Note 3.3 — Trading Terminology

Foundation · 00

How a stock reaches the market — the journey

Before understanding order types and bid-ask spreads, you need to understand how a stock even gets to the exchange. This gives every subsequent term its context.

The Journey of a Stock — From Private Company to Your Portfolio

Private company

Founders + VC/PE investors own it privately

→

IPO

Company lists on NSE/BSE. Public can buy shares.

→

Listed stock

Trades on exchange between buyers & sellers daily

→

Your portfolio

You buy via broker using order types

The stock market has two layers: the primary market (where new shares are created and sold for the first time — IPOs and FPOs) and the secondary market (where existing shares are traded between investors). Most everyday trading happens in the secondary market. The distinction matters because the mechanics and who gets the money are completely different.

Listing · 01

IPO — Initial Public Offering

One of the most hyped events in financial markets. Understanding what an IPO actually is — and what it isn't — is essential for making rational decisions when the next big one arrives.

Primary Market Event

Initial Public Offering (IPO)

The first time a private company sells shares to the general public on a stock exchange

How an IPO works — step by step

1

Company decides to go public

Founders need capital to expand, or early investors (VC/PE funds) want to exit. Going public raises large capital that private funding cannot provide.

2

Appoint investment banks (Book Running Lead Managers)

BRLMs determine the IPO price band, conduct roadshows to institutional investors, and manage the subscription book.

3

SEBI approval & DRHP filing

The company files a DRHP with SEBI. All material financial information, risks, and use of proceeds must be disclosed publicly.

4

IPO subscription opens (3 days)

Retail investors, HNIs, and institutions bid for shares within the price band. Each category has a quota. You apply through your demat account using ASBA (money blocked in your bank, only debited if allotted).

5

Allotment & listing

If oversubscribed, shares are allotted via lottery (retail category). If undersubscribed, all applicants get shares. Stock lists on NSE/BSE approximately 6 days after IPO closes. Price discovery begins.

Two types of IPO share structure

Fresh issue

Company creates new shares and sells them. Money raised goes directly into the company — used for expansion, debt repayment, R&D. Good for the business.

Offer for Sale (OFS)

Existing shareholders (founders, PE investors) sell their shares. Money goes to those selling shareholders — not the company. Company gets no capital. Common in promoter exit IPOs. Not automatically bad, but understand who benefits.

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The IPO categories in India (retail investor must know this)

QIB (Qualified Institutional Buyers) — 50% of IPO reserved for mutual funds, insurance companies, FIIs. They get priority.
NII/HNI (Non-Institutional Investors) — 15% reserved for individuals applying for more than ₹2 lakh.
RII (Retail Individual Investors) — 35% reserved for individuals applying up to ₹2 lakh. Allotted by lottery if oversubscribed.

⚠ The IPO hype trap

IPOs are intensely marketed. The company and its bankers choose the listing moment — they pick peak valuations and strong market conditions to maximise what they raise. You are almost always buying at the price that benefits the seller most. A hyped IPO on day 1 is rarely a bargain. Many of India's largest IPOs (Paytm ₹2,150 → ₹440, LIC ₹949 → ₹600 post-listing) have destroyed retail investor wealth. Always evaluate the IPO as you would any business: using the ratios from Note 3.2 — not on hype or grey market premium alone.

🇮🇳 India IPO stats — the scale

India raised over ₹1.6 lakh crore (~$20 billion) through IPOs in 2021 alone — the busiest IPO year in Indian history. Zomato, Nykaa, Paytm, Policy Bazaar, and Star Health all listed that year. Most delivered negative returns to IPO investors over the following 2 years. The lesson: IPO market activity peaks at market tops, not bottoms.

Listing · 02

FPO, Rights Issue & OFS

After a company is already listed, it may need to raise more capital. Three mechanisms exist — each with different implications for existing shareholders.

Mechanism	What it is	Who can participate	Effect on existing shareholders
FPO Follow-on Public Offer	Already-listed company issues new shares to the public again to raise additional capital	General public, same as IPO	Dilution — new shares reduce existing shareholders' percentage ownership. Share price often falls slightly.
Rights Issue	Company offers new shares to existing shareholders only, at a discount to market price, in proportion to their current holding	Existing shareholders only	No dilution if you participate. If you don't subscribe, your stake gets diluted. Rights can also be sold on the exchange.
OFS Offer for Sale	Promoters or large shareholders sell their existing shares through the exchange. No new shares created.	Institutional + retail via broker platform	No dilution (no new shares). Can signal that promoter is reducing stake — monitor why.
Buyback	Company repurchases its own shares from the market, reducing total share count	Existing shareholders (can tender shares)	Anti-dilution — EPS rises. Signals management believes stock is undervalued.

Rights issue — should you subscribe?

A rights issue is only attractive if you believe in the company's growth story — because you're investing more capital at a discount. If the company is raising money because it's in financial trouble (not growth capital), the discount is a trap. Always read the stated use of proceeds: "expand capacity" → potentially good. "Repay debt" → understand why debt became a problem before subscribing.

Market Structure · 03

Primary vs Secondary market

Two completely different markets operating within the same ecosystem. Confusing them leads to misunderstanding where money actually flows.

Primary market

Where new securities are created and sold for the first time. IPOs, FPOs, rights issues, government bond auctions all happen here. Money raised goes to the issuer (company or government). You are buying directly from the company.

Secondary market

Where already-issued securities are traded between investors. NSE and BSE are secondary markets. When you buy TCS shares today, money goes to the seller — not to TCS. TCS gets nothing. This is where 99% of everyday trading happens.

The key implication most beginners miss

When you buy or sell stocks on NSE or BSE every day, you are trading with other investors — not with the company. The company's share price going up doesn't give the company more money. It makes existing shareholders richer and gives the company a stronger currency to raise money in the future (if needed). Only in IPOs/FPOs does the company directly receive capital from you.

Market Mechanics · 04

Market capitalisation & free float

Two foundational metrics that define a company's size and how easily its shares can actually be traded.

// Market Capitalisation

Market Cap = Current Share Price × Total Shares Outstanding

// Example: Reliance share price ₹2,800 | 6,766 crore shares outstanding
Market Cap = ₹2,800 × 6,766 crore = ~₹18.9 lakh crore // ~$227 billion — India's largest company by market cap

// Free Float Market Cap
Free Float = Shares available for public trading // excludes promoter-held, locked-in shares
Free Float % = Free Float Shares ÷ Total Shares × 100

Market cap categories — India classification

Category	SEBI definition (India)	Characteristics	Risk/Return
Large Cap	Top 100 companies by market cap	Stable, well-researched, high liquidity. Nifty 50 = top large caps	Lower risk, steady returns
Mid Cap	101st to 250th by market cap	Growing businesses, less liquid than large caps, more volatility	Moderate risk, higher potential
Small Cap	251st and below	Less liquid, less researched, higher information asymmetry. High volatility.	High risk, high potential reward

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Why free float matters for you

A company with ₹10,000 crore market cap but only 15% free float means only ₹1,500 crore of shares are actually available to trade. Low free float = low liquidity = your large buy order can itself move the price significantly. This is why Nifty 50 uses free float market cap (not total market cap) for its weightings.

Market Mechanics · 05

Bid-ask spread & liquidity

Every single transaction on a stock exchange involves a bid price and an ask price. The difference between them — the spread — is the most immediate cost you pay every time you trade, yet most beginners never notice it.

Market Mechanic

Bid-Ask Spread

The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask)

Bid (Buy side)

₹499.50

Highest price a buyer
is willing to pay

Spread

₹1.00

(0.2% of price)

Ask (Sell side)

₹500.50

Lowest price a seller
is willing to accept

How a trade actually executes

Order Matching — How Your Buy Gets Filled

You place buy order

₹500.50 (market order)

→

Exchange order book

Matches with best available seller

→

Seller at ₹500.50

Accepts the ask price

→

Trade executes

At ₹500.50 — the ask

When you place a market order to buy, you pay the ask price (seller's price). When you place a market order to sell, you receive the bid price (buyer's price). The spread is the immediate cost. You buy at ₹500.50 and could only instantly sell at ₹499.50 — you're already ₹1 "down" the moment you buy. This is why market makers exist and how they earn their living.

Spread size = liquidity measure

Security type	Typical spread	Why
Nifty 50 large caps (TCS, HDFC)	₹0.05 – ₹0.50 (0.01–0.05%)	Extremely high volume → always buyers and sellers → tiny spread
Mid cap stocks	₹0.50 – ₹5 (0.1–0.5%)	Moderate volume. Spread widens in volatile periods.
Small cap stocks	₹5 – ₹50+ (0.5–5%+)	Low volume, few participants. You can move the price just by buying.
Illiquid penny stocks	10–30%+ spread	Extremely dangerous. Buy at ₹10, immediate sell value is ₹7.

Practical rule for retail investors

For long-term investors, the bid-ask spread is rarely significant on large caps — it's a fraction of a percent and you hold for years. For active traders, spread is a real recurring cost. For small/micro-cap stocks, always check the spread before placing a market order. A 5% spread on a ₹10,000 trade costs you ₹500 before the stock moves a rupee.

Market Mechanics · 06

Volume & open interest

Price tells you where the market is. Volume tells you how much conviction is behind that price move. These two together are far more informative than price alone.

Trading volume

The total number of shares (or contracts) traded in a given period — usually a day. High volume on a price move = strong conviction, many participants agree. Low volume on a price move = weak signal, few participants, easily reversible. Volume is the market's "applause meter."

Open interest (F&O)

Specific to F&O markets. Open interest = total number of outstanding contracts that have not been settled. Rising OI + rising price = new money entering, bullish signal. Rising OI + falling price = new shorts being added, bearish signal.

// Volume interpretation rules

Price UP + Volume HIGH → Strong bullish move // conviction buying
Price UP + Volume LOW → Weak rally // lack of conviction — may not sustain
Price DOWN + Volume HIGH → Strong bearish move // conviction selling — concern
Price DOWN + Volume LOW → Weak pullback // sellers losing conviction — may reverse

Order Types · 07

Order types — overview & why they exist

Every time you trade, you place an order. The type of order you choose determines the price you get, the certainty of execution, and your risk exposure. Knowing the right order for the right situation is a fundamental skill.

Order type	Core mechanism	Best used when	Main risk
Market order	Execute immediately at best available price	Speed is critical; large-cap liquid stocks	Slippage on illiquid stocks
Limit order	Execute only at your specified price or better	Price precision matters; patient entry/exit	May not execute if price not reached
Stop-loss (SL)	Triggers a limit order when price hits stop level	Protecting existing position from large losses	May not fill if stock gaps past stop price
SL-Market (SL-M)	Triggers a market order when stop level is hit	When guaranteed exit matters more than exact price	Executed at market price — can be ugly in fast falls
GTT order	Good Till Triggered — persists until price is hit (days/months)	Setting buy/sell targets without monitoring daily	Order may trigger on temporary spike/dip
After-market order (AMO)	Placed after market hours, queued for next session open	Pre-planning trades overnight	Executes at unknown next-day open price

Order Types · 08

Market order

Market Order

Execute now, at any price

Instant execution

A market order instructs your broker to buy or sell immediately at the best currently available price — no price condition attached. You are prioritising certainty of execution over price.

When it's the right choice: Large-cap, high-liquidity stocks (Nifty 50 companies) where the bid-ask spread is minimal. When you urgently need to exit a position or capture a fast-moving opportunity.

// Market order — what happens under the hood

You place: BUY 100 shares of HDFC Bank — Market Order

Exchange scans order book:
Seller A offering 50 shares at ₹1,699.00 // filled first
Seller B offering 30 shares at ₹1,699.50 // filled next
Seller C offering 20 shares at ₹1,700.25 // filled last

Result: You bought 100 shares at 3 different prices — average ₹1,699.40
// This is called "slippage" — your average fill differs from the price you saw

⚠ Market order on illiquid stocks — dangerous

On a stock trading 5,000 shares/day, a market order for 500 shares can itself move the price significantly. You could trigger a cascade of higher ask prices, ending up paying 3–5% above the last traded price. For any stock outside the top 200 by volume — always use limit orders.

Order Types · 09

Limit order

Limit Order

Execute only at my price or better

Price control

A limit order specifies the maximum price you'll pay to buy (or minimum price you'll accept to sell). The order only executes if the market reaches your price. You are prioritising price over certainty of execution.

When it's the right choice: Almost all situations for long-term investors. Especially on mid/small caps, volatile conditions, or when you have a specific target entry price in mind.

// Limit order — buy example

Stock currently trading at ₹520.
You believe fair value is ₹490.

You place: BUY 100 shares LIMIT ₹490

// Order sits in the exchange order book waiting.
// If stock falls to ₹490 → your order executes at ₹490 or lower.
// If stock never falls to ₹490 → order expires at day end (or you set it as GTC).

// Limit order — sell example
You hold stock at avg cost ₹490. You want to book profit at ₹600.
You place: SELL 100 shares LIMIT ₹600
// Executes only when stock reaches ₹600 or above. Locks in your target profit.

Best practice for long-term investors

For most equity investors, limit orders are the default. They prevent paying more than you intended, protect you during volatile conditions, and work seamlessly during market drops where you want to accumulate. The slight inconvenience of a potentially unfilled order is far outweighed by price control over years of investing.

Order Types · 10

Stop-loss (SL) order

The single most important risk management tool available to any trader or investor. A stop-loss is a pre-planned exit — it removes emotion from a falling position.

Stop-Loss (SL)

Protect my position from large losses

Risk management

A stop-loss is a two-price order: a trigger price and a limit price. When the stock falls to your trigger price, a limit sell order is automatically placed at your limit price. It exits your position before losses become catastrophic.

The psychology: Without a pre-set stop-loss, humans rationalise every loss — "I'll wait for it to recover." A stop-loss removes that decision from you.

// Stop-loss order mechanics

You bought stock at ₹500. Max loss you accept: 10% → stop at ₹450.

You place: SELL SL: Trigger ₹452 | Limit ₹450

// How it works:
// Stock is at ₹500 → nothing happens (order dormant)
// Stock falls to ₹452 → trigger hit → limit sell order placed at ₹450
// Limit order fills at ₹450 (or better if there's a buyer above ₹450)
// Your loss is capped at ~₹50/share (10%)

// Gap risk — the limitation:
// If stock GAPS DOWN overnight (bad news after market) from ₹500 → ₹410
// Trigger fires at ₹452 but no buyer at ₹450 → order may fill at ₹410
// Gap risk = real risk with stop-loss orders. Use SL-M to guarantee exit.

Where to place your stop-loss — the strategy

Fixed % stop-loss

Set stop at a fixed percentage below your entry — 5%, 8%, 10%. Simple and consistent. Works for traders who need clear rules.

Technical stop-loss

Set stop just below a key support level. More contextual — based on price behaviour rather than an arbitrary percentage. Covered in Note 4.3.

Trailing stop-loss

Stop price moves up as stock price rises, locking in profits while still protecting downside. e.g., always 10% below the highest price reached. Available on Zerodha as GTT.

Mental stop-loss

No actual order — you monitor manually and plan to sell when a level is breached. Works for experienced, disciplined investors only. Beginners almost always fail to honour mental stops when emotions kick in.

Order Types · 11

SL-Market & GTT orders

SL-Market (SL-M) order

SL-M Order

Exit guaranteed, price uncertain

Guaranteed exit

Like a stop-loss, but when triggered, it fires a market order (not a limit order). This guarantees you exit the position — but you have no control over the exact fill price in a fast-moving market.

Use when: The risk of not exiting at all (gap risk with SL) is worse than the risk of getting a slightly worse price. Common for leveraged positions where holding through a bad move can be catastrophic.

GTT — Good Till Triggered

GTT Order

Set it and forget it — months in advance

Long-term planning

A GTT order persists in the system until the price condition is met — potentially for months or even a year. Available on Zerodha, Groww, and most Indian brokers. Unlike a regular limit order that expires at day end, a GTT stays active.

Practical use: "I want to buy TCS if it falls to ₹3,200" — set a GTT buy at ₹3,200 and forget it. It fires automatically when the condition is met, even 3 months later.

🇮🇳 GTT on Zerodha — practical walkthrough

On Zerodha Kite, you can set a GTT order with two legs: a target (sell above X) and a stop-loss (sell below Y). The system monitors the price continuously. When either condition is triggered, the corresponding order is placed. This allows long-term investors to set profit-booking and stop-loss levels once and not monitor the stock daily — a massive psychological benefit.

Advanced · 12

Short selling

One of the most misunderstood — and feared — mechanisms in markets. Short selling is not inherently evil. It performs a critical market function. But it carries a unique risk profile that every investor must understand.

Advanced Mechanism

Short Selling

Borrowing shares you don't own, selling them now, and buying them back later — profiting if the price falls

How short selling works mechanically

Short Sale — Step by Step

1

Borrow: You borrow 100 shares of Company X from your broker (the broker lends shares from its own inventory or other clients).

2

Sell: You immediately sell those 100 borrowed shares at the current price of ₹500 each. You receive ₹50,000 in cash.

3a

If price falls to ₹400: You buy back 100 shares at ₹400 (₹40,000), return them to the broker. Profit: ₹50,000 − ₹40,000 = ₹10,000 gain.

3b

If price rises to ₹650: You must buy back 100 shares at ₹650 (₹65,000) to return them. Loss: ₹50,000 − ₹65,000 = ₹15,000 loss.

The asymmetric risk of short selling

When you buy a stock, your maximum loss is 100% of your investment (stock goes to zero). When you short a stock, your maximum loss is theoretically unlimited — because a stock can rise to ₹1,000, ₹2,000, ₹10,000 with no ceiling. A short squeeze (?) can destroy short positions rapidly. This unlimited downside makes short selling inherently more dangerous than buying.

Short selling in India — the regulatory picture

🏛️

SEBI rules on short selling in India

SEBI permits short selling in Indian equity markets. However, intraday short selling (sell in the morning, buy back same day) is common and simple. Overnight short selling requires stock lending via the SLB (Securities Lending & Borrowing) mechanism — less common for retail investors. Most retail short selling in India happens via F&O (futures and options), where no physical borrowing is needed.

Advanced · 13

Margin trading

Margin is borrowed money from your broker to buy more stock than you could with just your own capital. It amplifies both gains and losses — proportionally and equally. Most retail investors who blow up their accounts do so through uncontrolled margin.

Advanced Mechanism

Margin Trading

Using your broker's funds to take a larger position than your own capital allows

// Margin trading example

Your capital: ₹1,00,000
Broker offers 4× margin: you can buy ₹4,00,000 worth of stock
You buy 100 shares of Stock X at ₹4,000 = ₹4,00,000 total position

// Scenario A — Stock rises 10%:
Stock goes to ₹4,400 → position value = ₹4,40,000
Profit = ₹40,000 on ₹1,00,000 capital = 40% return // 4× amplified vs 10% without margin

// Scenario B — Stock falls 10%:
Stock goes to ₹3,600 → position value = ₹3,60,000
Loss = ₹40,000 on ₹1,00,000 capital = -40% loss // Your own capital took 4× the hit

// Scenario C — Stock falls 25%:
Stock goes to ₹3,000 → position value = ₹3,00,000
Loss = ₹1,00,000 = your entire capital is wiped out // Margin call — broker closes your position forcibly

⚠ Margin call — the forced exit

When your losses eat into your capital below the broker's maintenance margin threshold, the broker issues a margin call: deposit more money immediately or your position is closed — regardless of your view on the stock. In fast markets, this can happen in minutes. You don't get to "wait for recovery." Margin calls are one of the most common ways retail traders lose their entire capital in a single day.

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For long-term investors — a simple rule

Never use margin for long-term stock investments. Margin is a short-term tool for traders with specific, time-bound positions and strict stop-losses. A quality company in a bear market can fall 40–60% before recovering — margin would have wiped you out long before the recovery you correctly anticipated. Your conviction is worth nothing if you can't hold the position.

Advanced · 14

Leverage & Futures/Options (F&O)

Leverage is the ability to control a large position with a small amount of capital. F&O (Futures and Options) are the primary instruments through which retail investors access leverage in Indian markets — and the primary way they lose money.

1× (no leverage)
Cash equity, long-term

2–3×
Mild margin

5–10×
Active trading

10–20×
F&O territory

50–100×
Currency/commodity

Futures

A contract to buy or sell an asset at a fixed price on a future date. You pay only a margin (5–15% of contract value) to control the full contract. Lot sizes are pre-fixed. Profits and losses are marked to market daily.

Options

A contract giving the right (not obligation) to buy or sell at a fixed price before a set date. Call option = right to buy. Put option = right to sell. You pay a premium upfront. Maximum loss = premium paid (for buyers). Covered in depth in Phase 2.

SEBI study (2022)

89%

of individual F&O traders lost money in FY2022

Avg loss per trader

₹1.1 lakh

average annual loss for losing F&O traders (FY22)

Profitable traders

11%

Only 1 in 9 individual F&O traders made money

The leverage mindset shift

Leverage doesn't make you smarter — it makes you faster. A 2% wrong move with 20× leverage = 40% of your capital gone. The same analysis skills that make you a good long-term investor do not automatically translate to leveraged trading. F&O trading requires a fundamentally different skill set: risk management, position sizing, and loss psychology. Master equities first.

Regulation · 15

Circuit breakers, SEBI & market structure

Markets don't operate in a free-for-all. SEBI and the exchanges have multiple safeguards to prevent complete breakdowns. Understanding these prevents panic when they're triggered.

Circuit breakers — index level (NSE/BSE)

When market-wide panic hits, these halt all trading to allow information and calm to return.

Nifty/Sensex fall	Trading halt duration	If triggered after 2:30 PM
10% fall	45 minutes	If triggered after 2:30 PM → 15 minute halt only
15% fall	2 hours	If triggered after 1:00 PM → 45 minute halt only
20% fall	Market closed for the day	Always closed for rest of day

Circuit breakers — individual stock level (upper/lower circuits)

Individual stocks have their own circuit limits — typically ±2%, ±5%, ±10%, ±20% depending on the stock's category. When hit, the stock trading is paused temporarily. This prevents single stocks from being manipulated or crashed in a session.

// Individual stock circuit limits (India)

Group A/B (large/mid caps) → ±20% daily limit
Group S/ST (SME/trade-to-trade) → ±5% or ±10% limit
Z group (suspended/compliance issues) → ±5% limit

// Upper circuit = stock hits max gain for the day → buying halted, only sellers
// Lower circuit = stock hits max loss for the day → selling halted, only buyers
// Liquidity trap: lower circuit = you CANNOT sell even if you want to exit

⚠ Lower circuit — the liquidity trap

If a stock hits its lower circuit limit, selling is restricted because there are no buyers willing to transact at that price. You are stuck in the position. This can persist for multiple consecutive days in a crash. This is one of the hidden dangers of small-cap and illiquid stocks — in a panic, you may not be able to exit at all until the circuit is released.

SEBI — the regulator you must know

What SEBI does

SEBI (Securities and Exchange Board of India) is the regulator of Indian capital markets. It sets rules for exchanges (NSE, BSE), brokers, mutual funds, and listed companies. All listed company disclosures go through SEBI. SEBI investigates and penalises insider trading and market manipulation.

SEBI's investor protections

Segregated client funds (brokers can't use your money). T+1 settlement (you receive shares/money next business day). Mandatory KYC. Investor grievance portal (SCORES). Demat dematerialisation prevents physical certificate fraud.

Reference · 16

Full glossary & cheatsheet

Every term from this note in one place — your quick-reference dictionary for trading terminology.

Term	One-line definition	Key thing to remember
IPO	First time a company sells shares to the public	Company receives the capital. Often priced to benefit seller, not buyer.
FPO	Additional shares sold by already-listed company	Dilutes existing shareholders — check why they need more capital.
Rights Issue	New shares offered to existing shareholders at discount	Subscribe if you believe in the company. Don't subscribe blindly for the discount.
OFS	Promoter/investor sells their stake via exchange	No new capital to company. Watch promoter selling pattern.
Buyback	Company repurchases own shares, reducing share count	Anti-dilutive. EPS rises. Often signals management confidence.
Market Cap	Share price × total shares	Large cap = more stable; small cap = higher risk/reward.
Free Float	Shares available to public (excludes promoter holding)	Low free float = low liquidity = price moves on small volumes.
Bid price	Highest price buyer is willing to pay	When you sell a market order, you get the bid price.
Ask price	Lowest price seller will accept	When you buy a market order, you pay the ask price.
Spread	Difference between bid and ask	Immediate transaction cost. Wider on illiquid stocks.
Volume	Shares traded in a period	Price move + high volume = conviction. Low volume move = weak signal.
Market order	Execute immediately at any price	Use only on large, liquid stocks. Never on small caps.
Limit order	Execute only at specified price or better	Default order type for long-term investors.
Stop-loss (SL)	Auto-exit when price falls to trigger level	Non-negotiable risk management. Set it before you need it.
SL-Market	Stop-loss that fires a market order	Guarantees exit; no price guarantee. Use for leveraged positions.
GTT order	Order persists until price condition is met (weeks/months)	Ideal for long-term investors setting patient entry/exit targets.
Short selling	Sell borrowed shares first, buy back later to profit from decline	Unlimited loss potential. Use stop-loss religiously.
Short squeeze	Price rise forces short sellers to buy back, pushing price higher	Can cause violent, fast price spikes. Don't short heavily shorted stocks.
Margin	Borrowed money from broker to trade larger positions	Amplifies both gains and losses equally. Margin calls can wipe you out.
Margin call	Broker demands more capital or forcibly closes your position	Happens fast. No negotiations. Avoid by not over-leveraging.
F&O (Futures & Options)	Derivative contracts to buy/sell at future price	89% of retail F&O traders lose money (SEBI data). Learn fully before trading.
Circuit breaker (index)	Market-wide trading halt when index falls 10/15/20%	Don't panic. Gives market time to stabilise.
Lower circuit (stock)	Stock halted at max daily loss — no sellers can exit	Liquidity trap. Avoid illiquid stocks for this reason.
SEBI	India's securities market regulator	Governs exchanges, brokers, mutual funds, and listed companies.
T+1 settlement	Trade settles (shares/money exchanged) next business day	You can't withdraw sale proceeds same day in India.