StockEducation

The glossary

210 market terms in one or two plain sentences each. 78 of them carry a note on what the term means on NEPSE specifically, which is the part a general glossary cannot tell you.

Nepal-specific

Terms you will meet on NEPSE and almost nowhere else. No international glossary covers these.

Allotment — link to this term
The process of deciding who receives shares in an oversubscribed issue, and how many.
On NEPSE: Results appear in Mero Share once the issue closes.
ASBA — link to this term
Applications Supported by Blocked Amount. Your application money is blocked in your bank account rather than transferred, and is only debited if shares are allotted.
On NEPSE: The standard way to apply for any Nepali IPO, FPO or right share.
Auction — link to this term
The sale of unclaimed or forfeited shares, such as unsubscribed rights, conducted through the exchange.
Bank classes (A, B, C, D) — link to this term
Nepal's licensing tiers for banks and financial institutions: Class A commercial banks, Class B development banks, Class C finance companies and Class D microfinance institutions, each with different capital requirements and permitted activities.
On NEPSE: The class is part of every listed BFI's identity on NEPSE — the sector indices follow these classes, and a Class D microfinance stock behaves very differently from a Class A commercial bank.
Base rate — link to this term
The minimum benchmark below which a bank may not lend, calculated from its own cost of funds and published monthly. A loan is priced as the base rate plus a premium.
On NEPSE: Every Nepali bank publishes its base rate on its website and NRB compiles them. Compare base rates across banks before borrowing — the premium is negotiable, the base is not.
BFI — link to this term
Bank and Financial Institution — the collective term for Nepal's commercial banks, development banks and finance companies.
On NEPSE: BFIs make up a large share of NEPSE's market capitalisation.
BOID — link to this term
The sixteen-digit Beneficiary Owner Identification number that identifies your Demat account.
On NEPSE: Needed for every IPO application and share transfer. Write it down.
Bonus share — link to this term
Additional shares issued free to existing shareholders out of accumulated profit. Your holding grows but the price adjusts down.
On NEPSE: Widely used by Nepali companies in place of cash dividends. It is not free money — the pie is cut into more slices.
Book building — link to this term
A pricing method where institutional bids establish the issue price, rather than the company fixing it in advance.
Capital gains tax — link to this termalso: CGT
Tax on the profit made when you sell shares, withheld by the broker at the time of sale.
On NEPSE: The rate depends on how long you held and whether you are an individual or an institution. Rates change — confirm the current ones with your broker.
Cash reserve ratio — link to this termalso: CRR
The share of its deposits a bank must keep parked at the central bank in cash. Raising it drains lendable money from the system; lowering it releases money.
On NEPSE: One of NRB's main liquidity levers, revised in the annual monetary policy and its reviews. When brokers talk about 'tight liquidity', CRR is part of that story.
CDSC — link to this termalso: Central Depository
CDS and Clearing Limited, the central depository that holds all dematerialised shares in Nepal and runs Mero Share.
Circuit limit — link to this termalso: Circuit breaker
The maximum a price is allowed to move in one session before trading in it is restricted.
On NEPSE: NEPSE applies a daily band. A stock locked at its limit can be impossible to exit, which is the risk people underestimate.
Demat account — link to this termalso: Dematerialised account
The electronic account that holds your shares, opened through a depository participant and recorded at CDSC.
On NEPSE: You need only one, regardless of how many brokers you use.
Deposit and Credit Guarantee Fund — link to this termalso: DCGF, deposit insurance
The public fund that insures small bank deposits, so a depositor is repaid up to a ceiling if a member institution fails.
On NEPSE: In Nepal this is the DCGF. The insured ceiling is revised — check the current limit on DCGF's site rather than any figure printed anywhere. Amounts above the ceiling are not guaranteed, which is a reason large savers spread deposits across banks.
Deprived sector lending — link to this term
A regulatory mandate that banks lend a minimum share of their portfolio to low-income and underserved borrowers, directly or through microfinance institutions.
On NEPSE: An NRB requirement, with the percentage revised in monetary policy. It is one reason commercial banks hold stakes in microfinance companies — those stakes show up when you read a bank's annual report.
DP charge — link to this termalso: Depository participant charge
A flat fee charged per company per settlement by your depository participant.
On NEPSE: It does not scale with trade size, so it is a large percentage of a very small trade. This is why frequent tiny trades are expensive.
Floorsheet — link to this term
The published record of every trade executed in a session, showing broker, quantity and price.
On NEPSE: Unusually transparent by international standards, and heavily used by Nepali traders to watch broker activity.
FPO — link to this termalso: Further Public Offering
Further Public Offering — an additional sale of shares by a company already listed.
Interest rate corridor — link to this term
The band within which the central bank steers short-term interest rates: a ceiling rate at which it lends to banks, a floor at which it absorbs their spare cash, and a policy rate in between.
On NEPSE: NRB runs one. When interbank rates drift outside the corridor, NRB is expected to act — watching the corridor tells you which way deposit and loan rates are being pushed.
IPO — link to this termalso: Initial Public Offering
Initial Public Offering — the first sale of a company's shares to the public.
On NEPSE: Applied for through Mero Share using ASBA. Heavily oversubscribed issues are allotted by lottery, so a large application does not improve your odds proportionally.
Know Your Customer — link to this termalso: KYC
The identity checks a financial institution must complete before opening an account: who you are, where you live, and where the money comes from.
On NEPSE: Every account in the chain — bank, Demat, Mero Share, TMS and broker — runs KYC. Most rejected applications fail on mismatched details across these forms, so fill in the same name and address everywhere, exactly as your citizenship card writes them.
Mero Share — link to this term
CDSC's online system for viewing your holdings and applying for new issues.
On NEPSE: It is not for buying and selling listed shares — that is TMS. Confusing the two is common.
Microfinance institution — link to this termalso: MFI, laghubitta
A Class D institution that lends small amounts, mostly without collateral and often through group guarantees, to borrowers commercial banks do not reach.
On NEPSE: Microfinance is its own sub-index on NEPSE and for years carried some of the market's highest valuations and sharpest swings. Read the NPL and provisioning lines before being impressed by growth.
NEPSE — link to this term
The Nepal Stock Exchange, the country's only stock exchange, based in Kathmandu.
On NEPSE: Trades Sunday to Friday, closed Saturday. Pre-open auction 10:30-11:00 NPT, continuous trading 11:00-15:00 NPT.
NRB — link to this termalso: Nepal Rastra Bank
Nepal Rastra Bank, the central bank. Its directives govern the banks and financial institutions that dominate NEPSE.
On NEPSE: An NRB policy change can reprice a large part of the market at once.
Ordinary share — link to this termalso: Public share
A normal share available to the general public, as distinct from a promoter share.
Promoter share — link to this term
Shares held by a company's founders and promoters, subject to lock-in and transfer restrictions.
On NEPSE: They often trade at a different price from ordinary shares in Nepal.
Remittance — link to this term
Money sent home by citizens working abroad. For the receiving country it is income that arrives without a loan or an export leaving.
On NEPSE: Remittance is Nepal's macroeconomic anchor — a large share of GDP, the main source of the banking system's deposits, and therefore upstream of market liquidity. Strong remittance months ease liquidity; weak ones tighten it.
Right share — link to this termalso: Rights issue
New shares offered to existing shareholders in proportion to what they already hold, usually below market price.
On NEPSE: Very common in Nepal, especially among banks raising capital. Ignoring a rights issue dilutes your holding.
SEBON — link to this termalso: Securities Board of Nepal
The Securities Board of Nepal, the regulator for the securities market. It licenses brokers, approves issues and sets fees.
Spread rate — link to this term
The gap between the average rate a bank earns on loans and the average rate it pays on deposits. It is the bank's gross margin on money, and the regulator caps it.
On NEPSE: NRB sets a maximum spread and revises it in monetary policy — which is why no figure is printed here. A bank stock's profitability question starts with its spread.
Statutory liquidity ratio — link to this termalso: SLR
The share of deposits a bank must hold in liquid assets — cash, gold and approved government securities — so it can meet withdrawals without selling loans.
On NEPSE: Set and revised by NRB. Together with CRR it decides how much of every deposited rupee can actually become a loan.
Sub-index — link to this termalso: Sector index
An index tracking one sector rather than the whole market.
On NEPSE: NEPSE publishes sub-indices for banking, development banks, finance, microfinance, life and non-life insurance, hydropower, manufacturing, hotels and others.
TMS — link to this termalso: Trade Management System
The Trade Management System, the platform NEPSE brokers use to place buy and sell orders.
On NEPSE: Your login is tied to one broker. Changing brokers means a new TMS login; your shares stay put.

How the market works

Orders, settlement, liquidity — the plumbing behind every trade.

Ask — link to this termalso: Offer
The lowest price any seller is currently willing to accept. It is what you would pay if you bought immediately.
Averaging down — link to this term
Buying more of a falling stock to lower your average cost. It works only if your original reasoning still holds.
Example: 100 kitta at Rs 500, then 100 more at Rs 400: average cost Rs 450. The question that matters is whether you would buy it fresh at Rs 400 — if not, you are lowering an average, not building a position.
Bear market — link to this term
A sustained period of falling prices, usually defined as a decline of a fifth or more from the peak.
Bid — link to this term
The highest price any buyer is currently willing to pay. It is what you would receive if you sold immediately.
Blue chip — link to this term
An established, financially sound company with a long record. The term is informal.
Broker — link to this term
A licensed firm that places your orders on the exchange. You cannot trade directly.
On NEPSE: SEBON licenses every NEPSE broker and publishes the list. Check it before depositing money.
Broker commission — link to this term
The fee a broker charges on each trade, set on a sliding scale by transaction value.
On NEPSE: Set by SEBON, not by the broker, so brokers compete on service rather than price. Rates change — confirm the current scale.
Budget — link to this term
A plan for where income goes before it goes there: essentials, wants, and saving. The point is not tracking every rupee but deciding the saving share first.
On NEPSE: NRB's financial-literacy materials, free on this site's financial-literacy page, teach budgeting from the ground up in Nepali.
Bull market — link to this term
A sustained period of rising prices and confident buying.
Call deposit — link to this term
An interest-bearing account between a current and a fixed deposit: withdrawable on demand, paying less than an FD but more than nothing.
On NEPSE: Institutions and companies park working cash here. For an individual investor the practical use is holding money you intend to invest soon.
Compounding — link to this termalso: Compound interest
Earning returns on past returns. Growth feeds on itself, which is why time invested matters more than timing.
FV = PV × (1 + r)^n
Example: Rs 1 lakh growing 10% a year is Rs 1.1 lakh after one year, but about Rs 6.7 lakh after twenty — the last five years add more than the first ten. Time in, not timing, does the heavy lifting.
On NEPSE: The compound-growth calculator on this site runs this formula in rupees, including what an expense ratio quietly compounds away over ten years.
Correction — link to this term
A fall of roughly a tenth from a recent high — smaller and more common than a bear market.
Debt-to-income ratio — link to this termalso: DTI
Monthly debt payments as a share of monthly income. Lenders use it to decide how much more you can borrow; you can use it to decide whether to borrow at all.
DTI = monthly debt payments ÷ monthly income
Example: EMIs of Rs 30,000 on income of Rs 75,000 is a DTI of 40% — around the level where lenders hesitate and where new investing should wait until the ratio falls.
On NEPSE: Nepali banks apply their own ceilings under NRB guidance. If EMIs already crowd your income, the market is not the place to reach for the difference — never invest borrowed money you cannot afford to lose slowly.
Diversification — link to this term
Spreading money across investments that do not move together, so one bad outcome cannot sink you.
On NEPSE: Holding ten Nepali stocks that are all banks is not diversification — they share the same interest-rate risk.
Emergency fund — link to this term
Money set aside to cover living costs through a job loss, illness or urgent repair — kept liquid, so an emergency never forces you to sell investments at a bad time.
Example: Monthly essentials of Rs 40,000 mean an emergency fund of Rs 1.2 to 2.4 lakh (three to six months) in a savings account or breakable FD — before the first kitta, not after.
On NEPSE: Build this before buying your first share. NEPSE's settlement takes days and bear markets take years; money you may need next month does not belong in the market.
Fixed deposit — link to this termalso: FD, term deposit
A deposit locked with a bank for an agreed term at an agreed rate, paying more than a savings account in exchange for not touching the money. Breaking it early usually forfeits part of the interest.
Example: An FD paying 6% while inflation runs 7% grows the number and shrinks the purchasing power: the real return is roughly −1% a year. Run your own numbers in the real-return calculator.
On NEPSE: The default Nepali comparison for every investment: 'why not just keep it in FD?' The honest answer needs the real return after inflation, which the calculator on this site works out.
Float — link to this termalso: Free float
The portion of a company's shares actually available for public trading, excluding locked-in promoter holdings.
On NEPSE: Nepali promoter shares are locked for a period, so the tradable float is smaller than total shares.
Index — link to this term
A single number summarising the whole market, or a slice of it, so its direction can be tracked over time.
On NEPSE: The NEPSE index covers the whole market; sub-indices track sectors like banking, hydropower and microfinance.
Last traded price — link to this termalso: LTP
The price at which the most recent trade actually happened. It is the price everyone quotes.
Limit order — link to this term
An order that names the price you will accept. You will never pay worse than your limit, but you may not be filled at all.
Liquidity — link to this term
How easily a stock can be bought or sold without moving its price. High liquidity means many willing buyers and sellers.
Listing — link to this term
The process by which a company's shares become tradable on an exchange. In exchange for the money raised, the company accepts disclosure and regulation.
Market order — link to this term
An order to trade at whatever price is currently available. It fills almost certainly, at a price you did not choose.
On NEPSE: In a thin NEPSE stock a market order can fill far from the price you saw. A limit order is the safer default.
Net worth — link to this term
Everything you own minus everything you owe. The single number that says whether your finances grew this year, independent of income.
Net worth = total assets − total liabilities
Example: A flat worth Rs 80 lakh with a Rs 30 lakh loan outstanding, Rs 5 lakh in FDs, Rs 3 lakh in shares and Rs 2 lakh cash: net worth = 90 − 30 = Rs 60 lakh. Track it yearly at what things would sell for.
On NEPSE: For most Nepali households the asset side is land, gold and increasingly shares. Counting them at what they would actually sell for — not what was paid — is the discipline.
Open, high, low, close — link to this termalso: OHLC
The four prices that summarise a session: where it started, its highest and lowest points, and where it ended.
Order book — link to this termalso: Market depth
The live list of all unfilled buy and sell orders for a stock, with the price each is willing to accept.

The order book

5121,200511800510350spread5086005071,500506900asksbids
Sellers stack above, buyers below. Nothing trades until someone crosses the gap. The quantity at each price is how much you can trade before moving it.
Portfolio — link to this term
The full collection of investments you hold.
Position sizing — link to this term
Deciding how much money to put into a single trade, set before you enter it.
Example: You accept losing Rs 10,000 on one idea and your stop sits Rs 50 below entry: buy 10,000 ÷ 50 = 200 kitta, whatever your total capital is. The loss you can take sizes the position, not conviction.
Previous close — link to this term
Yesterday's closing price. Today's change is measured against it.
Primary market — link to this term
The issue of new shares by a company directly to investors. The money goes to the company.
On NEPSE: In Nepal this is where most retail investing starts, through IPO applications on Mero Share.
Rupee cost averaging — link to this termalso: Dollar-cost averaging
Investing the same amount at regular intervals regardless of price, so the money buys more units when the market is down and fewer when it is up, averaging your cost over time.
Example: Rs 5,000 monthly into a fund priced Rs 100, then Rs 80, then Rs 125 buys 50 + 62.5 + 40 = 152.5 units for Rs 15,000 — average cost Rs 98.36, below the Rs 101.67 average price, because the fixed amount bought more when it was cheap.
On NEPSE: The NPR name for what the world calls dollar-cost averaging. On a market as cyclical as NEPSE, its real value is behavioural: it keeps you buying through the years when buying feels worst.
Secondary market — link to this term
Trading of already-issued shares between investors. The company receives nothing.
Settlement — link to this term
The transfer that actually moves shares to the buyer and money to the seller, a set number of working days after the trade.
On NEPSE: Counted in trading days, so a festival break stretches the wait. Confirm the current cycle with your broker.
Share — link to this termalso: Stock, equity, scrip
A unit of ownership in a company. Owning one means you own that fraction of the business, its profits and its problems.
Speculation — link to this term
Buying with the sole expectation that the price will rise, without regard to what the business is worth.
Spread — link to this termalso: Bid-ask spread
The gap between the bid and the ask. A wide spread means a thinly traded stock and a costlier round trip.
Spread = Ask - Bid
Example: Best bid Rs 498, best ask Rs 500: the spread is Rs 2. Buy and sell instantly and you lose the spread before any charge — wider spreads make short-term trading quietly expensive.
On NEPSE: Spreads on lightly traded NEPSE stocks can be wide enough to matter more than commission.
Stock exchange — link to this term
The marketplace where listed shares are bought and sold. It matches buyers with sellers; it does not itself sell you anything.
On NEPSE: Nepal has one: the Nepal Stock Exchange (NEPSE), in Kathmandu.
Stop loss — link to this term
A predetermined price at which you will sell to cap a loss, decided before you buy.
Systematic investment plan — link to this termalso: SIP
A standing instruction to invest a fixed amount into a mutual fund on a schedule, monthly rather than all at once.
On NEPSE: Several Nepali fund managers offer SIPs into their open-end schemes. It automates rupee cost averaging and removes the temptation to time NEPSE.
Term insurance — link to this term
Pure life insurance: it pays out if the insured dies within the term, and otherwise pays nothing. Because there is no savings component, the cover per rupee of premium is the largest available.
On NEPSE: Most policies sold in Nepal are endowment plans, which bundle savings and insurance and do both jobs modestly. Separating them — cheap term cover plus your own investing — is worth pricing before signing an endowment form.
Turnover — link to this term
The total money value of shares traded, as opposed to the number of shares.
Turnover = Volume x Price
On NEPSE: NEPSE reports daily turnover in rupees; it is the headline measure of how active the market was.
Volatility — link to this term
How much and how fast a price moves. High volatility means larger swings in both directions.
Volume — link to this term
The number of shares traded in a period. It measures how much conviction is behind a price move.

Fundamental analysis

The numbers that describe a business and what it is worth.

Annual general meeting — link to this termalso: AGM
The yearly shareholders' meeting where dividends are approved and directors elected.
On NEPSE: Attendance and voting are proportional to your holding.
Asset allocation — link to this term
Deciding how your wealth splits across kinds of assets — shares, deposits, property, gold — before choosing anything within them. The split drives more of your outcome than any single pick.
Example: A household with Rs 10 lakh to deploy might hold Rs 4 lakh in fixed deposits, Rs 4 lakh in shares and Rs 2 lakh liquid. The split is the decision; which shares comes after.

Correlation, not count

five banksone bet, held five timesfive sectorsthey do not move together
Five banks move together, so they behave as one holding. The same money across sectors that do not move together is what actually spreads risk.
On NEPSE: A typical Nepali balance sheet is heavy in land and gold; listed shares are usually the liquid slice. Decide the slice's size from your horizon and nerves, not from what NEPSE did last month.
Balance sheet — link to this term
A statement of what a company owns and owes at a single moment.

What a balance sheet balances

AssetsCurrentcash, inventory, receivablesNon-currentproperty, plant, investments=Liabilitiesdebt, payables, provisionsEquitycapital + reservesAssets − Liabilities = Equity = book value
Everything the company owns was paid for either by lenders or by shareholders. That is why the two sides are always equal.
Book closure — link to this termalso: Record date
The date on which the shareholder register is fixed to decide who receives a dividend or rights issue.
On NEPSE: Buy after book closure and you do not receive that dividend or right.
Book value — link to this termalso: Net worth per share
What a company's assets are worth on paper after subtracting all liabilities, per share.
Book value per share = (Assets - Liabilities) / Shares
Example: Assets of Rs 10 arba minus liabilities of Rs 8 arba leaves Rs 2 arba of equity. With 1 crore shares, book value per share is Rs 200.
Buy and hold — link to this term
Owning good businesses for years and letting compounding work, rather than trading in and out. The method's cost is sitting through every downturn without selling.
On NEPSE: On NEPSE, where each round trip pays commission and capital-gains tax on profits, holding has a mechanical edge over frequent trading before any market view at all.
Capital adequacy ratio — link to this termalso: CAR
A bank's capital measured against its risk-weighted assets — its cushion against losses.
On NEPSE: NRB sets the minimum every Nepali BFI must maintain.
Cash flow statement — link to this term
A statement of the cash that actually moved in and out, as opposed to accounting profit.

Where the cash went

Operating+120Investing−60Financing−30Net+30free cash flow = operating − capital expenditure
Operating cash is what the business produced. Investing is what it spent on itself. Financing is what it raised or repaid. Only the first is repeatable.
On NEPSE: The hardest statement to manipulate, which is why it is worth reading first.
Contrarian investing — link to this term
Buying what the crowd is selling and selling what it is chasing, on the argument that consensus is already in the price.
On NEPSE: NEPSE's history of sector manias — hydropower, microfinance — is the local case study. Being contrarian is not buying everything that fell; it is checking whether the business behind a hated price is still sound.
Current ratio — link to this term
Whether a company can meet its short-term obligations from its short-term assets.
Current ratio = Current assets / Current liabilities
Example: Current assets Rs 60 crore against current liabilities Rs 40 crore: 60 ÷ 40 = 1.5. The company holds Rs 1.50 of near-cash for every rupee falling due within the year.
Debt to equity ratio — link to this termalso: D/E
How much a company has borrowed relative to shareholders' money. Higher means more risk if earnings fall.
D/E = Total debt / Shareholders' equity
Example: Debt of Rs 3 arba against equity of Rs 2 arba is 1.5. For every rupee the owners have at risk, lenders have Rs 1.50 — leverage that magnifies both good years and bad ones.
Dividend — link to this term
A share of profit paid out to shareholders, in cash or as bonus shares.
On NEPSE: Nepali companies frequently pay a mix of cash and bonus. The cash portion is taxed at source.
Dividend yield — link to this term
The cash dividend as a percentage of the share price — the income return on what you paid.
Dividend yield = Annual dividend per share / Price per share
Example: A 20% dividend on a Rs 100 face-value share is Rs 20 per share. If you bought at the Rs 100 face value that is 20% — but at a market price of Rs 800 it is 20 ÷ 800 = 2.5%. The percentage in the announcement is on face value, not on what you paid.
Earnings per share — link to this termalso: EPS
A company's profit divided by its number of shares — the profit attributable to each share you own.
EPS = Net profit / Number of shares
Example: A bank earns Rs 2 arba in a year and has 5 crore shares. EPS = 2,00,00,00,000 ÷ 5,00,00,000 = Rs 40. Every share's slice of the year's profit is Rs 40, whatever the market price is.
On NEPSE: Nepali companies report quarterly; annualise carefully rather than multiplying one quarter by four.
Fundamental analysis — link to this term
Judging what a business is actually worth by studying its financial statements, industry and management.

What each ratio family answers

Valuationexpensive?P/E, P/B, EV/EBITDAReturnsuses money well?ROE, ROCE, ROALiquiditycan pay bills?Current, QuickLeveragetoo much debt?D/E, Interest coverall four come from the same three statementsa ratio only means anything against a peer or its own history
Ratios are not a list to memorise. Each family answers one question, and you only need the ones whose question you actually have.
Gross margin — link to this term
The share of revenue left after the direct cost of producing what was sold.
Gross margin = (Revenue - Cost of goods sold) / Revenue
Growth investing — link to this term
Buying companies expected to grow earnings quickly, accepting a higher price for that growth.
Income investing — link to this termalso: Dividend investing
Choosing investments primarily for the cash they pay out — dividends and interest — rather than for price gains.
On NEPSE: On NEPSE this means reading dividend history and payout ratios, and remembering that bonus shares are not income — they split your ownership into more pieces.
Income statement — link to this termalso: Profit and loss, P&L
A statement of what a company earned and spent over a period.
Index investing — link to this termalso: Passive investing
Owning the whole market through a fund that tracks an index, accepting the market's return instead of paying costs to chase a better one.
On NEPSE: Check what is actually available before assuming this exists here: most Nepali mutual fund schemes are actively managed, so read a scheme's document to see whether it truly tracks an index before treating it as an index fund.
Inflation — link to this term
The general rise of prices over time, which is the same as the fall of money's purchasing power.
On NEPSE: Nepal Rastra Bank publishes the inflation numbers used in every real-return calculation, and imported inflation matters here because so much of what Nepal consumes crosses a border.
Intrinsic value — link to this term
What a business is genuinely worth on the facts, as distinct from what it currently trades at.
Example: If a business will reliably hand its owners about Rs 30 per share yearly, a buyer wanting a 10% return can justify roughly Rs 300. Price above that needs growth to be real; far below it is the margin of safety.
Margin of safety — link to this term
The gap between what you pay and what you judge a business to be worth. The buffer against being wrong.
Example: You estimate a share is worth Rs 400 but only buy below Rs 300. The Rs 100 gap is the room your estimate has to be wrong before the purchase is.
Market capitalisation — link to this termalso: Market cap
The total market value of a company: its share price times all its shares.
Market cap = Price x Shares outstanding
Example: 2 crore shares at Rs 450 each: market cap = Rs 9 arba. This is the price of the whole company at today's quote — not what it would actually cost to buy it, since buying would move the price.
Mutual fund — link to this term
A pooled investment: many investors' money run by a licensed manager under a scheme document, in exchange for fees.

Two prices for the same fund

NAV 12price 10a 17% discountNAV 12price 14a 17% premiumdiscount or premium = (price − NAV) ÷ NAV
A closed-end scheme listed on NEPSE has a NAV, published periodically, and a market price set by trading. They are rarely the same number.
On NEPSE: Nepali schemes come as closed-end funds that trade on NEPSE — often below their NAV — and open-end schemes bought from the manager. The advanced course's fund chapter and the NAV term cover why that discount exists.
Net interest margin — link to this termalso: NIM
The gap between what a bank earns on loans and pays on deposits, as a share of its assets.
NIM = (Interest earned - Interest paid) / Average earning assets
Example: A bank earning Rs 7 arba of interest and paying Rs 4.6 arba on Rs 60 arba of earning assets has NIM = (7 − 4.6) ÷ 60 = 4%. Compare it across banks in the same quarter, not across years with different rate regimes.
On NEPSE: The core profitability measure for the BFIs that dominate NEPSE.
Net margin — link to this term
The share of revenue that survives as profit after everything is paid.
Net margin = Net profit / Revenue
Net profit — link to this termalso: Net income, bottom line
What remains after every cost, interest and tax has been paid.
Non-performing loan — link to this termalso: NPL
A loan on which the borrower has stopped paying. A rising ratio is the clearest early warning in a bank.
NPL ratio = Non-performing loans / Total loans
On NEPSE: The single most important number when analysing a Nepali bank.
Operating profit — link to this termalso: EBIT
Profit from the core business, before interest and tax.
Payout ratio — link to this term
The share of profit paid out as dividends rather than retained in the business.
Payout ratio = Dividends / Net profit
Example: EPS Rs 40, total dividend Rs 15 per share (cash plus the face value of bonus shares): payout = 37.5%. The remaining 62.5% stays in the company as retained earnings.
Price to book ratio — link to this termalso: P/B
The share price compared with its book value. Below one means the market values it at less than its stated net assets.
P/B = Price per share / Book value per share
Example: Book value per share Rs 200, market price Rs 300: P/B = 1.5. The market prices the company at one and a half times what its own books say the equity is worth.
On NEPSE: Widely used for Nepali banks, where book value is more meaningful than for asset-light businesses.
Price to earnings ratio — link to this termalso: P/E, PE ratio
How many rupees you pay for each rupee of annual profit. A rough measure of how expensive a share is.
P/E = Price per share / EPS
Example: That bank's share trades at Rs 400 with EPS of Rs 40, so P/E = 400 ÷ 40 = 10. You are paying Rs 10 today for each rupee of current annual earnings. At Rs 800 the same profit costs you twice as much.
On NEPSE: P/E is only comparable within a sector. A bank and a hydropower company at the same P/E are not equally priced.
Quarterly report — link to this term
A company's published financial results for a three-month period.
On NEPSE: Nepali listed companies must publish quarterly. These are the primary source for any real analysis.
Real return — link to this termalso: Inflation-adjusted return
The return left after inflation. Money that grew slower than prices bought less at the end, whatever the account statement says.
Real return ≈ nominal return − inflation
On NEPSE: The reason 'safe' deposits are not automatically safe: an FD below inflation loses purchasing power every year, quietly. This site's real-return calculator does the arithmetic in rupees.
Reserve — link to this termalso: Retained earnings
Accumulated profit a company has retained rather than paid out.
On NEPSE: Large reserves are what allow a Nepali company to issue bonus shares.
Return on assets — link to this termalso: ROA
How much profit a company generates from everything it owns.
ROA = Net profit / Total assets
Example: The same Rs 1 arba profit on Rs 80 arba of assets is ROA = 1.25% — typical shape for a bank, where thin margins ride on a large balance sheet.
Return on equity — link to this termalso: ROE
How much profit a company generates from the shareholders' money it holds.
ROE = Net profit / Shareholders' equity
Example: Net profit Rs 1 arba on shareholders' equity of Rs 8 arba: ROE = 12.5%. The business earned 12.5 paisa in the year for every rupee owners left in it.
On NEPSE: A key comparison between Nepali banks, since they hold similar kinds of assets.
Revenue — link to this termalso: Turnover, top line
The total money a company brings in before any costs are subtracted.
Risk tolerance — link to this term
How much loss you can absorb — financially and emotionally — without abandoning your plan. It sets how much of your money belongs in volatile assets at all.
On NEPSE: NEPSE has fallen by more than half from a peak before. The honest test is not 'would that worry me' but 'would I sell everything at the bottom'.
Sector analysis — link to this term
Judging a company against the economics of its own industry rather than the market as a whole.
On NEPSE: Essential in Nepal, where banks, hydropower, microfinance and insurance work on completely different economics.
Value investing — link to this term
Buying shares priced below your estimate of what the business is worth.
Working capital — link to this term
The money available to run day-to-day operations.
Working capital = Current assets - Current liabilities
Example: Current assets Rs 60 crore minus current liabilities Rs 40 crore = Rs 20 crore of working capital — the cushion running day-to-day operations.

Technical analysis

Price, volume and the indicators built from them.

Accumulation — link to this term
The phase where informed buyers build positions quietly while sentiment is still poor and prices go nowhere.
Accumulation distribution line — link to this termalso: A/D line
A running total that weights each period's volume by where the close sat in its range.
Aroon — link to this term
Measures how long it has been since the highest high and lowest low in a period, to judge whether a trend is starting or ending.
Average directional index — link to this termalso: ADX
Measures how strong a trend is, without saying which way it points. Low readings mean a range, not a direction.
Average true range — link to this termalso: ATR
A measure of how much a stock typically moves in a period. Used to size positions and set stops to the stock's own volatility.
Example: If a stock's ATR is Rs 12, a stop two ATRs below entry sits Rs 24 away — sized to the stock's own noise, so normal wiggle does not stop you out.

Why a stop should be sized in ATR

Rs 5 stop2 × ATR stopthis stock travels about Rs 12 on an ordinary daythe red stop sits inside the daily range and is hit four timesthe green one sits outside it and is never touched
A stop placed inside the stock's ordinary daily range gets hit by noise, not by being wrong. ATR puts the stop outside that range.
Backtesting — link to this term
Testing a trading rule against historical data to see how it would have performed.
Bearish engulfing — link to this term
A red candle whose body fully covers the previous green one, read as sellers taking control.
Bollinger Bands — link to this term
Bands drawn a set number of standard deviations above and below a moving average, showing how far price has stretched from its own average.

Bollinger Bands and the squeeze

squeezevolatility at a lowexpansionupper and lower = 20-SMA ± (2 × standard deviation)middle band = 20-SMA
The bands are two standard deviations either side of a 20-period average. They narrow when the stock goes quiet, and quiet does not last.
Break of structure — link to this termalso: BOS
A move past a prior swing high or low, read as the trend continuing.
Breakout — link to this term
A move decisively through support or resistance, usually taken seriously only when volume confirms it.
Bullish engulfing — link to this term
A green candle whose body fully covers the previous red one, read as buyers taking control.
Candlestick — link to this termalso: Candle
A chart mark showing open, high, low and close for one period. The body is the open-to-close range; the wicks show the extremes.

What one candle records

highcloseopenlowrising sessionfalling session
The body spans the open and the close. The wicks show how far price travelled and was pushed back. Colour tells you which side finished ahead.
Chaikin money flow — link to this termalso: CMF
Combines price position within the range with volume, to judge accumulation or distribution.
Change of character — link to this termalso: CHoCH
The first failure to make a new high or low in the prevailing direction, read as a possible trend change.
Chart pattern — link to this term
A recognisable shape in price history that some traders treat as predictive. Their reliability varies widely and is worth checking rather than assuming.
Commodity channel index — link to this termalso: CCI
Measures how far price has moved from its statistical average, used to spot stretched conditions.
Composite operator — link to this termalso: Composite man
Wyckoff's device of imagining all large buyers as one actor, so you ask what that actor would be doing rather than guessing at news.
Confirmation — link to this term
Dow Theory's requirement that a signal in one index be matched by another before it is trusted.
Consolidation — link to this termalso: Range
A period where price moves sideways in a range, with neither buyers nor sellers in control.
Corrective wave — link to this term
In Elliott Wave, a three-wave move against the larger trend, labelled A, B and C.
Death cross — link to this term
A shorter moving average crossing below a longer one, read as a bearish signal.
Distribution — link to this term
The phase where informed holders sell into strength and enthusiasm, while prices look strong but stop advancing.
Divergence — link to this term
When price and an indicator disagree — price makes a new high but the indicator does not — often read as a weakening trend.
Doji — link to this term
A candle that opens and closes at nearly the same price, showing buyers and sellers evenly matched.
Donchian channel — link to this term
Bands drawn at the highest high and lowest low of the last n periods.
Double bottom — link to this term
Two failed attempts at the same low, read as a possible reversal.
Double top — link to this term
Two failed attempts at the same high, read as a possible reversal.

Double top

same level rejected twicesupport
Two failed attempts at the same level. The second failure is what matters: buyers could not do again what they did before.
Dow Theory — link to this term
The oldest framework in technical analysis: markets move in primary, secondary and minor trends, and a trend is confirmed only when more than one index agrees.

The three trends running at once

primary trendsecondary reactionadvanceminor noise
The primary trend is the tide. Secondary reactions run against it and retrace part of the move. Minor moves are the daily noise inside both.
On NEPSE: Nepal has one exchange and sector sub-indices rather than the separate industrial and rail averages Dow used, so the confirmation rule has to be adapted rather than applied literally.
Drawdown — link to this term
The fall from a peak to a trough in the value of a portfolio.
Example: Rs 10 lakh falling to Rs 6 lakh is a 40% drawdown — and getting back to Rs 10 lakh needs a 67% rise, not 40%. Losses are geometrically heavier than the gains that repair them.

Why losses are not symmetric

11%10%33%25%100%50%300%75%gain required to recoverloss taken
A 50% loss needs a 100% gain to recover. This asymmetry is the entire reason position sizing matters more than picking well.
Elliott Wave Theory — link to this termalso: Wave Principle
A framework proposing that crowd psychology moves markets in repeating five-wave advances followed by three-wave corrections, at every timescale.

Five waves up, three waves back

12345ABCimpulsecorrection
An impulse of five waves in the direction of the trend, then a three-wave correction. Each wave contains the same structure at a smaller degree.
Engulfing pattern — link to this term
A candle whose body completely covers the previous one, suggesting control has changed hands.
Evening star — link to this term
A three-candle topping pattern: a long rise, a small indecisive candle, then a sharp fall.
Exponential moving average — link to this termalso: EMA
A moving average that weights recent prices more heavily, so it reacts faster than a simple one.
Fair value gap — link to this termalso: FVG, imbalance
A gap between candle wicks that some traders treat as an imbalance price will return to fill. A restatement of the older idea that gaps tend to get filled.
Fibonacci extension — link to this term
Projected levels beyond a completed move, used to estimate where a trend might run to.
Common levels: 127.2%, 161.8%, 261.8%
Fibonacci retracement — link to this term
Horizontal levels drawn at set proportions of a prior move, used to anticipate where a pullback might stop.

Retracement levels on a completed move

0%23.6%38.2%50%61.8%100%pause at 61.8%
Levels are drawn from the low to the high of a move. Price often pauses near them — partly because a great many traders draw the same lines.
Fibonacci sequence — link to this term
The number series where each term is the sum of the two before it. The ratios between its terms are the source of the retracement levels traders use.
1, 1, 2, 3, 5, 8, 13, 21, 34...
Gap — link to this term
A jump between one session's close and the next session's open, with no trading in between.
On NEPSE: Common on NEPSE after news arrives outside the 11:00-15:00 session.
Golden cross — link to this term
A shorter moving average crossing above a longer one, read as a bullish signal.
Example: The 50-day average closing above the 200-day is a golden cross; crossing below is a death cross. Both describe what already happened to price — test any signal on NEPSE data before trusting it with rupees.

Golden cross and death cross

golden crossdeath cross50-day (short)200-day (long)the cross happens after the turn, never before it
A short average crossing a long one. Both are averages of the same closes, so the cross is confirmation of a move that already happened, not a signal ahead of it.
Golden ratio — link to this termalso: Phi
The proportion the Fibonacci sequence converges toward, roughly 1.618, and its inverse 0.618. It is the origin of the 61.8% retracement level.
Approximately 1.618
Hammer — link to this term
A candle with a small body and a long lower wick, suggesting sellers pushed the price down and buyers pushed it back.
Harami — link to this term
A small candle contained within the previous larger one, suggesting momentum has stalled.
Head and shoulders — link to this term
A three-peak pattern with a higher middle peak, traditionally read as a reversal of an uptrend.

Head and shoulders

shoulderheadshouldernecklinebreak
Three peaks with a higher middle one. The neckline joins the lows between them; a close below it is what traders treat as the signal.
Hull moving average — link to this termalso: HMA
A moving average built to reduce lag while staying smooth.
Ichimoku cloud — link to this termalso: Ichimoku Kinko Hyo
A Japanese system layering several averages to show trend, support and momentum on one chart.
ICT concepts — link to this termalso: Inner Circle Trader
A body of trading material popularised by the Inner Circle Trader. It is proprietary course content with no independent standard, no encyclopedic entry and no peer-reviewed evidence base — treat it as one trader's framework rather than established theory.
Impulse wave — link to this term
In Elliott Wave, a five-wave move in the direction of the larger trend, labelled 1 to 5.
Keltner channel — link to this term
Bands set a multiple of average true range above and below a moving average.
Liquidity sweep — link to this termalso: Stop hunt
A move that pushes just beyond an obvious high or low — where stop orders cluster — before reversing.

Liquidity sweep

prior highsweepstops sit just above the high
A push just past an obvious high, where stop orders cluster, before reversing. Whether this is engineered or simply where stops happen to sit is not something a chart can settle.
MACD — link to this termalso: Moving Average Convergence Divergence
An indicator built from the difference between two exponential moving averages, with a signal line, used to spot momentum shifts.
MACD = 12-period EMA - 26-period EMA

MACD, signal line and histogram

zeroMACD = 12-EMA − 26-EMAsignal = 9-EMA of MACDhistogram = MACD − signal
The histogram is the gap between the MACD line and its signal line. It shrinks toward zero before every crossover, which is the part worth watching.
Marubozu — link to this term
A candle with almost no wicks — one side controlled the whole session.
Momentum — link to this term
The rate at which a price is changing, as distinct from its direction.
Money flow index — link to this termalso: MFI
A volume-weighted version of RSI, judging buying and selling pressure using both price and volume.
Morning star — link to this term
A three-candle bottoming pattern: a long fall, a small indecisive candle, then a strong rise.
Moving average — link to this termalso: MA
The average closing price over a set number of periods, redrawn each period, used to smooth out noise and show trend.
MA = Sum of closing prices / Number of periods
Example: A 20-day moving average is the mean of the last 20 closes, redrawn each day. Price above a rising average describes an uptrend; the average itself is always late, because it is made of the past.

A moving average against price

pricemoving averagethe average lags by construction
The average smooths the noise and shows direction, but it is computed from prices that have already happened — so it always turns after price does.
On-balance volume — link to this termalso: OBV
A running total that adds volume on up days and subtracts it on down days, to see whether volume confirms price.

Price up, volume not confirming

price: higher highsOBV: flat, then lowerdivergence
On-balance volume adds volume on up days and subtracts it on down days. When price makes a higher high and OBV does not, the second high was made on less commitment.
Order block — link to this term
In smart-money terminology, a price zone where large orders are presumed to have been placed, expected to matter again if revisited. It is an inference from the chart, not observed order data.

Order block and fair value gap

order blockfair value gapprice often returns to both
A zone where large orders are presumed to sit, and a gap between wicks treated as an imbalance. Both are inferred from the chart — nobody outside the exchange sees actual order data.
Overbought — link to this term
A condition where an indicator suggests a price has risen far and fast. It means stretched, not doomed.
Oversold — link to this term
A condition where an indicator suggests a price has fallen far and fast.
Parabolic SAR — link to this termalso: SAR
Plots dots that trail price and flip sides when the trend reverses, used to place trailing stops.
Pivot point — link to this term
Support and resistance levels calculated from the previous period's high, low and close.
Pivot = (High + Low + Close) / 3
Premium and discount — link to this term
Splitting a price range at its midpoint and treating the upper half as expensive and the lower half as cheap.
Primary trend — link to this term
The main tide of the market under Dow Theory, lasting a year or more. Secondary reactions run against it; minor moves are noise.
Rate of change — link to this termalso: ROC
The percentage change in price over a set number of periods — momentum in its simplest form.
ROC = (Price now - Price n periods ago) / Price n periods ago
Relative strength index — link to this termalso: RSI
An oscillator between 0 and 100 measuring the speed of recent gains against recent losses. Conventionally above 70 is overbought and below 30 oversold.
RSI = 100 - (100 / (1 + Average gain / Average loss))
Example: RSI compresses recent gains versus losses into a 0–100 scale. By convention readings above 70 are called overbought and below 30 oversold — descriptions of recent speed, not commands to trade.

RSI and the two thresholds

1007050300overboughtoversoldRSI = 100 − 100 ÷ (1 + average gain ÷ average loss)
RSI is bounded at 0 and 100. Above 70 is called overbought and below 30 oversold, but in a strong trend it can sit at an extreme for weeks.
On NEPSE: In a strongly trending NEPSE stock RSI can sit above 70 for weeks. It is not a sell signal on its own.
Resistance — link to this term
A price level where selling has repeatedly been strong enough to stop a rise.
Retracement level — link to this term
A proportion of a prior move where price might pause or reverse. The commonly watched levels are 38.2%, 50% and 61.8%.
Risk-reward ratio — link to this term
How much you stand to lose against how much you stand to gain on a trade.
Risk-reward = Potential loss / Potential gain
Example: Entry Rs 500, stop Rs 480, target Rs 560: risking Rs 20 to seek Rs 60 is 1:3. At that ratio you can be wrong twice out of three times and still come out ahead of break-even, before charges.
Secondary reaction — link to this term
A counter-move against the primary trend under Dow Theory, typically retracing a third to two-thirds of the preceding move.
Shooting star — link to this term
A candle with a small body and long upper wick after a rise, suggesting buyers failed to hold the high.
Simple moving average — link to this termalso: SMA
A moving average that weights every period in the window equally.
Smart money — link to this term
Informed, well-capitalised participants, as opposed to the retail crowd. A useful frame, but nobody can actually see who is buying — it is inferred from price and volume.
On NEPSE: The NEPSE floorsheet publishes broker-level activity, which is more transparency than most markets give. It still does not tell you who the client was.
Smart Money Concepts — link to this termalso: SMC
A modern repackaging of Wyckoff-style ideas about where large orders sit, taught largely through paid courses and video. Its vocabulary is new; the underlying observations are a century old.
Standard deviation — link to this term
How far prices typically stray from their own average — the raw measure of volatility inside Bollinger Bands.
Stochastic oscillator — link to this term
An indicator comparing the closing price with its high-low range over a period, to judge momentum.
Support — link to this term
A price level where buying has repeatedly been strong enough to stop a fall.

Support and resistance

resistancesupportbreak
Levels where buying or selling has repeatedly been strong enough to stop a move. Once broken, a resistance level often acts as support.
Technical analysis — link to this term
Studying price and volume history to judge probable future price direction, rather than what a business is worth.
Three black crows — link to this term
Three consecutive long red candles, read as sustained selling.
Timeframe — link to this term
The period each candle or bar represents — daily, weekly, hourly. The same chart can look bullish on one and bearish on another.
Trade plan — link to this term
A written statement of why you are entering, where you will exit at a loss, and where you will take profit — decided before you enter.
Trend — link to this term
The prevailing direction of price over time. An uptrend makes higher highs and higher lows; a downtrend the reverse.

Higher highs, higher lows, and the break

HHHHHHHLHLlower lowtrend brokentrendline drawn through the rising lows, not the highs
An uptrend is a sequence, not a slope: each high above the last, each low above the last. It ends when a low fails to hold above the previous one.
Triple exponential moving average — link to this termalso: TEMA
An average that applies exponential smoothing three times to cut lag further.
Volume confirmation — link to this term
The Dow Theory principle that volume should expand in the direction of the primary trend. A rally on falling volume is suspect.
Volume weighted average price — link to this termalso: VWAP
The average price over a period weighted by volume — a benchmark for whether you traded well.
VWAP = Sum(Price x Volume) / Sum(Volume)
Wave degree — link to this term
Elliott's idea that the same wave structure repeats at every scale, from decades down to minutes.
Weighted moving average — link to this termalso: WMA
A moving average that gives more weight to recent periods on a straight-line scale.
Williams %R — link to this term
An oscillator showing where the close sits within the recent high-low range, on an inverted scale.
Wyckoff method — link to this term
Richard Wyckoff's 1910s framework for reading a chart as the footprints of large operators: accumulation, markup, distribution, markdown.

The Wyckoff cycle

AccumulationMarkupDistributionMarkdown
A range where large positions are built, a markup, a range where they are sold, then a markdown. The cycle repeats at every timescale.

Every definition here is written by the Stock Education team. Wikipedia’s articles carry a share-alike licence and Investopedia’s are copyrighted, so nothing is copied from either — and writing our own is what lets each entry say what the term means in Nepal.