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


The second phase of a bear market, when buyers thin out and sellers become more urgent. The downtrend of prices suddenly accelerates into an almost vertical drop, while volume rises to climactic proportions.

Paper profits

The difference between the purchase price of a share and its current market price. Another term for this is "market appreciation". There is a potential danger in this figure, because it may not be possible to sell the shares at their market price.

Par value

The price for which a share was first sold to the public. Normally, the market price quickly exceeds the par value as the company grows and makes profits. The objective of the par value is to enable the "asset base" of the company to be clearly established at its inception so that no illegal erosion of that base can take place.

Partly paid

Bonds or equities on which the holder has paid only part of the face value at the time of issue and is due to pay the balance in one or more installments, usually but not always at set dates and in set amounts.

Passing a dividend

Failure of a company to declare a dividend.


The breaking of a boundary line, trendline, or support and resistance level


A continuation chart pattern that is similar to the flag, except that it is more horizontal and resembles a small symmetrical triangle. Like the flag, the pennant usually lasts from one to three weeks and is typically followed by a resumption of the prior trend.

Penny stock

Shares, which trade for, low prices per share. They may be shares of a very good company, however, they are usually not. They are attractive to private investors who do not have enough capital to purchase more expensive shares.

Percentage of profit to shareholders' funds

After-tax profit of a company expressed as a percentage of the total shareholders' funds


Pip stands for percentage in point, the smallest increment by which a Forex cross price changes. Most currency pairs are quoted to four decimal places, meaning that a movement from 1.1850 to 1.1851 for a currency pair would constitute one pip. For a particular position, you can calculate the value of a single pip using the above formula. For instance, you know that the EUR/USD is quoted with four decimals, so for a given position you can multiply the position amount by the value of one pip, or USD 0.0001. So, on a EUR/USD 100,000 contract, one pip would equal USD 10. On a USD/JPY 100,000 contract, one pip is equal to JPY 1000 because USD/JPY is quoted with only two decimals (meaning one pip = JPY 0.01).

Point and figure charting

A type of chart consisting of columns of X's (showing rising prices) and O's (showing falling prices) arranged on a square grid. When the index increases, a rising column of black X's is created -- a rally. When the index falls, a descending column of red O's appears -- a decline.

Political risk

Risk which is political, rather than economic, financial or managerial. This kind of risk is very difficult to determine and can cause tremendous fluctuations in the market.


An investment portfolio is the total range of financial instruments owned, such as company shares, fixed interest securities or money-market instruments. An investment portfolio should have a range of relatively unrelated, or uncorrelated, investments in order to minimise risk-brokers and investment advisers warn against 'putting all your eggs in one basket'.

Portfolio Manager

This is someone who manages portfolios on behalf of investors. He makes the investment decisions and is not usually obliged to get his clients' permission to change their investments. He is paid a fee and sometimes a percentage of any profit he makes, and is not liable for any losses sustained by his clients.

Portfolio Structure

The percentage breakdown of a portfolio over the various market sectors.


An investment in an instrument. For example, when you trade (say, buy) USDJPY, you open a USDJPY position. When you then execute the opposite trade (in this case, sell) USDJPY, you close the position. Position can also refer to a trader's cash/securities/currencies balance, whether he or she is short of cash, has money to lend, is overbought or oversold in a currency, etc.

Position trading

A style of trading characterized by holding open positions for an extended period of time.

Posting date

A style of trading characterized by holding open positions for an extended period of time.

Posting date

The date a transaction is posted as a credit or debit in your account.

Pre-listing statement

Statement giving full initial information on the affairs of a company seeking a listing on a stock exchange.

Preference shares

Shares bearing a fixed annual rate of dividend with a prior right over all ordinary shares in the distribution of dividends from annual profits; and a prior claim to repayment of capital on a winding-up of the company. Unless such shares are specifically defined as non-cumulative the company is liable for any arrears of preference dividends.


In Forex options, the premium is used in two different contexts. The premium can be the: • total price of the Option, or the • amount by which the price of the Option exceeds its intrinsic value, also known as the Option's time value When you buy an Option, you pay a premium up front, which entitles you to profit from a price change in the underlying asset. The premium amount depends on the size of the potential profit. When you buy an Option, your potential loss is limited to the premium, but you have an unlimited profit potential.

Price earnings ratio (PE or P/E)

The market price of a share divided by its earnings. It expresses the number of years' earnings (at the current rate) which a buyer is prepared to pay for a share. If the earnings per share are 10 cents and the price 100 cents, then the price earnings ratio is 10:1. The ratio is, in fact, the reciprocal of the earnings yield. This ratio is also referred to as the PE ratio, the P/E ratio and the multiple.

Price lists

Lists of all buyers, sellers and sales prices issued by the Stock exchange at specific times during the day. These constitute the official records of prices.

Price range

The difference between the highest and lowest prices at which a particular share has traded over a certain time period - such as one trading day, or one year. The range is a good indication of the volatility of the share.

Primary market

The market for shares when they are first sold by a company to raise capital. New issues and rights issues are examples of activity on the primary market. Once the company has sold the shares, they enter the secondary market and are sold and bought by members of the public without in any way changing the capital structure of the company.

Primary order

The primary order of a three-way or If Done contingent order. Related (secondary) orders will not become active market orders unless this order is executed.

Primary trend

See Major trend.

Private placing

Shares in a new issue placed by private arrangement with clients by the sponsoring Broker and the merchant bank concerned with the issue. (The sponsoring broker must make available to other Broking firms 30 percent of his allocation of shares.)

Producing mine

One that has passed the development stages and is producing and treating ore.

Profit taking

Closing a position to take profits. Typically done using a limit order to close a position and take profits automatically when the market breaches a defined level.

Progressive stop

A stop order which follows the market up or down.


Any document, notice, circular, advertisement or other invitation offering to the public for subscription or purchase of any shares or debentures in a company. The prospectus must contain certain information as specified by law. A prospectus must also be issued in the case of a rights issue.

Protective stop

A stop order used to protect gains or limit losses in an existing position.


An item on the balance sheet that falls under liabilities. A provision is "raised" when the company has an expense for which it has not yet received an invoice and therefore does not know the amount. The provision is an estimate, which is charged against profits because the expense was incurred in the accounting period, which is being reported


A document, which entitles one person to attend shareholders' meetings, speak and vote on behalf of another person who is a shareholder of the company.

Proxy Voting

Acting or speaking for an absent shareholder on issues surrounding the management of the company at shareholders' meetings.

Public company

Limited liability company, which is not a private company.

Public offer

Offer made by a company to the public to subscribe to its issue of shares. The offer must be made by way of a prospectus to which a form of application is attached.


Return of prices to the trendline after a breakout.

Purchases on margin

Shares bought but not fully paid in cash, with the purchaser making use of the credit facilities offered by some brokers.

Put option

You can buy or sell a put Option. If you buy a put Option, you have the right, but not the obligation, to sell the underlying instrument at the agreed strike price on the agreed expiry date (European Option). If you sell a put Option, you have the obligation to buy the underlying instrument at the agreed strike price on the agreed expiry date (European Option).

Pyramid company

Company where the major asset consists of the legal control. (I.e. 50% of the issued shares) of a company already listed.