The Price-to-Earnings ratio tells you how much investors are paying for every rupee of earnings. A high P/E may indicate growth expectations; a low P/E may suggest undervaluation or low growth.

EPS measures how much profit is attributable to each share. Higher EPS generally indicates more profitability and can drive a higher stock price.

The Price-to-Book ratio compares a stock's market value to its book (accounting) value. A P/B below 1.0 can signal undervaluation; assets are worth more than the market capitalization.

Market cap is the total market value of a company. It classifies companies into large-cap (>LKR 10B on CSE), mid-cap, and small-cap, helping investors assess risk and size.

Shows the annual return from dividends as a percentage of the stock price. Useful for income investors who rely on dividend income rather than capital gains.

Shows what proportion of earnings a company pays as dividends. A ratio above 100% means the company pays more than it earns - unsustainable long-term.

Gross margin shows how efficiently a company produces its goods. It excludes operating expenses. Higher is better - a declining gross margin may signal pricing pressure or rising costs.

The bottom-line ratio that shows how much profit remains after all expenses, taxes, and interest. This is one of the most important indicators of overall financial health.

ROE measures what return a company makes on the money invested by its shareholders. It is a key measure of "capital efficiency." Warren Buffett often looks for ROE above 15%.

ROA shows how well a company uses its assets to generate profit. Banks and asset-heavy companies typically have lower ROAs; service and tech companies tend to have higher ones.

D/E measures financial leverage. A ratio above 2.0 signals high leverage and increased financial risk. A lower D/E is preferred for stability, especially in volatile economies.

Measures a company's ability to meet short-term obligations. A ratio below 1.0 is a warning sign. The ideal range for most companies is 1.5 to 2.5.

The most fundamental investment formula. It calculates the percentage gain or loss relative to the initial cost. Positive ROI = profit; negative ROI = loss.

CAGR smooths out volatile year-to-year returns and shows the consistent annual growth rate over a period. It's the most honest way to compare investment performance over time.

The profit or loss on holdings you still own. "Unrealized" means the gain/loss exists on paper only - it becomes real when you sell. This is tracked live in your Holdings tab.

Portfolio weight shows how concentrated you are in a single stock. A well-diversified portfolio typically limits any single stock to under 10-15% to manage concentration risk.

When you buy the same stock at different prices, your average buy price is the total amount invested divided by total shares. Buying on dips reduces the average cost - a key strategy.

The exact price the stock must reach for you to recover your full investment including all transaction costs. Selling above break-even means profit; below means loss.

A stop loss defines the maximum loss you are willing to accept before exiting. Setting a 10% stop loss on every trade ensures no single bad trade wipes out your portfolio significantly.

Every trade should have a defined risk and reward. Professional traders typically seek a minimum 1:2 ratio - risking LKR 1 to potentially gain LKR 2. Never trade with a ratio below 1:1.

Beta measures a stock's volatility relative to the overall market (ASPI on CSE). Beta > 1 = more volatile than market; Beta < 1 = more stable; Beta = 1 = moves with the market.

The Sharpe ratio measures return per unit of risk. A ratio above 1.0 is good; above 2.0 is excellent. It helps compare portfolios on a risk-adjusted basis, not just raw returns.

Position sizing determines how many shares to buy based on your risk tolerance per trade. Most professionals risk only 1-2% of their portfolio per trade to protect from ruin.

The largest peak-to-trough decline in portfolio value. A key metric to stress-test your portfolio. Knowing max drawdown helps set realistic expectations and manage emotional decision-making.

SMA smooths price data into a trend line. The 50-day and 200-day SMAs are most widely used. A stock trading above its 200-day SMA is generally in an uptrend - a bullish signal.

RSI is a momentum oscillator (0-100 scale). RSI above 70 = overbought (potential sell signal); below 30 = oversold (potential buy signal). Ideal for spotting reversal opportunities on CSE.

Support and resistance levels are price zones where a stock historically struggles to move past. Buying near support and selling near resistance is the foundation of most trading strategies.

Daily turnover indicates liquidity. High-turnover stocks are easier to buy and sell without major price impact. Always check CSE daily turnover before entering a large position.

CSE transactions incur multiple charges. Total all-in cost is typically 0.6% - 1.6% of trade value depending on your broker. Always factor this into buy/sell decisions to calculate true break-even.

The ASPI is the primary benchmark of the Colombo Stock Exchange. It represents the aggregate movement of ALL listed companies. A rising ASPI signals broad market optimism; declining signals pessimism.

When a company issues new shares at a discount (rights issue), the stock price adjusts downward. TERP helps you calculate the fair value after the rights issue to decide whether to subscribe or sell rights.

A bonus issue (scrip dividend) increases shares with no cash cost to shareholders. The stock price adjusts downward proportionally. Your total investment value remains the same - only shares increase.

The tendency to prefer avoiding losses to acquiring equivalent gains. For example, losing LKR 10,000 hurts twice as much as gaining LKR 10,000 feels good. This often leads investors to hold losing stocks for too long hoping to "break even."

The anxiety that an exciting or interesting event is currently happening elsewhere. In stocks, this leads to "chasing" a stock that has already jumped 20-30%, often buying at the very peak before a correction.

The tendency to search for, interpret, and favor information that confirms one's pre-existing beliefs. If you love a stock, you only read good news about it and ignore warning signs.

Most stocks experience a pullback after moving up 15-20%. Reaching TP1 is the most critical stage for long-term survival.

Psychology: Removes the fear of "missing out" on profits early on.

A 35% gain is a massive win in the CSE (often beating annual fixed deposit returns). This is where you capitalize on market outperformance.

Psychology: You are now "playing with house money." You've secured your initial investment and a solid profit.

Historically, the biggest wealth is built by holding a small piece of a winner for a long time (the "Runner").

Psychology: Prevents "selling a winner too early"—the most common multi-million rupee mistake.

The market spends 70% of its time moving sideways. Investors often lose money by getting "bored" and selling a stock prematurely.

The difference between a professional and an amateur is how small their losses are. Every investor gets it wrong sometimes.

Buying stocks that appear to be trading for less than their intrinsic or book value. Popularized by Warren Buffett. Key metric: Low P/E and Low P/B ratios.

Focusing on companies that are expected to grow at an above-average rate compared to their industry or the market. Key metric: High Revenue and Earnings growth rates.

Investing in companies that have a consistent history of paying and increasing dividends. Focuses on safe, long-term passive income.

A comprehensive strategy using Support & Resistance lines to execute low-risk trades. The primary rule is to trade near the boundaries, never in the middle.