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Stock Market Glossary

Demat Account:

A depository where the digital copies of stocks are stored and managed. Think of it as what bank accounts act to your money; the same is Demat account to your stocks

Trading Account:

A transaction account where your cash and securities are held. It is used to place buy and sell orders for your securities in the market.

2-in-1 Account:

An aggregation of Demat and trading account which is opened and linked together to invest in stocks, mutual funds, bonds etc for seamless transactions.

3-in-1 account:

An aggregation of a savings bank, Demat and trading account which is opened and linked together to invest in stocks, mutual funds, bonds etc for hassle-free transactions.

After Market Order (AMO):

It is an advance order that allows traders to place buy/sell orders after regular market hours for the next day trading.

Buy Today and Sell Tomorrow (BTST):

Normally, the shares get credited to your DEMAT account after 2 days. BTST authorizes you to sell shares before they are credited into your Demat account.

Sell Today Buy Tomorrow (STBT):

It is used in short selling and allows customers to sell the shares which are not in their Demat account at that moment. However, they can buy them the next day.

Trading Platform:

Set of software & applications offered by brokers that enable traders and investors to place their trades and helps them track accounts.

CDSL TPIN:

A unique six-digit password that allows a broker to debit the given stocks from your Demat account associated with CDSL, within 90 days.

Clearing charges:

A small amount charged by Clearing houses for executing your transactions using their own facilities. Clearing houses are required to minimize the risk of default on payments. 

DPR based square-off:

Daily Price Range (DPR) is the maximum variation allowed in a specific share during a trading session. Once the maximum permissible limit gets hit in either direction, then the trading on that specific share gets suspended. 

Exposure:

Exposure is the amount of money an investor or trader can stand to lose when they invest in any security like shares, mutual funds etc It is also known as a limit.

Good Till Cancelled Order(GTC):

A type of order that is placed by an investor and is used to get the trade executed at the desired price for a certain desired quantity within some time interval. The trade remains in effect until executed or revoked by the investor.

Limit order:

Limit order is used when an investor wants to buy or sell the security at a specific price.

Leg in trading:

A leg refers to an instance taken in trading. It refers to an instance; For example: Suppose you want to buy 10 shares of a company, then this could be your first leg and selling those 10 shares could be a second leg.

Market order:

It is used when an investor wants to buy/sell a security at the current market price.

Margin:

The additional money that can be borrowed from a broker when you lack funds to place your trade. The security you buy acts as a collateral.

Stamp duty:

It is a tax that the Government collects on legal documents that are involved in the process of transfer of assets or properties. Here the stocks, currency derivatives and commodities are assets.

Settlement:

It is a bilateral process where the buyer gets the security in its DEMAT account, and the seller receives its money in the trading account. It is the last step of the transaction and generally takes 2 days to get executed.

Securities Transaction Tax (STT):

STT is a direct tax levied by the Government of India on every transaction of securities(excluding currency and commodities) listed on the stock exchanges in India.

Equity:

An equity refers to the partial ownership of the company which is received upon buying the shares of that certain company.

Commodity:

Commodity refers to essential goods or primary goods that one can group under standard headings. Example: gold, silver, nickel etc

Options:

It authorizes an investor to buy or sell shares at a specific strike price within a certain time interval, as long as the contract is in effect

Futures:

It is a contract for securities such as shares or commodities that are bought at a predetermined price. However, the final delivery and payment are made later.