Investing & trading terms, in plain English
The concepts behind good decisions — defined simply, with why each one actually matters for your money.
Beta in InvestingBeta measures how much a stock or portfolio moves relative to the overall market. A beta above 1 amplifies market swings; below 1 dampens them.VolatilityVolatility measures how much an asset's price swings over time. Higher volatility means bigger, more frequent moves — and a bumpier ride.Maximum DrawdownMaximum drawdown is the largest peak-to-trough fall in a portfolio's value. It is the single number that best tests your nerve as an investor.XIRR (and Why It Beats Simple Returns)XIRR is the true annualised return of a portfolio, accounting for the exact timing and size of every deposit and withdrawal — the honest way to measure performance.Sharpe RatioThe Sharpe ratio measures return per unit of risk. It answers the question that raw returns cannot: was the reward worth the volatility?VWAP (Volume-Weighted Average Price)VWAP is the average price of a stock over the day, weighted by volume. Traders use it as a benchmark for fair value and to gauge intraday trend.Relative Volume (RVOL)Relative volume compares how much a stock is trading now versus its own recent average. It is the key filter for spotting stocks "in play".an R-Multiple (Risk-Based Position Sizing)An R-multiple expresses a trade's outcome in units of the risk you took. It is the foundation of consistent position sizing and risk management.Alpha in InvestingAlpha is the return a portfolio earns above or below its benchmark after adjusting for market risk. It is the honest measure of skill versus luck.an Expense RatioAn expense ratio is the annual percentage a mutual fund or ETF charges to run the fund. Small differences compound into large gaps over decades.Nifty 50The Nifty 50 is India's flagship stock index, tracking 50 of the largest, most liquid companies on the NSE. It is the default benchmark for Indian equities.Market CapitalisationMarket capitalisation is the total market value of a company's shares. It defines the large-cap, mid-cap and small-cap bands used by SEBI in India.a Stop-LossA stop-loss is a preset exit order that closes a trade once price hits a chosen level, capping the loss so a single position cannot damage your account.ATR (Average True Range)ATR measures a stock's typical price range over a period, giving a clean read on volatility. Traders use it to size stops and targets to real movement.RSI (Relative Strength Index)RSI is a momentum oscillator from 0 to 100 that gauges whether recent gains or losses dominate. Readings above 70 or below 30 flag overbought or oversold.a Moving Average (SMA vs EMA)A moving average smooths price into a trend line by averaging recent closes. SMA weights all periods equally; EMA reacts faster to the latest prices.Implied VolatilityImplied volatility is the market's expectation of future price movement, backed out of option prices. Higher IV means pricier options and bigger expected swings.Standard Deviation (in Investing)Standard deviation measures how far returns spread around their average. In investing it is the most common yardstick of volatility and, therefore, of risk.