Our comprehensive glossary explains many of the terms commonly used in the international markets.

Bad Debts

This is a debt, which cannot be recovered - thus forcing the company to write it off against profits. Most companies make provision for bad debts, a figure which is adjusted annually. When the economy is in recession, such provisions will tend to be higher, especially among banks. A provision for bad debts is a current liability.

Balance Of Payments

The combined net position on the capital and current accounts of the country. The current account indicates whether South Africa is spending more foreign currency on imports than it is receiving for its exports, while the capital account shows how much money foreigners are investing in South Africa.

Balance Of Trade

This forms part of the balance of payments calculation, but refers only to the difference between the value of exports offset against imports. While balance of trade will reflect the level of physical imports relative to exports, the balance of payments reflects non-physical flows such as capital and dividends to and from abroad, debt repayment and receipts, interest payments and receipts (the so-called invisible items).

Balance Sheet

A list of all balances taken from a company's ledger after incomes and expenses have been offset to arrive at a profit or loss. These balances are combined in carefully prescribed ways. The objective of the balance sheet is to give a snapshot of the company at a precise moment in time. This shows where the company obtained its money (liabilities) and how it has allocated that money (assets) so as to generate profits. Obviously, the sources of money must be totally accounted for in assets of one sort or another and therefore the "two sides" of the balance sheet must always balance.


A graphical representation of an instrument's movement that usually contains the open, high, low and closing prices for a set period of time.

Bar Chart

A popular way to display and analyze financial price information in graphical form. The horizontal axis of a bar chart represents the passage of time with the most recent time periods on the right side while the vertical axis represents the stock's price.

Bar HLC technical study

A chart style that shows the highest, lowest and closing prices for each chart period.

Bar OHLC technical study

A chart style that shows the opening, highest, lowest and close prices for each chart period.

Base currency

In forex, this is the currency that the investor buys or sells. For example, in EURUSD the base currency is EUR, that means one unit of EUR is worth a variable amount of USD. When you buy EUR, you pay with USD, and when you sell EUR you receive USD. The other currency (USD in this example) is called the Variable currency.

Basic charge

A fee determined by a broker for shares bought or sold on the same day. This is additional to brokerage charges on the purchase and sale of shares, where such basic charge is levied by the member firm concerned.


A trader who believes that prices will fall. A bearish market is one in which prices are falling, whereas a bear market is when prices have fallen by 20% or more over a sustained period.

Bear market

A long period of time when prices in the market are generally declining. Bear markets generally consist of three phases. Distribution, panic and discouraged distressed selling (where owners of instruments become discouraged by the long down turn and therefore sell).

Bear sales

Selling shares you do not possess in the expectation of being able to buy them at a lower price before they are due for delivery. Theoretically, the potential loss is limitless since the share price can rise to any level.

Bear trap

A situation that occurs when prices break below a significant level and generate a sell signal, but then reverse course and negate the sell signal, thus 'trapping' the bears that acted on the signal with losses. A bear trap is another form of whipsaw (A condition where a share's price heads in one direction, but then is followed quickly by a movement in the opposite direction).

Bear trend

A long downward trend in a share's price, a sector's index the all-market index or other indicator.

Beneficial owner

Legal owner of stocks and shares and accompanying rights and dividends even though the shares are not necessarily registered in his name. These shares may also be held in a nominee. Beneficial ownership passes at the time of purchase.

Benefit distribution

A distribution made by companies to holders of the securities in the form of cash or securities, usually in proportion to their holding.

Bid price

The price at which you can sell a specified instrument. For forex trading, this is the price at which you can sell the trade / base currency (quoted first) by buying the price currency of the pair. That is, if you sell USDJPY, you are selling 100 000 US dollars and buying Japanese yen.

Bid/Offer spread

This is the difference between the prices at which market makers will buy and sell shares. For example, the market maker may offer to sell share X at USD90 and bid (to buy) the same share at USD89. For smaller companies the percentage difference between the bid and the offer price will be greater than for larger companies.

Black Scholes model

A formula that examines the price variation of financial instruments over time. It is often used to determine the price levels of European call Options. The formula takes into consideration the factors influencing the price of a call Option, including the price of the underlying asset, the exercise price of the Option, the interest rate and the time until the Option's expiry.


A large amount of stock sold as a single unit. This term is most often used to describe a unit of 1000 shares or more.


Sharp market turns accompanied by extraordinary volume which signals the final wave of the trend, followed by a reversal or period of stagnation.

Blue chip

A very safe share that has a history of sound management and steady dividends. Investors buy these shares for security rather than quick capital gains.

Bonus issue

A term synonymous with scrip issue and capitalisation issue which describes shares given without charge to existing shareholders in proportion to the shares already held.

Book value

This is the value at which an asset appears in the books, or accounts, of a company. Very often, book values are higher or lower than the real values of the assets, and can be misleading when considering the balance sheet. A good example of this is where a company buys land and records it in its books at cost. Over the years, the land becomes much more valuable, but no adjustment is made to the book value.


This describes a stage in the business cycle when economic activity is increasing.


This is a term used by share market analysts to refer to a company's long-term indebtedness. It excludes those current liabilities, but which arise as the result of normal business practice.


The lowest point in a share's price cycle.


Edges of a pattern.


A European term, for a stock market. For example, the Paris Bourse, or the Frankfurt Bourse.


When the price of an instrument trades through a specific level. For example, if the execution price for a limit order to buy a share is set at 100, and the price jumps from 105 to 95, the 100 price level has been breached, the order will become a market order and be filled as soon as possible.


A term used by accountants to indicate that a company has reached the point where it is not making a loss or a profit.

Break-Up Value

Assessment of the remaining assets of a company on winding up after all liabilities have been paid. Such assets are available for distribution to shareholders of the company.

Breakaway gap

Price gap that forms on the completion of an important price pattern. A breakaway gap usually signals the beginning of an important price move.


When a price of a security emerges from a previous trading pattern. The new price 'breaks out' above the high (or below the low) trading pattern lines. Breakouts are used by technical analysts to predict substantial upside or downside movement.

Bridging finance

This is a loan obtained by a company to tide it over a short temporary cash flow problem.


Commission charged by a broker for the purchase or sale of shares.


Person who buys shares in the expectation that the market will rise and he will be able to sell them at a higher price.

Bull market

A period of time when prices in the market are generally increasing.

Bull trap

A situation that occurs when prices break above a significant level and generate a buy signal, but suddenly reverse course and negate the buy signal, thus 'trapping' the bulls that acted on the signal with losses..

Bull trend

A long period of consistently rising share prices, or index levels. Usually such trends last from 2 to 4 years.


Any precious metal (most commonly gold) which has not been processed into jewelry, coins, or used for any other manufacture. It is normally kept in bars known as ingots.

Business cycle

The overall upward - (peak) - downward - (trough) pattern that is followed by business activity. There are a number of theories about the causes of these cycles, but no real explanation for this. The share market tends to anticipate major changes in the direction of the cycle by about 6 months. The cycle normally lasts about 3 to 5 years.

Business day

A day on which the relevant Market is open for business. This would exclude Saturdays, Sundays or any holiday on which the particular market is closed. It is also known as market day.

Buy offer

A limit order to buy at the current Offer (Ask) Price.

Buyer's price

Price indicated by a buyer at which he is prepared to purchase shares.

Buying pressure

A high demand for a particular share or class of shares which exceeds the supply and so causes the price to rise.