The quoted offer at which someone can Buy. Also called the Offer Price

A unit of percentage measure equal to 0.01% i.e 10BPs = 10 x 0.01% = 0.1% or 1/10th of a percent

Someone who believes that prices in a market are going to decline. In a bear market the bears are in a majority and so the market prices fall.

A bear market characterised by declining prices. When significant numbers of traders sell their stock in order to avoid excessive losses, or speculate on stock which is dropping in value, the market shows a trend of declining confidence. This is referred to a bear market. The opposite pattern of investor behaviour occurs in a bull market.

Someone who believes that prices in a market are going to rise. In a bulThe quoted price at which an investor can Sell a stock, index or commodity market the bulls are in a majority and so the market prices rise.

Prices of financial instruments are quoted in pairs known as the bid and the offer. The bid or "sell" price is quoted first and the offer or "buy" price is quoted second. The spread is the difference between bid and the offer. If you were viewing the price of Vodafone for example it would look like this: Vod 1.25 / 1.55. You would sell at 1.25 if you thought that Vodafone will fall in value, or you would buy at 1.55 if you thought that Vodafone will rise in value.

The term 'binary' refers to the fact that there are always two clear options or outcomes in a binary trade " yes or no, win or lose " the payoff is all or nothing. When you place a trade on a binary option, you have two factors to consider: one is the strike price, which is Global Trader's predicted closing price upon expiry of the option, the other is Global Trader's spread which is always within a range of 1-100 and sets the odds of the trade. You will place your trade according to whether you believe that the closing price of the option will be above or below the quoted strike price. If your prediction is correct, you will be paid out according to the odds of your trade. If your prediction is wrong, you will be paid nothing. This procedure allows you to determine up front exactly how much you will win or lose. Thus, as long as you calculate how much you can afford to lose when you open your trade, your risk is limited to a pre-determined loss. The best way of understanding how binary options work is to study an example of a binary trade.

Bonds are a debt instrument. Simply speaking, if an institution (e.g. corporation or government) wishes to borrow large sums of money, it can choose to approach an investor for a loan, and offer a promissory note to repay the loan plus interest at the end of a fixed period (usually more than one year) and according to fixed terms. This approach and offer takes the form of making bonds available for sale. When the investor buys a bond, he or she becomes the creditor of that institution. Purchasing bonds is considered to be a safe income producing investment because there is guaranteed interest attached to the transaction.

An instruction to buy or sell a product when it reaches a price that is better than that prevailing, at the time of the placing the order. It can be used to open a new position, where you anticipate a more favourable market price (buy or sell). It can also be used to close an existing open position, when the price reaches a certain level.

Someone who believes that prices in a market are going to rise. In a bull market the bulls are in a majority and so the market prices rise.

A bull market is a confident market with rising prices. Investors tend to run with the herd. If we are confident that market prices are going to rise, we all buy stock now in the expectation that we will soon be able sell at a profit. This is referred to as a bull market. And if we are putting our money down in droves, this behaviour is described as a bull run. The opposite pattern of behaviour is referred to as a bear market.

When trading in cash instruments, this term means exactly what it says. Its meaning is similar but not necessarily the same in the context of derivatives trading. For instance, if you open a position with the intention of speculating on a possible rise in the value of the stock, you will 'buy' or place your trade on the offer price (also referred to as going long). If however, you wish to speculate on the possible drop in the value of the stock, you will 'buy' or place your trade at the bid price (also referred to as going short). You also 'buy' to close out an existing 'sell' position.

This is the current actual market price of an asset - the price you would pay for immediate delivery. The cash price of an asset is determined directly by the demand in the market. Unlike derivatives instruments whose quoted value may include the broker's commission or other fees, the cash price of an asset is always its most current market value. When you trade in cash instruments, you have to pay the full amount in cash when you purchase an asset, and you take immediate ownership. The term 'cash price' is often used for stock indices, whereas the term 'spot price' is used when talking about forex or commodity prices. The terms mean exactly the same.

A CFD is a Contract for Difference. It is an agreement between two parties to settle (generally in cash) the difference between the buying and selling price of the CFD. While CFDs imitate traditional share trading, they differ because they are a derivative product - you don't actually own the underlying asset. This means that you can trade on the price movements on an asset without having to physically take ownership of it. For example, you can enter into a contract where you 'buy' a CFD on 200 shares of IBM, without having to buy the actual 200 shares on an exchange, and still benefit from the same economic outcome. When you take ownership of a CFD, you will receive the full economic benefits of share ownership, i.e. price appreciation and dividend yield. The only exception is that you are not entitled to voting rights associated with share ownership. Your obligations under the CFD contract are to meet the margin requirements and financing costs. Unlike a home mortgage agreement where you make monthly payments, with CFDs the financing costs must be settled daily (because the value of shares is so much more volatile than the value of a home). CFDs also differ from traditional share trading in that they are a leveraged product, which means that you only need to fund a percentage of your position - much like putting down a deposit for a home loan. This percentage is referred to as the margin. Your broker provides the balance of the finance and will charge you financing costs on that loan.

This term refers to tracking price movements on graphs or charts so that you can see at a glance how the markets are moving. It is a tool that helps you to analyse and anticipate the direction of a market.

This refers to the action that is taken when you conclude your trading transaction. It is also referred to as liquidating your position. In other words, once you have sold your asset or settled your contract and you have realised your profit or our loss (your margin has been returned to you plus your profit or minus your loss) the position is then said to be closed. A partially closed position will occur if you execute an opposite trade of a lesser amount than the previous open position.

This is the name used for physical products that have universal prices, such as gold, copper, iron ore, crude oil, rice, maize, sugar, etc. Commodities are always basic resources which have not had value added to them. Unlike a value-added product such as a mobile phone which comes in many levels of quality and design, the price of a commodity is determined by global supply and demand. Well-established commodities are actively traded on the spot markets and derivative markets. Producers of commodities are dependent on the market prices for the revenues they receive in exchange for their products.

These are the two currencies that comprise a forex rate, which is the amount that the first currency in the pair is worth, expressed in terms of the second currency. For example, if the value of the US dollar (USD) against the South African rand (ZAR) is quoted as USD/ZAR 7.5000, this means that one US dollar is exchanged for R7.50. If the rate changes to 7.5001 it means that the dollar is getting stronger and the rand is getting weaker. If it changes to 7.4999 it means that the dollar is getting weaker and the rand is getting stronger.

Daily contracts automatically expire at the end of the trading day, so they are suited to someone looking for a price movement in a market within that timeframe.

A derivative is a financial instrument whose value is derived from the underlying asset. It is a contract or an agreement between two parties to engage in a financial transaction that derives its value from an underlying asset, but you don't actually take ownership of the asset. For instance, you might speculate on the movement of the underlying price of AngloGold shares, without needing to buy or sell the actual shares. Derivatives are available on a wide range of assets, such as commodities, equities, loans, bonds and indices. Trading in derivatives is most often done for speculation or for hedging. Most derivative instruments have an expiry date and, generally, you would speculate on what you anticipate the price of the instrument to be by the time it expires. Derivatives are also leveraged instruments, which means which means that you only need to fund a percentage of your position - much like putting down a deposit for a home loan. This percentage is referred to as the margin. Your broker provides the balance of the finance and will charge you financing costs on that loan.

A dividend is the portion of a company's profits that is paid out to its shareholders. Dividends are usually declared regularly, two or three times a year. If you trade in equities and thus own shares in a company, you will be eligible for the dividend portion on your shares. This also applies to trade in derivative CFDs which are based on underlying equities. In some cases shares are traded ex-dividend, which means that the right to receive the dividend is retained by the seller.

In finance, an equity is another name for a stock or share and equity trading is the buying and selling of company shares. When you buy shares in a company, you are known as a shareholder, and you may receive dividends, if a dividend is declared by the company's board of directors. Equity trading is suited to medium- to long-term investments. The attraction of owning shares in the long term is that the dividends may provide regular additional income in the medium term. Equities are a cash instrument, which means that when you trade in equities you take full ownership of your shares in exchange for paying for their full value. The transaction works like any other exchange of goods for their cash value. For example, if you trade 1,000 shares in ABC Company, that are valued at R1.20 per share, you will have to pay the full amount of R12,000 to take ownership of your share.

This is the name given to the licensed trading entity where financial instruments such as equities, commodities, bonds and indices are traded. It functions much like a conventional market place, but offers the added value of ensuring that trading is regulated and complies with all financial requirements. Assets that are traded on an exchange have to be registered or listed on that exchange, subject to certain requirements on matters such as corporate governance, obligations to investors, public disclosure, etc. Another responsibility of an exchange is to publish price information for any assets trading on that exchange. Exchanges provide companies and other groups (such as governments) a facility from which they can sell their securities to investors. Traditionally trading on an exchange takes place on the trade floor of the exchange premises, but in the new era of information technology, the trader is more likely to conduct his business from an electronic platform on his computer. With applications such as the platforms provided by Global Trader, you can enjoy your own personal link to an exchange via your own desktop screen.

The date on which a contract will expire, and after which can no longer be traded.

The official price at which the trade expires on the expiry date, commonly referred to as the “Make-up” or “Settlement Price”.

The date and time at which a position will automatically close - it is the close out date of your transaction. Most derivative instruments have an expiry date and, generally, you would speculate on what you anticipate the price of the instrument to be by the time it expires.

Used to describe when a market order is executed, commonly expressed as having been “filled”.

A term indicating neither growth nor decline. It is often used when a particular market is neither rising nor falling. / If you (the customer) have no positions in the market (i.e. you had a long position but you recently sold), you are said to be flat.

This term is an abbreviation of 'Foreign Exchange'. When you trade in Forex you trade in currency pairs, and engage in the simultaneous buying of one currency and selling of another.

The Financial Services Board. The Government appointed body responsible for regulating Futures trading in South Africa.

A good or asset's interchangeability with other individual goods/assets of the same type. Assets possessing this property simplify the exchange/trade process, as interchangeability assumes that everyone values all goods of that class as the same

A futures or spread trade involves an agreement to conduct a transaction at some specified time in the future where the price is agreed now. For a spread trade it means that the expiry date is at some point in the future. Often the price of a futures product will differ from the cash price of that product. Also see Global Trader spread trading.

This is what happens when a market experiences a jump (up or down) in its trade price, without any trades occurring at intervening prices. It happens mostly when a market resumes trading after a period of overnight or weekend closure. Other factors that can result in a gap can be economic figures, company announcements, political events and natural disasters. You need to be aware that your stop loss or new or limited order could be affected by an unexpected gap.

Gearing is also referred to as leverage. It is the practice of entering into a transaction using funds that are borrowed from your broker. For instance, if you were to buy CFDs to the value of R100,000, Global Trader could ask for a deposit of R10,000 and lend you the balance of R90,000. This means that you do not need to fund the entire position, but simply put up a percentage (margin) which is determined by your broker. Gearing enables you to profit significantly if the market moves in your favour (i.e. the direction that you expect) but at the same time you risk significant losses if the market moves against you.

A guaranteed Stop order ensures, for a small fee, that any losses are restricted to the amount you specify in a closing order, both during and outside of market hours. A Guaranteed Stop are a protection against slippage

This is the practice of undertaking one investment activity in order to protect against loss in another. For example, you might sell short on the derivative of an equity product that is declining in value, in order to make up for your losses on the shares that you own in the same company. While hedging reduces potential losses, it also tends to reduce potential profits.

An illiquid market doesn't have much volume. i.e. it is not attracting a high volume of trades. A small amount of trading can cause volatile price movements and often results in wide bid/offer spreads.

An index is a group of shares whose price movements are observed together as one unit. They usually reflect the market as a whole and provide a measurement of the market's performance. Most exchanges have an index of their markets - for instance the JSE has the ALSI (All Share Market Index), the London Stock Exchange has the FTSE 100, the New York Stock Exchange has the Nasdaq, Hong Kong has the Hang Sen, and so on. Indices serve as a barometer of market sentiment and macroeconomic factors and serve as instruments that are traded in the derivatives markets.

This term refers to "day trading" which means the act of buying and selling a share within the same day. Day traders seek to make profits by leveraging large amounts of capital and short-term trading strategies to take advantage of small price movements in highly liquid shares. Day trading is not for everyone and involves significant risks. Moreover, it demands an in-depth understanding of how the markets work and various strategies for profiting in the short term.

See gearing/leverage.

When an exchange enforces a temporary price ceiling or floor, suspends, restricts or closes the stock index for a set period of time in order to maintain a fair and orderly market and reduce the risk of large and sudden price movements.

A liquid market is distinguished by a high volume of trading, which means that its price movements are relatively stable and it offers narrow bid/offer spreads. It also has the advantage of being able to be converted into cash quickly, without any price discount or any restriction on the size of transactions.

Trading on a rising price is called 'going long' and trading on a declining price is called 'going short'. When you go long, you buy a share with the aim of selling it later at a higher price and making a profit on the transaction. Alternately, when you go short, you sell a share (without owning it) with the aim of buying it back later at a lower price. When you enter a short trade you are selling borrowed shares or shares that you do not own. You then buy them back when the price has fallen, technically return the borrowed shares to your broker, and keep the profit. By trading both the long and short side of the market you can obtain much better consistency in your trading.

A margin is the cash deposit you are required to make when you enter into a geared (leveraged) transaction. The process is similar to putting down a cash deposit for a home loan. In the case of financial trading, the margin provides collateral to cover any losses that may result from your trade. Essentially you are able to trade with borrowed money, which offers significant financial gains, but can also result in high losses. You are also required to pay interest on the borrowed funds. The percentage of margin that you are charged (called the margin rate) is calculated according to the volatility of the market and of the individual stock and is likely to be anywhere between 10%-30%. Global Trader will keep an eye on your position (a daily procedure called mark to market) and if the market moves against you and your losses exceed your initial margin, you will have to pay in additional margin.

Margin is often calculated as R/point x (stop loss + Initial Spread) e.g. A Client buys R75 per point of Vodacom Future with a stop loss of 50 points, Margin Required = R75 x (50+6) = R4200

If you suffer losses on your trade, those losses will be debited from your margin account. If the losses exceed the free cash amount in your trust account, your broker will request that you deposit more funds to return your account to a positive balance (see variation margin). The margin call is the phone call from your broker to tell you how much is due. Because you are liable for any loss that exceeds your margin, you could lose substantially more than your initial investment. Global Trader offers an additional margin alert service - you receive a courtesy phone call to alert you in advance if your position is looking vulnerable.

As an account holder with Global Trader, your funds will be lodged in two accounts. The first is your trust account, in which you keep all the funds you have allocated to trading with Global Trader. The second is your margin account. This is reserved for the margin deposits that are required when you enter into a leveraged transaction (also see variation margin). Global Trader will transfer margin funds from your trust account as required. All profits earned will be paid into your trust account, and all net margins funds will be refunded to your trust account when your position is closed.

Exchange registered companies that quote a two-way spread in relation to securities.

A Mini Contract for Difference (Mini CFD) is similar to a CFD, in that it is a derivative product which is based on underlying equities markets, and it is a geared product that can be traded on Global Trader's Spreads Platform. There are two main differences between a Mini CFD and a CFD: 1) Mini CFDS have a rollover feature which allows you to realize your profit or loss at the close of each day, without needing to close your position. 2) Mini CFDs are traded at a rand risk per point. In other words, Mini CFDs are traded on the movement of the spot price of a share which is represented in points, and the transaction is based on the number of points that the spot price may move up or down over the period that you hold a position.

These are named after the wholesale markets where banks lend and borrow large sums of money. Money market fund managers specialise in placing your funds on the best terms possible with institutions that wish to borrow money for short periods. In a nutshell, you lend your money to the institution, your earn interest on your loan, and you are refunded after an agreed period - usually 90 days. Money market funds usually offer a higher yield (a percentage return on your investment) than that offered by the retail banks. Depending on the investment policies of a particular fund, the portfolio manager may invest in either short term debt instruments of government, or short-term loans to companies (commercial paper) and negotiable certificates of deposit (NCDs) at banks.

Monthly contracts are most common in commodities. They expire in the month prior to the month stated for the contract itself. For example, the expiry date for Brent Crude Oil - June is in May.

See bid/offer.

This refers to the action that is taken when you commence with a trading transaction. You make your choice, place your order, deposit your funds and the trade begins. Until you decide to conclude the transaction (close the position) or the time period of the contract expires, the position is said to be open.

This is an automated instruction that you can implement on your Global Trader platform. It ensures that your order is placed when the market price reaches the amount at which you are willing to buy or sell. This facility ensures that your orders will be placed as desired, without you having to watch your platform at all times.

This is an automated instruction that you can implement on your Global Trader platform. It ensures that your position will be closed at a certain level if the market moves against you. You can therefore limit your loss (stop your loss) to a specified amount in advance, and be sure that the order will be executed without you having to watch your platform at all times. In some cases, the Global Trader platform has a mandatory stop loss function, which will automatically assign a stop loss to your position, according the to the funds available in your account. A trailing stop loss is a variation of this function which enables the stop loss to move with the market, should it be moving in your favour.

This is an automated instruction that you can implement on your Global Trader platform. It ensures that your position is closed at a certain level if the market moves in your favour. It allows you to automatically lock in (take) your profit without you having to watch your platform at all times.

This is the trade of financial instruments, such as stocks, bonds, commodities or derivatives, directly between two parties without going through an exchange or other intermediary. Trading occurs via telephone, fax or electronic platform, usually via a network of middlemen called brokers or dealers. It is contrasted with exchange trading, which occurs at regulated trading facilities such as futures exchanges or stock exchanges. OTC products are not listed on an exchange. They also tend to be more volatile and carry a higher risk than those on a major exchange, which makes them attractive for medium- to short-term trading.

The closing of an open position will be partial if you execute an opposite trade of a lesser amount than the previous open position.

Quarterly contracts are the most popular - four a year, expiring in March, June, September and December. These terminate automatically at the end of the quarter, but can be extended to the next quarter. In spread trading terms, quarterly contracts would be considered a long-term investment.

This type of trade allows you to choose the number of rands you wish to trade on each point of movement in a market. For instance, you might open a position on a Mini CFD in which the price is quoted as 100 points and you anticipate that it will rise by 10 points by the time of its expiry. If you risk R1 per point, you will buy at a 100 points (and pay R100). If your prediction is correct, the position will close at 110 points - the market will have gained 10 points and earned you R1 x 110 = R110.00, giving you a profit of R10. Your winnings rise exponentially with the number of rands you risk per point. If you risk R10 per point for the same position, you would pay R1,000 upon opening the position and earn R10 x 110 = R1,100, giving you a profit of R100. A similar rand risk per point applies to trading in binary options.

Prestigious international news agency and pricing service.

The process whereby a position approaching expiry is closed and similar position is opened in the next contract period.

To place an opening trade at the bid price of a spread in anticipation of the underlying market falling, commonly referred to as “taking a short position” or “going short”. You can of course also sell at the bid price to close an existing long position.

Securities Exchange News Service

Holding or opening a “Sell” position in anticipation of the underlying market rising. To go short means to sell. See “Sell”.

The price difference between where an order is placed, and where it is actually filled. This can occur in extremely volatile markets, where the price fluctuation is so rapid that in the few seconds between placing and filling an order the price difference can occur.

Slippage or gapping occurs when the market moves directly from one quoted price to another significantly different quoted price. Market gaps are common during times of volatility. Slippage has a bearing on stop loss orders, because the market may never trade at the price specified in a closing order. Guaranteed orders are a protection against slippage.

See cash/spot price.

This is the difference between the two ends (the bid and offer) of a price quoted in a derivatives product trade. The spread reflects the lowest and highest prices predicted for the time of expiry of the instrument (as in the case of CFDs), or it reflects the lowest and highest points movement predicted for the time of expiry of an instrument (as in the case of binary options). The amounts quoted also factor in Global Trader's costs such as commission or margin fees. When the margin (in this case the gap) on either side of the current market value is narrow, the spread is said to be "tight". The tighter a spread, the greater your chance of making a profit on the trade. You 'buy' at the higher end of the spread and 'sell' at the lower end.

Spread trading is the alternative to conventional dealing in shares, forex, commodities and other markets. Trading in Global Trader spreads (futures) involves speculating on whether the price of an instrument will go up or down in the future. This means that you 'buy' if you think the price of the instrument (e.g. gold) is going to go up, or you 'sell' if you think the price will drop. In fact, you trade on the point movements that the instrument makes, staking one or more rands per point (see rand risk per point). For every point an instrument moves in your favour, you win multiples of your stake and for every point it moves against you, you lose multiples of your stake. A spreads instrument is a derivative product and Global Trader offers leveraged trading of spreads instruments on its Spreads Platform.

The level below purchase price at which you want to automatically close your trade, even though you will be losing money.

See order, stop loss.

An instruction to either buy or sell at a level that is less favorable than the current price of the financial instrument in question.

An instruction to buy or sell in order to close your trade once it reaches a certain level of profit. When a Take Profit order is hit on a trade, the trade is closed at the current market value.

Definition

The standard term for the smallest price movement in a contract.

See margin/trust account.

Our trade prices are always based upon the prices of financial assets traded on various financial exchanges around the world. These financial assets are the 'underlying instruments'.

When you open a geared position, you will be required to transfer your margin amount from your trust account into your margin account. Should you begin to sustain losses on your position, those losses will be paid out to Global Trader from your margin account. As your margin funds become depleted, you will need to top them up with funds from your trust account. The top up amount required is called the variation margin. Global Trader will require you to ensure that you have sufficient variation margin funds in your trust account to top up your margin account if needed. If the funds in your trust account run low and you don't have enough variation margin on hand, that's when Global Trader makes a margin call.

A term to describe the relative movement of a market. A market that moves a great deal is said to be of high volatility and one that is quiet is said to have low volatility. When price movements rise and fall rapidly and react strongly to influences in the market, the market is said to be volatile. Volatile markets or financial instruments are associated with a high degree of risk.