Glossary

Every metric this site shows you, defined in plain English. Each entry also says what the metric cannot tell you — which is usually the more useful half, and the half most sites leave out.

Market Fundamentals Valuation Technical Risk Method Mechanics

Market

KSE-100 Index: The benchmark index of the Pakistan Stock Exchange. It tracks 100 companies chosen to represent the largest company by market capitalisation in each sector, plus the next largest companies overall. It is capitalisation-weighted, so a move in a giant like OGDC shifts the index far more than an equal percentage move in a small listing. When Pakistani media say "the market rose 400 points", they almost always mean the KSE-100.
Free float: The portion of a company's shares actually available for public trading, excluding blocks held by sponsors, the government, or strategic investors. On the PSX free float matters a great deal: many listings have a small float, which means thin volume, wider spreads, and prices that jump on modest orders.
52-week range: The highest and lowest price over the past year. It gives quick context for where today's price sits, but a stock near its 52-week low is not automatically cheap — a falling business makes new lows all the way down.
Volume and turnover: Volume is the number of shares traded; turnover is the rupee value of that trading. Volume confirms conviction: a breakout on heavy volume is more credible than the same move on a quiet day. On the PSX, low-volume small caps can be genuinely hard to exit at the quoted price.
Circuit breaker: The PSX limits how far an individual stock may move in one session (historically 7.5% or Rs 1, whichever is higher, with wider bands for some securities). A stock "locked at upper circuit" has hit the cap and trading is effectively one-sided. This is a structural feature of Pakistani markets with no US equivalent for ordinary stocks.

Fundamentals

Market capitalisation: Share price multiplied by the number of shares outstanding — what the market says the whole company is worth. It matters more than the share price alone: a Rs 20 share is not "cheaper" than a Rs 2,000 share, because the two companies may have wildly different share counts. Use market cap, not price, when comparing two businesses.
EPS (Earnings per share): Net profit divided by shares outstanding — the company's earnings attributable to one share. Rising EPS over several years is the cleanest evidence a business is genuinely growing. Beware one-off gains (asset sales, currency revaluation) that inflate a single year's EPS without reflecting the underlying business.
ROE (Return on equity): Net profit as a percentage of shareholders' equity — how efficiently management converts the owners' capital into profit. Consistently high ROE without heavy debt is one of the strongest signs of a durable business.

Valuation

P/E ratio (Price-to-earnings): Share price divided by EPS — how many rupees you pay for one rupee of annual earnings. A low P/E can mean a bargain or a business the market expects to shrink; a high P/E can mean quality or hype. P/E is only meaningful against a peer in the same sector: Pakistani banks and cement companies simply do not trade at comparable multiples.
Book value and P/B: Book value is assets minus liabilities — the accounting net worth per share. Price-to-book compares the market price to that figure. P/B below 1 means the market values the company at less than its stated net assets, common on the PSX for banks and holding companies, and it is a signal to investigate rather than an automatic bargain.
Dividend yield: Annual dividend per share divided by share price, as a percentage. Dividend yields are a major reason Pakistani investors hold equities, particularly in fertiliser, banking and energy names. A very high yield is often a warning: it usually means the price has fallen sharply, and the dividend may be cut next.

Technical

RSI (Relative Strength Index): A momentum oscillator from 0 to 100 measuring the speed and size of recent price moves, conventionally over 14 days. Readings above 70 are called overbought and below 30 oversold. Critically, these are not buy and sell instructions: in a strong trend RSI can sit above 70 for weeks while the price keeps climbing. It is most useful for spotting divergence, where price makes a new high but RSI does not.
MACD: Moving Average Convergence Divergence. It subtracts the 26-day exponential moving average from the 12-day, then plots a 9-day signal line on top. The histogram is the gap between the two. When the histogram flips positive, short-term momentum has turned up relative to the medium term. It lags by construction, and produces frequent false signals in sideways markets.
Moving average (SMA/EMA): The average closing price over a set window, redrawn each day. The 50-day and 200-day averages are the most watched. Price above a rising 50-day average is a common definition of an uptrend. Moving averages describe what has already happened — they do not predict.
ADX (Average Directional Index): Measures trend strength from 0 to 100 without saying which direction. Below roughly 20 the market is ranging and trend-following signals tend to misfire; above 25 a real trend is present. ADX is best read alongside a directional indicator, never alone.
Bollinger Bands: A moving average with bands drawn two standard deviations above and below. The bands widen when volatility rises and contract when it falls. Price touching the upper band means it is statistically extended, not that it must reverse.

Risk

Beta: How much a stock moves relative to the wider index. Beta of 1 moves with the market; above 1 amplifies it; below 1 dampens it. Beta measures co-movement, not quality, and it is unstable — a stock's beta this year may not hold next year.
Volatility: The dispersion of returns, usually the annualised standard deviation. Higher volatility means a wider range of plausible outcomes in both directions. It is a measure of uncertainty, not of loss.

Method

Backtest: Running a strategy or model against historical data to see how it would have performed. Backtests flatter almost every strategy, because the rules were chosen knowing what happened. Treat any backtested figure — including ours — as an upper bound, not an expectation.
Overfitting: When a model learns the noise in its training data rather than a real pattern. It scores brilliantly on history and fails on new data. It is the single most common reason a promising trading model disappoints in live use, and the main reason we publish our out-of-sample accuracy rather than our backtest.

Mechanics

T+2 settlement: Trades on the PSX settle two business days after execution. Shares and cash change hands on T+2, which affects when sale proceeds are actually available to withdraw.
CDC account: The Central Depository Company holds Pakistani shares in electronic form. Your broker maintains your sub-account, and CDC's IAS service lets you verify your holdings independently of your broker's statement — worth doing periodically.

Want the longer version?

Our guides work through these ideas properly — how to read a stock page end to end, and where technical indicators mislead.

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