NSE Terminal Glossary
You’ve heard these terms. You’ve traded through them.
You may not know what they actually mean — yet.
The Terms That Cost Indian Traders
Money Before They Understood Them.
Every term on this page is something Rohan had to learn the hard way — or the right way. Here you get to choose which one.
For educational purposes only. Not investment advice. Profitma is not a SEBI-registered investment adviser.
Most traders search for these terms after a trade that didn’t go the way they expected.
Understanding the term here means you don’t pay for the lesson again at the terminal. The Drishti Series shows you what to do with each concept once you have it.
Price Action
The signals most traders misread — on every session they thought they understood.
What is a false breakout on Nifty?
A false breakout happens when Nifty or a stock appears to break above a key resistance level — but quickly reverses back below it. Here is how to identify them and why they happen on NSE.
Book 1: The Honest Beginner
What is a doji candle on NSE?
A doji forms when a stock or index opens and closes at nearly the same price, leaving a tiny body with wicks above and below. On NSE, high-volume dojis at key levels are one of the clearest indecision signals in price action.
Book 1: The Honest Beginner
What is a hammer candle on NSE?
A hammer candle has a small body at the top and a long lower wick — signalling that sellers pushed price down during the session but buyers absorbed the selling and pushed it back. At the bottom of a downtrend with volume confirmation, it is one of the clearest reversal signals in price action.
Book 1: The Honest Beginner
F&O & Expiry
Where F&O money goes. And why most of it flows from retail traders to the other side.
Why do BankNifty options drop to zero on expiry?
BankNifty options that are out-of-the-money on Thursday expiry lose all their value — fast. Here is the mechanics behind theta decay and expiry-day price behaviour on NSE.
Book 2: The Confident Reader
What is the difference between spot price and futures basis in F&O?
Futures basis is the difference between a stock or index's spot price and its futures price. Understanding whether basis is positive or negative — and why it converges to zero at expiry — is essential for any F&O trader.
Book 2: The Confident Reader
What is theta decay in options?
Theta is the daily time value lost by an options contract as it approaches expiry. Near NSE weekly expiry, theta decay accelerates sharply — destroying OTM option premiums even without any movement in the underlying.
Book 2: The Confident Reader
What is open interest in NSE F&O?
Open interest is the total number of outstanding F&O contracts not yet settled. Rising OI with rising price signals trend strength. Here is how to read it and what it means on expiry day.
Book 2: The Confident Reader
What is implied volatility in options?
Implied volatility is the market's forward-looking expectation of price movement, derived from current option premiums. High IV means expensive options. IV crush after events is one of the most common ways retail traders lose money on correct directional calls.
Book 2: The Confident Reader
What is put-call ratio (PCR) on NSE?
Put-call ratio is total put open interest divided by total call open interest. It is a contrarian sentiment indicator — extreme high PCR signals crowded short positioning, extreme low PCR signals crowded bullish positioning.
Book 2: The Confident Reader
Market Structure
The forces shaping every move before you even see the candle form.
How do operator traps work in Indian midcaps?
Operators in Indian mid- and small-cap stocks engineer price moves that trap retail buyers at the top or retail sellers at the bottom. Here is how to read the volume and price signals they leave behind.
Book 1: The Honest Beginner
How do circuit breakers work on NSE and BSE?
Circuit breakers halt trading in a stock or index when prices move beyond a defined limit — 5%, 10%, or 20%. Here is how they work, why they exist, and what they mean for liquidity in Indian midcap stocks.
Book 1: The Honest Beginner
What is a bull trap in trading?
A bull trap occurs when price breaks above resistance — attracting buyers — then reverses sharply, trapping them in a losing position. On NSE, bull traps are common at Nifty round numbers and near weekly expiry.
Book 4: The Business Reader
What is FII and DII data in Indian markets?
FII (Foreign Institutional Investor) and DII (Domestic Institutional Investor) data shows daily institutional buy and sell activity in Indian equities. Understanding the flow between these two groups explains much of the Nifty's directional behaviour over medium-term periods.
Book 4: The Business Reader
What is a bear trap in trading?
A bear trap occurs when price breaks below support — attracting short sellers — then reverses sharply upward, trapping those who shorted the breakdown. On NSE, bear traps are especially common at key index support levels near weekly expiry.
Book 4: The Business Reader
What is market breadth on NSE?
Market breadth measures how widely a Nifty move is shared across its constituent stocks. A rally driven by 45 of 50 stocks is structurally different from one driven by 10. Breadth divergence — index rising while breadth deteriorates — has preceded major NSE corrections.
Book 4: The Business Reader
Trading Psychology
The patterns that override your plan — every time real money is at stake.
What is FOMO in trading?
FOMO — Fear of Missing Out — is the emotional pressure to enter a trade because a move is already happening. It is one of the most common causes of late, high-risk entries in Indian markets.
Book 8: The Market Philosopher
What is revenge trading?
Revenge trading is entering a trade primarily to recover a recent loss — not because a valid setup exists. It follows a consistent emotional sequence and almost always deepens the loss it was meant to erase.
Book 8: The Market Philosopher
What is confirmation bias in trading?
Confirmation bias is the tendency to seek and interpret information that confirms your existing view while discounting contrary evidence. In trading, it makes you selectively read charts, explain away bad news, and hold losing positions longer than the thesis justifies.
Book 8: The Market Philosopher
What is overtrading in the stock market?
Overtrading means taking more trades than your system requires or risking more capital per trade than your plan specifies. It appears as frequency overtrading (too many trades) or size overtrading (too large) — both destroy returns through friction costs and impaired decision quality.
Book 8: The Market Philosopher
Risk Management
The rules that protect you when the trade goes exactly the way you didn't expect.
What is position sizing in trading?
Position sizing determines how much capital to risk on a single trade. It is the most important risk control a retail trader can apply — more important than entry timing or indicator choice.
Book 6: The System Architect
What is maximum drawdown in trading?
Maximum drawdown is the largest peak-to-trough decline in a trading account over a given period. It determines whether a strategy is psychologically executable in live conditions — and sets the capital requirement for trading it safely.
Book 6: The System Architect
How should you place a stop-loss in trading?
A stop-loss placed at a technically valid level — where the trade thesis is invalidated — is fundamentally different from one placed to limit rupee loss. Technical stop placement determines position size. Arbitrary placement gets hit by normal market noise and does not protect the thesis.
Book 6: The System Architect
Fundamentals & Valuation
The questions that reveal what a business is actually worth — before the price does.
What is PE ratio and how to use it for Indian stocks?
PE ratio is share price divided by earnings per share. It varies significantly by sector in Indian markets and must be read in context — a PE of 35 is expensive in banking and cheap in FMCG. Here is how to use it correctly.
Book 3: The Value Detective
What is promoter holding in Indian stocks?
Promoter holding is the percentage of shares owned by the founding or controlling group, disclosed quarterly. High holding signals alignment. Declining holding warrants investigation. Pledged shares are the most serious risk signal in Indian corporate governance.
Book 3: The Value Detective
What is ROCE and why does it matter for Indian stocks?
ROCE (Return on Capital Employed) measures how efficiently a business generates operating profit from all capital it uses. It is a better quality filter than net profit margin, because it captures both equity and debt capital and is harder to distort through accounting choices.
Book 3: The Value Detective
Signal Building & Backtesting
How to know if your edge is real — or if you've been backtesting your own confirmation bias.
What is walk-forward testing in trading?
Walk-forward testing validates a trading strategy by testing it on data that was never used in its development. It is the primary check against overfitting — the most common reason backtested strategies fail in live markets.
Book 5: The Signal Builder
What is win rate vs risk-reward in trading?
Win rate and risk-reward ratio are the two variables that determine a strategy's expectancy. Neither is meaningful alone — a 70% win rate can still lose money, and a 1:5 ratio is worthless with a 5% win rate. Here is how they interact.
Book 5: The Signal Builder
A Term Without Context Is Just a Word
The books show you what to do with it
when real money is on the line.
Every concept in this glossary is a chapter in the Drishti Mastery Series — not as a definition, but as a decision Rohan had to make under pressure.
Book 1 is completely free. It starts with the terms that explain most retail losses.