Forex Trading Glossary and Acronyms

A

Accepting risk

, also known as risk retention, is a feature or risk management regularly utilized in the investment and business fields. Risk acceptance is appropriate when the level of risk is not great enough to justify the cost involved to avoid it.  

Accounting adjustment

An accounting adjustment is a transaction that has not yet been included in the accounting system of a business as of a specific date. Accounting adjustments are done by using adjusting journal entries.  

Accounting period

Is a period of time, which can be either a fiscal or calendar year. It can also be any other period of time, for instance, a week, month, quarter, or half-year. The accounting period is important to apply the matching principle, which states that all expenses must be matched in the same accounting period as all the revenue earned as a result of the expenses recorded.  

Accounting profit

, also known as bookkeeping profit, is the net income of a business after subtracting the explicit costs from the total revenue. This is done in agreement with generally accepted accounting principles (GAAP). Explicit costs comprise, inter alia, operating expenses, depreciation, interest and taxes.  

Accounting ratio

, also known as financial ratios, are one aspect of financial statement analysis. One line item is compared to another line item in a business’s financial statements, comprising the income statement, balance sheet and cash flow statement. They are used to measure the efficiency and profitability of an entity based on its financial reports. The current ratio, which divides a business’s current assets by its current liabilities, is possibly the most used accounting ratio. Other examples of accounting ratios are, among others: return on assets ratio, gross margin ration and debt to equity ratio.  

Accounting system

A particular way in which a business records all its business transactions and reports its financial data for management decisions.  

Accounts payable

are amounts due to creditors or suppliers for goods or services that have not been paid for. Thus, a short-term debt, which appears under current liabilities on the balance sheet of a business.  

Accounts receivable

is the amount of money owed to a business by customers for goods or services delivered. It represents money due to a business in the short term and is listed as a current asset on the balance sheet.  

Accrual

The accumulation or gradual increase of money over time. As an accounting term, accruals refer to transactions recorded in a business’s accounting system as they occur even if the payment for the particular transaction has not been made or received. Examples of accruals: Expenses: Accounts payable like salaries and creditors, and interest payable. Revenues:  Accounts receivable like debtors, and interest receivable.  

Accrual basis of accounting

Is a method of recording accounting transactions of revenue when earned and expenses when incurred.  

Accumulated depreciation

Is the total amount of an asset’s cost that has been allocated to depreciation expenses (cumulative depreciation) since the asset was put into service up to a single point in the asset’s life.  

Acquisition

An acquisition takes place when one company buys another company or part of the company. If a company buys more than 50% of another company’s shares, it gains control of that company.  

ADX – Average Directional Index

Financial market trends receive their strength measurement through the technical indicator known as the Average Directional Index (ADX). The indicator spans 0 to 100 which describes market strength where stronger trends align with higher values and weaker trends correspond to lower values. When the ADX reading reaches 25 or higher it indicates a strong trend but a value under 20 suggests a weak market condition. Analyze trend direction and strength using the ADX indicator as traders perform trades guided by this information alongside +DI and -DI (Positive Directional Indicator and Negative Directional Indicator).  

Adjustment

Refers to the use of mechanisms by a country’s central bank to influence the exchange rate of the country’s currency.  

Adjusting journal entry

Adjusting journal entries are used to record any unrecognized revenue or expenses in the general ledger of a business at the end of an accounting period. By utilizing adjusting journal entries, a business’s accounting records are converted to the accrual basis of accounting. Examples are, inter alia, accruals, deferrals and estimates.  

Ad valorem tax

is a Latin phrase, meaning “according to value.” An ad valorem tax is a form of taxation based on the assessed value of an item. The most common ad valorem taxes are property taxes levied on real estate and personal property. Although, it may also be applied on imported goods. In South Africa, an Ad Valorem Excise Duty is levied on so called Ad Valorem products, generally regarded as “luxury items”, such as motor vehicles, cosmetics and electronic equipment.  

Aggressive accounting

A description of accounting practices that are invented to overstate a business’s financial performance. Also described as creative accounting. Practices utilized are, inter alia, delaying or covering up losses or overstating earnings.  

Aggressive investment strategy

Is an investment strategy in which an investor is prepared to take above-average risks in order to achieve above-average returns.  

Alternative investment

In general, an alternative investment is any type of asset that does not fall into one of the traditional investment categories of equities, fixed income (bonds) and cash equivalents. Examples of alternative investments: are venture capital, hedge funds, real property, art and antiques, commodities, and derivatives contracts.  

Alpha

, the first letter of the Greek alphabet, is a measure of the performance of an investment as compared to an investment of similar risk or a relevant benchmark index. It indicates when an investment strategy, portfolio manager or individual investor has managed to beat the market return over a certain period of time. For example: If the value of the starting point is zero, an alpha of one indicates that the return on the investment during a certain time span outperformed the overall market average by 1%. Alpha is also referred to as excess return or abnormal rate of return.  

Amalgamation

Is the process to combine the assets and liabilities of two or more companies to form a new entity.  

Amortization

Amortization is a technique in accounting of gradually writing off the initial cost of an intangible asset over a period of time, usually over the asset’s useful life. It is done for accounting and tax purposes. It also refers to the process of paying off a debt (loan) through regular principal and interest payments over time.  

Angel investor

An angel investor, also known as a private investor or seed investor, is a wealthy individual who provides financial backing for small start-ups or entrepreneurial businesses. The investment is usually done in exchange for some ownership equity in the business.  

Annualise

To annualise a number means to convert a rate of return over any time span or a short-term calculation into an annual return rate.  

Annuitant

An annuitant is a person who is entitled to the income benefits of a pension or an annuity.  

Annuitization

is the process of converting a sum of cash (annuity) into a series of income payments spread over a specific time or for the life of the annuitant.  

Annuity

An annuity is a financial product, designed to be a reliable financial resource of a fixed income stream for a specified period of time. They are primarily used as a reliable income stream for retirees.  

Appraisal

An appraisal is a valuation of something, such as real estate, a collectible or a business. It is usually done by an authorised person.  

Appreciation

Is the increase in the value of an asset over time. Appreciation is the opposite of depreciation, which is a decrease in the value of an asset over time. There can be a number of reasons for the appreciation of assets, for example: inflation, increased demand, declined supply and the uniqueness of the asset. Appreciation of financial assets such as stocks and real estate is called capital appreciation, while the increase in the value of one currency relative to another, is referred to as currency appreciation.  

Arbitrage

Arbitrage is the strategy of buying and selling assets, like securities, currencies or commodities, in different markets to take advantage of differing prices for the same asset. Arbitrage is one of the oldest trading strategies to exist, and in addition, a widely used one.  

Arbitrageur

Is a trader who makes use of arbitrage as a trading strategy.  

Arm’s length transaction

Is a business transaction or deal between a buyer and seller who have no pre-existing relationship with each other and acting independently without one party influencing the other.  

Ask price

The ask price is the lowest price a seller is willing to accept for a specific security. It is often referred to as the offer price. It is a term used in nearly every financial market in the world, including stocks, derivatives, bonds, and foreign currencies.  

Assessed value

Is the value placed on real estate or private property by a local government for determining ad valorem taxes.  

Asset

An asset is something with economic value that an entity or individual owns or controls with the assumption that it will provide a future benefit, like generating cash flow, improving sales or reducing expenses. Assets can be tangible, for instance, cash, machinery or property, or intangible, like goodwill, copyright and patents.  

Asset allocation

is an investment strategy, diversifying investments among a combination of asset classes, comprising equities, fixed income and cash equivalents. By taking an investor’s goals, tolerance for risk and investment horizon into account, the aim is to balance risk and reward by allocating the investments to different asset classes.  

Asset class

An asset class is a collection or grouping of investments that share similar characteristics, namely, inter alia: how they behave in the marketplace, regulations applicable and purchasing processes. Historically, equities, fixed income and money market instruments (cash equivalents) have been the primary asset classes. Nowadays, real estate, futures and other financial derivatives, and commodities are included in the asset class mix. Some investment professionals even include cryptocurrencies in their asset class mix.  

Asset financing

is when a business offers some of its balance sheet assets, such as inventory or accounts receivable, to borrow money or get a loan. The business borrowing the money must provide the lender with a security interest (legal right) in the assets pledged as collateral. It is usually a practice implemented to quickly obtain working capital for short term needs.  

Asset management

is the management of investment portfolios on behalf of others, by financial services businesses or professional individuals. The process has a dual purpose: to grow a client’s portfolio over time and to reduce investment risks.  

ATR – Average True Range

The Average True Range (ATR) calculates market volatility through an indicator that analyzes price movements between the high and low points during specific periods including trading gaps. Price movement strength rather than direction serves as the core functionality of the Average True Range indicator which J. Welles Wilder Jr. created. The volatility level in a market rises as the ATR reading increases and falls as the ATR reading decreases. The indicator functions to determine appropriate stop-loss positions along with risk monitoring in trading approaches.  

At best

A term used in instructions by investors when buying or selling shares to indicate that they want to buy or sell at the best possible price. For instance, as share prices start to fall, brokers are instructed to sell at best.  

At-or-better

An at-or-better order is an instruction to a broker to only execute a transaction at a specific price or above it. It is an example of a limit order, which is a type of order to buy or sell a security at a specified price or better.  

At par

, also known as par value, means at face value. The following financial instruments, bonds, preferred stock and other debt instruments, may trade at par, above par or below par. Par value is static and is assigned at the time the financial instrument is issued. In the world of bonds, the face value is the amount the issuer promises to pay the holder of the bond when the bond matures.  

AUD – Australian Dollar

The AUD (Australian Dollar) serves as the official currency for Australia alongside its use in Pacific island nations such as Kiribati along with Nauru and Tuvalu. The term AUD represents the Australian Dollar while its symbol is both $ and A$. The symbol differentiates it from other currencies which share the dollar name. Australia's strong commodities sector makes the AUD lead among the most traded currencies because it adopts a floating exchange rate system. The Reserve Bank of Australia (RBA) stands responsible for directing Australia's monetary policy approach while adjudicating interest rates and economic steadiness.  

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B

Balanced fund

A balanced fund is a mutual fund that invests money in different asset classes, with a balance between equity and debt, as well as between capital growth and income. Therefore the name “balanced fund”.  

Balance of payments

The balance of payments (BOP) documents all financial transactions made between individuals, businesses and government institutions in one country with other countries.  

Balance of trade

The balance of trade (BOT), also referred to as the trade balance, is the difference between a country’s imports and exports, over a given period, and is the main component of the balance of payments (BOP) of a country. A positive trade balance is when exports exceed imports, indicating a trade surplus. A negative trade balance is when exports are less than imports, signifying a trade deficit. The BOT is also the biggest part of a country’s current account.  

Balance sheet

A balance sheet is a statement of the financial position of a business that reports the assets, liabilities and owners’ (shareholders’) equity at a specific point in time. It illustrates a business’s net worth. It is one of the three main financial statements of a business, the other two being the income statement and the cash flow statement.  

Barrier level

Is a term in options trading that indicates a predefined rate which determines the outcome of a barrier option.  

Barrier option

A barrier option is a type of option which is based on a predefined rate known as a barrier level. Whether or not the price of the underlying asset reaches the barrier level determines whether the underlying asset is sold (put option), bought (call option) or not exercised.  

Base currency

A base currency is the first currency that appears in currency pair quotation, and will be followed by the second currency, known as the quote or counter currency. One currency will always be quoted in relation to another currency in the forex market, because a trader is buying one and selling the other. In the following quotation, EUR/USD 1.11, the euro is the base currency and the US dollar the quote or counter currency. The quotation indicates that you need 1.11 US dollar to by one euro.  

Basis points

refer to a common unit of measure for changes in financial percentages, such as interest rates. One basis point is 1/100^th of 1% = 0.01% or 0.0001. Put differently, 1% change = 100 basis points and 0.01% = 1 basis point. The word “basis” derives from the base move between two percentages, or the spread between two interest rates.  

Bear market

A bear market is characterised by prolonged price declines and can occur in any asset class. It typically describes a situation in which the price of an investment, such as stocks, falls at least 20% from its high. Widespread pessimism and negative investor sentiment are typical features of a bear market. It is called a bear market in reference to the metaphor of a bear which swipes its paws downward.  

Bears

are investors who believe that stock markets or specific securities are dipping and may attempt to profit from a decline in stock prices. A typical trait of bears in the world of investment is pessimism about the state of a specific market or underlying economy.  

Bid price

The bid price (the bid) is the highest price that a buyer (bidder) is willing to pay for a specific security. The bid price will always be slightly lower than the market price.  

Bid-ask spread

A bid-ask spread is the difference between the highest price (bid price) that a buyer is willing to pay for an asset, such as a security, and the lowest price (ask price) that a seller is willing to accept.  

Big figure

is the whole dollar amount of a quotation and is most often used in forex markets. For instance, in the following price quote of $27.50, the big figure is 27.  

Binary options

are financial options that have one of two payoff options: a fixed amount or nothing at all. Binary options have a clear expiry date, time and strike price, and have little in common with traditional options.  

BBO – Best Bid and Offer

BBO stands for Best Bid and Offer which represents both the highest ready purchase price (best bid) and the most minimal willing selling price (best offer or ask) for financial assets present in a market. Performing trading operations at BBO provides traders with the best possible prices at any moment in time so they can achieve optimum execution results. Markets use BBO data to update it automatically through continuous market actions which results in transparent market execution.

BOP – Balance Of Payments

The Balance of Payments (BOP) maintains a financial log system that monitors all economic deals between a country and foreign entities during one specific period.   A BOP system contains two essential parts: The current account manages transactions from goods along with services and income and transfers and the capital and financial accounts document investment elements and monetary flows. A country enjoys a surplus when its BOP total is positive because it exports more than it imports and the opposite shows a deficit. An analysis of BOP provides vital information about the economic state of a country as well as its ability to maintain stable exchange rates and its standing within the worldwide financial system.  

Bond

is a loan made by an investor to a borrower, for instance, a government, companies and municipalities. A bond is referred to as a fixed income instrument that pays investors (lenders or debtholders) a fixed interest rate, also known as coupon. Bonds are an asset class and a key component of a balanced portfolio. It is utilized as a strategy to reduce risk in an investment portfolio.  

BB – Bollinger Bands

Technical analysts use Bollinger Bands (BB) for evaluating market volatility and detecting times when assets become either overbought or oversold. The technical indicator includes three elements, the middle band uses a simple moving average and it pairs with upper and lower bands calculated using standard deviations. The asset reaches overbought states when the price approaches the upper band yet shows oversold levels when it approaches the lower band. Traders apply Bollinger Bands for analyzing market trends and breakouts while detecting potential reversal points which establishes its value for market analysis.  

BPS – Basis Points

The financial sector uses Basis Points (BPS) as a measurement tool to represent small percentage variations in interest rates and bond yields and general percentages. Basis points function as 0.01% (1/100th of a percentage point) units thus 100 basis points match up to 1%. The use of this unit helps prevent confusion during debates about tiny percentage fluctuations. The interest rate has a 25 basis point increase when it moves from 2.50% to 2.75%. The financial sector relies heavily on BPS measurements for defining rate changes in banking operations and investments and in financial market environments.  

Break-even price

are applicable to almost any financial transaction. Basically, the break-even price is the price necessary to make normal profit. Examples of break-even prices in practice:

• It is the amount of money for which an asset must be sold to cover costs to acquire and own it.
• It can also be the amount of money to determine the selling price of a product or service, in order to cover the costs of manufacturing or providing it.
• In options trading, it indicates the stock price at which investors can opt to exercise or terminate the contract without incurring a loss.

Broker

is an individual or firm that acts as an intermediary or trusted agent between an investor and a securities exchange. They are usually licenced professionals with specialised knowledge of the sectors in which they operate. They charge fees for advice or services rendered.  

Bulls

are investors who believe that financial markets, such as stock and forex markets, or a specific security will increase in value over time. Bulls buy securities with the intention to sell them later at a better price, effecting a profit. They are optimistic investors and are the opposite of bears.  

Bull market

A bull market is the condition of a financial market when prices continue to rise or are expected to rise. The term is most often used to refer to the stock market but is also applicable to other financial instruments, such as bonds, commodities and currencies. A bull market can last for months or even years. It is called a bull market in reference to the metaphor of a bull which thrusts its horns up in the air.  

Buy

is an act of acquiring possession and ownership of goods or services, or the rights to the use of it, in exchange for money or the equivalent value. Purchase is a synonym for buy.  

Buy and hold

is a passive investment strategy that is applied by an investor by buying securities, such as stocks or EFTs, and holding them for long periods, despite market fluctuations. It is an effective strategy for long-term capital gains.  

Buy-in

A buy-in occurs when an investor is compelled to repurchase shares because the seller was unable to deliver on the due date. The buyer can buy the shares from another seller and the original seller will have to stand in for the difference in price.  

C

CAD – Canadian Dollar

Official Canada operates with the currency of CAD Canadian Dollar which possesses the symbols $ or C$ and currency designation CAD. The CAD functions as one of the leading currencies held by international governments and Canadians frequently use the nickname "loonie" to describe it because it features a loon image on its one-dollar note. The Bank of Canada through its monetary policy operates as a currency manager and determines the currency value. The Canadian Dollar exists as a forex market currency that receives price influence from oil markets together with national economic indicators and monetary policy conditions.  

Call option

A call option, also referred to as a call, is a derivative financial instrument, implying its price movement is based on an underlying asset. They are financial contracts that give the owner the right, but not the obligation, to buy a specified amount of an underlying asset, such as a stock, bond, or commodity, at a predetermined price with a certain time frame. Calls are utilized by investors when the expectation is that the price of the underlying asset is to rise within a certain period of time.  

Candlestick chart

A candlestick is a type of price chart that indicates four different price levels of an asset for a specific period of time. The four different price levels being: the lowest and highest point and open and closing prices. Candlestick charts are used in technical analysis and can help traders to accurately predict market movements and to determine when to enter and exit trades. Candlesticks are used in all forms of trading, including indices, commodities, shares, and forex.  

Capital

refers to financial resources that are necessary for of a business to operate, enhance development and generate an income. It can also be described as assets that allow businesses to produce products to sell or render services to customers. Capital is a term for financial assets, such as cash and cash equivalents, manufacturing equipment, investments, and buildings. The four major types of capital are: equity, debt, trading and working capital. There is an important difference between capital and money. Capital is more durable than money and is used to accumulate wealth, while money has a more immediate purpose. Generally, money is defined as anything that is widely accepted as a medium of exchange for goods and services.  

Capital asset

, also known as fixed assets, are essential components of a business. They can be either “intangible”, for example a patent for a product, or “tangible”, like a vehicle. Examples of fixed assets are buildings, vehicles, machinery, property, plant and equipment, furniture and fixtures, and patents.   Characteristics of a capital asset:

• It has an expected useful life of longer than a year.
• It is not expected and intended for sale as a normal part of the business’s operations.
• Is expected to generate value over a long period of time.
• Difficult to be liquidated.

Capital employed

is the total amount of capital utilized by a business to generate profits. Put differently, it refers to the value of all assets, fixed assets and working capital, employed in a business. Employing capital, is a strategy by the management to invest in the long-term future of a business. There are various formulas to calculate capital employed, the simplest being: Total assets minus current liabilities.  

Capital expenditure

, also known as Capex, is an outlay of money by a business to acquire, improve, and maintain capital assets such as buildings and equipment.  

Capital gain

When the selling price of a capital asset exceeds it purchase or cost price, it results in capital gain. A capital gain can be:

• Realised capital gain is the gain made on a capital asset that has been sold for a profit.
• Unrealised capital gain can be described as the gain on a capital asset that has not been sold yet but can realise a profit if sold later.

Capital gains tax

is triggered when there is realised capital gain on the sale of a capital asset. The South African Revenue Services (SARS) states on its website that a capital gain arises when a person disposes of an asset for proceeds that exceed its base cost, which is the costs incurred in acquiring the specific asset and improving it. Put another way, capital gain tax is calculated as the total sale price minus the purchase price of the capital asset, as well as other applicable costs.  

Capital loss

A capital loss occurs when a capital asset is sold for less than the purchase price.  

Capital markets

are venues that channel savings and investments between suppliers of capital, (institutional investors and savers) and borrowers (governments, businesses, and individuals). The three major capital markets are the stock market, bond market and money market.  

Capitulation

is a term used in the financial world to describe the point in time when investors have decided to give up recovering lost gains due to significant declines in the prices of securities. Investors are often compelled to capitulate and panic sell when a bear market or a correction in a market occurs.  

Carry trade

A carry trade is a trading strategy that involves borrowing money at a low interest rate and investing in another financial instrument with a higher interest rate. It is a strategy often used by investors in foreign currencies. The amount of profit is generated by the differential between the two interest rates.  

Cash

In a general sense, cash is money in hand, such as banknotes and coins, that can be utilized to exchange goods or services. At times, it can also include the value of assets that can easily be converted into cash immediately. For accounting purposes, cash comprises, inter alia, money in hand, petty cash, bank account balance and marketable securities.  

Cash budget

A cash budget is an estimate of cash inflows and cash outflows for a business or individual over a specific period of time. This budget evaluates whether the business or individual has sufficient cash to operate.  

Cash flow

is the money that is coming in and going out of a business over a certain period of time. Incomings of cash are, for instance, sales of goods and services. Outgoings of cash are, for example, payments for expenses, like salaries, loan payments, taxes, and rent. Cash flows are calculated by subtracting the cash balance at the beginning of a period (opening balance), from the cash balance at the end of the period (closing balance). A cash flow is positive if a business has more cash at the end of a given period than at the beginning, and negative if the situation is vice versa.  

CCI – Commodity Channel Index

The Commodity Channel Index (CCI) functions as an effective commercial indicator that helps traders detect trading cycles in financial markets. Donald Lambert developed CCI to provide traders with an indicator showing when asset prices deviate from their historical averages for spotting market overbought or oversold points. The indicator moves between zero as its midpoint which indicates potential price reversal when it reaches above +100 or shows -100 and below because of oversold market conditions. The CCI tool serves trading professionals in the forex stocks and commodities sectors to monitor market momentum and potential investment possibilities.  

CFD – Contract For Difference

The financial instrument known as Contract for Difference enables traders to forecast asset price fluctuations without possessing the underlying assets through its derivative characteristics. Investors can make profits from market volatility by entering contracts with brokers for sharing asset price differences that develop between contract initiation and termination. The financial market incorporates CFDs for forex alongside stocks and commodities and indices trading where investors use leverage to maximize returns though this increases their potential losses.  

CFD broker

A CFD broker is an intermediary between traders and over the counter (OTC) markets to facilitate trading in CFDs.  

Chartist

A chartist, also called a technical analyst or a technical trader, is a person who utilizes charts or graphs to look for chart patterns and support and resistance levels in the trading of financial instruments in order to trade more profitable in future transactions.  

Choppy market

A choppy market is a financial market without any clear direction and where prices swing up and down considerably and making little overall progress up or down. It is often associated with volatile periods where trends are difficult to trade. It can occur in any financial market over a short or extended period of time.  

Cleared funds

are money that are immediately available for withdrawals or to use in financial transactions. Pending funds are funds before they are considered to be cleared and traders or customers will not be able to withdraw them or conduct transactions with them. In forex, cleared funds refer to funds that are available for trading, having been cleared from any obligations.  

Clearing

is the process of reconciling transactions between buyers and sellers between the execution of a transaction and its settlement. It is a procedure that validates the availability of the appropriate funds, records the transfer, and with regard to securities, ensures that delivery to the purchaser is accomplished.  

Clearing house

A clearing house acts as a mediator between a buyer and seller that are engaged in a financial transaction. Put differently, it facilitates the process of clearing. The main function of a clearing house is to ensure that the financial transaction from inception to settlement is smooth. In addition, a clearing house ensures financial market stability by providing efficiency and security.  

Closed position

A closed position occurs when a transaction has been executed by either buying or selling securities, closing a previously open position to have no further commitment. It is the opposite of an open position.  

Closing

, also known as position squaring, refers to the closing out of a transaction by taking the exact opposite position of an open position. Closing a long position in a financial instrument means selling it. And to close a short position, a trader would buy the financial instrument back.  

Closing price

The closing price is the last or final price of a security at which it trades during a regular market trading session on any given day.  

CHF – Swiss Franc

CHF represents the official currency of Switzerland and Liechtenstein and takes the name of Swiss Francs. Switzerland and Liechtenstein's currency functions using "Fr" for its symbol together with "CHF" for its ISO code. People view the Swiss Franc as a safe-haven currency which they look for during times when economic situations become uncertain. The Swiss National Bank (SNB) controls the currency issuance as Switzerland uses the Swiss Franc alongside Liechtenstein while the currency functions largely in international financial markets because of Switzerland's strong economy along with its status as a politically neutral state.  

Collateral

refers to an asset that a borrower pledges to a lender and a lender accepts as security for a loan. If a borrower defaults on the loan, the lender has the right to seize the collateral and sell it to recoup losses incurred.  

Commission

is a charge assessed by a broker, brokerage, agent, or salesperson for providing advice, facilitating and or executing a financial transaction. Regarding securities, a commission is a service charge by a broker or brokerage for providing investment advice or buying and selling securities for a client.  

Commodities

are tangible goods, or so-called hard assets, that are interchangeable for products of similar value. Commodities can be bought and sold directly in the cash or spot market or via derivative financial instruments, such as options and futures. Some examples of traditional commodities are oil, cold, grain and beef. Recently, the term also comprises financial instruments, such as indices and foreign currencies.  

Compound interest

is interest that accrues on the initial principal amount and the accumulated interest of a deposit or loan. It essentially means “interest on interest”, and differs from simple interest, which is calculated only on the principal amount of the loan.  

Confirmation

Confirmation refers to:

• A broker’s written acceptance of a trade completed, stating, inter alia, the price, commissions, and the terms of trade.
• The use of an additional technical indicator to support a trend suggested by one indicator.

Consolidation

can have different meanings, for instance:

• A term in technical analysis used to describe a stock’s price movement inside a given range of support and resistance levels over a period of time.
• The process of combining assets, liabilities, and other financial items of two or more entities into one.
• In the world of accounting, it is the process of combining financial data from several subsidiaries wherein all the subsidiaries report under the umbrella of the parent company.

Contagion

A contagion is the spread of an economic crisis or boom across markets, regions, and countries. This situation can occur both at a domestic or international level. Primarily seen by many analysts and academics as a symptom of global market independence.  

Contract

A contract is a binding agreement between two parties that establishes mutual legal obligations. In futures trading, a contract is a financial derivative that obliges the buyer to buy the underling asset, or the seller to sell the specific asset, at a predefined price and date in the future. In options trading, a contract is an agreement between two parties that gives the right, but not the obligation, to purchase or sell the underlying asset at a predetermined price until a specific date.  

Contract note

A contract note is the legal record that serves as the confirmation of trade done on a particular day by a stockbroker on behalf of a client on a stock exchange.  

Contract size

indicates the deliverable quantity of the underlying asset in a futures or options contract that can be bought or sold. The size of the contract varies according to the underlying asset.  

Control risk

is the probability that a business’s financial statements are materially misstated, due to the fact that current internal control failed to protect significant errors or misstatements in the financial statements.  

Corporate action

A corporate action is any activity executed by a company that materially changes it, effecting its stakeholders, like shareholders, creditors, and bondholders. An action usually to be approved by the shareholders of the company, as well as the board of directors.  

Corporation

A corporation is a legal entity, formed by a group of people, that is separate and distinct from its founders. Also referred to as a “legal person”, it has a legal existence of its own. Corporations enjoy most of the responsibilities and rights that an individual holds: they can buy, sell, enter contracts, loan and borrow money, sue others and be sued by them, own assets, pay taxes, and can commit offences and be punished. An important characteristic of a corporation is limited liability, meaning that owners (shareholders) may benefit from dividends but are not personally liable for the company’s debt, unless the owners give personal guaranties.  

Counter currency

The counter currency is the second currency in a quotation of currency pairs. It is listed after the base currency. A slash separates the two currencies to indicate their relative values. For example, in the following quotation, GBP/USD 1.27, the British pound is the base currency and the US dollar the counter currency. The quotation indicates that you need 1.27 US dollar to by one British pound. Counter currency is also known as the secondary currency or the quote currency.  

Counteroffer

A counteroffer is an offer in response to an earlier offer made by another offeror, implying the original offer was rejected and substituted with another one. An original offeror has three options when receiving a counteroffer: reject the counteroffer, accept it, or make another offer and continue negotiations if necessary.  

Counterparty

A counterparty is the other party or participant in a financial transaction, an agreement, deal, or negotiation. In order for a transaction to succeed, it must have a counterparty. For instance, for every seller of an asset, a buyer is required who is willing to buy and vice versa. In options trading, the counterparty to an option buyer would be an option writer.  

CNY – Chinese Yuan

China's main official national currency takes the name CNY or Chinese Yuan. The government refers to the Renminbi as its official currency though its unit of measurement is yuan. The Chinese national currency appears under the symbol ¥ while its international standard code stands at CNY. The Chinese Yuan stands as one of the world's most actively traded foreign exchange currencies because China maintains its strong economic position and extensive trading relations on a global scale.  

Country risk

refers to the risk that a foreign government will fail to fulfil its obligations on its bonds or other financial commitments. It also refers to the general level of financial, political, and economic uncertainty in a country which impacts the securities of issuers trading in that specific country.  

CPI – Consumer Price Index

The Consumer Price Index (CPI) functions as a major economic indicator because it determines the average modification in prices consumers pay for their essentials during certain timeframes. CPI functions as an indicator of living expenses which also enables tracking price movement in economic systems. The CPI functions through a comparison between modern prices of standardized market assortments in the present with prices recorded during an established base year. Official decisions about monetary policy extremes and wage adjustments together with social welfare distributions heavily depend on CPI statistics that authorities and central banks regularly access.  

Cross

The term “cross” has two definitions in the world of finance: Firstly, cross refers to when a broker receives one order to buy a number of shares at a specific price and another order to sell the same number of shares at the same price at the same time. If the broker is able to execute the two separate orders at the same time and at the same price, he is said to cross the orders. However, before a cross can be executed, the broker must offer the shares in the market at a higher price than the bid. If no higher bid is available, he is allowed to implement the transaction. Secondly, a cross is a foreign exchange transaction in which two non-U.S. currencies are exchanged directly for each other, rather of first being converted to greenbacks.  

Cryptocurrency

A cryptocurrency is a decentralized digital currency designed to function as a medium of exchange to execute financial transactions. It is based on a network that is distributed over a large number of computers. It is a virtual currency secured by cryptography, making counterfeiting and double-spending almost impossible.  

Currency

is a medium of exchange, a generally accepted form of payment, for goods and services. It is the money system used in a country, especially coins and paper bank notes. The value of a country’s currency fluctuates constantly in relation to other currencies.  

Currency codes

are the three-letter alphabetic codes that denote the various currencies of countries throughout the world. These codes are standardised by ISO, the International Organisation for Standardisation. Examples of currency codes: For the euro - EUR, for the US dollar - USD, for the British pound - GBP, for the Japanese yen - JPY, for the South African rand - ZAR, for the Botswana pula - BWP.  

Currency pair

A currency pair is a quotation of two different currencies traded in the forex market. A currency is quoted in relation to another currency. The first listed currency, the base currency, is the currency bought while the second listed currency, the quote currency, is the currency sold. Put differently, the quote indicates how much of the quote currency is needed to buy one unit of the base currency.  

Currency risk

, also known as exchange-rate risk, is a potential risk of losing money due to unfavourable changes in the relative valuation of currencies. Investors can minimise currency risk by utilizing derivatives like options and futures.  

Currency symbols

A currency symbol is a graphic symbol which replaces the name of a currency. It is a system maintained by ISO, the International Organisation for Standardisation. Examples of currency symbols: US dollar - $, British pound - £, the Japanese yen - ¥, the euro - €.  

Current account

can mean two things:

• A current account is a bank account that enables the account holder to access a diversity of banking services, such as making payments, receiving money, and scheduling debit orders.
• The current account of a country records a country’s transactions with all the other countries with which it trades, such as imports and exports of services and goods, the net amount of cross-border investments, and net transfers, like foreign aid.

It is calculated over a specific period of time, such as a quarter or a year.  

D

Day order

A day order is a limit order to buy or sell a security at a specific price that is only valid for the remainder of the trading day on which it is placed. If the order is not executed, the order becomes unfilled and is cancelled at the end of the day.  

Day trader

A day trader is a trader with a strategy to focus on intraday, meaning “within the day”, strategies. A day trader buys and then sells financial instruments, like currencies or stocks, within the same trading day. Day traders usually trade large volumes of a given asset in order to create a profit. All positions opened during the trading day are closed on the same day.  

Day trading

is a strategy pursued by day traders, mostly in the forex and stock markets. It is a term describing the purchases and sales of securities within a specific trading day. Day trading comprises a wide range of strategies and techniques to generate profits by capitalising on price changes of a given asset. However, day trading is subjected to degrees of high risk and uncertainty.  

Deal

A deal in business is a mutually binding contract or agreement between two or more parties with the intention to do business. The intention is to come to an agreement that is to the advantage of all the parties involved. Usually, a deal is clinched between a seller and a buyer to exchange items such as services, goods, information, money, and securities.  

Dealer

are people or businesses that buy and sell securities for their own account. They are important players in the financial markets, creating liquidity and enhancing long-term growth in the markets.  

Dealing spread

refers to the difference between the prices at which a trader can buy and sell, inter alia, shares, securities, and underlying assets. This difference is in effect a trader’s cost of trading a market. It is also known as spread, bid-offer spread, or bid-ask spread.  

Dealer spread

is the difference between a dealer’s purchase price and his or her selling price for a specific financial instrument. This is a method utilized by many dealers to make most of their profits.  

Debenture

are a type of debt instrument that companies, corporations, and governments issue in order to raise capital. Debentures have no collateral backing. Therefore, the reputation and creditworthiness of an issuer of debentures are important for investors. Debentures are documented in an indenture, a written agreement between the issuer and holder of the debenture. Issuers of debentures pay investors interest for the term of the debenture.  

Deferrals

In accounting, deferrals indicate the postponement of certain revenues or expenses on the income statement of a business until a more appropriate time. A deferred revenue, also referred to as unearned revenue, is deferred to a balance sheet liability account when a business has already received payment for goods or services not delivered yet. It is recognised as earned revenue on a business’s income statement once the goods or services are delivered to the customer. A deferred expense, also known as a deferred charge, is a cost that has already been incurred, but which has not been consumed yet. It is recorded as an asset (usually a current asset) on the balance sheet until the expense is realized. The expense is transferred from the balance sheet to the income statement after realization.  

Debit

is an accounting term that originates from the Latin word debere, which means “to owe.” A debit is an entry that either:

• Increases an asset account (on the balance sheet) or expense account (on the income statement.
• Decreases a liability or equity account (on the balance sheet).

It is always an entry on the left side of a double-entry bookkeeping system.  

Debt

is money borrowed by one party from another. Put in other words, debt is any money owed to an individual, business, organisation, or any other entity. In general, debt is acquired for a specific purpose.  

Debtor

A debtor is an individual, business, or other entity that owes money to another party.  Put differently, a debtor has a debt or legal obligation to pay the amount owed. There are different terms to describe debtors:

• A borrower - If the debt is in the form of a loan from a financial institution, like a bank.
• An issuer - If the debt is in the form of a bond or debenture.
• Trade debtor - If money is owed to a business for goods or services delivered.

Debt ratio

The debt ratio, also known as the debt-to-asset ratio, indicates the amount of a business’s assets that are financed by debts. The larger the debt ratio of a business, the greater is its financial leverage. A debt ratio greater than 1.0 shows that a business has more debt than assets. The debt ratio formula is: Total debt divided by total assets.  

Debt-to-Capital ratio

The debt-to-capital ratio is a measurement of a company’s use of debt in comparison with its total external financing, including shareholder equity. The ratio is calculated by dividing total debt by shareholders’ equity + debt. For example, a company has a total of R35 000 debt on its balance sheet, together with R60 000 in shareholders’ equity. The debt-to-capital ratio will be 0.37 (R35 000 divided by R95 000 (debt + equity)) or 37%. This indicates that the company uses 37% of debt to finance its operations through external funding. The higher the ratio figure, the more debt utilized. Hence, the riskier the company.  

Debt-to-Equity ratio (D/E)

The debt-to-equity ratio is a financial ratio that measures the degree to which a company is financing its operations through debt versus financing by shareholders. The debt-to-equity ratio is calculated by dividing total liabilities by the total of shareholders’ equity. Generally speaking, the higher the ratio, the greater is the risk for the company’s creditors and lenders.  

Deed

A deed is a signed legal document that transfers ownership of an asset from the owner (grantor) to the buyer (grantee). The deed is the vehicle for transferring the title of an asset and is not the title itself.  

Default

is the failure to adhere to the terms and conditions of a contract. A default can occur when a borrower skips payments, is unable to make payments on time, or stops making payments. Not only individuals, but also businesses, and even countries, can default on their debt obligations.  

Default rate

, also called penalty rate, is an interest rate imposed on borrowers who have defaulted on their debt obligations.  

Default risk

, also referred to as default probability, is the probability that a borrower may fail to keep his or her debt obligations. It is a risk that lenders are exposed to in almost all forms of credit.  

Deficit

A deficit, which is the opposite of a surplus, occurs when spending exceeds income. A deficit applies to governments, companies, organisations, other entities, as well as individuals. A budget deficit is when the income resources are less than the amount required for obligations.  

Deleveraging

occurs when a company or individual decreases its financial leverage, i. e. to reduce debt. The most direct way for a company to deleverage is to immediately pay off any existing debts, without incurring new ones.  

Delisting

describes the process when a company is removed from a stock exchange where its shares are traded. It can be a voluntary or involuntary process. Usually, one of the following reasons can trigger a company’s delisting:

• Bankruptcy.
• A company becomes a private company.
• A merger between two or more companies.
• A company is bought out.
• It ceases operations.
• It fails to meet listing requirements.

Delivery

refers to the transfer of a currency, security, cash, commodity, or an underlying asset that is the subject of a sales contract, to a buyer. It can occur in spot, option, forward and futures contracts. However, in many instances, traders offset their positions with opposite contracts before settlement and no delivery occurs.  

Delta

, sometimes referred to as a hedge ratio, is a risk measure used by options traders. It measures how the price of an options contract changes as the price of an underlying asset shifts. A put option (to sell) will have a price that moves in the opposite direction of its underlying asset, resulting in a negative delta of 1 to 0. Contrarily, a call option will have a price that shifts in correlation with the underlying asset’s price, creating a positive delta between 0 and 1.  

Demand

is a principle in economics that refers to a consumer’s desire to buy goods and services at given prices. Along with supply, demand determines the actual prices and volume of goods in a given market.  

Demo account

A demo account is a trading account that enables a prospective trader to simulate live trading environments. It operates in the same way as a real trading account. It is offered by most forex brokers on their trading platforms. Funds are simulated in a demo account in order for a trader to operate in a risk-free trading environment before deciding on a real trading account, funded with the trader’s own funds.  

Demutualisation

is a legal process by which a private, member-owned company, such as a cooperative, or a mutual life insurance company, changes its structure to that of a public company, owned by shareholders.  

Denomination

In general, denomination is a description of a currency amount, usually for coins or banknotes. For instance, denominations for South African banknotes include R10, R20, R50, R100 and R200. However, a denomination is not only the value specified on a currency, financial instruments such as bonds and other fixed income instruments are also generally issued in different denominations.  

Depreciation

Depreciation in accounting

Is a method that allows a business to write off an asset’s value over a period of time, commonly referred to as the asset’s useful life. It enables a business to spread out the cost of an asset over a number of years, in stead of realising the cost in one financial year. There are different types of depreciation. For instance, straight-line depreciation - the most used method - and reducing balance depreciation.

Depreciation in forex trading

, better-known as currency depreciation, is a decline in the value of a currency in comparison with other currencies. Currency depreciation can happen due to factors such as the involvement of a government, the weakening economy of a country, risk aversion among investors, and political instability in a country.  

Depression

A depression is described as a dramatic downturn in economic activity. It is described, by some economists, as a severe and prolonged recession. In general, when an economy suffers recession for two or more quarters in succession, it is defined as a depression. It is characterised by a sharp decline in economic growth and production, as well as a sharp rise in unemployment.  

Derivative

A derivative itself is a contract between two or more parties. The most common types of derivatives are options, futures, forwards, and swaps. A derivative is described as a financial instrument which derives its value (price) from an underlying asset or group of assets, such as commodities, bonds, stocks, market indices, interest rates and currencies.  

Devaluation

is when a country’s currency declines in relation to one or more other currencies. It is a monetary policy tool utilized by the government of a country to deliberately adjust its currency downward. A devalued currency boosts a country’s exports by reducing the cost of the exports. It can also help to decrease the imports of a country and to lessen its trade deficit. Sometimes a country is compelled to devaluate its currency when it can no longer defend its exchange rate.  

Digital currency

is a type of currency that is only available electronically or in digital form. It is not available in physical form, like banknotes and coins. Digital currency can be transferred between users and entities to buy goods and services via smartphones, tablets, and computers. It is also referred to as electronic money, digital money, virtual money, virtual currency, or cybercash.  

Dilution

happens when a company issues new shares, resulting in a decrease of an existing shareholder’s percentage ownership of the specific company.  

Disbursement

A disbursement is an act of paying out money from a bank account or other sources of funds, whether for purchases or other transactions. Disbursements comprise, inter alia, operating expenses of a business, dividends paid by a company, and interest payments on loans. Disbursements can refer to electronic fund payments (EFTs), cash payments, credit and debit card payments, or any other method of payment.  

Discount

is a term in finance and investing that describes a situation when a bond is trading for lower than its par or face value. The discount is the difference between the price paid for the bond and the bond’s par or face value.  

Discount broker

execute buy and sell orders on behalf of their clients. However, they do not generally provide any advice, analysis, research, or other investment services. Broker and client have little to no interactivity between them. Consequently, a discount broker charges lower fees. Discount brokers can be helpful to small investors looking to get market exposure, as well as to traders who actively sell and buy financial securities frequently.  

Discount rate

is the expected rate of return for an investment. It is an estimation of the current value of an investment based on its expected future cash flow. Considering the time value of money, the discount rate indicates the interest percentage that an investment may yield over its lifetime and allows investors to evaluate risk in investments. The discount rate is also referred to as the Discounted rate of return, cost of capital, or required rate of return.  

Disinvestment

is when an entity is selling or liquidating an asset, such as a manufacturing plant or subsidiary. It can also refer to capital expenditure reductions. Disinvestments are executed for various reasons, strategic, political, and environmental.  

Disposable income

is the amount of money an individual has leftover from his/her salary for spending and saving after deductions such as income tax, UIF, and compulsory deductions. It is also called your net salary. It is a key economic indicator of consumer spending.  

Divergence

in trading occurs when the price of an asset is moving in the opposite direction of a technical indicator or moving contrary to other relevant data. It is a trading tool used in technical analysis of financial instruments, such as currencies and stocks. Technical analysts distinguish between positive and negative divergence:

• Positive divergence signals the possibility of a higher price of an asset.
• Negative divergence indicates that a decrease of the price of an asset is possible.

Dividend

A dividend is a portion of a company’s profits and retained earnings paid equally to all its shareholders of the same class, like common and preferred. A dividend payment is authorised by the company’s board of directors and is paid on a certain date, referred to as the payable date.  

Dividend per share (DPS)

is the total amount of dividends, excluding special dividends, paid over a specific period of time by a company, for every share outstanding. The calculation for DPS: Total dividends paid out/Shares outstanding.  

Dividend payout ratio (DPR)

The dividend payout ratio, also referred to as the payout ratio, is the percentage of the earnings of a company paid out as dividends to shareholders. The DPR is an indication of how a company prioritises investment in core operations and future growth. The DPR can be calculated by dividing the dividends per share (DPS) by the earnings per share (EPS) of a company.  

Dividend yield

The dividend yield is a financial ratio indicating how much a company yearly pays to shareholders in the form of dividends relative to the market value of a share. The yield is expressed as a percentage. Put differently, the dividend yield shows you how much dividend income you receive in comparison to the current share price. The dividend yield formula is as follows: Dividend yield = Dividend per share/Market value per share. For example: Company XYZ trades at a price of R50 per share. During the financial year the company paid an interim dividend of R1.50 and a final dividend of R1.75 per share. The dividend yield will be calculated as follows: (R1.50 + R1.75)/R50 = 0.065 = 6.5%.  

Dove

A dove in economics is an economic policy maker or advisor who favours and promotes a more relaxed monetary policy, keeping interest rates low in order to boost economic growth. Doves value low unemployment rates over low inflation.  

Down payment

A down payment is an initial payment you often need to make when buying an expensive item, like a home or vehicle, with a loan. It is also known as a deposit and is normally deducted from the original purchase price before interest is calculated on the outstanding loan amount.  

Downtrend

A downtrend is a continuing downward movement in the price of an item or trading activity in an economy. Regarding financial instruments, a downtrend refers to a price that moves lower as it fluctuates over time, indicating lower peaks and lower troughs.  

Dual listing

, also known as cross-listing, refers to the listing of a company’s stock on more than one stock exchange. Advantages of dual listing for a company are:

• Additional liquidity - because there are more markets to buy and sell and there are more participants in the market.
• Increased access to capital - it makes more potential investors available and gives a company more exposure in general.
• The ability for its shares to trade for longer periods if the exchanges are in different time zones.

Due diligence

In the business world: Duty of the directors and officers of a company to act prudently in assessing risks associated with all transactions. In investing: Duty of the investor to obtain the necessary information to evaluate actual or potential risks concerning an investment.  

DXY – US Dollar Index

Supporting the foreign exchange market functions as the DXY index uses the Ukrainian Dollar Index system to monitor US Dollar value against the euro and Japanese yen combined with the British pound and Canadian dollar alongside the Swedish krona and Swiss franc currency types. This indicator shows how competitive the US dollar remains compared to major global currency values in worldwide markets. The index serves as an indicator for market participants to evaluate dollar performance compared to other global currencies because it determines decisions regarding foreign exchange trading and commodities acquisitions as well as international trade activities.  

E

Earnings before interest and taxes (EBIT)

is also called operating earnings, operating income, or operating profit. EBIT is a clear indication of a company’s profitability. Put differently, it shows how much profit is generated from a company’s operations alone and disregards taxes and interest. There are two methods to calculate EBIT:

• The direct method: EBIT = Total revenue less cost of goods sold (COGS) minus operating expenses.
• The indirect method: EBIT = Net income plus taxes plus interest.

Earnings before interest, taxes, depreciation, and amortization (EBITDA)

is a measure of a company’s operating performance. It focuses on the core operations of a business before the impact of capital structure, leverage, and financial deductions such as depreciation and amortizations. It can be utilized as a proxy for the cash flow available to pay the debt of long-term assets. EBITDA has two formulas:

• EBITDA = Net income + interest + taxes + depreciation + amortization,

OR

• EBITDA = Operating profit + Depreciation + amortization.

Earnings before interest, taxes, and amortization (EBITA)

and EBITDA are both useful methods to ascertain a company’s operating profitability. However, EBITA is preferably utilized when analysts value companies that have substantial capital expenditures. Contrarily to EBITDA, EBITA includes depreciation, but disregards amortization, which is the accounting method of writing off the cost of a fixed or intangible asset over a period of time. EBITA can be calculated by using one of the following two formulae:

• Direct method: EBITA = Total revenue - cost of goods sold (COGS) - (operating expenses + amortization).
• Indirect method: EBITA = Net income + interest + taxes + amortization.

Earnings per share (EPS)

is a widely used financial ratio to measure a company’s profitability. The higher the EPS of a company, the more profitable it is valued. It is a ratio indicating how much money a company generates for each share of its stock. Put in other words, it shows the ability of a company to produce net profits for ordinary shareholders. Below are two of the several formulae to calculate EPS:

• EPS = (Net income - preferred dividends)/Ordinary shares outstanding at end of period, or,
• EPS = (Net income - preferred dividends)/Weighted average shares outstanding.

ECB – European Central Bank

The European Central Bank (ECB) functions as the central bank which controls the euro currency that serves all European Union member states. The institution conducts monetary policymaking functions across the 20 EU member states that operate under the euro currency system to preserve price stability while dealing with inflation and upholding economic development. The ECB takes responsibility for determining interest rates as well as foreign exchange reserve management and eurozone financial stability maintenance. The institution maintains essential responsibilities for guiding economic and fiscal policies between member countries to support European economy health  

ECN – Electronic Communication Network

An ECN (Electronic Communication Network) stands as an automated trading system that enables direct market actions between trading participants without depending on traditional market brokers or intermediaries. The ECN platform links many liquidity providers from banks hedge funds and financial institutions to provide traders with optimal market rates. ECNs prove especially beneficial for trading in the Forex market because they maintain continuous five-day trading operations.  

ECN Broker

An ECN broker is a forex financial professional that utilizes ECNs in order to give clients direct access to liquidity providers in the currency market.  

Electronic Communication Network (ECN)

is essentially a computerised network that links smaller market traders in the forex market with liquidity providers, such as central banks and other financial institutions. ECNs are more expensive trading systems than traditional forex trading systems, because of more transparency and liquidity.  

Economic indicator

are key economic statistics that provide investors and analysts with a scenario of the general direction in which the economy of a country is moving over the long-term. They are also used to determine the intrinsic value of financial instruments, such as currencies or stocks. Examples of economic indicators are, inter alia: Gross Domestic Product (GDP), Consumer Price Index (CPI), and unemployment numbers. There are three main types:

• Leading indicators - which precede economic trends.
• Lagging indicators - which confirm trends.
• Coincident indicators – which are occurring currently.

Economics

is a social science that analyses how people, individually and collectively, utilize scarce resources for the production, distribution and consumption of goods and services. The two major types of economics are:

• Macroeconomics - which focuses on the overall working of regional, national, and international economies.
• Microeconomics - which studies the behaviours of individual consumers and producers.

Economy

The word “economy” derives from the Greek word oikonomia, which in turn is a combination of two words: Oikos (house) and nemein (to manage). Thus, meaning household management. In modern terms, an economy is a system of organisations, institutions, and individuals that either facilitate or play a role in the production, distribution, and consumption of goods and services in a society. Economies determine how scare resources are allocated to members of a society. Three major economic systems at present in use by governments are: Capitalism, socialism, and communism.  

End of day order (EOD)

An EOD is an order, by an investor to buy or sell securities at a specific price, that is open only until the end of the current trading day.  

Equity

In accounting and finance, equity typically refers to shareholders’ equity, which is the amount of money that would be paid back to the shareholders of a company if all its assets were liquidated and all the debt was settled. Put in other words, equity is a degree of ownership in any asset of a company after deducting all debts related to that specific asset. Regarding privately held companies, it is called owners equity. There are generally two types of equity value:

• Book value

Equity is always listed at its book value in accounting. The formulae to calculate the book value of equity is: Equity = assets - liabilities, or, Equity = share capital + retained earnings.

• Market value

In finance, equity is normally indicated as a market value, which may considerably higher or lower than the book value. The reason for the difference between the two values is that accounting results are from the past, while financial analysts are future-orientated, concerned about a company’s future financial performance. There is a difference in the formulae for calculating the market value of equity of a public company and a private company. With regard to a public company, the formula is: Market value = share price x number of shares. Concerning a private company, the calculation is: Market value = Estimated value by means of a discounted cash flow (DCF) analysis.  

Equity fund

An equity fund, also known as stock fund, is a mutual fund that invests primarily in stocks. Such a fund enables small or individual investors to invest in diversified portfolios, comprising stocks, bonds, or other securities.  

Equity market

An equity market, also called a stock market or stock exchange, is a market in which shares of public companies are bought and sold. Equity markets create opportunities for investors to have a share of ownership in a public company, while companies obtain access to capital needed.  

Estimates

An estimate is the calculation of a financial transaction for which no exact value is calculable. It is based upon judgement, experience, and information available at the time.  

Estate

An estate comprises everything an individual owns, including real estate, land, other forms of property, cash, financial securities, possessions, and any other assets, as well as liabilities. It is also called the net worth of a person at any given time.  

Estate planning

is the act of preparing and legally determining of how a person’s wealth and assets will be preserved, managed, and distributed after his or her death.  

Estate tax

, also known as estate duty, is a levy on a deceased estate whose value exceeds an exclusion limit (estate duty rebate) set by a country’s law.  

EUR – Euro

The euro is the official currency for 19 of the member countries of the European Union (EU). EUR is the currency code used to represent the euro and it is the second most traded currency in the world, after the US dollar.  

Eurozone

refers to an economic and geographic area that comprises the current 19 countries in die European Union (EU) that have fully incorporated the euro as their currency. The eurozone is considered on of the largest economic zones in the world.  

EMA – Exponential Moving Average

Exponential Moving Average (EMA) assigns additional significance to current price data which enables it to detect quick price trends above the Simple Moving Average (SMA). EMA functions as a fundamental trading tool that helps users detect market trends alongside upcoming trend reversals at high speed. The calculation applies greater significance to recent data points thus making the indicator respond rapidly to changing prices. Technical traders use this indicator as a smoothing tool that produces trading signals for purchasing or selling decisions.  

EWO – Elliott Wave Oscillator

The Elliott Wave Oscillator (EWO) functions as a technical analysis instrument that tracks market trend power and path direction. The EWO results from the difference between two simple moving averages that span 19 and 8 periods when applied to price movements. Market price analysis using Elliott Wave theory depends on this oscillator because it enables traders to study price patterns through wave sequences. Positive EWO readings reveal upward market momentum that traders can use to judge trend continuance until they spot downward momentum indicated by negative EWO readings.  

Exchange

An exchange is an open and organised marketplace where securities, currencies, commodities, and other financial instruments are traded between buyers and sellers. It may be a physical location where traders meet to buy and sell or an electronic network like the forex exchange.  

Exchange control

, also called foreign exchange control, is a method utilized by governments to limit access to foreign currency. Exchange controls are imposed by governments to better stabilise their economies by restricting the inflow and outflow of currency, in an attempt to improve their balance of payment positions.  

Exchange rate

An exchange rate is the value of a country’s currency versus the currency of another country. Put another way, how many units of one currency does it take to buy one unit of another currency? For example, as of June 30, 2026, the exchange rate for the currency pair USD/ZAR is 17.40, meaning it takes R17.40 to buy one US dollar.  

Excise duties and levies

, also referred to as excise tax, is a legalised tax on specific products. The South African Revenue Service (SARS) specifies on its website that “excise duties and levies are imposed mostly on high-volume daily consumable products (e.g. petroleum and alcohol and tobacco products) as well as certain non-essential or luxury items (e.g. electronic equipment and cosmetics). SARS also declares that a secondary function of excise duties and levies is to discourage the consumption of certain harmful products. Excise duties and levies on alcohol and tobacco, is called “sin tax” in popular parlance.  

Ex-dividend

literally means “without dividend”. Ex-dividend is the status of a company’s shares when the company has determined on the record date which shareholders will be entitled to receive declared dividends. Put differently, it is a term describing that a declared dividend belongs to the seller rather than to the buyer of the shares.  

Ex-dividend date

The ex-dividend date (ex-date for short) is the date before which shareholders must have bought a company’s shares to qualify for an upcoming dividend of the company. Investors who bought the shares of a company on or after ex-date are not entitled to the next dividend payment.  

Execution

is when a buy or sell order, regarding a particular security, from a trader to a broker is completed. The broker is obliged to execute the order in the best way possible. The execution of an order is also referred to as “the order is filled”. The execution of an order depends on the type of order. For example, the filling of a day order is restricted to a specific trading day, while a good-til-cancelled (GTC) order can be filled at any point in time until a trader rescinds it.  

Executor

An executor is a person appointed to administer the estate of a deceased person. The appointment is either by the person who has made the will (testator or testatrix) or by a court, in cases when there was no previous appointment. By administering the estate, the executor is making sure the deceased person’s last instructions and wishes are executed.  

Exercise

In options trading, the holder of an options contract exercises his or her right to either buy or sell the underlying asset at a specified price within a prescribed time period.  

Exercise price

The exercise price is the predetermined price at which and underlying asset in an options contract can be bought or sold at. The exercise price is also known as the strike price.  

Expense

In accounting, an expense is the cost of operations that a business incurs in its effort to generate revenue. There are two main types of business expenses:

• Operating expenses are related to the core activities of a business, such as cost of goods sold (COGS), salaries, rent, and administrative fees.
• Non-operating expenses are unrelated to the main activities of a business. Examples are interest payments, costs regarding currency exchanges, and legal fees.

Expiry date

An expiry date, also known as an expiration date, is the final date that derivative contracts, such as options and futures, are valid. Traders with options contracts have the choice to exercise the option or let it expire worthless. Holders of futures contracts can choose to roll over the contract to a future date or exchange the asset or commodity.  

Export

are services and goods that are produced in one country and purchased by buyers in another country. Along with imports, exports are a main element in the trade balance of a country.  

Exporters

are, inter alia, businesses, individuals, and corporations that sell and transport their goods and services to customers in other countries.  

F

Face value

, also referred to as nominal value or par value, is a financial term used to describe the following:

• Regarding stocks (shares): The original cost of the stock that is listed on the certificate of the stock in question.
• With reference to bonds: The price at which the bond is issued. Put differently, it is the amount the bond issuer owes the investor at the time of maturity, therefore, also called the maturity value.
• As for coins, stamps, and paper money: It refers to their true value.

Facility

Essentially, a facility is another name for a loan taken out by a business. Private or public lenders, like banks and corporations, allow businesses, other entities, and individuals to borrow a specific amount of money for different reasons for a specific period of time. Types of facilities include, inter alia, overdrafts, business lines of credit, revolving credit, term loans, and letters of credit.  

Factory orders

are economic indicators, comprising two separate indicators, namely durable and non-durable goods (products expected to last less than three years). Factory orders are released monthly by the Census Bureau of the US Department of Commerce.  

Fail

is a term used in trading when the seller fails to deliver a security, or the buyer does not pay owed funds by the settlement date. Failed trades are also known as unsettled trades. With regard to securities, when a purchaser is unable to pay for the securities, it is called a long fail. When a seller is not able to deliver the securities as pledged, it is referred to as a short fail.  

Fair market value (FMV)

Described in basic terms, fair market value is the probable price that a willing buyer will pay to a willing seller on an open market. The price of an asset meets the fair market value qualification when the following conditions concerning the buyer and seller are met:

• Both must enter into the transaction willingly.
• They have to be unrelated.
• Both have reasonable knowledge about the asset.
• All the rights and benefits are transferred to the buyer upon the completion of the sale.
• A reasonable time period must be given to complete the transaction.

Fair value

The term fair value is used differently in the financial world.

• In accounting, fair value is an indication of a business’s estimated worth of its assets and liabilities.
• In investing, it refers to an asset’s sale price agreed upon by a willing seller and buyer, who are unrelated, with the assumption that both parties have the required knowledge of the transaction and are under no pressure to enter into the transaction.

Fair value is not the same as market value (which is an indication of an asset’s price in the market place) or appraised value (which is the value of a property at a specific point in time as determined by a professional appraiser).  

Fee

Generally speaking, a fee is a fixed price charged for specific services or advice. Fees are applied in different ways such as charges, costs, penalties, and commissions. Examples of fees:

• A payment by an individual to a financial advisor for advice regarding investments and other financial products.
• A payment by a house owner to a property agent when selling a house.
• A payment by a business to an accountant to help manage its books.

FED – Federal Reserve System

As the central banking system of the United States, the Federal Reserve System maintains its official name of "Fed." The United States government created the Federal Reserve System in 1913 with the purpose of developing safer monetary and financial operations and steady economic systems. The central role of the Federal Reserve consists of supporting full employment together with stable prices within the U.S. economic system.  

Fiat money

is a currency that lacks intrinsic value and is not based on a physical commodity such as gold or silver. Most modern paper currencies are fiat currencies, including the US dollar, the euro, the South African rand, and other major currencies. Fiat money is backed by the full faith and credit of the government that issued it, meaning it only becomes valuable when the specific government decrees that it has worth. Said differently, fiat money is based on the credit of a country’s economy.  

Fiduciary

A fiduciary is an individual or organisation that acts in the best interest of another organisation or individual. A fiduciary is obliged to exercise the highest degree of care when managing the money and assets of another person, or of a group of people. Furthermore, a fiduciary is all the time required to act in good faith and trust. Examples of a fiduciary: Financial advisors, executors of deceased estates, accountants, board members of companies (directors), and corporate officers.  

Figure

In accounting and finance, the term figure is:

• A symbol for a number, especially an Arabic numeral, such as the number 7.
• A certain amount of money, for instance, when you ask for the price for an item or refer to a person’s salary, for example, she earns a six-figure salary (i.e. an amount with six figures, like R500 000).

Fill

A fill is a term that refers to the execution of an order to buy or sell a commodity or security in the market. When an order has been completed, it is often referred to as filled”. Market orders are filled at the best available price as quickly as possible, while limit orders are executed at a specific price.  

Fill or kill

is a conditional type of order used by a trader to instruct his or her broker to either execute the order completely and immediately or to cancel (kill) the order. In essence, a fill or kill is a combination of an immediate-or-cancel (IOC) and an all-or-none (AON) order.  

Finance

is a broad term describing the study and management of money and comprises activities such as borrowing, lending, budgeting, saving, investing, and forecasting. There are three main types of finance: personal, corporate, and public (government).  

Financial advisor

A financial advisor (also spelled as financial adviser) is a qualified professional who advises and helps people and businesses set and reach their short, medium, and long-term financial goals. Put differently, it is a person who advises people and businesses on their financial planning, including risk management, creation of wealth (investments), and estate planning.  

Financial analyst

A financial analyst gathers, examines and interprets financial data in order to make recommendations to individuals and businesses regarding business and investment opportunities.  

Financial asset

A financial asset is an asset whose value derives from a contractual or ownership claim. Financial assets are liquid assets (can easily be converted into cash in a short period of time) which do not inevitably have inherent physical worth or even a physical form. Financial assets are frequently traded and include the following types: Cash, bank deposits, mutual funds, loans, accounts receivable, bonds, and shares.  

Finance charge

is any fee representing the cost of borrowing, or put in other words, a fee payable for the use of credit. A finance charge is often an aggregated cost, comprising interest charges, commitment fees, administration fees, and any other related transaction fees.  

Financial instrument

A financial instrument refers to a monetary contract that effectuates a financial asset of one party (the buyer) and a financial liability of the other party (the seller). Financial assets may be categorised into two types:

• Cash instruments: Their values are directly determined by the markets. They can be securities that are transferable with ease or even deposits and loans agreed upon by borrowers and lenders.
• Derivative instruments: They are financial instruments of which the values are based on underlying items, such as currencies, indices, and assets.

Financial markets

refer broadly to any marketplace where traders buy and sell assets, including the forex market, stock market, derivatives market, and bond market, among others. Financial markets create liquidity for businesses and individuals; however, investments risk as well if trading is not cautiously managed.  

Financial risk

is the possibility of losing money or valuable assets. Regarding financial markets, risk is defined in terms of the amount of money a trader can lose when trading. In other words, the financial risk is not the actual loss, but an inherent risk of loss of what can be ultimately lost during trade transactions. Financial risk is also applicable to business ventures. Examples of financial risk are, inter alia: Operational risk, credit risk, liquidity risk, investment risk, and compliance risk.  

Financial sector

The financial sector is a section of a country’s economy made up of financial markets - like stock, commodity and forex markets, banking institutions, insurance companies, financial and investment services. A thriving financial sector is a key element to stabilise a country’s economy.  

Financial statements

are reports that show the financial performance of a business over a period of time and its financial position at a point in time. Financial statements comprise the following statements:

• Income statement - Focuses on the revenue and expenses of a business over a specific period of time.
• Cash flow statement - Indicates how money moved in and out of a business over a specified time frame. Essentially, it acts as a bridge between the income statement and the balance sheet.
• Balance sheet - This is a summary of the financial position of a business on a specific day, for instance, the last day of the financial year of the business. The balance sheet shows the assets, liabilities, and shareholders’ equity.

Financing

refers to the management of money and embraces activities such as borrowing, lending, purchasing, investing, budgeting, funding business operations, and savings. There are two types of financing:

• Equity financing: Is the process of raising capital for a company by selling company shares (stock) to investors.
• Debt financing: Is the borrowing of money in the form of a secured or unsecured loan for capital expenditures or working capital. Financing with debt is referred to as financial leverage.

Finder’s fee

A finder’s fee, also known as a referral fee, is a fee or commission paid to an intermediary or the facilitator of a transaction, for instance, a business deal or a loan agreement.  

First In, First Out (FIFO)

is a method of stock valuation in accounting. First In First Out, assumes that the units of stock purchased or acquired first are also the ones disposed of first. Put differently, FIFO assumes that the remaining inventory consists of items acquired or purchased last.  

Fiscal deficit

A fiscal deficit is the gap between a government’s total revenue and total expenditure in a fiscal year. It is an indication that a government is spending beyond its means. The gap between income and expenditure is reduced by government borrowing.  

Fiscal year (FY)

A fiscal year is a 12-month period that companies and governments use for financial reporting and budgeting. An entity’s fiscal year does not necessarily correspond with a calendar year (1 January – 31 December). For example, the fiscal year of the South African government stretches from 1 April to 31 March.  

FIX – Financial Information eXchange

As a messaging protocol FIX (Financial Information eXchange) allows real-time electronic communication between financial institutions including brokers investment firms and exchanges. Security markets and their corresponding derivatives as well as currency exchanges are trading platforms where FIX acts as the primary communication protocol. FIX serves as a standardized communication network that advances financial data transmission through secure efficient channels for trade orders and execution reports as well as market data operations thus increasing speed and reducing errors while enhancing global market transparency.  

Fixed asset

are long-term assets that a business owns and utilizes in operations to generate revenue. A long-term asset is not expected to be consumed or liquidated within a year. They are tangible assets that are classified as property, plant, and equipment (PP&E). Examples of fixed assets are buildings, land, office equipment, vehicles, manufacturing equipment, fixtures, and furniture.  

Fixed asset turnover (FAT)

is an accounting ratio that determines how efficiently a business uses fixed assets to generate sales. The higher the ratio the more effectively the use of fixed assets by a business. Formula to determine the FAT ratio: FAT = Net sales/Average fixed assets (The average fixed assets figure is calculated by adding the beginning and closing balances, then dividing that number by 2.)  

Fixed costs

are costs that do not change when the amount of goods or services produced or sold changes. Some examples of fixed costs are rent, insurance premiums, and loan payments.  

Fixed exchange rate

A fixed exchange rate is a system in which one country ties the value of its currency to another country’s (usually stronger) currency or widely used commodity, such as gold. The purpose of a fixed change rate is to keep a country’s currency value steady, avoiding exchange rate fluctuations. Many currencies are pegged to either the US dollar, the euro, or the British pound.  

Fixed income

is income received from investments that provide returns on a regular schedule, typically in the form of fixed interest or dividends. The most common types of fixed-income instruments are government and corporate bonds. Pensions and life annuities are also examples of fixed income.  

Fixed interest rate

A fixed interest rate, also known as a fixed rate, is an unchanging rate that remains the same for the entire term of a loan or mortgage, or for a part of the loan term. Fixed interest rates tend to be higher than variable rates.  

Flat

The term flat refers to different things in the world of finances:

• In the securities market: A price that lacks significant movement.
• With regard to fixed income: A bond that is trading without accrued interest.
• In forex trading: A condition of being neither short nor long in a specific currency. Said differently, a position that has been bought or sold at the same price as the buying or selling price of a currency respectively - also referred to as “being square.”

Floating exchange rate

A floating exchange rate is a system where the currency price of a country is determined by supply and demand relative to other currencies in the forex market. This in contrast to a fixed exchange rate.  

Floating stock

is the total number of shares of a company available for trading in an open market. Floating stock is calculated by subtracting closely-held shares (owned by insiders, major shareholders, and employees) and restricted stock from a company’s total outstanding shares.  

Follow-through

, also referred to as follow-through-day (FTD), is a bullish signal to indicate a high probability of change in direction from a downtrend to an uptrend in a stock market.  

Foreign exchange

, also referred to as forex or FX, is the trading of the currency of one country for another. Foreign exchange transactions take place on the foreign exchange market, also known as the forex market.  

Forex copy trading

allows a forex trader to directly copy the same positions as the investor he or she is copying. When copying another forex trader, one simply follows his or her trades and strategies blindly. Copy trading is a useful strategy for forex traders who do not have the time to follow the markets themselves and lacking the experience to trade in forex.  

Forex correlation

is the relationship between two separate currency pairs over a certain period of time. The relationship can be either positive or negative. A positive correlation indicates that the two currency pairs move in tandem at the same time. A negative correlation means that the currency pairs move in opposite directions at the same time.  

Forex exchange market

The foreign exchange market, also known as the forex market, is the over-the-counter (OTC) market in which the foreign currencies of the world are traded. The foreign exchange market is by far the largest and most liquid market in the world. It is also known as the currency market. The forex market is unique in the sense that it is not a central marketplace. Currency trading is conducted electronically. Put another way, all foreign exchange transactions take place via computer networks between all those involved in forex trading.  

Forward contract

A forward contract, often referred to as “forward,” is a contract between two parties to buy and sell an underlying asset at a specified price on a predetermined date in the future. A forward contract is considered a type of derivative.  

Forward market

A forward market is an over-the-counter (OTC) market for trading financial instruments or assets when the price of the asset is specified for delivery at a future date. A variety of financial instruments are traded in forward markets, although the term is primarily used to refer to the forex market. Although, the term is also applicable to markets were interest rates, securities, and commodities are respectively traded.  

Forward points

are the number of basis points added to or subtracted from the current spot rate of a currency pair to determine the forward rate for delivery on a predetermined future date. Forward points are also referred to as forward spreads. When points are added to the spot rate, they are forward points or a forward premium. When points are subtracted from the spot rate, they are discount points or a forward discount. Forward points are based on the difference between the interest rates of the two currencies and the length of the contract (deal).  

FOMC – Federal Open Market Committee

The Federal Open Market Committee (FOMC) functions as a crucial element within the Federal Reserve which holds its position as the central banking system of the United States. The Federal Reserve controls monetary policy by determining interest rates together with managing the currency supply in circulation. The FOMC holds regular sessions to review economic performance while deciding on federal funds rate changes and carrying out other policy tools to achieve both economic stability and full employment. Every financial market decision made by the Fed directly affects inflation levels and consumer purchases in addition to monetary rates.  

Forward price

The forward price is the predetermined delivery price for an underlying asset, such as a commodity or currency, as agreed by the buyer and seller of a forward contract, which will be paid at a predetermined date in the future.  

Free market

A free market is an economic system based on the market forces of supply and demand with no or little government control. According to economists, a free market is defined as one where goods are exchanged by a willing buyer and a willing seller.  

Free trade

is the idea that imports and exports of goods between countries should be able to take place with as few limitations from governments as possible. Limitations that hinder free trade are, inter alia, quotas, subsidies, tariffs, and restrictions.  

FSCA

stands for the Financial Sector Conduct Authority, previously known as the Financial Services Board (FSB), the market conduct regulator of financial institutions in South Africa. The FSCA performs its role as a regulator by enhancing and supporting the efficiency and integrity of the financial system and by protecting financial customers by promoting their fair treatment by financial institutions. It also provides financial customers with financial education and promotes financial literacy and financial capability.  

Fund

A fund is an amount of money provided for a specific purpose. Some examples of funds are emergency funds, mutual funds, trust funds, and retirement funds.  

Fundamental analysis (FA)

is a method of determining the intrinsic value, also referred to as real or true or fair market value, of a security such as a currency or stock. The purpose of fundamental analysis is to discover whether a security is overvalued or undervalued from an investor’s viewpoint. Fundamental analysts scrutinize and consider factors that can affect the security’s value. These can be macroeconomic factors such as the state of the economy in general and industries, or microeconomic factors such as the effectiveness of a company’s management and its financial position.  

Fund of Funds (FOF)

A fund of funds, also called a multi-manager investment, is a pooled investment fund holding other investment funds, such as mutual funds or hedge funds, rather than investing directly in stocks, bonds, and other securities. FOFs offer broader investment exposure with reduced risk, compared to direct investments in securities. However, FOFs can be more expensive than other investments because an investor can incur operating expenses for both the underlying funds as well as the FOF.  

Fund manager

A fund manager is an investment professional who is responsible for the implementation of a fund’s investment strategy. Supported by a team of analysts, a fund manager manages a fund’s portfolio trading activities.  

Futures contract

are derivative financial contracts that bind two parties to trade an underlying asset, such as a commodity or index, at a predetermined price on a specific date in the future.   Both parties, the buyer, and the seller are obliged to honour the terms of the contract, regardless of the current market price at the expiry date. Futures contracts, commonly referred to as “futures,” enable an investor to speculate on the direction of the price of an underlying asset, like a currency, commodity, or financial instrument. Some examples of futures are commodity futures (crude oil, natural gas, corn), currency futures, and precious metal futures (gold and silver).  

Futures market

A futures market, also known as a futures exchange, is a market in which traders buy and sell futures contracts. The majority of trading in futures markets occurs electronically and trading can be done 24 hours a day.  

Future value (FV)

is the amount of a current investment at a future date when compounded at a given interest rate. FV is based on the concept of the time value of money. Knowing the future value of an investment, an investor is enabled to make informed investment decisions.  

G

Gain

A gain refers to an increase in price, profit, or value of an asset. A gain occurs when the selling price of an asset is higher than the original purchase price. If the situation is vice versa, it is called a loss.  

Gap

A gap in trading, also referred to as gapping, refers to an area on the price chart of an asset where no trading activity occurs. Partial gapping appears when an asset’s opening price is above (gap up) or below (gap down) the previous day’s closing price but within the previous day’s price range. Full gapping occurs when the opening price is outside the price range of the previous day. Bar the basic “gap up” and “gap down”, there are four main types of gap:

• Common gaps: A gap in price action unrelated to price patterns. Normally, not an indication of profitable trading opportunities.
• Breakaway gaps: Signal a new trend where the price “gaps away” from the price pattern.
• Runaway gaps: Indicate an increase of an already bearish or bullish price pattern in the same direction. (Also known as continuation gaps.)
• Exhaustion gaps: Are the opposite of runaway gaps, where the price makes a final gap in the trend direction, but then reverses.

GBP – British Pound Sterling

Gearing

, also referred to as financial gearing, refers to the relationship of a company’s debt-to-equity (D/E). Gearing is an indication to which proportion the operations of a company are funded by lenders versus shareholders. In other words, gearing measures the financial leverage of a company. When the proportion of debt-to-equity is high, a company is said to be highly geared or highly leveraged.  

Gearing ratio

are a group of financial measures that determine a company’s financial leverage, i.e.  comparing a company’s shareholders’ equity to company debt in different ways. There are different types of gearing ratios, but the most common one is the debt-to-equity ratio. The formula to calculate the debt-to-equity ratio: (Short-term debt + long-term debt)/Equity Usually, the higher the gearing ratio, the higher the financial risk to shareholders and lenders.  

General ledger

A general ledger is a group of accounts that are utilized to categorise and store information from the transactions of a business. A general ledger comprises:

• Balance sheet accounts: Assets, liabilities, equity.
• Income statement accounts: Revenues, cost of sales, expenses, gains, losses.

General ledger account

are used to store and summarise business transactions of a business according to the double-entry system of accounting and bookkeeping. They are arranged in the general ledger of a business. Some examples of general ledger accounts:

• Asset accounts, such as Cash, Accounts Receivable, Equipment, and Inventory.
• Liability accounts, like Accounts Payable, Loans, and Customer Deposits.
• Shareholders’ equity accounts, such as Ordinary Shares, Retained Earnings.
• Operating revenue accounts, namely Sales.
• Operating expense accounts, for example, Salaries, Rent, and Marketing.

Given

In forex trading, given refers to a bid being hit. Bid is the price at which a forex trader or broker is willing to buy.  

Give up

is a method in commodities and securities trading where an executing broker places an order on behalf of another broker. The term derives from the fact that the broker executing the transaction gives up the commission to the broker who receives the order from a client. Nowadays, with all the trading done electronically, it is a method not widely practiced.  

Going concern

is a term in accounting applied to businesses. For a company to be a going concern, it must have the resources to continue operations long enough to fulfil its commitments, obligations, and operations. If there is doubt about a company’s ability to carry on as a going concern, the facts and conditions have to be disclosed in its financial statements.  

Going long

, also known as long or long position, is when a trader buys an asset - stock, commodity, or currency - with the expectation to sell at a higher future price, generating a profit. A long position is a bullish view and is the opposite of going short.  

Going public

is the process of a company going from private to public status. In other words, it is the first time the general public is allowed to buy the company’s shares on a stock exchange. It is also referred to as an initial public offering (IPO).  

Going short

, also referred to as short selling or shorting, is a trading strategy when a trader borrows a security and sells it in the market, with the intention to purchase it at a later stage at a lower price. Short selling is utilized by investors to speculate on the decline in the price of a security. However, it can be a risky strategy, causing trading losses.  

Gold

, a precious metal, is a commodity that can be used as an investment or as a trading instrument. Investing in gold implies buying and keeping it for a long period of time, like months or years. Trading in gold means to buy and sell it several times within short time periods, such as a few days, hours, or even minutes, with the purpose to generate profits. Generally, investors buy gold as a method of diversifying risk, mainly through futures contracts and derivatives.  

Gold certificate

A gold certificate is a certificate of ownership used by investors in gold to buy and sell the commodity rather than coping with the transfer and storage of the physical metal itself.  

Gold contract

A gold contract is the standard unit of trading gold which equals 10 troy ounces. In comparison with one regular ounce, which weighs 28.35 grams, one troy ounce is 31.1 grams - 9.7% heavier than the standard unit of measure. Thus, 10 troy ounces = approximately 9.12 regular ounces of gold.  

Good for day

A good for day, or day order, refers to an instruction from a trader to a broker, to buy or sell a certain asset at a specified price (also called the level) at any time during the trading day on which the order is made. A day order expires if the specified price is not met within the same day of trade.  

Good ‘til cancelled (GTC) order

A Good ‘til Cancelled (GTC) order is a type of order placed by a trader to buy or sell a security that remains valid until the order is executed or cancelled by the trader. Brokers and brokerages typically limit the maximum time an investor is allowed to keep a GTC order open. The time period allowed by some brokers is 90 days.  

Good ‘til date (GTD)

(or good ‘til day) is an order in trading that remains active until it is filled, cancelled or until the predetermined date arrives, whichever occurs first.  

Goodwill

occurs when one company purchases another one. In accounting, goodwill is categorised as an intangible long-term asset. Some factors such as the value of a company’s brand name, good customer relations, outstanding products and services, and sound employee relations give rise to a company’s goodwill. The following formula is used to calculate goodwill: Goodwill = P - (A + L), where: P is the purchase price for the company, A is the fair market value of assets, L is the fair market value of liabilities.  

Greeks

“Greeks” is a term used in the options market to describe the various dimensions of risk regarding positions in options trading. Greek letters, such as Delta, Gamma, Theta, Vega, and Rho are utilized to determine the various factors that affect the price of an option contract. For instance, Delta measures how much an option’s price is expected to change as a result from a change in the price of the underlying asset, while Gamma is a measure of Delta’s rate of change over time, as well as the rate of change in the underlying asset’s price.  

Greenback

is the nickname for the US dollar. Greenbacks were first printed to finance the American Civil War (1861 - 1865) and were named as such because their backs were printed in green.  

Gross Domestic Product (GDP)

refers to the total of all the completed products and services within a country’s borders within a specific period of time. Some economists refer to GDP as the ‘size of the economy.’ GDP is a good indication of a country’s economic health. It is typically calculated on a quarterly basis, as well as on an annual basis.  

Gross National Product (GNP)

measures all the domestic and foreign output of a country’s residents within a specific time frame.  It, however, excludes goods and services produced by foreigners within the specific country. Simply put, GNP measures economic activity of a country based on nationality, while GDP measures the size of a country’s economy based on location.  

Gross earnings

are applicable to individuals and businesses. As for individuals, gross earnings refer to a person’s income before any tax and other deductions or adjustments. It is usually the first line on an employee’s pay slip. With regard to businesses, gross earnings are the amount that is available after the cost of goods sold (COGS) has been deducted from the company’s revenue. COGS is the direct costs associated with making and selling goods, and or the direct costs associated with the provision of services. It is an item on the income statement of a business.  

Gross income

Pertaining to individuals and businesses, gross income is the same as gross earnings.  

Gross profit

Regarding businesses, gross profit is the same as gross earnings.  

Gross profit margin

is a measure of a business’s profitability, when the gross profit is expressed as a percentage of revenue. It is sometimes referred to as the gross margin ratio. The gross profit margin is a method to indicate a business’s financial health, before deducting administrative, and other general costs. Example to determine the gross profit margin of company FDK:

• Revenue - R10 000
• Gross profit - R7 000
• Gross profit margin = Gross profit/Revenue

= R7 000/R10 000 = 0.70 = 0.70 x 100% = 70% This implies that company FDK spends 30% of its revenue on cost of goods sold (COGS), and that it has 70% of its revenue left to cover indirect costs and generate profits for its owners.  

Guaranteed order

A guaranteed order is a type of order that protects a trader against market gapping. It guarantees that a trader’s order will be executed at the price asked.  

Guaranteed stop loss order (GSLO)

A guaranteed stop loss order (GSLO) is used to help a trader to manage investment risks when trading in the financial markets. A GSLO functions in the same way as a standard stop loss order, except that it guarantees to close your trade at the price specified by you, notwithstanding market volatility or gapping. A fee may be charged with a GSLO.  

Gunning

in forex, also known as gunned, is a term used to refer to forex traders pushing to trigger known stops or technical levels in the forex market.  

H

Halal

is an Arabic word meaning lawful or permitted. When trading in financial markets, traders of Muslim faith are obliged to adhere to the Islamic faith principles, such as the distribution of risk and benefits and the prohibition of payment and receipt of interest.  

Handle

In trading, the term ‘handle’ has two meanings, one applicable to forex trading and the other one used in most of the other financial markets. In most financial markets, handle, also known as the big figure, refers to the part of a price quote that appears to the left of the decimal point in the quote. For example, when the price quote of a share is R111.10, the handle is R111. In forex trading, the handle refers to the part of the quote that appears in both the bid (buy) price and the ask (offer) price. For instance, if a currency pair has a bid of 16.8010 and an ask of 16.8000, then its handle is 16.80.  

Hawk

are a country’s monetary policymakers and advisors who believe that higher interest rates are needed to control inflation or to impede rapid economic growth or both.  

Hawkish

applied by a country’s monetary policy makers who are hawks, are called hawkish. For instance, monetary policies introduced to slow down economic growth and preventing high inflation by raising interest rates.  

Hedge

A hedge is an investment to reduce an investor’s existing exposure to risk. Most hedges take the form of a position or combination of positions that reduces the risk of your main position. Put differently, investors hedge one investment by trading in another investment. In forex trading, some brokers allow traders to place direct hedges. A direct hedge is when a forex trader is allowed to place a trade that purchases one currency pair, for example EUR/USD, while simultaneously, the trader can also place a trade to sell the same currency pair.  

Hedge fund

A hedge fund is an alternative investment that utilizes different strategies to protect investment portfolios from market uncertainty, while earning positive returns for its investors, regardless the movement of the market. Hedge funds use pooled funds, i. e. funds in a portfolio from many individual investors that are combined to make investments.  

Hedge fund manager

A hedge fund manager is an individual or financial firm responsible for managing all the activities associated with the operation of a hedge fund, like making investment decisions.  

Hedge ratio

A hedge ratio compares the value of an open position protected through the use of a hedge with the overall position. It is expressed as a fraction or decimal and is used to quantify the extent of any potential risk that can be caused by an unanticipated change with regard to the hedging investment. The formula for the hedge ratio is: Hedge ratio = Value of the hedge/Total position value For example: When you have a hedge ratio of 0.6, it indicates that 60% of your total investment is protected from risk applicable to the specific investment.  

Hedging

is the process of reducing investment risk via offsetting investments. Put in other words, hedging is a strategy to reduce or cover the loss you would incur if something unexpected occurred.  

Held order

A held order is a market order that requires a swift reaction from a broker to fill it immediately without any price restriction. Traders make use of held orders when they immediately want to change their exposure to a specific security or commodity or to equal a bid or ask for a quick trade.  

Held-to-maturity (HTM)

Is a long-term security bought by a company or individual and to be owned until its date of maturity. Bonds are typically held-to-maturity securities.  

HFT – High Frequency Trading

The financial industry utilizes computers with advanced speed to perform algorithmic trades as part of high-frequency trading operations. Complex algorithms enable HFT firms to automate market data analysis to seize price differences that appear in microseconds. The trading approach requires exceptional speed alongside numerous transactions so it implies both limited earnings per deal and swift financial systems. The operations of HFT help improve market liquidity standards and boost high operational speeds but professional traders suggest its system generates excessive market volatility which leads to unfavorable trading conditions between institutional investors and retail traders.  

High close

is a manipulation tactic used by stock traders, who trade small numbers of shares at high prices at the end of a trading day. The closing price of a share is the price of the final trade of the day. The purpose of the tactic is to create the impression that the share is doing very well, with the possibility of an increase in the share price.  

High gearing

A high gearing ratio signifies a company has a larger percentage of debt than equity. Say differently, high gearing occurs when a company has a high level of debt compared to its share price.  

Historical cost accounting

is when the accounts of a business are prepared on the basis of historical cost, an accounting principle valuing assets at their original cost of purchase.  

Hit the bid

refers to a situation in trading in which a broker is willing to sell at the best possible bid price, considering the current condition of the market, quoted by another broker for a given security.  

HKD – Hong Kong Dollar

Hong Kong operates under the official currency system of the Hong Kong Dollar (HKD) which functions as one of the leading currencies for international trading activities. Hong Kong Dollar (HKD) appears under two abbreviation types HKD while its symbol remains HK$. The Hong Kong Monetary Authority maintains HKD stability and HSBC and Standard Chartered Bank together with Bank of China use a stringent currency board system to create the currency. The foreign exchange rate in Hong Kong stays stable because it is directly linked to the U.S. Dollar at HK$7.75 and HK$7.85 per USD.  

Hostile bid

A hostile bid is a type of takeover bid that is presented directly to the shareholders of the company against the wishes of the company’s management and or board of directors. Generally, bidders present the hostile bid via a tender offer to shareholders, proposing to buy the ordinary shares at a fixed price above the current market price, i.e. at a premium.  

Hung up

Description of the position of an investor whose securities have dropped well below the levels of their original purchase price. When an investor is in a hung up situation, he or she has one of two options, namely:

• either holding the securities, with the anticipation that the prices will recover, while still risking further losses, or,
• selling them and reducing his or her current losses.

Hybrid fund

A hybrid fund is a fund that invests in two or more asset classes, typically stocks, and bonds. A hybrid fund enables investors to diversify their portfolios with a single investment financial instrument.  

Hybrid market

A hybrid market is an exchange that offers a combination of traditional floor brokers and electronic trade execution. The New York Stock Exchange (NYSE) is a classic example of a hybrid market.  

Hyperinflation

is an indication of rapid, excessive, and out of control price increases in a country’s economy. It is a period of inflation that causes a country’s currency to become virtually worthless. Although a rare event for developed countries, hyperinflation is not unknown to countries such as Zimbabwe and Venezuela.  

I

Identifiable asset

An identifiable asset is an asset that can be assigned a fair value on the balance sheet of a company acquired by another company. Identifiable assets can be both tangible and intangible, while unidentifiable assets are usually referred to as goodwill. Examples are, among others, buildings, equipment, and inventory.  

If done order

An if done order, also called a contingent order, is a two-step order where the second part is only activated once the first part has been executed. Usually, the first part is an order that specifies a certain limit and is activated once the specified price is met. The second part can be a stop order, limit order, or OCO (One-Cancels-the-Other).  

Illiquid

The term illiquid refers to different situations, among others:

• Financial markets: When a low volume of a specific security is being traded in a financial market.
• Businesses: A business that has insufficient cash flow to meet its operational needs and honour its debt commitments.
• Assets: An asset that cannot quickly and easily be exchanged for cash without a substantial loss in value. Examples of such assets are real estate, buildings, and collectibles.

Immediate or cancel order (IOC)

(IOC), also referred to as an immediate order, is a type of order to a broker to buy or sell a certain security immediately. Any part of the order that cannot be executed immediately is cancelled. IOCs may also be referred to as market or limit orders.  

Impaired asset

An impaired asset refers to an asset that has a higher value listed on a company’s balance sheet than its market value. Impaired assets need to be written down on a company’s balance sheet in order to make it congruent with its market value. The amount written down is also recorded as a loss on the income statement.  

Import duty

, also referred to as customs duty, tariff, import tax, or import tariff, is a tax imposed by governments on goods imported from other countries. In South Africa, according to the South African Revenue Service (SARS), three kinds of goods are levied on imported goods:

• Custom duties.
• Anti-dumping and countervailing duties (on subsidised imported goods).
• VAT (which is also collected on goods imported and cleared for home consumption).

Imports

, the opposite of exports, refer to services or goods from foreign countries that is purchased or utilized by citizens, businesses, and governments in another country.  

Improvement

An improvement is a significant addition or change to an asset or structure that enhances its value and utility. Usually, to be classified as an improvement, an enhancement must meet one of the following conditions:

• It increases the overall value of the asset.
• It extends the life of the asset.
• It transforms the asset so that it can be used more effectively.

are, inter alia: The extension of a building, upgrading of equipment, a new roof for a factory.  

Imputed value

is the assumed value of an item when the actual or true value is not available or known, but implicit in the product or asset.  

INR – Indian Rupee

In and out

is a strategy in trading whereby a security or currency is purchased and sold within a short period of time. The strategy can be executed within a single trading session, or over a longer time frame but less than a period related to a strategy of buy and hold.  

In arrears

Commonly, a financial and legal term describing that debt payments are not up to date.  

Income

A simple definition of income is:  Income is the revenue that a business receives from selling its goods and or services or from yields on investments or the money an individual earns as compensation for his or her labour, services, or investments.  

Income risk

is the possibility that the income paid by a fund will decrease or fluctuate due to a change in interest rates.  

Income statement

The income statement is one of the three core financial statements of a company that shows the company’s financial performance over a specific accounting period, with the other two major statements being the balance sheet and the cash flow statement.  

Income tax

is the normal tax an individual pays on his or her taxable income.  

Incorporation

refers to the legal process used to form a corporation or company, resulting in a legal entity that separates the business’s assets and liabilities from its owners and investors.  

Incremental cost

, also called marginal cost, is the amount of money linked to one additional unit of production.  

Indenture

An indenture is a written legal and binding agreement between two or more parties. Indentures are usually associated with bonds, real estate, and indebtedness. It usually provides detailed information regarding terms and clauses, for instance, specifying the interest rate, convertibility, and maturity date concerning bonds.  

Index

An index is a representation of the value of a certain group of financial instruments, such as stocks and bonds, measuring the performance, or price movement, of a particular group of financial instruments. Put differently, and index is a way to determine the overall performance of a stock market, or a segment thereof, over a specific time period. Well-known stock indices are:

• The S&P 500 index (tracks the performance of the stocks of the 500 largest companies in the USA).
• The Dow Jones Index (tracks the performance of 30 companies from different industries in the USA).
• The FTSE 100 (a key indicator of the strength of the 100 biggest companies on the London Stock Exchange).

Both of the words, indexes, and indices, can be used as the plural for index.  

Index fund

An index fund is a type of mutual fund or exchange-traded fund (ETF), comprising a portfolio to match or track the components of a financial market index, such as the Standard & Poor’s 500 Index (S&P500). Index funds trade on all the major financial markets.  

Index future

An index future is a type of futures contract utilized by traders to trade a specific financial index, for example, stock indices. When you buy a financial index future, you agree to trade the specific index at a predetermined price at a specified date in the future.  

Index option

An index option, either call or put, is a financial derivative that gives the holder the right, but not the obligation, to purchase or sell the value of an underlying index, such as the Standard & Poor’s (S&P) 500. The settlement of index options is always made by cash payment.  

Indicator

are data utilized to measure current economic conditions, as well as trends in financial markets, to predict economic trends and forecast trends in financial markets. In general, indicators can be categorised into:

• Economic indicators are used to measure the growth and contraction of economies.
• Technical indicators are utilized in technical analysis to forecast changes in trends and prices of traded assets in financial markets.

Industrial production

measures the output of the industrial sector of a country. Typically, industrial production comprises mining, manufacturing, utilities, and, in some instances, construction. In South Africa, industrial production includes mining and quarrying, manufacturing, and electricity production.  

Industrial production index (IPI)

An industrial production index (IPI) is an expression of a country’s industrial production as an index level, relative to a specific base year or on a year on year (YoY) basis. With regard to South Africa, IPI is updated monthly and is measured since January 1962. Currently (July 2026), the average IPI is 2.9%, the all-time high (23.2%) was in April 1964, and a record low of minus 48.6% was recorded for April 2026.  

Industry

Generally, an industry is a group of businesses that are related based on their main business operations, i. e. based on their largest sources of revenue. Shares of companies operating within the same industry, for instance the gold mining industry, are inclined to have similar share price movements.  

Inefficient market

An inefficient market occurs when the prices of securities are random, not reflecting a security’s fair price because not all available information is incorporated. The result of an inefficient market is that a security or market becomes overvalued or undervalued due to the failure of traders to recognize its true value.  

Inflation

is a term in economics that describes the general rising of prices and goods in an economy. Consequently, the buying power of a country’s currency is falling, which means the cost of living increases.  

Inflation rate

The inflation rate is the percentage increase or decrease in the price of goods and services during a specific period of time, usually monthly or annually. The Consumer Price Index (CPI) is the most widely used measure of inflation. CPI measures the average change in prices over a period of time that consumers pay for a selected basket of goods and services.  

Inherent risk

An inherent risk is the risk of a significant misstatement in a company’s financial statements without taking internal controls into consideration.  

Inheritance tax

is a tax payable by a person who inherits assets, for instance, money or property, from a person who has died (a deceased person).  

Initial margin

An initial margin, also called original margin, is the percentage of a purchase price a trader is obliged to pay with cash or collateral, like eligible securities, when using a margin account. Put in other words, it is the amount an investor must deposit before a broker will lend money to the investor to purchase more securities.  

Initial public offering (IPO)

An initial public offering (IPO) is the process when a private company is offering its shares to the public in a new issuing of shares. IPOs are often used as a method to raise capital from public investors and to gain necessary market capital.  

In kind

refers to a payment in the form of a service or good instead of cash. Examples of payments in kind comprise, among others, concessions, special privileges, discounts, and paid holidays.  

In perpetuity

In finance, in perpetuity refers to the situation where a stream of identical cash flows or an annuity has no end. Ordinarily, the cash flows remain identical, thus, as a result decrease in value over time due to the effect of inflation.  

Inside day

An inside day is a two-bar candlestick chart pattern in which the total price range of a security on a specific day is completely within the preceding day’s price range. Essentially, the high of the second day must be lower than the previous day high, and the low of the second day higher than the low of the preceding day.  

Insolvency

is a term to describe a financial condition when a business or individual is unable to pay their debts. Basically, there are two types of insolvency:

• Balance sheet insolvency: When a legal entity, for instance a business, or an individual’s liabilities (debts) exceeds their assets.
• Cash flow insolvency: When a legal entity or person can no longer meet their debt obligations on time as they become due.

INR – Indian Rupee

The Reserve Bank of India issues and controls the official Indian currency named INR (Indian Rupee). The most widespread currency in South Asia is represented through ₹ symbol and INR ISO code. The rupee is divided into 100 paise although rising prices have mainly eliminated the use of limited-denomination coins. Indian banknotes show Mahatma Gandhi along with cultural and historical landmarks depicted on them. The Indian rupee currency value changes because of economic conditions together with domestic trade equilibrium and worldwide market directions.  

Instrument

In finance, an instrument, also referred to as a financial instrument, is a means by which something valuable is transferred, held, or realized. Examples of instruments are securities, commodities, indices, bonds, derivatives, and any asset that underlies a derivative.  

Intangible asset

An intangible asset is a non-physical asset. It is the opposite of a tangible asset and has a useful life greater than one year. Goodwill, a franchise, a brand, and intellectual property, such as trademarks, patents, and copyrights, are all intangible assets.  

Interbank market

The interbank market is a global network utilized by banks and other large financial institutions to trade currencies between each other. Trades can be executed directly between each entity or via electronic brokering platforms. The interbank market is unregulated.  

Interbank rate

The interbank rate is the rate that banks charge each other on short-term loans, normally overnight and seldom more than a week.  

Interest

The term interest has different meanings in the financial realm:

• Regarding loans: Is the cost of borrowing money.

Two main types of interest can be applied to loans, namely:

• Simple interest: The interest calculated on the principal sum of a loan.
• Compound interest: Is interest on both the principal amount of a loan and the compounding interest paid on that loan.
• With regard to shareholding in a company: The amount of ownership a shareholder has in a company.
• As for investments: The return earned on an investment.

Interest coverage ratio

The interest coverage ratio is a ratio to determine the ability of a business to make interest payments on its outstanding debt. It is calculated by dividing a business’s earnings before interest and taxes (EBIT) for a given time period by interest expenses for the same period. Interest coverage ratio, also known as the times-interest-earned ratio, is used by prospective lenders and creditors to evaluate the risk involved in lending money to a business. Normally, a higher coverage rate is better.  

Interest rate

An interest rate is an indication of the extent the costs of borrowing money will accumulate over time. The fee charged by a lender to a borrower for the privilege of borrowing money is typically expressed as an annual percentage rate (APR) of the principal amount of the loan. High-risk borrowers are usually charged higher interest rates and vice versa. Interest rates often change as a result of inflation. Banks and other financial institutions also pay interest rates on money received as deposits and savings accounts from individuals and businesses.  

Interest rate swap

An interest rate swap is a forward contract between two parties to exchange one stream of future interest payments for another based on a specified principal amount. Swaps are derivative contracts where the value of the swap is obtained from the underlying value of the two streams of interest payments.  

Interim dividend

An interim dividend is the distribution of a percentage of the profit of a company to shareholders before the calculation of the annual earnings of the company and before the annual general meeting (AGM). It is usually paid semi-annually.  

Interim statement

are financial reports issued by businesses covering a period of less than one year, for instance monthly or quarterly. An interim statement is also referred to as an interim report.  

Internal growth rate (IGR)

The internal growth rate (IGR) of a business is the maximum rate of growth achievable for a business without outside sources of financing.  

International Monetary Fund (IMF)

(IMF) was founded in 1944. It is an organisation that aims to encourage international trade, to promote financial stability of member countries, and to lend money to developing countries.  

Intervention

In forex, intervention refers to a situation when a government or central bank of a country buys or sells a currency in the forex market with the purpose to increase or decrease the relative value of the country’s currency to other foreign currencies.  

Inter-vivos trust

An inter-vivos trust, also known as a living trust, is created by an individual, known as the trustor, while he or she is still alive. The purpose of the trust is to manage certain assets or investments and support beneficiaries, such as a spouse or children.  

Intestate

refers to the situation when a person dies without a legal will. It is also called intestacy.  

In the black

The term ‘in the black’ refers to the healthy financial situation and profitability of a business or individual. It is an indication that a business or individual is financially solvent. It is the opposite of ‘in the red.’  

In the money (ITM)

refers to a situation when an option has intrinsic value, i. e. some fundamental, objective value. With regard to a call option, ITM indicates a situation when its strike (exercise) price is below the current market price of the underlying asset. With reference to a put option, ITM refers to a position when its strike price is above the underlying asset’s market price. An option can also be out of the money (OTM) when the price of the underlying asset has not got beyond the exercise price, and at the money (ATM) when the underlying asset equals the strike price.  

In the red

The expression ‘in the red’ is generally used to describe a business that is operating at a loss, is in debt, or cash negative. The term can also be applied to an individual. It is the opposite position of ‘in the black.’  

Intraday

means ‘within the day’, a term to describe price movements of securities during regular business hours of a trading day. Generally, it describes the low and high price of a given financial instrument during a given trading day.  

Intrinsic value

In finances, there are different definitions of intrinsic value.

• Regarding an asset or security: Is a measure of what an asset or security is worth, based on fundamental analysis. It is also called real value and may or may not be the same as the current market or book value.
• With reference to a call option: The amount by which a call option is in the money, i. e. the difference between the strike price and the market price of the underlying asset. If the price of the underlying asset is below the strike price the call option has no intrinsic value.
• As for a put option: As with a call option, it is the difference between the strike price and the market price of the underlying security. However, in this case the put option has no intrinsic value if the price of the underlying asset is higher than the strike price.

Introducing broker (IB)

An introducing broker (IB), also called a commodity broker or futures broker, is a brokerage firm or broker who is responsible for placing any pending transactions on behalf of their clients with other brokers or brokerage firms. An IB earns a salary through brokerage commissions.  

Inventory

is an accounting term that refers to the following goods of a business:

• Raw materials: Material available for the manufacturing of more goods to be sold.
• Work-in-progress: Goods in the process of being manufactured.
• Finished goods: Goods available to be sold.

Inventory represents one of the most important assets of a business and it is shown as a current asset on the balance sheet.  

Inventory turnover

is an indication of how many times a business has sold and replaced its inventory during a given time frame. The ratio is calculated by using the following formula: Inventory turnover = Sales/Average turnover Where: Average inventory = (Beginning inventory + Ending inventory)/2 Alternatively, sales can be replaced by the cost of goods sold (COGS). The alternative formula is utilized for greater accuracy by analysts because sales include a markup over cost. A low ratio signals weak sales and possibly excess inventory (overstocking), while a high turnover is an indication of either strong sales or inadequate inventory.  

Inverse ETF

An inverse exchange-traded fund (ETF) is a fund combining various derivatives in order to generate a profit when the market or underlying index declines. It moves inversely to the underlying index, for instance, if the underlying index declines then the inverse ETF would move in the opposite direction, increasing potential profits. An inverse ETF is also called a ‘Short ETF’ or ‘Bear ‘ETF’.  

Investment

is the act to utilize money to acquire assets, financial products, or other items of value with an expectation that they will generate income over time or appreciate over time. Put differently, investment is a way to use money in anticipation of making more money. In finance, an investment is to purchase a financial product or instrument with the hope of favourable returns in the future. Regarding business, investment refers to the purchase of an asset, such as inventory or durable equipment, with the goal of improving future business or capital appreciation. Usually, investment implies some degree of risk because it is oriented toward future rewards.  

Investment bank

An investment bank is a financial institution, acting as a financial intermediary. That is, they help companies to obtain debt financing by accessing capital markets, such as stock and bond markets. Investment banks play a large role in facilitating mergers, acquisitions, corporate restructuring, and initial public offerings (IPOs). They also offer advisory services to investors. However, unlike traditional banks, investment banks do not take deposits from or provide loans to individuals.  

Issued shares

are the authorised shares of a company that have been sold to the public and allocated to insiders as a form of compensation. The number of issued shares is recorded as ordinary shares under shareholders’ equity on the balance sheet.    

ISM – Institute for Supply Management

J

JPY – Japanese Yen

The Japanese Yen stands as Japan's official currency and ranks among the worldwide currencies that experience high trading volume. Japan maintains a strong financial system with its stable economy which makes the JPY one of the best reserve currencies. The homeland Bank of Japan issues the Japanese Yen currency through its symbol ¥. The JPY functions as a vital international trade and forex market currency while carrying trades commonly utilize it because Japan maintains low interest rates.  

J-curve

A J-curve is a type of graph, shaped like the letter ‘J’, where the plotted line drops at the beginning and increases gradually to a point higher than the starting point. A J-Curve is applicable in various fields, such as:

• Funds: The theory that the internal rate of return (IRR) of a fund will be low in its early stages, due to starting expenses, among others. When it becomes more stable and profitable, the IRR will increase.
• Economics: The shape of a country’s trade balance immediately after the devaluation of its currency. A devaluation implies more expensive imports, causing smaller trade surpluses or increased deficits.

However, this situation will not last long because international demand for the country’s exports will increase due to the cheaper exchange rate, while imports will decline because of increased prices. If a country’s currency increases in value, the result is usually an inverted J-curve.  

JIBAR futures (STIR)

are short-term interest rate futures contracts with the three-month JIBAR rate as an underlying instrument. STIR contracts enable efficient exposure for investors to the South African interest rate markets. Normally, when interest rates are expected to rise, investors sell STIRs, while an anticipated decrease in rates can move investors to buy STIRs.  

Johannesburg Interbank Average Rate (JIBAR)

The JIBAR is the money market rate that is used in South Africa. It is the benchmark for short-term interest rates in South Africa. The 3-month rate is the most widely used. Other Jibar discount terms are one-month, six-month, and 12-month. Jibar rates are utilized to determine the reset rate for over-the-counter (OTC) swaps and forward rate agreements (FRAs). The Johannesburg Stock Exchange (JSE) is currently responsible to provide the operational infrastructure in order to calculate and release the Jibar on a daily basis. The South African Reserve Bank (SARB) commented as follows on the Jibar in December 2018: ‘There is general agreement that the current calculation of the Johannesburg Interbank Average Rate (Jibar) be phased out over time, and that interest rate benchmark calculations should be based on actual transactions.’ However, as of July 2026, the Jibar is still in play.  

Johannesburg Stock Exchange (JSE)

The JSE was founded in 1887 during the first South African gold rush. It is the oldest and largest exchange in Africa and currently ranked the 19^th largest stock exchange in the world. Trading hours are from 09:00 - 17:00, Central African Time (CAT).  

Joint Venture (JV)

A Joint Venture (JV) is a business arrangement or contractual agreement in which two or more parties undertake to pool their resources for the purpose of accomplishing a particular task. Normally, the parties involved agree to share the profits and losses of the venture.  

Jointly and severally

is a legal term that describes that in a partnership or any other group of individuals, each person involved shares responsibility equally for liability. Jointly means all involved have joint liability, meaning each one has responsibility for the full amount pertaining to the liability. Contrarily, severally means that the individuals involved have only proportional liability. For instance, an individual with a 20% share in a partnership may have a liability that is proportional to that 20% investment. Jointly and severally is sometimes called joint and several liability.  

Journal

In accounting, the term journal refers to the following:

• As an entry of a financial transaction of a business, usually called a journal entry. With journal entries, the double-entry bookkeeping method (debit/credit) is normally used.
• As a detailed accounting record of all the financial transactions done by a business.

K

Keep the powder dry

In trading, ‘keep the powder dry’ is an expression that means to limit your trades due to rough trading conditions.  

Kill

A kill is a request to cancel an order between its placement and its execution.  

KRW – South Korean Won

Knock-in option

A knock-in option is a type of option that is activated only after the underlying asset’s price reaches a certain level. Knock-in options, also referred to as ‘knock-ins’, comprise two types:

• Down-and-in: The option is triggered only if the underlying asset’s price drops to a certain level.
• Up-and-in: The option is activated only after the price of the underlying asset increases to a specific level.

A knock-in option is also called a barrier option because a certain barrier (the underlying asset’s price) has to be reached before it has value.  

Knock-out option

A knock-out option becomes worthless if the underlying asset’s price crosses a certain price level. Knock-out options, also known as ‘knock-outs’, include two types:

• Up-and-out: This occurs when the underlying asset’s price exceeds a predetermined price.
• Down-and-out: The option ceases when the price of the underlying asset decreases below a predefined price.

A knock-out option is also called a barrier option because a certain barrier (the underlying asset’s price) has to be crossed for the option to become worthless.  

L

Lapse

A lapse comes about when the benefits, rights, and everything else specified in a contract are no longer effective because the contract holder has neglected to honour requirements, terms and conditions stipulated in the contract. An insurance policy could become a lapsed document.  

Lapsed option

A lapsed option is an option that expired without being filled. Put differently, it is an option that has become worthless.  

Last dealing day

The last day a trader may trade a specific financial instrument.  

Last dealing time

The last time a trader may trade a specific financial instrument.  

Last In First Out (LIFO)

is a method utilized to account for inventory in which the goods acquired last are treated as the ones sold first.  

Last trading day

The last trading day is the final day that a derivative contract, such as a futures contract or options contract, may trade. Typically, the last trading day is the day before the expiration date.  

Law of supply and demand

The law of supply and demand is a theory in economics, describing that the interaction between the demand for and supply of goods and services affects the prices of goods and services delivered. Generally, high supply and low demand decrease prices and vice versa.  

Leading indicator

A leading indicator is an indicator that changes before the economy has changed, signaling the economy’s direction in advance. Put in other words, statistics that are observed in order to predict the future economic activity of, among others, a country or company. Examples of leading indicators are, inter alia, unemployment insurance applications, building permits, manufacturing activity, and an increase in new orders for capital goods by manufacturers.  

Ledger

A ledger also referred to as a book of final entry or second book of entry is a written or computerized record of all the transactions a business has executed during a particular period of time. The transactions are entered in different ledger accounts as debits or credits from different journals, the books of first entry. The ledger comprises financial information that is used to compile the financial statements of a business. The main ledger accounts are:

• Asset accounts are, inter alia, fixed assets, current assets such as cash and accounts receivable.
• Liability accounts comprising, among others, loans, and accounts payable.
• Shareholders’ equity accounts like ordinary shares and retained earnings.
• Revenue accounts such as sales.
• Operating expenses accounts.
• Non-operating or other income and loss accounts, for instance, interest and disposal of an asset.

Lender

A lender is an individual, a financial institution, or a public or private group or entity that makes funds available to others to borrow. Normally, the expectation is that the funds will be repaid, including the payment of any interest and fees applicable.  

Lessee

A lessee, also referred to as a tenant, is a person who leases a property from its owner.  

Lessor

A lessor is the owner of the property (residential or commercial) that is leased to another party, called the lessee. A lessor is also known as a landlord.  

Level

In trading, a level refers to a price zone or a particular price in technical analysis. Support and resistance levels are two features utilized by traders to identify price levels or areas on chart patterns that incline to act as barriers, preventing the price of an asset from getting pushed in an upward or downward direction. Support levels occur on a chart where a downtrend is expected to pause due to sufficiently strong buying interest. Resistance levels are the opposite of support levels, occurring where an upward trend is expected to pause briefly, because selling pressure may subdue buying pressure.       

Leverage

, leverage refers to the trading strategy where a trader is allowed by a broker to trade with a large amount of money using none or almost none of his or her funds, borrowing the rest from the broker. It is also known as the margin. With regard to financing, leverage refers to the degree to which a business or individual is utilizing borrowed money. It is the use of borrowed capital to increase the potential return on an investment. It is also called financial leverage.  

Leveraged names

refer to short term traders, mainly of the hedge fund community.  

Leverage ratio

A leverage ratio, also called a gearing ratio, is one of a variety of financial calculations that evaluates the ability of a business to meet its financial obligations. The most common leverage ratios utilized in accounting to determine the financial leverage of a business are the debt ratio and debt-to-equity ratio.

• Debt ratio

The formula for the debt ratio, also called the debt-to-assets ratio, is:   Debt ratio = Total debt/Total assets   For example, when company FCR has R20 million of debt and R30 million of assets on its balance sheet, then the debt ratio of company FCR is R20 000 000/R30 000 000 = 0.67 = 67%. This implies that the company has R0.67 of debt for every South African rand of assets.  

• Debt-to-equity ratio

The debt-to-equity ratio measures the relationship between the capital contributed by its shareholders (shareholders’ equity) and the capital contributed by creditors.   The formula for the debt-to-equity ratio is:   Debt-to-equity ratio = Total debt/Total equity   For instance, company FCR has R15 million of debt and R15 million of shareholders equity. Then FCR’s debt-to-equity ratio will be R15 000 000/R15 000 000 = 1.0 times or 100%, meaning for every South African rand owned by the shareholders of the company, one South African rand is owed to its creditors and lenders. If the ratio is greater than 1, the majority of a business’s assets are financed by means of debt. If it is less than 1, assets are mainly financed through equity.  

Levy

A levy is the amount of money charged (levied) as taxation on certain goods and assets.  

LIBOR – London Interbank Offered Rate

The worldwide standard interest rate benchmark LIBOR (London Interbank Offered Rate) reflected how London-based major banks charged other banks for loans. An extensive array of financial products relied on LIBOR to determine their interest rates since it represented the London Interbank Offered Rate.  

Liability

A liability is normally an amount of money (or something else) that an individual or business owes. When a person or business is liable for a debt, they are obliged to settle it over a predetermined period of time. Concerning a company, the term liability differentiates between current and long-term liabilities. Current liabilities, such as accounts payable, are debts payable within one year. By contrast, long-term liabilities, such as loans and mortgages, are debts payable over periods longer than a year.  

Lien

A lien is a legal right against a property that enables a lender to take control of the property or proceed with legal action to settle any outstanding debt. A lender with such a legal claim is called a lienholder.  

Life annuity

A life annuity, also known as a lifetime annuity, is a financial product that pays a fixed amount at regular intervals - either monthly, quarterly, biannually, or annually - for the lifetime of the annuitant.  

Limit order

A limit order is one of the most common types of orders, the other one being a market order. Limit orders are orders from traders to brokers to buy or sell a security at a predetermined price (the limit price) or better. For a buy limit order, the order will be filled only at the limit price or a lower price. Regarding a sell limit order, the order will be executed only at the pre-specified price or a higher one. Limit orders are commonly known as limits.  

Limited liability

refers to the liability of shareholders of limited companies. It means that shareholders of such companies can only be liable for a company debts up to the value of their shares held in the company.  

Line chart

A line chart, alternatively known as a line graph or line plot, is a graphic representation of the historical price action of an asset, connecting a series of data points with a continuous line. It is the most basic type of chart utilized in finance, depicting only a security’s closing prices over time.  

Line of credit (LOC)

A line of credit (LOC), also called credit line, is an open-end credit account that allows borrowers to draw the funds, repay it, and draw it again for a specified period of time.  

Liquid asset

A liquid asset is cash on hand and assets that can easily be converted into cash within a short period of time.  

Liquid market

A liquid market is a financial market with many available buyers and sellers and where financial products, such as currencies, futures, stocks, and bonds, being traded, are standardized and in high demand.  

Liquidating dividend

Usually, a liquidating dividend is a type of payment that a company makes to its shareholders, either during a full liquidation or a partial liquidation when shareholders receive a return of capital, instead of a share of retained earnings.  

Liquidation

In forex, liquidation is the process of closing an existing position through the opening of a new transaction to offset it. In the world of accounting, it is the process of selling all the assets of a business in order to generate cash to pay off creditors and anyone the business owes money to. Liquidation implies the termination of a business.  

Liquidation level

In forex trading, the liquidation level, usually expressed as a percentage of the funds in a trader’s margin account, is a predetermined level that if reached, will initiate the automatic closure of the existing positions of a trader. It is commonly known as the margin call and is usually predetermined by the broker or the trader.  

Liquidation margin

The liquidation margin is the value of all the positions, including long and short positions, in a margin account of a trader. As for a long position, the liquidation margin is equal to what the trader would retain if the position was closed. With respect to a short position, the liquidation margin is equal to what the trader would owe to buy the security.  

Liquidity

describes the ability of an asset or security to be converted into cash quickly without affecting its market price.  

Liquidity ratio

A liquidity ratio measures a company’s ability to quickly liquidate its current assets, such as accounts receivable and inventory to cover current liabilities (payable within one year). Typically, the following financial ratios are utilized as liquidity ratios:

• Current ratio: Is a ratio that indicates the proportion of a company’s current assets to its current liabilities. It is calculated by dividing the current assets (cash and cash equivalents, marketable securities, accounts receivable, and inventory) by the current liabilities.

The higher the ratio, the better the liquidity position of the company. It is also referred to as the cash asset ratio or cash ratio.

• Quick ratio: Also known as the acid-test ratio, is almost the same as the current ratio, but with the significant difference, that inventory is excluded from the current assets. The reason for the exclusion is that it is not always easy to turn inventory quickly into cash.

Liquidity risk

is the situation when an individual or business is unable to liquidate its current assets in order to meet its short-term debt obligations.  

Living will

A living will is a legal document that specifies a person’s choices and desires when he or she faces a life-threatening condition and is unable to communicate their choices for medical treatment.  

Long position (Long)

A long position, also referred to as long or simply long, refers to the buying of security, such as a commodity, stock, or currency with the expectation that it will increase in price. It is the opposite of a short position (short).  

Long put

In options trading, a long put refers to purchasing a put option in anticipation of a decrease in the price of the underlying asset. If the underlying asset declines in value the put option increases in value, benefiting the buyer. Traders could utilize long put options for speculative reasons or to hedge a long position in the underlying asset.  

Long-term asset

are investments in a business that are not intended to be liquidated or consumed within a year of acquisition. It is also known as non-current assets. Long-term assets comprise fixed assets such as property, plant, equipment, fixtures, and vehicles as well as long-term investments (shares and bonds). A long-term asset can also be an intangible asset, such as a patent and a trademark.  

Long-term liabilities

are financial obligations of a business that need to be repaid only after a year since acquiring the debt. They are also referred to as long-term debt or non-current liabilities. Examples are, among others, loans, debentures, and deferred tax liabilities.  

Lot

is one of the key terms in forex trading. It is a unit to measure the number of currency units required for a trade. Forex is traded in the following lots:

• Standard lot - is similar to a trade size and is the equivalent of 100 000 units.
• Mini lot - 10 000 units.
• Micro lot - 1 000 units.
• Nano lot - 100 units.

Lump-sum payment

A lump-sum payment is a large sum of money that is paid in one single payment instead of installments over a specific period of time.  

M

Macroeconomics

is a branch of economics that studies the behaviour and performance of an economy at the aggregate level, focusing on the major factors in an economy, for instance inflation, gross domestic product (GDP), unemployment, and the growth rate.  

Macro trading

is when traders base their trading decisions on fundamental analysis. It is a strategy utilized to generate profit by taking advantage of macroeconomics data, such as economic growth, unemployment, and inflation.  

Majority shareholder

A majority shareholder is an individual or entity that owns and controls more than 50% of the outstanding shares of a company.  

Managed futures

are alternative investments comprising a portfolio of futures contracts that are actively managed by a professional money manager. Managed futures can be utilized as a hedging tool within an investment portfolio.  

Management

In the world of business, management refers to, among others, the following:

• To organise, coordinate, and direct the activities of a business for the purpose of accomplishing defined goals and objectives.
• A group of individuals, such as directors and managers, who are empowered and authorised to make decisions and oversee an enterprise, such as a company or other type of business.

Managerial accounting

entails the preparation and presentation of financial information for internal purposes of a business in order to enable management to make key business decisions. Managerial accounting includes a variety of aspects of accounting, such as costing, forecasting, cash flows, financial analysis, and budgeting.  

Management fee

A management fee is the charge paid to an investment manager to manage an investment fund. Usually, fees are based on a percentage of assets under management (AUM).  

Margin

In investing, margin refers to the money borrowed by a trader from a broker to buy a security or securities. In this context, it is also called buying on margin and is the difference between the total amount of the security and the loan amount. In forex, margin is the amount of money a trader is required to pay in advance in order to open and maintain a new position.  

Margin account

A margin account is a brokerage account allowing a trader to borrow cash from a broker to purchase financial products, such as shares, options, and futures.  

Margin call

A margin call occurs when the amount of a trader’s margin account dips below the minimum amount required by the broker. Typically, the broker will send a demand to the trader to bring the margin account to the level of the minimum maintenance margin. To carry out the margin call from the broker, the trader either has to put up additional funds, or close trading positions to reduce the required maintenance margin.  

Marginal cost

, also known as incremental cost, is the additional cost incurred in the production of one more unit of a product or service.  

Marginal profit

is the difference between marginal cost and marginal revenue (also referred to as marginal product). Put differently, it is the revenue earned by a person or business by making one additional or marginal unit of product less the cost incurred in making the additional unit.  

Marginal revenue (MR)

is the increase in a business’s gross (total) revenue when the business sells on additional (marginal) unit of the particular product.  

Marginal tax rate

The marginal tax rate is the highest rate of tax a taxpayer will pay on his or her income.  

Marginal unit

A marginal unit, also referred to as an additional unit, is described as only the last, gradually increasing (incremental) unit of something, being it cost, benefit, utility, or revenue.  

Market

Generally speaking, a market is a place where buyers and sellers can meet to engage in economic transactions. Buying and selling can be done directly or via intermediaries. Market transactions may involve, inter alia, products, goods, services, information, and financial instruments, such as stocks, currencies, commodities, and derivatives. Markets may be physical, where buyers and sellers meet personally, or virtual like the forex market and most of the stock markets.  

Market basket

In economics, a market basket is a mix of goods and services, commonly purchased by consumers, to calculate a Consumer Price Index (CPI) in order to determine the rate of inflation, based on the average change of price paid for a particular basket of services and goods over a given time period.  

Market capitalization

, commonly referred to as market cap, refers to the total market value of all the outstanding shares of a company. Market cap of a company is calculated by multiplying the number of outstanding shares by the current market price per share.  

Market index

A market index is a measure of a market or particular segments of the market, enabling investors to gauge the performance and movement of a financial market or market segments.  

Market indicator

A market indicator is a quantitative tool that is utilized in technical analysis by traders to interpret data financial data to predict market trends.  

Market maker

A market maker, also known as a liquidity provider, is a market dealer that quotes both a buy and sell price in a financial instrument in a financial market. Market makers both buy and sell financial instruments, such as stocks, hoping to generate profits from the bid-ask spread. Market makers provide liquidity to markets by being ready and able to buy and sell financial products at any time during trading hours.  

Market order

A market order is a buy or sell order in which a trader request a broker to execute the order at the best price currently available in the market. It is also referred to as ‘at the market.’  

Market price

The market price is the current price at which an asset can be bought or sold. Also known as market value.  

Market risk

, also called systematic risk, is the possibility of an investor incurring losses due to unfavourable factors affecting the overall performance of the financial markets in which he or she is involved. Examples of market risk are interest rate risk, equity price risk, exchange rate risk, and commodity price risk.  

Market sentiment

refers to a general feeling and attitude of investors and traders toward a specific security or financial market. Understanding market sentiment enables investors and analysts to predict the price movement of securities and which direction a financial market will head. A positive and optimistic market sentiment, resulting in rising prices, is referred to as bullish market sentiment, while a negative and pessimistic sentiment, resulting in falling prices, is an indication of bearish market sentiment. Market sentiment can be impacted by things such as political factors, economic news, pandemics like Covid-19, to name but a few.  

Marketable securities

are non-cash financial assets that can be converted to cash quickly. Marketable securities comprise ordinary shares, treasury bills, bonds, and money market instruments, among others.  

Matching principle

is an accounting principle that requires a business to report expenses on its income statement in the same period in which the related revenues are earned.  

Maturity

In finance, maturity refers to the date on which the borrower of a loan is obliged to pay the principal balance of the loan. It is also the date when the issuer of a bond must pay the principal amount plus interest to the holder of the bond.  

MetaTrader 4

The trading platform MetaTrader 4 (MT4) provides trading functions for forex as well as CFDs alongside several other financial markets. MetaQuotes Software created MT4 as a trading platform which features automated trading EAs with numerous charting tools and user-friendly components for both novice and veteran traders. Traders from around the world choose MT4 because of its stability together with its customizable features that include various order types.  

MT5 – MetaTrader 5

MetaTrader 5 (MT5) exists as a multi-asset trading platform that MetaQuotes developed specifically for forex, stocks, commodities and futures market participation. MetaTrader 5 (MT5) exists as a multi-asset trading platform that MetaQuotes developed specifically for forex, stocks, commodities and futures market participation. Expert Advisor automation, embedded economic scheduling and sophisticated charting solutions and trading orders are available for user benefits through MetaTrader Terminal.  

Median

In a set of numbers, the median is the value of the middle number (or the average of the two middle numbers) when the numbers are arranged in an increasing or decreasing order of magnitude. If the number of observations in a sample is odd, there will always be a middle value which will be the median. If the number of observations is even, the median is obtained by the average of the two middle items.  

Merchant bank

A merchant bank is a financial institution that manages and administers loans, financial advisory services, and underwriting on a large scale to large enterprises and a smaller scale to high net worth individuals. Unlike commercial and retail banks, merchant banks do not provide services to the general public.  

Merger

A merger is an agreement that combines two or more existing entities into one, through, among others, a purchase acquisition, or a pooling of interests. Reasons for mergers are, inter alia, to expand a business’s reach or to gain market share.  

MXN – Mexican Peso

The Mexican Peso functions as the official national currency of Mexico where it uses MXN as its abbreviation. MXN stands for Mexican Peso which uses the "$" symbol yet remains distinguishable through the "MX" prefix because of other dollar currencies. The Peso has 100 centavos as its minor division with status as one of the most exchanged currencies in Latin America. Different market factors affect its exchange rates such as worldwide commodity market movements Mexican economic data and domes tic political events. Both domestic purchasing and global commerce mostly utilize the Mexican Peso as the primary currency.  

Money Flow Index

The Money Flow Index (MFI) serves as a technical indicator which evaluates the power of monetary input and output activity in financial assets throughout a specific time frame.

The indicator uses combined price and volume data to detect market positions that are overbought or oversold thus indicating possible trend reversal points.

Microeconomics

is the study of the behaviour of small economic units, like individuals, households, and businesses and how decisions are made and executed based on the allocation of limited resources.  

MOM

In business, MOM is an acronym for month-over-month, which indicates growth rates that are rates of change expressed with regard to the previous month.  

Momentum

is the speed at which a security’s price or volume is changing and is usually defined as a rate. It is considered an oscillator in technical analysis.  

Momentum indicator

A momentum indicator is an indicator in technical analysis, utilized to predict future market trends based on recent price and volume data, assessing the rate of change in a security’s price over a given period of time. Examples are, among others, Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Stochastics.  

Momentum player

A momentum player is a professional trader who trades the momentum of a security rather than the price. In forex trading, momentum players usually use a momentum indicator, such as MACD, as a trading tool.  

Monetary policy

refers to the regulation of money supply and interest rates by a country’s central bank to control inflation, stabilise the country’s currency, and enhance sustainable economic growth.  

Money laundering

is the illegal practice of making large amounts of money, generated by criminal activity, such as smuggling weapons or drug trafficking, look as if it originates from a legitimate source.  

Money market

The money market refers to trading in financial instruments, such as short-term debt securities, by financial institutions, borrowers, and investors. Money market instruments include, inter alia, treasury bills, certificates of deposit (CDs), and banker’s acceptances. It is a market of large volume and high liquidity.  

Money market account (MMA)

is a type of savings account that shares some features with check (current) accounts. Traditionally, they offer competitive interest rates.  

Money market fund

A money market fund is a type of mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents. The goal of money market funds is to preserve capital while obtaining a nominal yield and are considered significantly low investment risk.  

Money supply

The money supply is all the cash and other liquid instruments, such as money market instruments and marketable securities, in a country’s economy at a given time.  

Mortgage

A mortgage is a loan from a bank or a financial institution that enables the borrower to buy a house. The borrower (mortgagor) gives the lender (mortgagee) a lien (legal right) on the house as collateral for the loan.  

Moving average (MA)

A moving average is an indicator in technical analysis that describes the average price of a security over a specified period of time. By using the MA, the impacts of inconsistent, short-term fluctuations on the price of a security over a certain time period are reduced. It is a technical indicator commonly used in technical analysis.  

Moving Average Convergence Divergence (MACD)

is a technical indicator that shows the relationship between two moving averages of the price of a security that is indicating a new trend, either bullish or bearish.  

Multi-asset class

A multi-asset class, also called a multi-asset fund, is a combination of asset classes, such as cash, shares, and bonds, utilized as an investment. The weightings and types of assets classes vary according to the individual investor’s risk profile.  

Mutual fund

A mutual fund is a type of financial vehicle comprising a pool of money contributed by many investors to invest in various securities like, inter alia, shares, money market instruments, and bonds. Mutual funds are managed and operated by money managers.  

N

Naked call

A naked call, also referred to as an uncovered call or a short call, is a strategy in options trading in which a trader, who is selling the options contract, does not own the underlying asset. This strategy enables a trader to generate income without actually owing the underlying security. A naked call is in contrast to a covered call, where a trader owns the underlying asset of the options contract.  

Naked option

A naked option, also called an uncovered option, is an options contract in which the seller of the contract does not own the underlying asset.  

Naked put

A naked put is an options strategy in which a trader writes, or sells, put options without holding a short position in the underlying asset. Also called an uncovered put or a short put.  

Nasdaq

was once an acronym for the National Association of Securities Dealers Automated Quotation system. Nasdaq was the financial world’s first electronic exchange, where all trading in securities is done over a network of computers and telephones. It has its headquarters in the city of New York, USA.  

National currency

A national currency is the official currency of a country, issued by the country’s central bank or monetary authority.  

Natural hedge

A natural hedge is a management strategy of protecting an entity against risk by holding two assets whose changes in value offset each other. For instance, the negative change in one currency is counterbalanced by a positive change in another currency. It is referred to as natural hedging because it does not require sophisticated and costly financial products like derivatives and forwards.  

NAV return

The net asset value (NAV) return refers to the change in the net asset value of a mutual fund or an exchange traded fund (ETF) within a certain time frame. The NAV return is different from a mutual fund’s or EFT’s market value change or total return realised.  

Near money

In finances, near money is a term describing highly liquid assets that can easily be converted to cash. For instance, bank deposits and treasury bills. It is also referred to as quasi-money or cash equivalents.  

Near the money

The term near the money indicates an options contract whose strike price (exercise price) is near the current market price of the corresponding underlying asset.  

Negative equity

refers to the situation when the value of an asset, such as real estate property, falls below the amount owed on a loan or mortgage to purchase it. Negative equity is also known as being underwater or upside down.  

Negative growth

In economics, negative growth refers to a decrease in the gross domestic product (GDP) of a country during a certain period of time, such as a quarter or a year. Usually, negative growth is the forerunner of a recession and eventually a depression. The traditional definition of a recession is a negative growth in GDP for two or more consecutive quarters.  

Negative interest rate

occur when borrowers are credited interest by lenders in stead of paying interest to lenders. Usually, it happens during times of deep economic recessions.  

Negative return

A negative return comes about when a business incurs a financial loss or lower returns on a particular investment during a certain time period. The term can also be applied to the performance of a stock or bond, indicating when the value of a stock dips below the original purchase price. A negative return can also be called negative return on equity.  

Net asset value (NAV)

With regard to an entity, the net asset value (NAV) refers to its net value, calculated as the total value of the entity’s assets minus the total value of its liabilities. Pertaining to funds, NAV is commonly used as a per-share value determined for an EFT or mutual fund. The NAV is based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding. It is calculated at the end of each trading day.  

Net cash flow

The net cash flow of a business refers to the difference between its cash inflows, for example from sales and loans, and its cash outflows (expenses) during a given period of time. It is also referred to as change in cash and cash equivalents, being a crucial measure of a business’s ability to continue its operations and to expand.  

Net current asset value per share (NCAVPS)

is a measure to determine a company’s fair market value. It is a method that enables investors to evaluate a company’s stock as a potential investment. NCAVPS is calculated by subtracting the total liabilities (preferred stock included) of a company from its current assets and then dividing the sum total by the shares outstanding.  

Net debt

is a liquidity standard to determine if a business will be able to repay all of its debts if they were due immediately. It is a calculation that indicates how much debt a business has on its balance sheet in comparison to its liquid assets. Net debt is calculated by utilizing the following formula: Net debt = STD + LTD – CCE where: STD = short-term debt that is due in 12 months or less, such as accounts payable, bank loans, and lease payments, LTD = long-term debt, comprising, among others, lease payments, long-term loans, and bonds, that have a maturity date longer than 12 months, CCE = cash and cash equivalents that can easily be converted to cash. Cash equivalents are liquid investments with a maturity of 90 days or less, for example certificates of deposit (CDs).  

Net debt-to-ebitda ratio

The net debt-to-ebitda (earnings before interest, taxes, depreciation, and amortization) ratio evaluates a business’s financial leverage and how many years the business would need to operate at its current level to pay back all of its debt. The formula for the net debt-to-ebitda ratio is as follows: Net debt-to-ebitda = Net debt/Ebitda Typically, ratios from 4 and higher are warning signs that a business is likely to struggle to handle its debt burden. On the contrary, a negative ratio indicates that a business has more cash than debt.  

Net domestic product (NDP)

of a country is calculated by subtracting depreciation from the gross domestic product (GDP). It is a gauge indicating how much a country has to spend just to maintain its current GDP. Put in other words, a rise in NDP would signal growing stagnation in a country’s economy, while a decrease would be an indication of ongoing economic growth.  

Net exports

A country’s net exports are the value of its total exports minus its total imports. It is also known as the balance of trade or trade balance. A trade surplus occurs when there is a positive net export number, while a trade deficit is represented by a negative net export value.  

Net exposure

is the difference between a hedge fund’s long positions and short positions. A positive net exposure signals vulnerability to declines in the market, while a negative net exposure implies losses during market rallies.  

Net income (NI)

Regarding an individual, net income is the amount a person earns after deducting taxes and other applicable deductions from his or her gross income. With reference to businesses, net income is calculated as sales minus cost of goods sold (COGS), all applicable expenses (operating, administrative, general), interest, depreciation, and taxes. It is an indicator of a business’s profitability and is also referred to as net profit or net earnings, and occasionally, the bottom line, as it appears as the final item on the income statement.  

Net income after taxes (NIAT)

is a term in accounting to describe the profit of a business after all taxes have been settled.  

Net liquid assets

refer to a business’s liquid assets, such as accounts receivable, cash, and cash equivalents, less its current liabilities. It is a measure of the immediate liquidity position of a business.  

Net national product (NNP)

The net national product of a country is its gross national product, the total sum of finished goods and services produced by its nationals, minus depreciation.  

Net position

In forex trading, the amount of currency bought or sold that has not yet been counterbalanced by opposite transactions.  

Net present value (NPV)

The net present value (NPV) of an investment or project is the difference between the present value of cash inflows and the present value of cash outflows over a certain time period. NPV is utilized in project and investment planning, determining the profitability of an investment or a project.  

Net profit margin

The net profit margin is the net profit of a business divided by its net revenue, expressed as a percentage. It is an indication of how much net income or profit is generated as a percentage of revenue. The higher the net profit margin, the more effective a company is converting revenue into actual profit. It is also called net margin and one of the most important measures to gauge a business’s financial well-being.  

Net tangible assets (NTA)

Net tangible assets (NTA) of a business are the total assets minus the intangible assets, such as goodwill, trademarks, and patents, less all the liabilities. NTA are sometimes called a company’s net asset value.  

Net working capital (NWC)

, also referred to as working capital, is the difference between a business’s current assets, such as cash, inventories of products, and accounts receivable, and its current liabilities, like accounts payable and short-term loans. A business with current liabilities exceeding current assets is operating with a working capital deficit, causing a probability to default on short-term obligations.  

Net worth

The term net worth can be applied to inter alia, individuals, corporations, companies, and countries. It is a measure of wealth, calculated by subtracting all the liabilities and obligations from all the assets owned by an individual or entity. With regard to companies, net worth is also referred to as book value, shareholders’ equity, or owner’s equity.  

NFP – Non-Farm Payroll

The United States uses NFP to measure employment changes through Non-Farm Payroll by separating them from farm and government and non-profit sectors. The U.S. Bureau of Labor Statistics publishes NFP figures monthly to show changes in labor market performance that affect both economic growth and inflation rates. Wanton market instability results from this report because traders monitor its statistics to evaluate American economic conditions and Federal Reserve interest rate adjustments.  

No dealing desk (NDD)

refers to a trading platform offered by a forex broker that provides access to the interbank market where there are numerous liquidity providers who are willing to buy and sell currency pairs at any time. NDD brokers utilize a straight through processing system (STP) which automatically sends the trades of forex traders to the liquidity providers.  

No deposit bonus

In forex trading, a no deposit bonus is a bonus offered by forex traders to enable novice forex traders to start trading without the risk of losing their own money.  

NOK – Norwegian Krone

Norway uses the Norwegian Krone (NOK) as its sole authorized currency. The NOK denomination contains 100 øre fractional parts while its abbreviation remains NOK. Since 1875 Norges Bank has issued the Krone as the official currency of Norway. The Nordic currency exists as a standard trade instrument on international forex markets while its value remains stable due to Norway's financial strength in its oil sector. The Krone functions as currency for both Svalbard and Jan Mayen which belong to the Norwegian territory.  

Nominal gross domestic product (GDP)

is the gross domestic product of a country using current prices, without accounting for inflation, whereas real GDP takes inflation into consideration.  

Nominal interest rate

The nominal interest rate is the interest rate before taking inflation into consideration. On the contrary, the real interest rate takes the inflation rate into account.  

Nominal rate of return

The nominal rate of return is the revenue generated by an investment before considering expenses such as inflation, investment fees, and taxes.  

Nominal value

is the price of a security, such as a bond or stock, stated on the front of the security. With reference to a bond, it is the amount of money (the redemption price) that the bondholder will receive at maturity of the bond. Nominal value is also known as face value or par value.  

Non-liquid asset

A non-liquid asset is an asset that cannot be converted into cash easily because there is no guarantee that it will sell within a certain time frame. Examples are equipment, property, and art collections.  

Not-held order

Usually, a not-held order refers to either a market not-held order or a limit not-held order.

• Market not-held order: A market order that a trader does not want filled immediately. The forex broker has the discretion to execute the order when he or she feels best.
• Limit not-held order: An upper or lower limit is attached to this type of order. Although, the forex broker is given discretion to execute the order or not, if the security reaches the set limit price.

Notional value

indicates the value of a derivative’s underlying assets at the spot price. Regarding an options or futures contract, notional value is the number of units of the contract’s underlying asset, multiplied by the asset’s spot price. It is a term that is also applicable to derivative contracts in the currency market.  

No touch

In forex trading, no touch is a term applicable to a barrier option that refers to an option that pays a fixed amount to the options holder if the market never reaches the predefined barrier level.  

NZD – New Zealand Dollar

The NZD (New Zealand Dollar) functions as the leading currency in New Zealand alongside its use in Niue and Cook Islands along with Tokelau and the Ross Dependency in Antarctica. The monetary unit of New Zealand exists under the symbols "$" and "NZ$" whereas it breaks down into 100 cent parts. The financial market recognizes the NZD Dollar for its consistent value and recognizes it as a commodity currency which reacts to dairy farming exports and meat products from New Zealand.  

O

Obligee

An obligee, also referred to as a promisee, is an entity or person in whose favour an obligation, contract, bond, or promise is made by an obligor.  

Obligor

Generally, an obligor, also called a debtor, is a person or entity that owes debt to another individual or entity (the creditor). With regard to bonds, the term obligator refers to the issuer of a bond who has an obligation to repay all principal amounts and interest on outstanding debt at date of maturity.  

OBV – On Balance Volume

Technical analysis indicator On-Balance Volume utilizes stock market volume flow to monitor price variations in assets. The indicator computes a total by increasing volume from bullish days while decreasing volume from bearish days. The concept behind OBV is that volume occurs before price changes which indicates upward price potential when OBV increases but downward price changes when OBV decreases.  

OCO – One Cancels Other

The advanced trading order OCO unites two orders in a single structure as it contains both the primary order and the secondary order. A primary order that executes will automatically trigger the cancellation of its corresponding secondary order. The same action occurs when the secondary order executes. Traders who need control over their profit limits and risk protection require this type of order to achieve simultaneous conditions. When a trader sets a buy order and a stop-loss order through OCO the combination automatically cancels one of these orders after triggering the primary order to minimize opposing trades.  

Odd lot

Typically, in stock trading an odd lot refers to a number of shares lower than the normal trading unit of 100 shares of a stock. Trading odd lots are generally more expensive due to higher commission levels.  

Off-balance sheet (OBS)

items refer to an accounting practice whereby a company does not include certain liabilities or assets on its balance sheet. Although, not listed on the balance sheet, they remain assets and liabilities of the company.  

Offered

Regarding trading of securities, the term offered refers to a market situation where the demand to buy a security is outnumbered by the number of offers of the particular security. With regard to the currency market, the term offered indicates that a currency pair is attracting substantial offers.  

Offer price

The offer price, also called the ask, the ask price, or the asking price, is the best price at which a security can be bought. Put differently, it is the price at which a seller in a financial market is willing to sell a security. In forex trading, the offer price indicates the price at which a trader can buy the base currency, which is shown to the right in a currency pair. For example, in the currency quote USD/ZAR17.4530/32, the base currency is the US dollar, and the ask price is 17.4532, implying a trader can buy one US dollar for 17.4532 South African rand. In contract for difference (CFD) trading, the offer price represents the price at which a trader can buy the underlying asset.  

Offering

Usually, offering is when a company makes some of its stock available to be purchased by the public. It is often referred to as an initial public offering (IPO). Although, it can also refer to a bond issue.  

Offset

An offset is the elimination or reduction of an original position (long or short) by assuming an opposite position of the same security in order to reduce or cancel some or all of the market risk involved in the original position. Offsetting positions can also be created via hedging instruments, such as options or futures. The strategy of offset is also known as close out, even up or offsetting transaction.  

One-cancels-the-other order (OCO)

A one-cancels-the other order (OCO) is a type of conditional order, specifying that if one order is filled, then the other order is automatically cancelled. OCO orders are utilized by experienced traders to mitigate risk and to trade volatile securities that trade in a wide price range.  

One-touch option

A one-touch option pays a fixed amount (premium) to the option holder if the spot rate touches the strike price at any time before the option expires.  

Online broker

An online broker is a broker that enables traders to open and close trading positions, utilizing a digital platform. Benefits of trading with an online broker are, among others, fast execution of trades, traders are enabled to manage multiple positions at once, and lower costs.  

Open-end fund

An open-end fund is a type of mutual fund that utilizes pooled investor money and with no restrictions on the number of units that can be issued. Put differently, investors of the pool are allowed to make contributions to and withdrawals from the fund on an ongoing basis.  

Opening price

The opening price is the price at which a security, such as company’s stock, is trading upon the opening of a financial market on a trading day. An opening price is not necessarily equal to the closing price of the previous trading day.  

Open order

An open order, sometimes referred to as a backlog order, is an unfilled order because certain requirements, such as a specified price, have not yet been met. Open orders may be cancelled before they are completely or partly executed. Open orders are normally associated with good - ‘til-cancelled orders.  

Open position

An open position refers to a trade that has been established, but which has not yet been closed with an opposing trade. For example, an investor who owns 500 shares of a company, has an open position in those shares until they are sold. An open position can occur after a long or short position has been established by a trader.  

Operating cash flow (OCF)

, also called cash flow from operations or cash flow from operating activities, is the total amount of cash generated by the regular operating activities of a business during a certain period of time, such as a month, quarter, or a year. It is an important indicator to gauge the financial success of a business’s operating activities. OCF is the first part of a business’s cash flow statement, the other two being, cash flow from investing activities and cash flow from financing activities.  

Operating cash flow ratio

The operating cash flow ratio is a measure of how well a business can cover its current liabilities with the cash generated from its core operating activities within the same period. Put in other words, it is a liquidity ratio, indicating how much a business earns from its operating activities, per South African rand of its current liabilities. The formula for the operating cash flow ratio is: Operating cash flow ratio = Operating cash flow/Current liabilities A ratio number greater than one, shows that a business has generated more than enough cash in a given period to pay off its current liabilities, if needed. A ratio of less than one indicates the opposite - the business has not generated enough cash to cover its current liabilities.  

Operating loss

A business suffers an operating loss when its operating expenses exceed its gross profit (sales less cost of goods sold (COGS)).  

Option

An option is a derivative, a financial instrument that is based on the value of its underlying security, such as a stock or currency. Types of options:

• Call options enable the holder to buy the underlying asset at a predetermined price within a certain period of time.
• Put options allow the holder of the option to sell the underlying asset at a predefined price within a specific time period.

Options contract

An options contract is an agreement between a buyer and seller that gives the buyer of the option the right, but not the obligation, to buy or sell an underlying asset at a preset price (strike price) at a predetermined date.  

Option margin

An option margin is the cash a trader must deposit in the account of the options trading broker as collateral before trading with options.  

Option premium

An option premium is the price that a trader pays for the right in an options contract to trade an underlying asset at a specified price before a predetermined date. The amount of an option premium is mainly determined by its intrinsic value, fluctuations in the value of the underlying asset, and the time remaining before the expiration of the option.  

Order

In finance, an order comprises instructions from a trader or investor to a broker or brokerage firm to buy or sell an asset on behalf of the trader or investor.  

Order book

An order book is a list of orders that indicates different offers from sellers and buyers for a specific security. It discloses the prices and volumes that traders and investors in the market are willing to purchase and sell the security for.  

Ordinary shares

of a company are shares that represent normal equity ownership in a company. Ordinary shares give a shareholder full voting rights at annual general meetings (AGMs) of the company, the opportunity to receive dividends (should the company decide to pay dividends), and to receive distributions should the company unwind.  

Out of the money (OTM)

is a term in options trading, describing an options contract that only has extrinsic value (the difference between the option premium and its intrinsic value). An OTM call option will have a strike price that is higher than the market price of the underlying asset. Conversely, an OTM put option has a strike price that is lower than the market price of the underlying security.  

Outright futures position

An outright futures option is a long or short futures position that is not hedged from market risk. It is a position taken by a trader who is prepared to risk everything on the increasing or falling price of the underlying asset and effectuates a long or short position accordingly. A profit is generated from a long outright futures position if the price of the underlying asset increases, or from a short position, if the price declines after the short trade is opened.  

Outright option

An outright option is a strategy in options trading in which a trader buys or sells options contacts that are not hedged. It is the most basic form of options trading.  

Overbought

assets, as with oversold assets, are assets that technical analysts see as not trading for their true value. Overbought is when an asset is selling for more than its actual value.  

Overgeared

A business that has high debt (borrowings) in comparison to its assets, is said to be overgeared.  

Overheads

, also called overhead, are daily ongoing expenses of a business that cannot directly be connected to the production of a specific product or service. However, overheads are still necessary for the smooth running of a business, providing crucial support for the profit-generating activities of a business. Examples include rent, administration expenses, insurance, and utilities.  

Overnight position

are trading positions that remain open until the next trading day. It is common practice in foreign exchange and futures markets.  

Oversold

assets, as with overbought assets, are assets that technical analysts see as not trading for their true value. Oversold is when the price of an asset has declined sharply to a level below its true value.  

Oversupply

occurs when there is more of a certain product available than consumers who want to buy it. Put in other words, oversupply is the result when supply exceeds demand, resulting in a surplus.  

Over-the-counter (OTC)

refers to any transaction with regard to securities that is not conducted through a formal exchange, such as the New York Stock Exchange or the Johannesburg Stock Exchange (JSE).  

Over-the-counter (OTC) market

are decentralised markets in which currencies, stocks, commodities, and other financial instruments are traded between two parties. Put simply, it is a market structure comprising various technical devices through which trades are executed.  

Overvalued

An overvalued asset is an investment that trades for more than its intrinsic value. Overvalued stock of a company has a current price that is not substantiated by its price-earnings ratio (P/E ratio) - a ratio that relates a company’s share price to its earnings per share.  

P

Paid

In forex trading, the term paid refers to the offer side, which is the side to the right of a currency pair quotation in a trade. A seller is paid an amount for selling the base currency in a currency pair quotation.  

Paid-in capital

, also called paid-up capital or contributed capital, is the amount of capital received by a company from investors in exchange for either ordinary or preference shares at the initial issuance of the shares. Paid-in capital includes both the par value of shares sold and the additional paid-in capital, representing the amount in excess of a share’s par value.  

Pair

refers to the forex quoting convention of quoting on the currency in relation to another currency. Currencies are always quoted in pairs.  

Paneled

is a term used in trading of securities to indicate that the market is accelerating in a noticeably short time frame. Typically, a reference to an exceptionally large round of selling a currency.  

Paper money

is a country’s official medium of exchange for goods or services. Typically, the printing of paper money is regulated by a country’s central bank or national treasury. In most European countries, the same paper money is used, namely the euro.  

Par

is one of the terms used to describe the face value of a financial instrument, such as a bond, preferred stock, or other debt instruments. Such instruments may trade at par, below par, or above par.  

Parabolic

is a term that describes a market that moves a considerable distance in a notably short time period. It frequently accelerates in a way that resembles one half of a parabola. Parabolic accelerations can either be down or up.  

Parabolic SAR (stop and reverse) indicator

The parabolic SAR (stop and reverse) is an indicator in technical analysis, utilized by traders to determine the trend direction of an asset. It is also used to identify potential reversals in price movements and to provide entry and exit points.  

Parent company

A parent company, also referred to as a holding company, is a company that has a controlling interest in another company or companies, enabling the holding company to control management and operations.  

Parity

Generally, the term parity refers to a condition where two or more things are equal to each other. It is a term that is utilized in a few ways in the trading of securities, such as:

• The forex market: Parity indicates the point where two currencies have an equal value, meaning that the exchange rate between two currencies is one to one (1/1).
• Options: When the premium of the option plus its strike price equals the market price of the underlying asset. Put another way, parity is the price at which an option is trading at its intrinsic value.
• Financial markets or exchanges: When numerous bids are identical and as such equal.

Partial fill

A partial fill is an order that is not completely executed or filled at the desired price. Typically, partial fills pertain to limit orders, where a trader instructs a broker to buy or sell a security if the price reaches a certain level.  

Par value

is the face value of a bond, meaning the principal amount that a lender (investor) is lending to the borrower (issuer). Put differently, it is the amount the issuer will redeem the bond at maturity.  

Passive income

In an informal sense, passive income refers to money being earned on a regular basis with little or no effort on the part of the receiver of the income. Express differently, it refers to regular earnings from sources other than employers and contractors. Typical examples of passive income are, interest on investments, rent from property, and dividends received from companies.  

Passive investing

is an investment strategy where investors seek maximum return on their investments over the long term, with a minimum selling and buying in the market. Passive investing utilizes indices and portfolios to invest funds and to gain from lower fees.  

Patient

In trading, every strategy should inform a trader where and when to enter a trading position. However, it is crucial to wait for the opportune moment to act. Thus, patient refers to wait for certain price levels or news events (economical or political) to hit the market before entering a position.  

Patterns

, also called trading patterns, are the foundation of technical analysis. Patterns are formed by the movement of a security’s price over a certain period of time. The pattern is created by drawing lines to connect corresponding price points, such as highs or lows, during a specific time frame. Patterns are utilized by analysts as a strategy to predict the future direction of a security’s price.  

Pegging

is a method used by a country’s central bank to control a country’s currency by tying it to another country’s stabler currency. In options trading, it refers to the practice of manipulating an underlying asset’s price before the expiration of an option.  

Pennant

A pennant is a continuation chart pattern, formed when a considerable upward or downward movement occurs in a security price, followed by a brief consolidation, before resuming in the same direction. Characteristics of a pennant pattern:

• A flagpole: A pennant pattern always commences with a flagpole, indicating the initial strong move.
• Breakout levels: There are two breakouts where the upward or downward trend continues - one at the end of the flagpole, and the other one after the consolidation period.
• The pennant itself: The pennant is the small symmetrical triangle formed by the two converging trendlines. The pennant occurs between the flagpole and the breakout when the market consolidates.

Per capita

The term per capita is a Latin term that translates to ‘per head’ or ‘per person’. It is a term used in economics, business, and statistics to determine the average per person in a given situation. Commonly used to indicate the gross domestic product (GDP) of a country per person.  

Percentage change

, or percent change, is the relative change between an old value and the new value, expressed as a percentage of the old value. It indicates the degree of change (positive or negative) over time. It is utilized for many purposes in finance, among others, to indicate the change in price of a security.

• Calculating a percentage increase

[(New value - Original value)/Original value)] x 100 An answer with a negative value implies that the percentage change is a decrease.

• Calculating a percentage decrease

[(Original value - New value)/Original value)] x 100 An answer with a negative value implies that the percentage change is an increase.  

Perpetuity

In finance, a perpetuity is a series of identical cash flows that keep paying out for an indefinite amount of time. It can also refer to an annuity that lasts forever.  

Personal income

can be described in two ways.

• With regard to individual income: It refers to the gross earnings received by an individual or a household including all the sources of income, inter alia, salaries, wages, dividends, and interest from investments, bonuses, and profit-sharing from businesses.
• On a national level: It indicates the collective amount of money received by the inhabitants of a country.

Petty cash

The term petty cash, also called the petty cash fund, refers to a small amount of cash kept on hand by a business for minor expenses, such as stationery and office supplies.  

Pip

A pip, an acronym for point in percentage, is the unit of measure in forex trading to express the smallest change in value between two currencies. It is usually the last (fourth) decimal place of a price quote of a currency pair. A pip is represented by a single-digit move in the fourth decimal place in a typical currency pair quote. For example, if a quotation of USD/ZAR moves from 17.4550 to 17.4552 this would be a two- pip movement.  

Plain villa

is the most basic version of a financial instrument. A plain villa financial instrument has no special features or any special components.  

Pledged asset

A pledged asset is an asset of value that is transferred to a lender by a borrower as security for debt or a loan. The borrower retains ownership of the asset and continues to earn interest on the pledged asset.  

PMI – Purchasing Managers Index

The Purchasing Managers Index serves as an economic metric which evaluate both manufacturing and service sectors to determine national economic condition. The PMI exists as a market research effort that surveys executive purchasing staff members to collect information about their companies' production activities and new orders together with inventory management and workforce engagement.  

POC – Point of Control

Market profile and volume analysis determine The Point of Control (POC) as its fundamental concept. The Point of Control defines the price point where traders conducted the greatest number of trades during their observation period thus showing market-wide acceptance of this level. Through its POC traders can detect important support and resistance levels because this point shows the price area where most market transactions occurred. The Point of Control functions as a reference point to help traders predict market movements by showing them how prices behave around this strategic price level.  

Political risk

is the risk of loss for an investor due to political changes or instability in a country.  

Ponzi scheme

A Ponzi scheme, named after Charles Ponzi, a fraudster in the 1920s in New England in the USA, is a fraudulent investment scheme promising impossibly high rates of return on investments with little risk to investors. It is a scheme similar to a pyramid scheme in that money from new investors is used to pay earlier investors.  

Pooled fund

A pooled fund is a fund in which a number of individuals contribute funds to be invested as one big portfolio and to be professionally managed. Commonly speaking, investors ‘pool’ their funds to be invested. Examples of pooled funds are mutual funds, unit trusts, and hedge funds.  

Portfolio

A portfolio is a collection of investments owned by the same individual or entity.  

Portfolio manager

A portfolio manager is an individual or group of people who manages the assets of a mutual fund, implementing the fund’s investment strategies, and overseeing the day-to-day activities of the fund.  

Position

A position is a financial term that indicates the market commitment, or risk exposure, of a trader. A position can occur in any type of financial instruments, such as bonds, shares, currencies, options, or futures. Examples of positions:

• An open (current) position is a trade that is either currently able to make a profit or incur a loss.
• A closed (past) position is a trade that has recently been cancelled.
• Short positions which are borrowed and then sold.
• Long positions which are owned and then sold.

Position trader

A position trader is a type of trader who holds a position in a security for an extended period of time, expecting that it will appreciate in value. The holding period may differ from a few weeks to years. Position traders are trend followers and focus on the long-term performance of a security.  

Pre-initial public offering (IPO) placement

A pre-initial public offering (IPO) placement is the sale of a percentage of a company’s shares prior to the listing of the shares on a public exchange. Usually, the buyers, such as hedge funds and private equity firms, in a pre-IPO placement are allowed a discount from the price offered in the IPO.  

Pre-market trading

refers to the electronic trading that occurs in the morning before a stock exchange opens for regular trading. It is a period that is characterised by thin liquidity volumes and considerable bid-ask spreads.  

Preference shares

, commonly known as preferred stock, are shares of a company with specific dividends that are paid before any dividends are paid to ordinary shareholders. In the event of a company’s liquidation, they take precedence over ordinary shares. However, preferred shareholders do not have voting rights like ordinary shareholders.  

Preferred dividend

are the amount of money paid from a company’s retained earnings to its preference shareholders. Contrary to ordinary (common) shareholders, holders of preference shares enjoy guaranteed dividends at higher rates.  

Premium

The term premium can refer to a number of things in finance, being:

• The total cost to buy an option.
• The amount by which the first trading of an initial public offering (IPO) exceeds the offering price.
• The additional cost above an item’s normal cost.
• The price of a bond above its issuance price.
• The amount by which the forward or futures price exceeds the spot price.
• A regular periodic payment for insurance coverage. Also referred to as an insurance premium.

Premium bond

A premium bond is a bond that trades above its face value, meaning it costs more than the face amount on the bond. The face value of a bond is the amount paid to the bondholder at maturity. Face value is also referred to as par value or par.  

Premium margin

A premium margin is the current market value of an option that is traded on a market, as determined by the previous closing price. It represents the amount of money needed to liquidate an option position. It is a method to cover the credit risk associated with an option position.  

Prepaid expense

A prepaid expense is a payment for goods or services, to be received in the future, in advance. The amount of prepaid expenses is reported as a current asset on a business’s balance sheet. As the goods and services are received, they are debited on the income statement and the current asset account is credited.  

Present value (PV)

is the theory that proclaims an amount of money today has more value than the same amount in the future. Also referred to as discounted value or present worth, PV is a financial calculation that measures the value of a future amount of money or stream of payments in today’s ZARs, adjusted for some appropriate interest rate and inflation. Put differently, it is the present (current) value of one or more future cash payments, discounted at an appropriate rate, usually the current market interest rate (the cost of capital rate).  

Price action

refers to the up and down movement of a security’s price over a given period of time. Price action forms the basis for the technical analysis of securities, such as a stock, a commodity, or a currency.  

Price transparency

is a situation where both the seller and the buyer are enabled to know all of the bid prices, ask prices, and trading quantities regarding the trading of stocks.  

Price-weighted index

A price-weighted index is a type of stock index in which each company included in the index is weighted according to its current share price. Companies with a higher share price will be given more weight than those with a lower share price.  

Primary market

The primary market is where securities are created in order to sell them to the public (investors) for the first time. Securities that can be purchased directly from the issuers are, among others, stocks, and corporate or government bonds. An initial public offering (IPO) is an example of a primary market.  

Prime rate

The prime rate, also known as the prime overdraft rate, is the interest rate that clearing banks charge their most creditworthy customers. In South Africa, the prime rate of clearing banks is usually adjusted when the repo rate of the South African Reserve Bank (SARB) is adjusted. The repo rate is the interest rate that banks pay to borrow money from the Reserve Bank.  

Principal

The term principal has various financial meanings, among others:

• The original amount borrowed in a loan, or the part of the sum borrowed which remains unpaid, excluding interest. In this sense, also called principal amount.
• The original amount put into an investment.
• The chief participant in a business transaction.
• The role a broker plays when purchasing or selling securities for his or her own account.

Private company

In South Africa, a private company is privately owned by from one to fifty shareholders. Private companies do not trade on public stock exchanges. A private company is treated by South African law as a separate legal entity. Furthermore, the name of a private company must end with the words ‘(Proprietary)Limited’ or ‘(Pty) Ltd.’  

Producer Price Index (PPI)

The Producer Price Index (PPI) is an inflationary indicator, measuring change to the cost of production and manufacturing. In South Africa, the PPI determines the average change in the price of goods and services sold by manufacturers and producers in the wholesale market during a given period of time, such as a quarter or a year.  

Profit

refers to the net gain of an activity. Regarding a business, it is the money realised when revenue generated from a business activity or activities exceeds the expenses, costs, and taxes pertaining to the specific activity or activities.  

Profit after tax

, also referred to as net profit after tax, is the earnings of a business after all costs, expenses, and applicable income taxes have been deducted from the business’s revenues.  

Profitability

is the ability of a business to utilize it resources to such an extent that it generates revenue in excess of its expenses. Put differently, it refers to a business’s competency to generate profits from its activities.  

Profitability ratios

There are various profitability ratios that can be used to gauge the profitability of a business. Generally, they can be divided into two categories, namely:

• Margin ratios indicate a company’s ability to turn sales into profits. Examples are, among others, gross profit margin, operating profit margin, and cash flow margin.
• Return ratios show how effectively a company generates returns for its shareholders. Examples are, inter alia, return on equity, return on retained earnings, and return on debt.

Profit and Loss statement (P&L)

The profit and loss statement is synonymous with the income statement of a business. It is a summary of the revenues, cost of goods sold (COGS, and expenses during a specified time frame, such as a quarter or a financial year.  

Prospectus

A prospectus is a legal disclosure document that describes the details of the investment offering of shares/securities for sale to the public by a company. A prospectus includes factual information about the company that will enable a prospective investor to make an informed investment decision.  

Protective put

A protective put, also known as a synthetic call, is a risk management and options strategy. It is a situation where a trader holds a long position in the underlying asset of an option while buying a put option with a strike price equal or near to the current price of the underlying asset. This strategy protects a trader against a decrease in the price of the underlying asset.  

Proxy

A proxy is a written document in which a shareholder authorises someone else, like another shareholder or the management of a company, to vote on his or her behalf at the annual general meeting (AGM) of a company or any other shareholder meeting.  

Public company

A public company is a company that initially has sold all or a portion of its shares to the public via an initial public offering (IPO), and trades thereafter on at least one stock exchange.  

Pullback

A pullback is a temporary pause or reversal in the price action of an asset before continuing in the same direction. Usually, a pullback lasts only a few consecutive trading sessions.  

Purchasing Managers’ Index (PMI)

The Purchasing Managers’ Index (PMI) is a leading economic indicator that indicates the performance of manufacturing and servicing businesses within a country. Put in other words, it is an index that indicates the prevailing trends in the manufacturing and service sectors in a country.  

Put

is the act of exercising a put option.  

Put option

A put option, also known as a put, is an options contract that gives the holder (owner) the right, but not the obligation, to sell a certain amount of the underlying asset to the writer of the option, at a predetermined price (strike price) within a specific time frame.  

Puttable

refers to a security that has a put option feature.  

Pyramid scheme

Usually an illegal and fraudulent scheme, a pyramid scheme is an investment scheme in which investors are promised exceptionally high returns on their investments. A key feature of a pyramid scheme is that earlier investors are paid with money received from new investors.  

Q

Qualified opinion

A qualified opinion is a statement that is part of an audit report that accompanies a company’s audited financial statements. There can be various reasons for a company’s statements to receive an auditor’s qualified opinion. Some of the reasons are:

• The financial information provided by a company was limited in scope.
• A company’s accounting books and records do not fully reflect conditions that meet the conditions of generally accepted accounting principles (GAAP).
• Uncertainty about a significant upcoming event.
• The management of a company was unwilling or unable to rectify certain unacceptable accounting practices.

Quantative easing (QE)

is an unconventional monetary policy applied by a country’s central bank during a financial crisis, such as the Covid-19 pandemic in 2026. It entails the purchase of government securities in order to increase the money supply. It also makes it easier for banks to lend money in order to stimulate economic growth in a country. In South Africa, during the Covid-19 crisis, the South African Reserve Bank (SARB) issued the following statement, saying that the bank ‘will commence a programme of purchasing government securities in the secondary market. The purchases will be conducted across the yield curve. (These) measures will be implemented until liquidity conditions normalise.’  

Quarterly CFDs

is a type of future with expiry dates every three months (once per quarter).  

Quick assets

are assets of a business that can be converted into cash relatively quickly. They comprise cash equivalents, accounts receivable, and marketable securities.  

Quick ratio

The quick ratio, also called the acid test ratio or liquidity ratio, determines a business’s ability to pay its short-term liabilities by utilizing its quick assets. Put differently, it indicates the ability of a business to pay its current liabilities without having to sell its inventory or obtain additional financing. The higher the ratio result, the better a business’s liquidity. There are two formulas to calculate the quick ratio: Quick ratio = (Cash + cash equivalents + marketable securities + accounts receivable)/Current liabilities or, Quick ratio = (Current assets - inventory - prepaid expenses)/Current liabilities  

Quid pro quo

is a Latin phrase for ‘something for something’. It refers to an agreement between two or more parties to exchange goods or services of similar value.  

Quote

A quote, also known as quoted price, is the last price at which an asset traded. It refers to the latest price to which a buyer and seller agreed and at which some amount of the asset was settled.  

Quote currency

The quote currency, also called the counter currency, is the second currency listed in a currency pair quote. The first currency of a quote is the base currency. The exchange rate of a currency pair indicates how much of the quote currency is required to be sold or purchased in order to buy or sell one unit of the base currency. In a direct currency pair quote, the quote currency is the foreign currency, while in an indirect quote, the quote currency represents the domestic currency.  

Quoted company

A quoted company is a company listed on at least one stock exchange and whose shares can be purchased and sold on the stock exchange where it is listed.  

Quoted shares

are shares of listed companies that can be bought and sold on a specific stock exchange.  

Quote-driven market

A quote-driven market is an electronic exchange system in which continuous prices or quotes are provided by market makers to buyers and sellers in order to maintain a liquid market. It is a market in contrast with an order-driven market and is most often found in markets for commodities, bonds, and currencies. A quote-driven market is also referred to as a price-driven market or a dealers market.  

R

Rally

A rally is a period in which the prices of securities, such as stocks, currencies, and bonds, experience sustained upward price movements. A rally can also be applicable to a particular financial market or stock exchange when it experiences a general upward trend. Typically, a rally will occur after a period of flat or falling prices.  

Range

In trading, range refers to the difference between the highest and lowest prices of a security, index, or commodity in a given period of time, such as a day, month, or year. It is also referred to as a trading range and is often used to indicate volatility.  

Rate

Generally, a rate is a method to compare two related quantities. Commonly, the second quantity is a quantity expressed in terms of time, such as per second, per hour, per year, etc. In forex trading, the rate is the price of one currency with reference to another currency, normally utilized for trading purposes.  

Rate of return

The rate of return (ROR) is a measure to determine the profit or loss of an investment over a specific period of time, such as a year. It is typically expressed as a percentage of the initial value of an investment. ROR can be utilized for all types of investments. The standard formula for the ROR of an investment is: Rate of return = [(Current value of investment - Initial value)/Initial value] x 100 A positive ROR reflects a profit, while a loss is indicated by a negative ROR.    

RBNZ – Reserve Bank of New Zealand

Real asset

A real asset is a tangible asset that has an intrinsic value due to its physical features, such as function, location, and purchase costs. Real assets are assets that generate value for a business. Examples include, among others, commodities, real estate, machinery, and equipment.  

Real gross domestic product (GDP)

is a measure that indicates the value of all services and goods produced by a country’s economy in a given year. Contrary to nominal GDP, real GDP takes inflation into consideration, meaning it calculates the actual in goods and services, excluding the effect of rising prices.  

Real income

, also known as real earnings, is the amount of income (earnings) available to a person or entity after taking inflation into account.     

Real interest rate

The real interest rate is the nominal interest rate (the observed market interest rate) after adjustment for the actual or expected inflation rate has been made.  

Real money

refers to traders of considerable size, such as insurance companies, asset managers, and pension funds, that have sufficient funds to buy securities at their full value. Real money implies that such traders have no need to borrow money or utilize leverage to buy the securities.  

Real rate of return

The real rate of return is the annual rate of return (nominal rate of return) earned on an investment, adjusted for inflation.  

Realized profit

A realized profit, also called a realized gain, refers to, among other things:

• A gain realized when selling an asset at a price higher than the original purchase price. Put in other words, it happens when the selling price of an asset exceeds its book value or cost.
• In trading, a profit that results from a completed trade.
• In forex trading, the amount of money a trader has made when a position has been closed.

A realized loss is the opposite of a realized profit.  

Receivables

, also known as accounts receivable, is an accounting term for the amount owed to a company by its customers for goods and/or services provided by the company but not yet paid for. Receivables are shown as current assets on the balance sheet.  

Receivables turnover ratio

The receivables turnover ratio, also referred to as the accounts receivable ratio and the debtor’s turnover ratio is an efficiency ratio that determines how efficient a business is in collecting outstanding debt from its customers. A high turnover ratio is an indication that a company’s ability to collect accounts receivable is efficient. Contrarily, a low turnover ratio implies that a company’s collection process is insufficient. The formula for the receivables turnover ratio: Receivables turnover ratio = Net credit sales/Average receivables  

Recession

A recession is a significant decline in economic activity in a particular country or region. It is typically described as two consecutive quarters of economic decline as reflected in economic indicators such as the real gross domestic product (GDP), employment, and manufacturing.  

REITs

, an acronym for real estate investment trusts, are companies that own, manage, and finance real estate across a wide range of property sectors. Most REITs provide various benefits to investors and are listed on stock exchanges.  

Relative strength index (RSI)

is a key technical indicator utilized in the analysis of financial markets, assessing the momentum of assets determining whether they are oversold or overbought.  

Relative value

, a term used in economics, investment, and business, is created when the value of an asset, financial instrument, or investment, is compared with the value of similar assets, financial instruments, or investments.  

Repatriation

is a term in forex that describes the converting of any foreign currency into the local currency of a country.  

Repo rate

In South Africa, the repo rate, short for repurchase rate, is the interest rate at which the South African Reserve Bank (SARB) is prepared to make credit available to the banks. It is the key instrument of the monetary policy of the SARB and is, among other things, utilized to control inflation.

Reserve currency

A reserve currency is a foreign currency or precious metal, such as gold, that is kept by central banks or other major financial institutions of countries to enable them to participate in global economic activities, such as investments, international transactions, and international debt obligations.  

Resistance level

A resistance level, also known as resistance, is a price level of an asset on a price chart where an asset’s upward price trend reaches a point (a ceiling) where selling pressure may surpass buying pressure, forcing the asset’s price to turn downward against an uptrend. Resistance is the opposite of support in trading and is an important tool in technical analysis.  

Restatement

A restatement refers to a revision of one or more of the earlier financial statements of a company, in order to rectify a past error that is substantial enough to warrant a restatement.  

Retail investor

A retail investor, also called an individual investor or small investor, is an investor who buys and sells securities for himself or herself, as opposed to institutional investors, such as pension funds, mutual funds, and exchange traded funds (ETFs).  

Retail sales

refer to the finished goods (durable and non-durable) and services bought by consumers and businesses within a specific period of time.  

Retained earnings (RE)

are the amount of the net income (net earnings) left over for a business after it has distributed dividends to shareholders. RE are utilized to reinvest in business operations or to reduce debt. Retained earnings are recorded under shareholders’ equity on the balance sheet. It is also known as accumulated earnings or unappropriated profit. RE are calculated by adding the net income of a specific period to (or deducting the net loss from) the total of the retained earnings at the start of the period and then subtract any dividends paid to shareholders.  

Retirement planning

comprises methods, planning and strategies to ensure you have enough funds and other assets to sustain yourself during your retirement. Normally, the period in your life after you have officially finished working.  

Return

Simply put, a return is the amount of money gained (positive return) or loss (negative return) on an investment over a specific period of time. Usually, it is presented as a percentage of the original amount invested. Although, it can also be stated in terms of a change in value. Return is also referred to as a financial return.  

Return of capital (ROC)

refers to the return of the original investment (principal amount), or portion of it, to an investor. It does not include any profit gained or loss incurred on the investment.  

Return on assets (ROA)

is a measure to determine a business’s profitability in relation to its assets. Put differently, it indicates how efficiently a business utilizes its assets. The higher the return, the more efficient and productive the assets are exploited and managed. The formula to calculate ROA is: ROA = Net income (net earnings)/End of period assets It can also be calculated as the return on average assets (ROAA), namely: ROAA = Net income (net earnings)/Average assets where, average assets are equal to assets at the end of a certain period minus assets at the beginning of the period divided by 2.  

Return on average capital employed (ROACE)

The return on average capital employed (ROACE) is a profitability ratio that determines the profitability of a company, based on the investments it has made. This ratio differs from the related return on capital employed (ROCE) because it takes into consideration the average capital of a given period, as opposed to the capital sum at the end of the specific period. The formula for ROACE is: ROACE = EBIT/(Average total assets - Average current liabilities) where, EBIT = Earnings before interest and tax The higher the ratio, the more an indication that a company manages its capital efficiently.  

Return on capital employed (ROCE)

is a profitability ratio that measures how efficiently a company can generate profits from its capital employed. It is considered on of the best profitability ratios. Formula for ROCE: ROCE = EBIT/Capital employed where, EBIT = Earnings before interest and tax Capital employed = Total assets - current liabilities  

Return on average equity (ROAE)

is a financial ratio that measures a company’s profitability based on its average shareholders’ equity outstanding, typically over a financial year. Formula for calculating ROAE: ROAE = Net income/Average shareholders’ equity where, average shareholders’ equity = the sum of value of the equity at the beginning and at the end of the year, divided by 2.  

Return on equity (ROE)

is a financial measure to determine how efficiently a company’s management is by utilizing the investments made by its shareholders to generate profits. Put in other words, ROE is a profitability ratio from the viewpoint of the investor. Return on equity is calculated by dividing a company’s net income, also called net earnings, by the total sum of its outstanding ordinary shares (shareholders’ equity), expressed as a percentage.  

Return on investment (ROI)

is a performance ratio, measuring the gain an investment generates for an investor in relation to the original capital cost of the investment. The is presented as a percentage or ratio. The higher the ratio, the higher the return for the investor. The most commonly used formula of ROI is: ROI = Net income/Cost of investment where, Net income = Current value of investment - Cost of investment  

Return on net assets (RONA)

is a performance ratio indicating how efficiently a business utilizes its fixed assets to generate net income, also called net earnings or net profit. RONA’s calculation: RONA = Net income/(Fixed assets + Working capital)  

Return on retained earnings (RORE)

is a financial tool that calculates the yield a company generates for its shareholders by reinvesting its profits (after dividend payments) back into the company. The ratio is reflected as a percentage, with a higher number indicating a greater growth potential.  

Return on revenue (ROR)

is a measure of a company’s profitability that compares its net income to its revenue. Put differently, ROR compares the amount of net income generated for each ZAR (South African rand) or US dollar. A rise in the ROR of a business is an indication that it is producing higher net income with lesser expenses. Return on revenue is one of the key financial ratios to determine a company’s profitability. It is also called net profit margin. The formula to calculate ROR: ROR = Net income/Revenue  

Return on sales (ROS)

, also referred to as operating profit margin, is used to determine a company’s operational productivity. Express differently, it measures a company’s operational efficiency by evaluating what percentage of its revenues are actually turned into profits. Calculation of ROS: ROS = Operating profit/Net sales where, Operating profit = Earnings before interest and taxes  

Revaluation

is the calculated upward adjustment of a country’s currency due to official actions of its central bank. It is the opposite of a devaluation, which is a decrease of a country’s currency.  

Revenue

, also known as sales or income, is the sum of all goods and services sold by a business in a given period. Revenue is the ‘top line’ on the income statement of a business.  

Revenue deficit

refers to the difference between the projected income and actual income of a government or business. A revenue deficit implies that an entity’s income is not enough to cover its basic activities.  

Reversal

A reversal is a turnaround in an asset’s price movement. A reversal can happen during an upward trend or downward trend. It is also referred to as a trend reversal and is the opposite of a continuation, when a price continues to move in the same direction, upward or downward.  

Reverse repurchase agreement (RRP)

A reverse repurchase agreement (RRP), also referred to as reverse repo, entails the purchase of a security with the commitment to sell it at a higher price at a definite future date. For the party selling the security (and undertaking to repurchase it at a predetermined day in the future), it is a repurchase agreement (RP) or repo; for the other party involved in the agreement (buying the security and agreeing to sell the security at the specified date in the future), it is a reverse repurchase agreement (RRP) or reverse repo.  

Revolver

In finance, revolver refers to a consumer who only pays the minimum payment required on a credit card each month. The term originates from the loan practice of revolving credit. It is the opposite of a transactor, a customer who pays the full outstanding balance on his or her credit card each month.  

Revolving credit

, also called a revolving credit facility or a revolving line of credit, is a type of loan offered by a bank or other financial institution to borrowers. It has a maximum credit limit, enabling a borrower to borrow up to the credit limit at any time when necessary.  

RFR – Risk-Free Rate

The Risk-Free Rate (RFR) represents the investment return without any risk element which fundamental government bonds issued by countries like the United States demonstrate through Treasury bills. The RFR functions as a standard reference point that helps investors assess other investments because returns generally increase with risk exposure. Time value of money considerations together with inflation forecasts compose the RFR which serves as the minimum reference point for examining investment return expectations.  

Rights issue

A rights issue occurs when a company allows existing shareholders to buy additional shares at a discount for a certain period of time. The purpose of a rights issue is to enable a company to raise additional capital, in order to, among other things, repay debt, or to upgrade current facilities. However, the issuance of additional shares will dilute the share price, resulting in a lower share price.  

Risk

In finance, risk refers to the possibility that an outcome or the return on an investment will differ from an expected outcome or return. Put in other words, risk refers to the degree of uncertainty or potential financial loss implied in an investment.  

Risk assessment

Generally, risk assessment is a term to describe the process to identify and analyse potential risk factors that may cause the loss or partial loss of a loan, asset, or investment.  

Risk averse

Regarding investments, risk averse is a term that describes the investor who prefers to protect his or her capital investment over the possibility of higher returns on the investment. Express differently, a risk averse investor is a person who chooses avoiding loss over generating a profit.     

Risk-free asset

A risk-free asset is one that provides an almost indisputable return, implying virtually no possibility of loss. Treasury bills of governments are the most common example of risk-free assets.  

Risk management

In finance, risk management comprises the identification and analysis of, and reaction (acceptance or reduction) to risk factors, that are part of business and investment decisions. Typically, risk is managed when an investor, fund manager, or business attempts to control as much as possible future outcomes by acting proactively rather than reactively.  

Risk tolerance

is a term in investing that refers to an investor’s ability to handle possible losses pertaining to investments.  

Roll forward

A roll forward refers to the prolongation of a derivatives contract, such as options, futures, and forwards, by replacing the contract with another one at the current market price for the same underlying asset, at a later expiration date.  

Rollover

In forex trading, a rollover is the interest earned or paid when the process of extending a currency open position from one trading day to another, is executed.  

Round trip

In forex trading, round trip refers to the purchasing and selling of a specified amount of a currency. Generally, round trip refers to the repeated buying and selling of a security in order to inflate trading volume.     

Royalties

are payments to owners of intellectual properties for the right to use a particular property. The terms of royalties are arranged per license agreements. Royalties are paid for intellectual properties such as, patents, trademarks, franchises, music royalties, and book publishing royalties.  

RRR – Risk-Reward Ratio

Trading and investment professionals employ the Risk-Reward Ratio (RRR) to evaluate the size of potential returns versus the nature of potential losses in their trading operations.

You obtain the Risk-Reward Ratio by splitting potential risk by potential reward.

When trading operations yield a 1:3 RRR ratio the invested dollar creates potential profits which amount to thrice its initial value.

Someone with a lower RRR assumes higher risk compared to their potential reward yet those with a higher RRR achieve better risk versus reward benefits.

Running loss or running profit

A running loss or profit is an indicator in forex trading of the status of a trader’s open positions. It refers to unrealized money that a forex trader would lose, or gain should he or she close all open positions at that moment in time.  

RVI – Relative Vigor Index

Technical analysis uses the Relative Vigor Index (RVI) as an oscillator tool to determine the current trend intensity. The indicator analyzes security closing prices versus their historical price points throughout a defined time frame which normally spans 14 periods. The RVI enables traders to identify price movement strength by showing rising numbers for robust bullish trends and declining numbers for bearish momentum trends.  

S

Safe haven assets

are financial assets that are utilized by investors to protect themselves or even to gain profits during periods of market turmoil. The most common safe haven assets used by investors during periods of market instability and volatility are defensive stocks from particular sectors, the US dollar, and precious metals, such as gold.  

SAFEX

is the acronym for the South African Futures Exchange, a subsidiary of JSE Limited, the Johannesburg Stock Exchange. It comprises two divisions: one to trade equity derivatives, and one to trade agricultural derivatives.  

Sale

Generally, a sale is a financial transaction between two or more parties (buyer and seller), involving the exchange of goods or services for money or other assets of value. With regard to financial markets, a sale refers to an agreement between a purchaser and a seller in respect of a security’s price.  

SARB

refers to the South African Reserve Bank, the central bank of South Africa. It was founded in 1921.  

Savings account

are basic interest-bearing accounts that are offered by banks or other financial institutions. Savings accounts are safe and reliable for short-term needs. However, usually offering low interest rates and restricting the number of withdrawals.  

Scalping

In trading, scalping is a strategy aimed at generating profits from small changes in the price of an asset. Scalping depends on technical analysis indicators, such as candlestick chart patterns and moving average convergence divergence (MACD), to be executed successfully. In forex trading, scalping is a popular strategy by forex traders, focusing on minor movements of a currency pair and exploiting the small movements to generate profits. It can also be described as a trading method characterised by relatively short intervals between the opening and closing of a position. Scalping is also known as scalp trading.  

SEC

stands for Securities and Exchange Commission in the U.S.A. It is the main regulatory body for the securities industry in the United States of America. Its mandate encompasses, inter alia:

• To protect investors.
• To maintain fair, efficient, and orderly financial markets.
• To enable capital formation.

Secondary market

The secondary market is a financial market where investors and traders buy and sell securities from and to other investors and traders. It differs from the primary market where shares are directly bought from companies when they are first issued. Put in other words, in a secondary market, securities are sold and bought that are already owned by traders and investors.  

Secondary sector

The secondary sector, also called the manufacturing sector, is one of the main sectors of the economy. It is the sector concerned with manufacturing finished, usable goods. Furthermore, it encompasses construction and utilities, such as electricity.  

Sector

A sector refers to an area in a financial market, industry, or economy whose components share similar features. For example, shares on a stock market are often grouped into distinctive sectors, such as industrial, technology, gold mining, and financials, to name but a few.  

Security

In a financial or investing context, a security is generally described as a financial instrument that has monetary value and can be traded between parties. Put differently, it is an encompassing term for, among others, stocks, bonds and debentures, mutual funds, exchange traded funds (ETFs), and derivatives, such as hedge funds. Currencies are not categorised as securities. Although, a currency can function as the underlying asset for a derivative, which is a slightly different type of security. Security can also refer to a property or other type of asset that is pledged as collateral for a loan or debt.  

Seed capital

The term seed capital, also called seed money or seed financing, refers to the initial funds that are required to start a new business. Typically, seed money is provided by family, friends, or angel investors - usually wealthy investors who provide seed capital in exchange for a share in the business.  

SGD – Singapore Dollar

Singapore uses its official currency named Singapore Dollar (SGD) which has an abbreviation of SGD. MAS controls the management and issuance of the Singapore Dollar which operates through the Monetary Authority of Singapore. The monetary system of Singapore includes one hundred cents as its subunit. Within Southeast Asia the SGD stands as a stable currency which ranks among the strongest currency types. The currency functions extensively throughout Singapore together with its active trading volume on foreign exchange markets extend to neighboring countries. Specific symbols "$" and "S$" represent the Singapore Dollar to separate it from other currencies that carry the dollar denomination.  

Seigniorage

is the profit gained by a government when the face value of the money that is created exceeds the cost of that money.  

SEK – Swedish Krona

The official currency in Sweden is the SEK which stands for Swedish Krona. The abbreviation for Swedish Krona is SEK while its symbol stands as "kr." Swedish currency exists in two parts as SEK and 100 öre divisions but the öre currency stopped circulating. Swedish Krona operation and distribution responsibility belongs to Sveriges Riksbank the Swedish central bank. The SEK functions as a premier currency throughout Nordic nations where it is regularly employed for trading and foreign investment especially within foreign exchange frameworks because Swedish economic stability and international business connections strengthen its global market position.  

Sell

Generally, the word sell describes the action in which one party (the seller) transfers goods or render services to another party (the buyer or purchaser) in exchange for money. In trading, sell means different things, such as:

• To transfer ownership of a security or other asset for a sum of money or something else of similar value.
• Advice provided by a technical analyst or advisor that a specific security or asset should be sold.
• An order, also called a sell order, from a trader or investor to a broker to sell a security, commodity, or asset.
• A trader taking a short position in the belief that the price of a currency is decreasing.

Sell forward

is the practice of selling a currency, security, or commodity at a fixed price for delivery at a date in the future.  

Selling short

is a strategy used by traders and investors, borrowing a security from a broker, and selling it with the expectation to purchase it back at a later stage at a lower price, and eventually returning it to the broker. The reason for selling short by a trader is to profit from the declining price of a security. There are two types of selling short, covered, and naked:

• Naked short selling occurs when a trader sells a security without having possession of it.
• Covered short selling is when a trader borrows a security from a broker for a certain period of time in order to sell it and to buy it again at a later stage.

Selling short is also called short selling, short, short position, or shorts.  

Sell limit order

A sell limit order is an order from a trader to a broker to sell a security at a specific price (the limit price) or better.  

Sell-off

A sell-off refers to the selling of a large quantity of an asset or large volumes of securities at fast falling prices in a short period.  

Sell on close

is a type of order to a broker to sell a specific amount of a security at the prevailing market price at the end of that day’s last trading session of the particular market.  

Sell to close

is a strategy in options trading that is utilized to exit an existing position. Put differently, STC means to close a position by selling. Typically, traders ‘sell to close’ call options contracts they own when they want to exit a long position on the underlying asset of the options contract.  

SL – Stop Loss

The fundamental risk management instrument known as the Stop Loss (SL) helps traders control their potential losses throughout trading operations. The entry of a Stop Loss requires traders to instruct brokers about closing trades automatically when specific financial asset prices hit preset thresholds. The use of Stop Loss functions as an instrument for traders to control potential price drops that could hurt their investments. A person's risk threshold determines the specific price levels at which Stop Loss orders protect trades in volatile market conditions.  

Settlement

A settlement, also known as a trade settlement, is the process by which a trade is entered into the accounts of the parties involved - entering securities, such as stocks, bonds, or other financial assets, into the account of the purchaser and money into the seller’s account. Although, the settlement of currency trades may or may not entail the real physical exchange of one currency for another one.  

Settlement day

The settlement day is the date when at trade is settled, implying that the buyer must pay the seller while the seller must deliver the specific asset to the buyer. Financial instruments have different settlement days:

• Stocks and bonds - usually two business days after the execution date (T+2).
• Government (USA) securities and options - business day after the day of trade (T+1).
• Currencies - two business days after the transaction day (T+2).

Share

• A share represents one unit of ownership in a company or mutual fund, ensuring particular rights for the owner of the share.
• Typically, the two main types of shares are ordinary (common) shares and preference (preferred) shares.

Share at par

is the value of a share as it is written on a share certificate of a company that has issued the shares. Share at par is also called face value, par, or nominal value.  

Share certificate

A share certificate, also known as a stock certificate, is a document issued by a company as proof that an individual or entity is the owner of the shares of the company as indicated on the share certificate. Nowadays, physical share certificates are hardly ever issued, as they are mostly replaced with digital records.  

Share class

Simply put, share class refers to a company’s strategy to divide its shares into different classes of shares in order to grant different rights to different types of shareholders. There are various classes of shares, such as A-shares, B-shares, and I-shares, to name but a few. Rights conferred to the various classes of shares include voting rights, entitlement to profits, and rights to dividends.  

Shareholder

A shareholder, also called a stockholder, is an individual, company, or entity that holds at least one share of a company’s stock, which makes them partial owners. Depending on the type of share a shareholder holds, he or she is entitled to certain rights.  

Shareholder activist

A shareholder activist is a shareholder of a company who aims to use his or her share of ownership to bring change within a company by influencing the resolutions and actions of the particular company.  

Shareholders’ equity (SE)

represents the residual value for shareholders of a company after liabilities have been taken into account. It is an account on the balance sheet of a company, comprising share capital plus retained earnings. The formula, also referred to as the accounting equation or balance sheet equation, for shareholders’ equity is: SE = Total assets - Total liabilities Other descriptions of SE are stockholders’ equity, owner’s equity, net worth, or net assets.  

Shareholder equity ratio

The shareholder equity ratio is a measure to indicate the amount of leverage utilized by a company. Put differently, it shows how much of a company’s assets are funded by the issuance of shares instead of borrowing money. The lower the ratio result, the more debt was used by a company to finance its assets. An equity ratio with a higher value usually shows that a company owns more funding from equity than debt. The ratio, expressed as a percentage, is calculated as follows: Shareholder equity ratio = Total shareholder equity/Total assets  

Shareholders’ agreement

A shareholders’ agreement, also known as a stockholders’ agreement, is an agreement between the shareholders of a company, with the company as a group, and with each other. It sets out how the company should be managed and indicates the rights and responsibilities of the shareholders.  

Share index

A share index, also referred to as a stock index, is a group of shares that are used to give an indication of the performance of a specific financial sector or stock exchange over a given period of time. Usually, a share index consists of widely traded and top shares from a given stock exchange.  

Share price

A share price, also known as a stock price, is the amount it would cost to purchase one share (unit of ownership) in a company. A share price is not fixed but fluctuates according to market conditions. Differently said, a share price reflects the prevailing market price of one unit of a company’s equity capital that is traded on a specific stock exchange.  

Short call

A short call is an options trading strategy in which a trader sells or ‘writes’ a call option, expecting that the price of the underlying asset is going to fall.  

Short covering

, also known as buy to cover, refers to buying back securities that have been borrowed in the process of short selling, in order to close a short position in the particular market and to hand back the borrowed securities.  

Short position

In short selling, short position refers to the situation in which traders are convinced that the price of a security will fall. In forex trading, short position refers to a condition in which the base currency of a currency pair is sold.  

Short squeeze

A short squeeze occurs when a security’s price jumps rapidly beyond expectations of analysts and other parties in a market. A short squeeze forces short sellers to exit their short positions as quickly as possible in order to cut their losses. Put in other words, traders with short positions are literally ‘squeezed’ out of the market, given the fast-rising price of the security. The scramble of short sellers in order to quickly turn from selling to buying, adds to upward pressure on the security’s price.  

Short-term debt

refers to a business’s financial obligations that are payable to lenders within one year. It is also called current liabilities and comprises, inter alia, accounts payable, short-term loans, and income taxes payable.  

Short-term investments

, also referred to as temporary investments or marketable securities, are highly liquid assets that are expected to be sold or converted into cash within a short time frame. The time frame depends on how urgent a business needs cash, and can even be a significantly short period, such as 3 to 12 months. Although, typically, a short period concerning short-term investments is a time frame of 1 - 3 years. Common types of short-term investments are, among others, money market accounts, short-term bonds, treasury bills, and certificates of deposits (CDs).  

Shortfall

A shortfall occurs when there is a shortage of something, such as coal to generate electricity. A shortfall also refers to a situation in which an amount of money is insufficient to cover an obligation. With regard to the budget of an individual or business, it describes a position where the projected expenses exceed the expected sources of income.  

Sidelines

is a term that describes a situation when traders are staying out of the markets due to no direction in price movements and turbulent market conditions. Traders are said to be ‘on the sidelines’ or ‘sitting on their hands.’  

Signature loan

A signature loan is a type of loan, provided by banks and other financial institutions to certain people, that is not backed by collateral. Only the signature of the borrower and a promise to pay are required to back the loan. A signature loan is also referred to as: an unsecured loan, a good faith loan, or a character loan.  

Silent partner

A silent partner is a person who provides capital to a business or startup capital to an entrepreneur. Usually, he or she is not actively involved in the management or operations of the business. Although, a silent partner still may play a part as an advisor.  

Simple interest

is a quick and easy way to calculate the amount of interest payable on a loan. In fact, the term ’simple’ implies it is the simplest way to calculate interest. Simple interest is calculated only on the original amount (the principal) of a loan. The formula to calculate simple interest is: Interest = Principal amount x interest rate x time period For instance, assume you borrow R1 000 (the principal amount) from a bank, at an annual interest rate of 6.5% for 2 years. Your simple interest payable over a period of two years will be: R1 000 x 0.065 x 2 = R130. The percentage of 6.5% was converted to a decimal figure by dividing the percentage by 100. Thus, 6.5/100 = 0.065.  

Simple moving average (SMA)

is the most basic type of moving average. It is an indicator utilized in technical analysis. It is calculated by adding up specific price points, usually the closing prices, of a financial instrument over a certain time period, and then dividing the total of the price points by the number of price points. Simple moving averages enable traders to determine if the price of a security or currency will continue or reverse in an upward or downward trend.  

Sinking fund

A sinking fund is a type of fund set up by a business, earmarked for specific purposes, such as repaying debts, replacing assets, or retiring bonds (buying back issued bonds). A sinking fund prevents a business to default on its obligations. In this context, ‘sinking’ is a term that literally means ‘sinking the debt.’  

Slippage

In trading, slippage refers to the difference between the price requested in a trade and the price at which the trade is filled. Generally, slippage occurs in highly volatile markets, characterised by fast moving prices. It takes place in all types of financial markets, such as forex, bonds, and futures, to name but a few.  

Slippery

is a term that refers to a financial market when the belief prevails that the market is ready to quickly move in any direction.  

Sloppy

is a slang term in forex trading that describes turbulent and stormy trading conditions, lacking any significant trends and or follow-through.  

SMA – Simple Moving Average

SMA functions as a well-known technical indicator used by traders which determines average asset prices across a chosen time span. Because this indicator applies equal importance to each data value within its time frame it gets categorized as "simple." A 50-day SMA functions by summing 50 consecutive closing prices then dividing the total by 50.  

SMI – Stochastic Momentum Index

Using a time period range the Stochastic Momentum Index (SMI) functions as a technical indicator to evaluate asset momentum through current price valuation. While the traditional stochastic oscillator monitors price range only the SMI applies value smoothing techniques and centers its analysis on price direction movement.  

Small cap

is a term that refers to a company with a relatively small market capitalisation. The market capitalisation of a company is the market value of its outstanding shares. With regard to the Johannesburg Stock Exchange (JSE), a small cap company is classified as one with a market capitalisation below R1 billion.  

Solvency

describes the ability of a business to meet its long-term debt and financial obligations. Solvency is a key measure to determine a company’s financial health, verifying that it is a ‘going concern’, being able to continue operations long enough to fulfil its obligations, objectives, and commitments.  

Solvency ratio

Commonly, solvency ratios are used to determine the ability of a business to repay its debts. There are various solvency ratios, such as the current ratio, the quick ratio, the debt-to-equity ratio, and the interest coverage ratio. If there is a specific ratio that is regarded the key solvency ratio, it is the one that determines whether a business has sufficient cash flow to cover its short- and long-term liabilities. The formula for the key solvency ratio is: (Net after tax profits + Depreciation + Amortization)/(Short term liabilities + Long term liabilities) The higher the solvency ratio, the better a business’s ability to meet all its debt obligations.  

Speculator

A speculator is an entity or person who trades in financial markets on the assumption that prices of securities will go up or down, enabling gains from price changes. Typically, speculators trade a security for a short period of time.  

Spot date

Usually, the spot date is the day when a spot trade in currency trading is settled, meaning when the funds involved in the trade are transferred. In forex, the spot day for most currency pairs is usually two business days after the trading day, the day at which the order is placed.  

Spot exchange rate

Generally, the spot exchange rate (also called the spot rate) is set by the forex market. It is the amount one currency will exchange for another currency at the present time in the currency market.  

Spot market

The spot market, also referred to as the cash market or physical market, is a financial market in which commodities or financial instruments, such as currencies and securities, are traded for immediate delivery, meaning the financial instrument is exchanged for cash. In the majority of spot markets, immediate delivery means a T+2 settlement day. Thus, the trade day plus two business days. A spot market may be an exchange, or an over the counter (OTC) market.  

Spot price

The spot price, also called the spot rate, is the current price in a financial market at which a given asset, such as currency, commodity, or security, can be purchased or sold for immediate settlement. Simply put, spot price refers to the action to buy a financial instrument ‘on the spot’, instead of waiting until a later date.  

Spot trade

In forex trading, a spot trade, also called a spot transaction, refers to the sale or purchase of a currency for immediate delivery on a predefined spot date. A spot trade can be contrasted with a futures or forward trade.  

Spread

In trading, a spread refers to the difference between the bid and ask price of, among others, a stock, bond, or commodity.  

Spread betting

refers to a strategy utilized by traders, speculating on the price movement of an underlying asset. A trader does not own the underlying asset but only speculates on its price movement.  

Square position

In forex trading, a square position occurs when the purchases and sales of a trader are in balance, thus all existing positions are closed out, eliminating market risk exposure.  

Stable market

A stable market indicates a market that is able to absorb large trading volumes without causing major price changes.  

Standard lot

A standard lot, similar to trade size, is the equivalent of 100 000 units of the base currency in a currency pair in forex trading.  

Startup capital

is the money required by an entrepreneur to start up a new business. Expenses necessary for starting a new business are, among others: paying employees, buying equipment and supplies, furnishing the office, cell phone and data expenses, and renting office space.  

STP – Straight Through Processing

STP (Straight Through Processing) is a method used by financial institutions, particularly in forex trading, to automate the processing of transactions without manual intervention. It allows orders to be executed directly from the trader’s platform to the liquidity provider or market, ensuring fast and efficient trade execution. This process minimizes delays and human error, offering traders faster, more transparent, and more reliable transactions, which is especially beneficial in high-speed trading environments.  

Statement of cash flows

The statement of cash flows, also called cash flow statement, is one of the main financial statements of a business, along with the income statement and balance sheet. It reports the sources and utilization of cash according to operating activities, investing activities, and financing activities.  

Statement of financial position

The statement of financial position, also known as the balance sheet, is one of the main financial statements of a business. It reports the financial position of a business with regard to its assets, liabilities, and shareholders’ equity, at the last day of a specific accounting period.  

Statement of shareholder’ equity

The statement of shareholders’ equity, also referred to as statement of stockholders’ equity, indicates the changes within the equity section of a business’s balance sheet. It reports additional information concerning equity-related activities during a given financial period. Activities such as, sales and repurchases of shares, dividends issued, and profits or losses during the given period.  

Sterling silver

is an alloy used in jewellery making. It comprises 92.5% silver and usually 7.5% copper or another metal (usually nickel or zinc). Pure silver, also called fine silver, has actual silver content of 99.9%.  

Sticky deal

is an informal term in trading, referring to a new issue of a security that may be difficult to sell due to underlying issues, such as bad news or turbulent markets.  

Stochastic oscillator

A scholastic oscillator is a technical momentum indicator, comparing a specific closing price of a security to a range of its prices over a particular time frame. It is utilized to provide overbought and oversold trading signals.  

Stock analysis

, also referred to as market analysis, is a strategy used by traders and investors to analyse and evaluate an individual stock, a financial instrument, a specific sector, or a specific stock market. Stock analysts aim to gauge the future trends of a stock, sector, or stock exchange.  

Stockbroker

A stockbroker, also known as a broker, is a licensed professional who is authorised to execute buy and sell orders for stocks and other securities on behalf of investors and traders. Due to the increase in online trading, the need for stockbrokers is dwindling.  

Stock code

A stock code, also called a stock symbol or a ticker symbol, is a unique series of letters allocated to a stock or share of a company for trading purposes on a stock exchange. For example, the stock code (ticker code) on the Johannesburg Stock Exchange (JSE) for Vodacom is JSE:VOD, for British American Tobacco (BATS) JSE:BTI, and for AngloGold Ashanti JSE:ANG.  

Stock exchange

A stock exchange, also called a stock market, refers to centralised formal exchanges and over-the counter (OTC) markets where the shares of publicly traded companies are bought and sold. Financial instruments traded on stock exchanges are, among others, stocks (shares), bonds, and stock-related instruments.  

Stock register

A stock register is a detailed record of transactions pertaining to shares issued by a publicly traded company. A stock register is also referred to as a share register, register of members, or shareholder register.  

Stock market crash

A stock market crash is an unexpected, sudden, and rapid drop in the prices of stocks on the stock market. Typically, a crash occurs in a period of a day, or a few days and the market does not recover quickly. A stock market crash is also reflected in a significant drop in a stock market index. Famous stock market crashes include those during the 1929 Great Depression, the dotcom bubble burst in 2001, the financial crisis in 2008, and during the Covid-19 pandemic in 2026.  

Stock option

A stock option is a contract between two parties that allows a trader or investor the right, but not the obligation, to buy or sell underlying stocks at a predefined price and within a certain period of time. There are two types of stock options:

• A stock put option, which gives the buyer the right to sell and which is a bet that the price of the underlying stock will decline.
• A stock call option, which allows the buyer the right to purchase and which is a bet that the underlying stock’s price will rise.

Stock repurchase

A stock repurchase, also known as share repurchase or share buyback, occurs when the management of a public company buys back company shares from the market. Reasons for a share buyback are, among others:

• To boost the share value, improving a company’s financial statements.
• To increase a company’s own equity shareholding in the company.
• Management considers the shares undervalued.

Stop and reverse (SAR)

A stop and reverse order is a type of stop-loss order that closes the current position of a trader and, either at the same time, or immediately thereafter opens an opposite position.  

Stop entry order

A stop-entry order is an order to buy (buy stop) at the current market price, or to sell (sell stop) at a price below the prevailing market price.  

Stop limit order

A stop limit order is a combination of a stop order and a limit order. After a specific stop price is reached, the order becomes a limit order, only filled at the limit price or better.  

Stop loss order

A stop loss order states that a security be purchased or sold when it reaches a predetermined price, the stop price. Reaching the stop price, the stop order changes to a market order, to be filled at the next available opportunity. For a trader in a long position, it is a sell stop order, to sell below the current market price. It is a buy stop order to buy above the current market price in order to close a short position. Typically, stop loss orders are utilized to prevent additional losses when the price of a security declines.  

Stop loss hunting

, also referred to as ‘stop runs,’ is a situation in which some market participants aim to push the price of a security to levels where other participants have set their stop losses. When the security’s price hits these levels, the stop loss orders are liquidated at once and market volatility increases. This situation can create profit-making opportunities for traders who have open trades and are on the right side of the price trend.  

Stop order

A stop order is an order to buy or sell a specific quantity of a security when a predetermined price (stop price) is reached or passed. When the stop price is reached, the stop order is changed to a market order that is filled at the best available price.  

Stop out

is a term that has two different meanings in financial markets.

• Generally, it refers to a situation in which a security has reached the stop loss level at which a trader is forced to exit his or her position with a loss on a stop loss order. Once this situation has occurred, the trader is described as ‘stopped out.’
• In the forex market, it refers to the level at which all of a trader’s positions are automatically closed because the trading account can no longer support any open positions due to an insufficient margin.

Stop price

A stop price is the price specified in a stop order or stop loss order.  

Stops building

refers to the accumulation of stop loss orders. Either the accumulation of stop loss orders to purchase above the market price in an upward price trend, or to sell below the market price in a downward price movement.  

Straddle

A straddle is a strategy in options trading, involving the purchase or sale of both a put and call option, with the strike price and expiration date on the same underlying asset.  

Straight-through processing (STP)

is a process that automates the end-to-end processing of securities trades. It is a process done entirely through electronic transfers.  

Strike price

The strike price, also called the exercise price, is the predefined price at which a derivative contract, such as an options contract, can be purchased or sold when it is filled. Regarding call options, the strike price is where the underlying security can be bought by the option holder. For put options, the exercise price is the price at which the underlying asset can be sold.  

Subsidiary

A subsidiary is a company that is wholly or partially owned by another company, usually referred to as the parent company or the holding company.  

Support level

A support level, also referred to as support, refers to a price level that a security does not fall below for a period of time. A support level is created by a surplus of buyers.  

Surplus

Regarding a business’s resources or assets, surplus refers toa level where resources or assets exceed the production capacity. With regard to a budget, a surplus occurs when earnings exceed expenses payable, such as operating expenses, interest, and taxes.  

Suspended trading

refers to a temporary halt in the trading of a particular financial instrument, such as a security, on a financial market. It can be done for various reasons, such as to prevent mass panic selling. It is also referred to as trading halt.  

Swap

In forex, swap refers to a rollover interest that a trader either earns or pays for keeping his or her positions overnight. In this context there are two types of swaps:

• Long swap - utilized to keep long positions open overnight and when a trader will likely earn interest on the open positions.
• Short swap short - used to keep short positions open until the following trading day and where a trader will pay interest on the open positions.

With regard to currencies, a currency swap, also called a cross-currency swap, is a contract between two parties, agreeing to exchange two currencies at a later date at a forward exchange rate.  

Swing trading

is a trading technique utilized by traders to profit from short- to medium-term price movements (upward or downward) of a financial instrument, such as a stock. Swing traders mostly use technical indicators to determine trading opportunities.  

Systematic risk

refers to the risk inherent to an entire market or market segment. Systematic risk can be triggered by political, economic, or financial factors.  

Systemic risk

is the possibility that a major flaw at the company level could cause serious instability or even chaos in an entire industry or economy. Typically, systemic risk spreads from unsound institutions to relatively sound institutions. It is also called undiversifiable risk or market risk.  

T

T + 1, T + 2, T + 3

are abbreviations that indicate the settlement date of security transactions. The letter T stands for transaction date, the day on which the transaction is effectuated. The numbers 1, 2, and 3 indicate the number of days the transfer of money and ownership of securities take place, after the transaction date.  

Take profit order (T/P)

A take profit order (T/P) is a type of limit order that specifies the precise price at which a security will automatically be sold. If the predefined price is not reached, the T/P order is not executed. A take profit order is a strategy utilized by short-term traders. Alternate names are limit order or sell limit order.  

Takeover

A takeover, also called an acquisition or business acquisition, occurs when one company (the acquirer) acquires control of another company (the target company), either via purchasing its shares or its assets. A takeover can be hostile or friendly. Simply put, a friendly takeover takes place when the management and shareholders of the target company are satisfied with the conditions and arrangements of the takeover. Contrarily, a hostile takeover is when the target company opposes the acquisition.

Tangible asset

are assets with a physical form and that have real transactional value. Examples are, among others, vehicles, property, and equipment. Usually, a business’s tangible assets are categorised as current and long-term assets.  

Tangible book value per share (TBVPS)

is a measure that determines a company’s value on a per-share basis, excluding any intangible assets, if applicable. A major reason for intangible assets to be excluded is that they would be worthless in case of a liquidation. TBVPS is calculated as follows: Total tangible assets/Total number of shares outstanding.  

Tangible net worth

, also called tangible asset value, is an indication of the true value of the tangible assets of a business. Put differently, tangible net worth of a business excludes any value obtained from its intangible assets, such as patents and intellectual property, To calculate tangible net worth the following formula is used: Tangible net worth = Total assets - intangible assets - liabilities.  

Target company

A target company is a company that has been targeted as an attractive option for a merger or acquisition by a potential acquirer.  

Taxable income

refers to an individual’s or business’s income that is used to calculate tax liability, implying how much tax is owed to a government in a given tax year.  

Tax bracket

A tax bracket is a range of incomes subject to a certain income tax rate. The higher an individual’s taxable income, the higher the tax rate. The method utilized to tax rising income at increasing rates is through tax brackets.  

Tax rate

A tax rate is the percentage at which a business or individual is taxed. In South Africa, the maximum tax rate for individuals is 45%, while businesses are taxed at a rate of 28%.  

Technical analysis (TA)

is a strategy utilized in trading to examine and predict price movements of financial instruments, such as shares and currencies, in financial markets. TA is exercised by using price charts and statistical trends in markets. Technical analysis assumes that if previous market patterns can be discerned, they can be useful to predict reasonably accurate future price trends.  

Technical analyst

A technical analyst is a trader or investor who utilizes technical or chart analysis in trading decisions. A technical analyst is also known as a chartist, technician, market technician, and tech.  

Technical indicator

A technical indicator is a technical or chart analysis tool that enables traders to better comprehend price movements of financial instruments in order to act accordingly. Technical indicators are also referred to as technicals. Types of technical indicators are, inter alia:

• Trend indicators, such as moving averages and parabolic stop and reverse (Parabolic SAR).
• Momentum indicators, for example stochastic oscillator and relative strength index (RSI).
• Volatility indicators, for instance Bollinger bands and standard deviation.
• Volume indicators like volume rate of change.

Tertiary sector

The tertiary sector, also known as the tertiary industry or service sector/industry, is one of the main sectors of the economy. It provides intangible goods and services to customers. The tertiary sector comprises financial services, retail, tourism, catering, restaurants, education, entertainment, and I.T. services.  

Testamentary trust

A testamentary trust, also called a will trust, is written into an individual’s last will and testament. It is created upon the death of the testator of the will. Generally, the purpose of a testamentary trust is to care for and protect minor beneficiaries under the age of 18 and to provide for disabled or mentally challenged beneficiaries.  

Theory of price

The theory of price is a theory in economics that asserts that in a free market economy the market price for any particular service or good, reflects the relationship between supply and demand.  

Theta

is one of the measures from the group of measures referred to as the Greeks. Theta measures the value of an option relative to the time left before the expiry date. Put differently, theta refers to an options time decay, indicating how much an options value will decline every day up to the maturity of the option.  

Thin market

A thin market, also called a narrow market, refers to a financial market or sector of a market, characterised by a low number of buyers and sellers. In a thin market price changes are larger than normal, causing more volatility. It is the opposite of a liquid market, which has a healthy balance of purchasers and sellers.  

Thinly traded

The term thinly traded indicates securities that are traded in low volumes due to a lack of interested buyers and sellers. Thinly traded securities, also referred to as illiquid securities, cannot easily be liquidated without a significant change in price. When transactions do take place, there are increased volatile changes in price.  

Tick

Regarding securities trading, a tick measures the smallest possible upward or downward movement in the price of a security. One tick reflects a specific amount of money (the tick size or tick value), and this value varies according to the type of security being traded. A tick can also indicate the change in the price of a security from one transaction to the next transaction.  

Ticker symbol

A ticker symbol, also known as a stock code or stock symbol, is a combination of characters, usually letters, to identify shares or stocks that are traded on a given stock exchange. For example, the ticker symbols for the five largest companies according to market capitalisation on the Johannesburg Stock Exchange (JSE) - as of August 2026 - are:

• JSE:PRX - Prosus NV
• JSE:ANH - Anheuser-Busch InBev (AB InBev)
• JSE:BTI - British American Tobacco South Africa (BATS)
• JSE:NPN - Naspers N
• JSE: BHP - BHP (Previously BHP Billiton)

Time decay

, also called theta, refers to the risk involved with an options trade, indicating the decline in the value of an option during the period until the expiration day.  

Time deposit

A time deposit, also called a term deposit, is a type of bank account that has a fixed term and interest rate. A penalty is payable when the funds are withdrawn before the predetermined date of maturity. A certificate of deposit (CD) is the best-known example of a time deposit.  

Times interest earned (TIE) ratio

The times interest earned (TIE) ratio indicates a company’s ability to pay its debts on a periodic basis. Stated differently, the TIE ratio reflects a company’s ability to continue to invest in the business itself, after meeting its cash obligations. The formula for the TIE ratio is:

• TIE ratio = EBIT (Earnings before interest and taxes)/Interest expenses.

The TIE ratio is also called the interest coverage ratio.  

Time order

A time order, also called a time limit order, is an order to execute a trade within a specific period of time. If not filled within the given period of time, the order is either cancelled or is changed to a market order.  

Time spread

is a strategy in option trading, enabling a trader to buy or sell an option with a shorter time to the expiry date and at the same time allowing the trader to sell or purchase an option with the same strike price but with a longer time until expiration. It is also known as calendar spread or horizontal spread.  

Time to maturity

, also known as time until expiration, is the time remaining until a financial contract expires.  

Time value

, also referred to as extrinsic value or time premium, refers to the part of an option’s price (premium) than can be attributed to the amount of time left until the expiry date of the option contract. Said differently, time value is the amount by which an option’s premium (price) exceeds its intrinsic value. As a formula, the time value of an option is expressed as: Time value = Option premium - Intrinsic value.  

Time value of money (TVM)

, is a financial concept based on the assumption that money in the present is worth more than the same sum of money in the future. Mainly, this is true for two reasons, namely:

• Money loses some of its value over time due to inflation.
• Money has a potential earning capacity, implying money can be invested and earn a return.

TVM is sometimes referred to as the net present value (NPV) of money and present discounted value.  

Tomorrow next (Tom next)

is a short-term forex transaction, enabling traders to simultaneously purchase and sell a currency over two separate business days, namely: tomorrow (one business day) and the next day (two business days from today).  

Top line

The term top line refers to the top line item, such as sales or revenue, on a business’s income statement. When a business increases its sales or revenue, it is said that it is generating top line growth.  

Top-down analysis

is what is called a ‘big picture’ approach. To start evaluating a security, such as a stock of a company, a top-down analyst starts by analysing macroeconomic factors, following it up by a sector analysis, and eventually an individual stock analysis.  

Total cost of ownership (TCO)

is the total sum of the purchase price of an asset and its operation costs. It is a calculation that enables owners and potential buyers to determine the direct and indirect costs of acquiring an asset.  

Total expense ratio (TER)

The total expense ratio (TER) measures the overall operating costs of an investment fund relative to its assets. The operating expenses comprise admin fees, management fees, legal fees, and auditor fees. The calculation for TER, expressed as a percentage, is: TER = Total cost of fund/Total assets of fund. TER is also referred to as net expense ratio or after reimbursement expense ratio. Regarding investment funds, such as annuities, in South Africa, ASISA (Association for Savings and Investment South Africa) describes TER as follows: ‘The TER is a measure that can be used by investors and advisors to determine how much of a Financial Product’s underlying assets are relinquished as payment for services rendered in the administration of the Financial Product. This is expressed as a percentage of the daily NAV of the Financial Product calculated over a period of three years on an annualised basis.’  

Total shareholder return (TSR)

refers to the profit generated by a company’s shares for an investor during a holding period. TSR comprises all capital gains and dividends during the given period. Simply put, TSR is the total amount received by an investor after he or she has sold the specific investment. The formula for TSR is: (Current price - Purchase price) + sum of dividends received. To calculate the TSR percentage, the TSR is divided by the initial purchase price.  

Tracker fund

A tracker fund, also called an index fund, is a mutual fund (pooled fund) that tracks one of a stock market’s indices, such as the JSE Top 40.  

Trade

is a broad basic concept in the economy that describes the buying and selling of goods and services. Trade takes place between, inter alia, countries, individuals, businesses, and individuals and businesses.  

Trade balance

The trade balance, also known as balance of trade (BOT), is the net amount of a country’s imports and exports, excluding all investments and financial transfers. Said differently, the trade balance reflects the difference between the goods and services imported and exported by a country during a given period of time.  

Trade deficit

A country suffers a trade deficit, also called a negative balance of trade, when its imports exceed its exports during a given time frame. Typically, countries with a trade deficit tend to see their currencies declining.  

Trader

In financial markets, a trader is an individual who buys and sells financial instruments, such as shares, commodities, currencies, and bonds. Usually, traders trade on their own behalf. Brokers perform the same function, although, on behalf of their clients.  

Trade signal

A trade signal prompts a trader to buy or sell a security, caused by information produced in an analysis utilized, such as technical or fundamental analysis.  

Trade size

In forex trading, trade size is similar to a standard lot, which is the equivalent of 100 000 units of the base currency in a currency pair. A trade size, also referred to as position size, is determined by the number of lots and the size and type of lot a trader buys or sells in a trade.  

Trade surplus

A trade surplus of a country reflects a positive balance of trade. It occurs when a country’s exports exceed its imports. Typically, the currencies of countries that experience a trade surplus, appreciate in value.  

Trading

In financial markets, trading refers to the act and process of purchasing and selling financial instruments, such as stocks, derivatives, and currencies.  

Trading account

In forex trading, a trading account, also called a forex account, refers to an account with which forex traders trade foreign currencies. Typically, a forex trader is obliged to deposit an amount, denominated in his or her home currency, in a trading account to start trading in forex.  

Trading floor

A trading floor, also referred to as a trading pit, is the area of an exchange where securities are exchanged. It is typically associated with futures exchanges and stock exchanges.  

Trading halt

A trading halt, also referred to as a stock halt, is a temporary suspension of the trading of a security or securities on one or various exchanges. Typically, some reasons for a trading halt are:

• Pending major corporate transactions, such as a merger or an acquisition.
• Significant news (negative or positive) about a company.

Trading heavy

describes a financial market experiencing difficulty to move upwards, displaying a trend downwards. It refers to a market that will not improve despite buying attempts from traders.  

Trading mistakes

Simply put, a trading mistake occurs when a trader makes a wrong or faulty judgement when trading a financial instrument. There are numerous trading mistakes that a trader is likely to suffer from. They are, to name a few:

• Trading without a plan.
• Not understanding leverage.
• Over-reliance on software.
• Not understanding trading risks.
• Overconfidence after making a profit.

Trading offered

takes place when a currency pair is performing weak and tends to move lower, while offers to sell are at the order of the day in the market.  

Trading patterns

are systematic and distinctive formations of a security’s price during a given period of time. A trading pattern is created by a line that connects common price points, such as highs, lows, or closing prices. Trading patterns are a crucial component of technical analysis. Common examples are bearish and bullish trading patterns.  

Trading platform

A trading platform is a software tool provided by brokers or brokerages, enabling traders to manage and execute trading with regard to financial instruments. Trading platforms allow traders to open, close, and manage market positions.  

Trading range

A trading range, also referred to as range, indicates the difference between the highest and lowest prices of a security or commodity during a specific period of time, such as a day, month, or 52 weeks.  

Trailing stop

A trailing stop, also known as a trailing stop order, is a type of stop order with the additional option of acting as a limit order or a market order. A trailing stop sets the stop level a specific distance away from the prevailing market price of a security. It the price of a security rises or drops in a trader’s favour, the stop price automatically follows a trader’s position. If the security price rises or drops against a trader, the stop price will stay in place.  

Transaction

A transaction can mean:

• In accounting, any occurrence or condition that is recorded in a business’s accounting records or books.
• In trading, an agreement between a buyer and a seller to exchange, inter alia, goods, services, assets, or financial instruments.

Transaction costs (TC)

Put simply, transaction costs (TC) are expenses incurred when selling or buying a service, good, or product. In trading financial instruments, transaction costs comprise, among other things, brokers’ commissions and fees, and spreads, which reflect the differences between the price the seller paid for a security and the price the buyer buys at. With regard to financial instruments in South Africa, ASISA (Association for Savings and Investment South Africa) describes TC as follows: ‘TC  is a measure that can be used by investors and advisors to determine the costs in buying and selling the underlying assets of a Financial Product. This is expressed as a percentage of the daily NAV of the Financial Product calculated over a period of three years on an annualised basis.’  

Transaction date

The transaction date is the date on which a trade takes place for a financial instrument, such as a security. It is the date at which ownership officially transfers from a seller to a buyer.  

Trend

A trend is the general direction of a financial market or an asset’s price. Usually, the longer the direction continues, the more reliable the trend becomes. Trends can be:

• Sideways, called a flat trend.
• Upwards, referred to as a bullish trend, identified by higher highs and higher lows.
• Downwards, known as a bearish trend, typified by lower highs and lower lows.

In technical analysis, trends are identified by trendlines or price actions.  

Trend analysis

is a technique utilized in technical analysis, attempting to predict the future price movements of a given security, based on price trends in the past.  

Trend trading

is a trading strategy in which traders make trade decisions based on price trends of securities.  

Trending stock

A trending stock, also called a trending share, refers to a situation in which a company’s stock is experiencing a notable price movement, upwards or downwards, in comparison to its underlying market index.  

Trendline

A trendline is a type of chart pattern, a straight line that connects a series of prices, such a highs or lows. It is one of the basic components in technical analysis, enabling traders to identify support and resistance levels as well as the trends of price movements in the past.  

Trial balance

A trial balance is an accounting report of closing balances in each of a business’s ledger accounts. The ledger balances are categorised into debit balances and credit balances, with asset and expense accounts in the debit category and liabilities, capital, and income accounts in the credit category. The total of the debit column must be equal to that of the credit column. It is a report that is used to prepare the financial statements of a business.  

Triangle

In technical analysis utilized in forex trading, a triangle is a type of chart pattern represented by two converging trendlines as the price of a currency temporarily moves sideways. Typically, it occurs mid-trend and is usually an indication that an existing trend will continue. There are three main types of triangle patterns in forex trading:

• Symmetrical triangle

Is a neutral pattern that does not lean in any specific direction. However, it still supports the direction of an existing trend.

• Ascending triangle

It is a bullish formation, indicating that buyers are more aggressive than sellers, reflecting a price that continues to make higher lows.

• Descending triangle

Contrary to an ascending triangle pattern, it is a bearish formation, signalling that sellers are more aggressive than purchasers, indicating that a price continues to make lower highs.  

Triple bottom

A triple bottom is a bullish reversal pattern used in technical analysis, comprising three reasonably equal and well-spaced lows followed by a breakout above the resistance level - a sign that a price probably will turn around and rises.  

Triple top

A triple top is a chart pattern used in technical analysis to predict a potential reversal in the upward price movement of a currency or underlying asset. Put differently, it is a chart pattern that signals a bearish reversal. It comprises three roughly equal and well-spaced peaks (tops), indicating that the price could not break a major resistance level three times in a row.  

TMA – Triangular Moving Average

The Triangular Moving Average (TMA) is a moving average that twice averages the data points to smooth price data. It uses a simple moving average (SMA) of the price data for a period, followed by another SMA of the data. Double smoothing cuts noise and provides a more precise direction of the trend, and therefore can be beneficial for price trend identification and also entry/exit signals. TMA is more sensitive than simple or exponential moving averages but also lags due to its double smoothing.

TP – Take Profit

Take Profit (TP) is an order left with a broker to automatically close a trade as soon as the price reaches a profit level. It helps traders lock in profits without needing to watch the market all the time. By specifying a TP level, traders are able to have a clear exit strategy and stay away from emotional trading during volatile market conditions. TP is generally paired with stop-loss orders to manage risk and protect gains effectively.   TRIN – Trading Index (commonly referring to the Arms Index) TRIN, or the Trading Index, also referred to as the Arms Index, is a technical stock indicator employed for measuring market breadth by comparing the advancing volume with declining volume stocks. It serves to ascertain if the market is oversold or overbought. A TRIN value of more than 1.0 suggests bearish conditions, or greater selling pressure, while a value of less than 1.0 suggests bullish conditions or greater buying pressure.  

Troy ounce

The troy ounce, dating back to the Middle Ages, is the standard unit used in weighing precious metals, such as gold and silver. A troy ounce equals 31.103 grams, whereas a traditional ounce is the equivalent of 28.349 grams. Therefore, the troy once being heavier than the traditional ounce, is more valuable than the traditional ounce.  

Turnover

, also referred to as gross revenue or income, is the net sales generated by a business during a given period of time. It is an important indication of the efficiency of a business.  

Turnover ratio

In accounting, a turnover ratio indicates the amount of assets or liabilities that are replaced by a business in relation to its sales. It determines the efficiency with which the management of a business uses it assets. Generally, the higher the turnover ratio, the higher the effectiveness of a business’s management. There is a wide variety of turnover ratios, including:

• Inventory turnover ratio: Indicates how many times a business has sold and replaced its inventory during a given time period.
• Accounts receivable turnover ratio: Measures the time it takes to collect an average amount of accounts receivable.
• Fixed asset turnover ratio (FAT): Shows how effectively a business utilizes fixed assets to generate sales.

Two-way price

A two-way price, also referred to as a two-way quote, is a price quoted for a currency pair in which both the bid and offer price are indicated.  

U

Ugly

The term ugly describes unsparing conditions in financial markets that can be volatile with rapid moving prices.  

Unborrowable stock

refers to stock of a company that no one is prepared to lend out to short sellers, implying that the traditional way to short sell the stock becomes impossible.  

Unbundling

Generally, unbundling refers to a process of breaking apart an object into smaller parts. In the business world, unbundling is a process by which a company with various business components maintains its core businesses, while selling off specific components, such as assets, divisions, or subsidiaries.  

Uncovered option

An uncovered option, also referred to as a naked option or ‘being naked’, is a sold (written) option where the seller does not own the underlying security. It is the opposite of a covered option.  

Undercapitalisation

occurs when a business lacks sufficient funding, or capital, to support its normal business operations and pay its accounts payable.  

Underlying asset

An underlying asset is the security, such as a stock, upon which the price of a derivative, such as an option, is based.  

Underpricing

refers to a situation when a company offers its shares at a too low price in an initial public offering (IPO). When a new share trades higher than its initial price at the close of a its first trading day, it is considered to be underpriced.  

Undersubscribed

, also called underbooking, occurs when the initial public offering (IPO) of a company’s shares exceeds the demand for the shares.  

Undervalued

In finances, undervalued refers to a financial security that is selling for a price supposed to be below its true intrinsic value.  

Unemployment rate

Generally, unemployment refers to people who are able to work and who are seeking a job but are unsuccessful in finding a job. Usually, the unemployment of a country is measured by the unemployment rate, dividing the number of unemployed people by the total number of people who are able to work. The unemployment rate is a lagging macroeconomic indicator, indicating the status of a country’s economy.  

Unissued stock

refers to a company’s authorised shares that have never been sold to investors.  

Unlimited liability

refers to the full legal responsibility that business owners and partners accept for all the business debts and liabilities, implying they are liable for all the business debts when the business defaults its debt payments.  

Unlimited risk

A trader is subjected to unlimited risk when there is a possibility for unlimited losses on a trade, implying that at any time a security’s price can move for an unspecified time against a trader’s position. A short trade is a trading strategy that subjects a trader to unlimited risk.  

Unlisted security

are financial instruments, such as ordinary shares, that are not listed and traded on an official exchange. Typically, unlisted securities are issued by smaller or new companies that cannot or do not want to comply with listing requirements of official exchanges.  

Unpaid dividend

An unpaid dividend is a dividend that has been declared by the management of a company but not yet paid.  

Unrealised gain

, also referred to as paper profit, refers to a potential profit, resulting from the increase in the value of an asset that has not yet been sold. An unrealised gain is turned into a realised profit when the asset is sold.  

Unrealised loss

An unrealised loss, also called a paper loss, is a loss in the value of an asset, but not in cash value. Put differently, it is a loss that arises from holding an asset after it has decreased in price but has not yet been sold. An unrealised loss becomes a realised loss when an asset is sold.  

Unsecured debt

refers to debts (loans) that are not secured by collateral, i. e., assets such as a vehicle or a property. Lenders of unsecured loans are subjected to losses when borrowers default.  

Unwind

is a term used to describe the closing out a trading position, specifically when the trade is large or complex.  

Uptick

An uptick, also known as a plus tick, refers to the increase in the price of a security since the preceding trade of the security.  

Uptick rule

In the U.S.A, the uptick rule, also referred to as the plus tick rule, is a rule applied by the Securities and Exchange Commission (SEC) that requires a trader to short a security only at a higher price than the previous transaction of the security.  

Uptick volume

refers to the volume of shares of a specific stock that trades when the share price is rising. It is one of various indicators utilized by traders to make buy and sell decisions.  

Usable margin

In forex trading, usable margin refers to the money in a trader’s trading account that is available to open new trade positions or to protect against losses on open positions. It is also referred to as free margin or available margin.  

USD – United States Dollar

The United States Dollar (USD) is the official currency of the United States and its territories. It is one of the most traded and utilized currencies in the world and often serves as the world's reserve currency.  

Used margin

, also called maintenance margin, indicates the amount of money in a forex trader’s account that is needed as collateral to maintain all open trading positions. Simply put, it is all the margin that is ‘locked up’, implying it is not available to open new positions. Put in other words, used margin is the total sum of all the required margin from all the current open positions.  

Useful life

is an important concept in accounting. The useful life of a depreciable fixed asset refers to its estimated lifespan during which it can be utilized by a business to generate revenues.  

Usury

occurs when a lender lends money to a borrower at an interest rate in excess of the rate permitted by law or at a rate that is considered extremely high.  

V

Valuation

refers to the analytical process used to determine the present (current) value of a business or an asset. Various techniques can be used to do a valuation.  

Valuation analysis

is a process, utilizing different valuation methods, to determine the fair value or intrinsic value of a business, such as a company. Valuation methods utilized are, among others:

• Comparable company analysis, also called peer group analysis.
• Precedent transactions analysis.
• Discounted cash flow (DCF) analysis.

Value

refers to the monetary, material, or assessed worth of a business, an asset, a good sold, or a service rendered. It also describes the worth of a liability or debt obligation acquired. Value is applicable to a variety of concepts, such as shareholder value, fair value of a company, and market value.  

Value date

has different meanings in trading and finance. In finance, the value date, also called the maturity date, refers to a date in the future at which the value of an asset or transaction becomes effective. Put in other words, it is a future date when the value of a fluctuating financial product is determined. In forex trading, the value date, is the date on which a transaction is expected to be settled. For spot transactions, the value date is usually two days after the transaction was agreed upon. In addition, the value date may be referred to as the ‘valuta’.  

Vanilla option

A vanilla option is a type of financial instrument that allows its holder the right, but not the obligation, to either buy or sell the underlying asset at a predefined price within a given period of time. Vanilla options are financial instruments with no special or unique features.  

Variable cost

A variable cost is an expense that changes according to the change in the volume of goods that a business produces. In other words, variable costs rise when production increases, and decreases when production declines. Total production costs comprise variable costs and fixed costs, which do not change, regardless the change in the production volume.  

Variable cost ratio

The variable cost ratio is a tool utilized in cost accounting to indicate the additional costs incurred by a business when production is increased. The variable cost ratio is an important factor to ascertain the overall profitability of a business. The formula to determine the variable cost ratio is: Variable cost ratio = Variable costs/Net sales. The ratio is expressed as a percentage.  

Variable interest rate

A variable interest rate fluctuates over the time period of a loan because it is typically based on a reference interest rate. In South Africa, the variable interest rate, at which banks lend money to borrowers, is based on the repo rate of the South African Reserve Bank (SARB). The repo rate is the interest rate at which the SARB is willing to provide credit to the banks. The variable interest rate is also referred to as the floating interest rate or adjustable interest rate.  

Vega

is one of the risk measures, referred to as the Greeks. Vega measures an option’s price sensitivity relative to its underlying asset’s volatility.

Venture capital

, also known as risk capital, is a type of financing, provided by investors (venture capitalists) to small and startup businesses with long-term growth potential. The venture capital can be in the form of equity capital or loan capital.  

Vertical spread

A vertical spread is a strategy in options trading that involves the simultaneous trading of two options of the same type with the same expiration dates, but at different strike prices.  

Volatility

Regarding financial markets, volatility refers to the rate at which the price of a security fluctuates over a given period of time. If a security’s price moves up and down rapidly with in a short period of time, it is considered extremely volatile. A security has low volatility when its price moves slower over a longer period of time.  

Volume

is a measure of quantity. In the trading of financial instruments, volume refers to the amount of a specific security traded during a given time frame, such as a trading day. Volume is a key indicator of market liquidity and activity. A high volume represents active trading and higher liquidity and vice versa. Volume is also called volume of trade or trade volume and is applicable to stocks (shares), bonds, commodities, and derivative contracts, such as options and forwards.

Volume-weighted average price (VWAP)

is a tool used in technical analysis that indicates the ratio of a security’s price in relation to its total trade volume during a trading day. In other words, it is a measure of the average price at which a security is traded over a certain time period, based on both volume and price.  

Voting shares

, also called voting stock, are ordinary shares of a company that give a shareholder, among other rights:

• The right to vote on company matters during an annual general meeting (AGM).
• The right to vote on matters with regard to company policymaking.
• In co-operation with co-shareholders, the right to vote on who should be part of the company’s board of directors.
• To accept or reject a major company action, such as a merger or acquisition.

VPT – Volume Price Trend

The Volume Price Trend (VPT) refers to the technical indicators that show the relation between the price movement and trading volume concerning changes over time. In addition, the VPT tells the intensity of the price trend using a cumulative volume-weighted price flow. This is evident with a rising VPT line, which indicates buying pressure, and a declining VPT, indicating selling pressure.  

VWAP – Volume Weighted Average Price

The VWAP stands for Volume Weighted Average Price and is one of the technical indicators that measure the average price of a security in trading over a certain time period based on both volume and price. The way VWAP gets calculated is by summing every change in dollar values (prices multiplied by volumes) to the total traded volume.  

W

Wasting asset

A wasting asset describes an asset that decreases in value over time. The concept is applicable to, inter alia:

• Fixed assets like vehicles and machinery. This decrease is recorded in the accounting records of a business as depreciation expenses.
• Natural resources, such as minerals, coal mines, and oil wells, decline in value as they are depleted over time. Depletion is the accrual accounting method used to reflect this decline in value in the accounting records.
• Options contracts of all types because their value fall to zero at expiration.

Weak longs

are traders who hold a long position in a security or currency and are quick to exit that position at the first sign of weakness in the market. Generally, weak longs are short-term traders rather than long-term investors. Some of the characteristics of weak longs are:

• Reluctant to hold their long positions through all types of fluctuations.
• Looking for profits in the short-term.
• Unwilling to incur much loss.
• Will quickly close their positions in unfavourable trading situations and look for other, more favourable, trading opportunities.

Weak shorts

are a description of traders who hold a short position in a currency or financial asset, such as a stock, who will exit the position the moment the price starts rising. Typically, weak shorts have limited financial resources, preventing them from taking on too much risk on a single short position. Therefore, they will generally have tight stop-loss orders, instructing their brokers to close their short positions in order to cap their losses on their short trades.  

Wedge chart pattern

The wedge chart pattern is used in technical analysis to indicate potential price reversals of, for example, currency prices. The wedge pattern has three common characteristics:

• Two converging trend lines, connecting the respective highs and lows of a price series, converging towards each other, and moving in the same direction.

The upper trend line operates as resistance level, while the lower trend line acts as support level.

• Decreasing volume as the price progresses through the pattern.
• A breakout from one of the trend lines.

Depending on its direction, a wedge pattern may be regarded as:

• A rising wedge, reflecting a bullish price trend.
• A falling wedge, indicating a bearish price movement.

Weekend trading

enables traders to access and trade certain financial markets, such as cryptocurrency markets, and indices on Saturdays and Sundays.  

Weekly chart

A weekly chart is a type of chart that displays high, low, open, and close prices of a financial instrument for the entire week, smoothing out the daily price fluctuations. Typically, weekly charts are utilized for long-term trading.  

Weighted alpha

is a method to measure the performance of a security, such as a stock, over a period of time, usually a year. Greater emphasis (weight) is placed on recent price movements. A positive weighted alpha indicates that a stock has increased in value over the year, while a negative weighted alpha reflects the contrary. When compared with a specific benchmark, a positive weighted alpha indicates that the particular security produced a return more desirable than the benchmark, while a negative result shows the opposite. A weighted alpha of one to zero means that the security had generated returns on par with the benchmark.  

Weighted average

A weighted average is based on the principle that certain numbers in a data set are more important (carry more weight) than others. This is contrary to a simple average in which all numbers in a data set are of identical importance (weight). Steps to calculate the weighted average of a set of data (numbers):

1. Determine the weight of each data point (number).
2. Multiply the weight by each value (number).
3. Add the results of step two together.

Weighted average cost of capital (WACC)

is a calculation of a business’s cost of capital in which each type of capital is weighted by its percentage of the total capital and then added together. Sources of capital included in the WACC are ordinary shares, preference shares, bonds, and other long-term debts.  

When issued (WI)

is a term that describes a conditional transaction in which a security has been authorised but not yet issued. Securities that are traded on a when-issued basis are, inter alia, new issues of stocks, bonds, and treasury securities.  

Whipsaw

is an occurrence in a volatile financial market when the sharp price movement of a security will suddenly switch direction. A whipsaw can occur during an upward or downward price movement. A trader is said to be ‘whipsawed’ when the price of a security suddenly moves in the opposite direction of a trade that he or she has placed.  

Wholly owned subsidiary

A wholly owned subsidiary is a company whose ordinary shares are 100% owned by another company, the parent company, also sometimes called the holding company.  

Will

A will is a written legal document by which an individual (the testator or testatrix) indicates how his or her estate are to be treated and distributed upon death.  

Winding up

is a process that takes place when a business or partnership is dissolved. It is a time when an entity ceases to operate as usual and usually a process that follows bankruptcy. The main purpose of winding up is to settle debt with creditors, sell off stock to stockholders, and distribute the remaining assets to shareholders and partners.  

Win/Loss ratio

The win/loss ratio, also referred to as the success ratio, indicates the number of winning (money-making) trades of a trader relative to the number of his or her losing trades. The calculation of the ratio is: Win/loss ratio = Winning trades/Losing trades. A win/loss ratio above 1.0 is usually satisfactory.  

WMA – Weighted Moving Average

The Weighted Moving Average (WMA) is one moving average that gives greater importance to more recent data points, hence it will respond more keenly to price changes as compared to the Simple Moving Average (SMA). Contrary to SMA, which considers all the data points of the time period with equal weight, WMA uses a weighting factor that diminishes for older data; therefore, trends and momentum shifts can be captured much better by traders.  

Working capital

, also known as net working capital (NWC), is the difference between a company’s current assets and its current liabilities. It is a measure of a company’s liquidity, calculating whether a company has enough liquid assets to settle its short-term debts within a year.  

Working capital turnover ratio

The working capital turnover ratio, also called net sales to working capital, indicates how effectively a business utilizes its working capital to produce sales. The ratio is calculated as follows: Working capital turnover ratio = Net sales for a given financial year/Average working capital. Where, net sales = sales minus refunds and discounts, and average working capital = working capital at the beginning of the year plus working capital at year-end divided by 2. For instance, a working capital ratio of three would indicate that a business is generating three times its sales revenue per one South African rand of working capital.  

Working order

A working order, also referred to as a pending order, is a general term for either a limit order or stop order to open. Basically, they are orders for a broker to execute a trade when an asset or security reaches a specific price.  

World Bank

The World Bank is an international organisation dedicated to help emerging market countries through financing, financial advice, and research. Its main purpose is to reduce poverty. The World Bank was founded under the Bretton Woods Agreement in 1944. At present, the 189 members of the Bank share ownership. The U.S.A has a controlling voting interest.  

World Economic Forum (WEF)

The World Economic Forum (WEF) is an international organisation with the aim to discuss major issues regarding the world political economy. Issues covered are, inter alia, economics, politics, social, and environmental concerns. The WEF, headquartered in Geneva, Switzerland, was founded in 1971. Its annual meeting takes place in Davos, Switzerland.  

World Trade Organisation (WTO)

was founded in 1995. It is an international institution that supervises the global trade rules among countries.  

Write down

In accounting, write down refers to a transaction in which the value of an asset is reduced to its fair market value (FMV). Put differently, the value of the asset is adjusted because its FMV is less than its carrying value as reflected in the business’s accounting records. The particular asset account on the balance sheet will be credited with the reduced amount, while an impairment loss will be debited on the income statement. A write down is the opposite of a write up.  

Writing naked

is a strategy utilized by option writers (option sellers) that enables them to sell options without actually owning the underlying security. It is a type of strategy that could generate significant profits for the option seller if the security moves in a favourable direction. However, it remains a risky strategy because huge losses could be incurred if a security moves in an unfavourable direction.  

Write off

A write off is an accounting process in which an asset or liability is removed from the accounting records and financial statements of a business. Reasons for a write off, are, among others:

• The comprehension that an asset no longer can be liquidated, has no further use to the business, or has no market value.
• An account receivable cannot be collected because the customer is not able to pay the debt owed to the business.
• Inventory is outdated or losses on inventory.

Write up

A write up is a method used in accounting to increase the book carrying value of an asset to bring it in line with its market value.  

Writer

In options trading, a writer, also referred to as a grantor, is a seller of an option who opens a position in return for a premium to be collected from a buyer.  

Writing an option

refers to the process in the trading of options contracts in which a trader sells an option to a buyer for a fee (premium). The buyer receives the right to buy or sell the underlying security at a certain price and predetermined date. The writer (seller) is obliged to adhere to the conditions of the contract when the buyer (holder) exercises his or her rights according to the option contract.  

X

XAG – Silver

XAG is the currency code for silver in the precious metals market, which is equivalent to one troy ounce of silver and generally referred to nowadays in trading, investment, and forex. XAG silver is an expensive commodity that finds widespread industrial application, including electronics, jewelry, and medicine.

XAU – Gold

XAU is the internationally recognized symbol for one troy ounce of gold, commonly used in financial markets to represent the value of gold in trading and investment.

XPD – Palladium

XPD, the symbol for palladium in the periodic table, is a rare and valuable precious metal primarily used in the automotive industry for catalytic converters, which help reduce harmful emissions.

XPT – Platinum

XPT, or Platinum, is a precious metal traded on financial markets with the symbol XPT. It is a rare and valuable metal used in various industries, including automotive, jewelry, and electronics.  

Y

Yard

is a term used in the financial world, indicating one billion units of something, such as U.S. dollars. In the U.S.A., a billion refers to one thousand million - the number one followed by nine zeros, which is written out as 1 000 000 000. It is a term used in transactions to avoid confusion with similar sounding words such as million or trillion. Although the term billion is also used for one thousand million in Great Britain, European countries and many other countries use the term billion to refer to a million million - 1 000 000 000 000. In these countries the term milliard is used to describe one thousand million.  

Year end

In accounting, year end, also referred to as an accounting reference date or fiscal year end, refers to the completion of an accounting period. A business’s accounting or fiscal year may differ from the calendar year, closing, for instance, on 28/29 February, 31 March, or 30 June.   At year end, a business carries out certain procedures to close their accounting records and prepare its financial statements for a financial year.  

Year end dividend

A year end dividend is a final dividend declared by the board of directors of a company after the company’s financial statements have been finalised. Typically, the amount of a final dividend is officially announced to the public on a company’s annual general meeting (AGM).  

Year-Over-Year (YOY)

is a method to compare the performance of an item, such as a financial instrument, on a year-over-year basis to determine whether the instrument has performed as expected. The YOY growth rate calculates the percentage change of a given subject during the past twelve months. It is an effective way to evaluate the growth of a particular subject, such as sales of a business.  

Year to date (YTD)

refers to the period from the first day of the calendar year or fiscal year up to a certain date before the end of the particular year.  

Yield

The term yield indicates the earnings generated and realised on an investment over a certain time period, expressed as a percentage, based on the amount invested, current market value, or face value of the investment.  

Yield-based option

A yield-based option is a type of option that gets its value from the difference between the strike price, expressed as a percentage, and the yield on the underlying debt instrument.  

Yield curve

A yield curve is a line that plots the yields (interest rates) of similar credit-quality bonds against their different maturity dates, ranging from shortest to longest.  

Yield to call (YTC)

represents the return a bondholder would receive if the bond is held until its call date, prior to its date of maturity. YTC is applicable to callable bonds.  

Yield to maturity (YTM)

, also called redemption yield or book yield, is the total return expected on a bond if the bond is held until its maturity date. Although considered a long-term bond yield, YTM is expressed as an annual rate.  

Z

ZAR – South African Rand

The South African Rand (ZAR) is the official currency of South Africa and is also used in the Common Monetary Area (CMA), which includes Lesotho, Eswatini, and Namibia.  

Zero downtick

, also called zero minus tick, occurs when a security is traded at the same price as the trade prior to it but lower than the last trade at a different price. For instance, the shares of company WSO start to trade at R50 per share. In a second trade the share price drops to R48 and remains at R48 in the third trade. The third price would be called a zero downtick.  

Zero spread accounts

are trading accounts with no difference between the bid and ask price. They are accounts provided by brokers to traders, enabling them to know ahead of time what their entry and exit levels will be when they open trading positions.    

Zero uptick

, also referred to as zero plus tick, refers to a situation in which a security is traded at the same price as the previous trade but at a higher price than the last trade at a different price. For example, if in a succession of transactions, the shares of company ANH trade at R100, R105 and at R105 again, the latter price of R105 would be considered a zero uptick or zero plus tick.

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