a stopped-out trade is about −1R. It lets you compare a trade in an ₹800 stock with one in a ₹13,000 stock. → Ch 2 §9 · Ch 11 §11
ROCE (Return on Capital Employed): EBIT ÷ capital employed (equity + debt): the pre-tax operating return on all long-term capital. Because it ignores how capital is split between debt and equity, it is the fairest way to compare a borrower with a debt-free company. Sustained high ROCE is evidence of a moat. → Ch 7 §3
ROE and ROA (Return on Equity, Return on Assets): ROE = net profit ÷ average shareholders' equity: profit earned on each rupee shareholders have put in or left in the business. Varsity's checklist asks for above 25%, and its author elsewhere says he prefers 18% or more; use DuPont to see whether it comes from margins, efficiency or debt. ROA divides profit (plus after-tax interest, in Varsity's version) by average total assets, and matters most for banks. → Ch 7 §3 · Ch 7 §12
Rolling returns: The CAGR for every possible start date over a fixed holding period, for example every 5-year window. It shows the range and consistency of a fund's returns far better than one point-to-point figure. → Ch 14 §9
Rollover: Closing an expiring futures position and opening the same position in the next month. A long pays the price gap between the two contracts (roughly the cost of carry: 91.1 Nifty points, about ₹5,922 a lot, in Sep 2026) plus costs on four legs. Rollover % shows how much expiring open interest was carried forward. → Ch 9 §14
RSI (Relative Strength Index): Wilder's 0–100 momentum oscillator, comparing the average size of recent up-days with recent down-days, usually over 14 days: RSI = 100 − 100 ÷ (1 + average gain ÷ average loss). Above 70 is called overbought and below 30 oversold (Varsity's author prefers 80/20), but in an uptrend RSI tends to range between 40 and 80. Not the same as relative strength against the index. → Ch 4 §6
Rupee-cost averaging: With a fixed-amount SIP you buy more units when the NAV is low and fewer when it is high, so your average cost per unit is the harmonic mean of the NAVs paid, never above their simple average. It smooths entry; it does not raise expected returns. → Ch 14 §12

S

SEBI scheme categories: The defined boxes every scheme must fit into since 2017: for example large cap (at least 80% in the top 100 stocks), flexi cap (at least 65% equity of any size), debt funds by duration or credit quality, and hybrids by their equity share. A category sets a fund's rules and benchmark; it is not a quality rating. → Ch 14 §6
SEBI (Securities and Exchange Board of India): India's market regulator. It writes the rules for exchanges, brokers, listed companies and funds, protects investors and punishes manipulation and insider trading. Check that anyone giving you advice is SEBI-registered. → Ch 1 §4 · Ch 14 §6
Segregated portfolio (side-pocket): A separate portfolio into which a debt fund moves a defaulted or downgraded bond, so that new investors do not share the old loss and existing holders keep their claim on any recovery. → Ch 14 §8 · Ch 15 §6
Sequence-of-returns risk and withdrawal rate: Once you are withdrawing, a crash early on forces you to sell more units at low prices, so the order of returns decides how long the money lasts. A bucket plan (1–2 years of withdrawals in liquid funds, the next 3–5 years in short-term debt, the rest in equity) manages it. The US '4% rule' looks optimistic for India; the course suggests 3–4% with room to cut spending. → Ch 16 §18
Set-off and carry forward of losses: Using losses to cut tax on gains. A short-term capital loss can absorb short- and long-term gains; a long-term loss only long-term gains. An F&O loss can absorb any income except salary in the same year. Capital and F&O losses carry forward 8 years and speculative (intraday) losses 4, but only if you file on time. → Ch 13 §9 · Ch 15 §9
Setup and trigger: A setup is a chart condition worth watching, such as a pullback to the 20 EMA in an uptrend. A trigger is the price event that says act now, such as trading above the setup day's high. Keeping them separate stops you buying a falling stock too early. → Ch 5 §7
Sharpe, Sortino and Calmar ratios: Risk-adjusted return measures. Sharpe = annualised return above the risk-free rate ÷ volatility. Sortino counts only downside volatility. Calmar = CAGR ÷ maximum drawdown. The course's System B scored Sharpe 0.47, Sortino 0.64 and Calmar 0.36. → Ch 12 §5 · Ch 14 §7
Shooting star: An upside-down paper umbrella after an uptrend: a small body near the low and a long upper shadow at least twice the body. Buyers pushed to a new high, then sellers drove the price back down. Bearish, with the stop above the high. → Ch 2 §13
Short selling: Selling first and buying back later to profit from a fall; losses are theoretically unlimited. In the Indian cash market a short must be squared off the same day, or the exchange auctions the shares you failed to deliver at a penalty. To hold a short overnight, use futures or options. → Ch 1 §12
SIF (Specialised Investment Fund): A product inside the mutual-fund structure, available since 1 Apr 2025, that may run long-short and similar strategies (unhedged shorts up to 25% of assets). It needs at least ₹10 lakh per investor across a fund house's SIF strategies. → Ch 14 §6
SIP, STP and SWP (systematic investment, transfer and withdrawal plans): A SIP invests a fixed amount at regular intervals; a step-up SIP raises it by a fixed percentage each year. An STP moves a fixed amount each period from one scheme (often a liquid fund) to another. An SWP redeems a fixed amount each period, typically for income in retirement. Every STP or SWP instalment is a taxable redemption, but only its gain portion is taxed. → Ch 14 §12 · Ch 15 §6 · Ch 16 §7 · Ch 16 §18
Slippage: The gap between the price your rules assume and the price you actually get: the bid-ask spread plus the price moving while your order fills. The course's backtests charge 0.05% a side for the Nifty and 0.1% a side for single stocks. → Ch 12 §4
Sovereign Gold Bond (SGB): A government bond priced in grams of gold that pays 2.5% a year interest (taxed at slab) on top of the gold price. From 1 Apr 2026 the redemption gain is tax-free only if you subscribed at issue and held to maturity (8 years); bonds bought on the exchange or redeemed early are taxed. No new tranche has been issued since February 2024. → Ch 14 §11 · Ch 15 §13
SPAN and exposure margin (Standard Portfolio Analysis of Risk, Extreme Loss Margin): Initial margin for futures and short options = SPAN + exposure margin. SPAN is NSE Clearing's daily worst-case loss across 16 price-and-volatility scenarios (9.34% of contract value for Nifty futures on 30 Sep 2026); exposure margin adds 2% for index and 3.5% for stock derivatives. The full amount must be maintained every day, or you get a margin call. → Ch 9 §6
Speculative and non-speculative business income: Equity intraday profits are speculative business income; F&O profits (including intraday F&O) are non-speculative business income. Both are taxed at your slab rate, need ITR-3 and allow expenses including STT, but speculative losses can only be set off against speculative income. → Ch 13 §6 · Ch 13 §11
STCG (Short-Term Capital Gain): Gain on listed shares or equity funds held for 12 months or less, taxed at a flat 20% plus 4% cess for sales from 23 Jul 2024. The new regime's rebate (zero tax up to ₹12 lakh of income) cannot be used against it, so even a modest earner pays the full rate. → Ch 13 §5 · Ch 13 §7 · Ch 15 §3
Stochastic oscillator: Where today's close sits within the last 14 days' high–low range, on a 0–100 scale; the common slow setting is (14, 3, 3). Above 80 is overbought and below 20 oversold, and %K crossing %D in those zones is the signal. It mostly repeats what RSI says. → Ch 4 §9
Strike price: The fixed price at which an option buyer may buy (call) or sell (put) the underlying. NSE lists many strikes for each expiry; near the money, Nifty strikes are 50 points apart. → Ch 10 §3
STT (Securities Transaction Tax): A government tax on every trade in listed securities, and usually the biggest cost for retail traders. Rates from 1 Apr 2026: delivery 0.1% on buy and sell; intraday 0.025% on the sell side; futures 0.05% on the sell side; options 0.15% of premium on the sell side, or of intrinsic value if exercised; equity-fund redemptions and equity-ETF sales 0.001% on the sell side (nil for debt, gold and international funds). It cannot be deducted from capital gains but is a deductible business expense. → Ch 13 §2 · Ch 15 §8
Supertrend: An ATR-based trailing line that sits below price in an uptrend and flips above it when price closes below the line, so it is a trend signal and a trailing stop in one. Varsity uses Kite's default of period 7 and multiplier 3. → Ch 4 §12
Support and resistance: Support is a price zone below the current price where buying has repeatedly stopped declines; resistance is a zone above it where selling has repeatedly stopped rallies. Treat each as a band, not a single price. Once decisively broken, resistance often becomes support and vice versa (role reversal). They give swing traders their stops and targets. → Ch 3 §4 · Ch 3 §5
Survivorship bias: Testing only on stocks that survived and are well known today, which flatters the results. Adding back just five fallen 2017 names (YES Bank, Zee and others) cut the course's breakout system from 12.1% to 8.3% CAGR. The fix is a point-in-time universe. → Ch 12 §10 · Ch 14 §9
Swing trading: Holding a position for a few days to a few weeks to catch one leg of a trend or one bounce from a level, with decisions made on end-of-day data after the close. In this course swing trades are delivery (CNC) trades; their main risks are overnight gaps and events. → Ch 5 §2
Systematic and unsystematic risk: Systematic (market) risk hits all stocks together: interest rates, global sell-offs, war. Unsystematic (company) risk is specific to one business. Diversification removes most company risk, with little extra benefit beyond about 20 stocks; market risk can only be cut by holding less equity or hedging. → Ch 9 §15 · Ch 11 §2 · Ch 16 §4

T

T+1 settlement: Trades settle one working day after the trade date, so a Monday purchase reaches your demat account on Tuesday (India has been fully on T+1 since January 2023). It is also why the ex-date now equals the record date. By the end of the trade day your broker emails a contract note listing every trade and charge: keep it as your record for tax. → Ch 1 §10
Tax harvesting (LTCG and tax-loss harvesting): LTCG harvesting means selling enough long-term holdings each year to book about ₹1.25 lakh of tax-free gain, then buying back on the next trading day to raise your cost. Tax-loss harvesting means realising losses before 31 March to set against gains. For shares and ETFs, don't sell and rebuy on the same day: that nets off as an intraday trade. A mutual-fund redemption and a fresh purchase are separate transactions. → Ch 13 §14 · Ch 15 §10 · Ch 15 §11 · Ch 16 §14
Tax-aware rebalancing and asset location: Restoring your target mix while paying the least tax: new money first, ignore small drifts, sell equity in February–March within the ₹1.25 lakh exemption, sell long-term lots, use losses and avoid exit loads. Asset location means choosing whose name or which account holds each asset, for example putting slab-taxed debt-fund gains with a lower-income adult in the family. → Ch 16 §14 · Ch 16 §15 · Ch 15 §10
TER and BER (total and base expense ratio): The TER is a fund's yearly running cost as a percentage of assets, taken out of the NAV every day. From 1 Apr 2026 SEBI caps the base expense ratio (BER), the fund house's own fee, slab by slab on assets: for example 2.10% on the first ₹500 crore of an equity fund and 0.90% for index funds and ETFs. Brokerage and statutory levies are shown separately. → Ch 14 §4
Terminal value: In a DCF, the value of all cash flows after the forecast period, usually by the Gordon growth formula: final-year FCF × (1 + g) ÷ (r − g). It is often more than half the total value, so small changes in r − g move the answer a lot. Keep g near long-run inflation; the course uses 5%. → Ch 8 §7
Theta (time decay): How much premium an option loses per day with everything else unchanged. Buyers have negative theta and sellers positive. Decay speeds up into expiry: the ATM Nifty call lost about 7.6 points a day with 30 days left and 33.4 with one day left. → Ch 10 §7
Tracking difference and tracking error: Tracking difference is the annualised return gap between an index fund or ETF and its total return index: the cost you actually bore. Tracking error is the annualised standard deviation of the daily return differences: how unevenly it follows the index. → Ch 14 §10
Trading journal: A record of every trade: setup, entry, stop, size, exit, result in R, and what you thought and felt. Reviewed weekly, it lets you judge a setup by its numbers rather than by memory. → Ch 5 §16 · Ch 11 §16
Trailing stop, breakeven stop and time stop: Ways to manage an open trade. A breakeven stop moves the stop to the entry price once the trade is in profit (the playbook does it after selling half at +2R). A trailing stop moves only in your favour: the playbook exits after a close below the 20 EMA, and chandelier and Supertrend stops trail by a multiple of ATR. A time stop exits a trade that hasn't reached +1R within 10 sessions (15 for Setups 3 and 4). → Ch 5 §8 · Ch 4 §10
Transaction charges (brokerage, exchange fee, SEBI fee, stamp duty, GST, DP charge): Everything a trade costs besides STT: brokerage (Zerodha: ₹0 for delivery, 0.03% or ₹20 per order for intraday and futures, ₹20 flat for options), NSE's transaction charge, SEBI's ₹10 per crore, stamp duty on the buy side only (0.015% for delivery), 18% GST on brokerage plus exchange and SEBI charges, and a ₹15.34 DP charge for each stock sold out of demat that day. Total charges ÷ quantity is the breakeven move. → Ch 13 §2 · Ch 1 §17 · Ch 14 §4 · Ch 15 §8
Trend, trendline and channel: An uptrend makes higher highs and higher lows, and stays intact until a close below its last higher low; a downtrend makes lower highs and lower lows. A rising trendline joins two or more higher lows (a falling one, lower highs), and a third touch validates it. A parallel line through the opposite extremes forms a channel. → Ch 3 §2 · Ch 3 §3
Triangles, flags and pennants: Continuation patterns. Triangles coil between converging lines: ascending (flat top, rising lows, usually breaks up), descending (flat bottom, falling highs) and symmetrical (wait for the break). A flag or pennant is a short, tight, low-volume pause of about 5–15 sessions after a near-vertical move, the pole. The target projects the pattern's height from the breakout. → Ch 3 §9
Turnover (for tax) and tax audit: For F&O business income, turnover is the sum of the absolute profit or loss on each trade (ICAI's 2022 method), not the value traded. It decides whether you need an audit, not how much tax you pay: an audit is needed above ₹10 crore of turnover when cash receipts and payments are each within 5%, or in the presumptive-scheme opt-out case. → Ch 13 §11

V

Value at Risk and expected shortfall (VaR, CVaR): The 95% one-day VaR is the loss a portfolio should exceed on only about one day in twenty. Expected shortfall (CVaR) is the average loss on those worst days. VaR is a good "normal weather" gauge and says nothing about crash days such as the Nifty's −12.98% on 23 Mar 2020. → Ch 11 §6
Vega: The change in an option's premium for a 1-point change in implied volatility; it is the same for a call and a put at one strike. The ATM Nifty options had a vega of about 24, so implied volatility rising from 13% to 15% added about 48 points to each. → Ch 10 §7
Volatility and the volatility skew: Volatility is how widely returns swing around their average, measured by standard deviation (× √252 annualises a daily figure). Historical volatility is how much a price did move; implied volatility is how much option prices expect it to move. The skew: Nifty puts below spot carry higher implied volatility than calls above it, because markets fall faster than they rise. → Ch 11 §3 · Ch 10 §8 · Ch 16 §3
Volume: The number of shares (or contracts) traded in a period; 100 shares changing hands counts once. A move on heavy volume shows wide participation. Varsity compares each day with its 10-day average, and in the course's data heavy-volume down days were followed by much weaker returns than light-volume ones. → Ch 3 §7
VWAP (Volume-Weighted Average Price): The average price weighted by volume, using the typical price (high + low + close) ÷ 3. Intraday VWAP resets every day; a rolling VWAP covers a moving window; an anchored VWAP starts from an event such as a major low and shows the average cost of everyone who has bought since. → Ch 4 §13

W

WACC (Weighted Average Cost of Capital): The blended return required by shareholders and lenders: equity weight × cost of equity + debt weight × cost of debt × (1 − tax rate). It is the discount rate for free cash flow to the firm in a DCF. For almost debt-free Pidilite, WACC ≈ cost of equity, about 13%. → Ch 8 §6
Win rate and profit factor: Win rate is winning trades ÷ all trades; profit factor is gross profit ÷ gross loss, and it must stay above 1 after costs. Neither tells the whole story: a 30% win rate is fine with +3.6R winners, and a 90% win rate is a disaster if the one loss is −20R. → Ch 11 §11 · Ch 12 §5
Working capital and the cash conversion cycle (CCC): Working capital is the cash tied up in running the business, mainly inventory and receivables less payables. The cash conversion cycle measures it in days: inventory days + receivable days − payable days. Shorter is better, and a negative cycle means suppliers fund the business. Asian Paints' FY26 cycle was about 84 days. → Ch 6 §6 · Ch 7 §6

X

XIRR: The yearly rate that makes the present value of dated cash flows (investments negative, today's value positive) equal zero. It is the right return measure for SIPs and any other irregular investments, where CAGR does not apply. → Ch 14 §12 · Ch 16 §13

Y

YTM (yield to maturity): The yearly return a bond portfolio would earn if every bond were held to maturity and paid in full. After costs, it is a rough guide to what a debt fund will earn over a period close to its duration. → Ch 14 §8

← Contents Start with Chapter 1 →