List of Glossary Terms

The PDSnet Glossary of Terms contains definitions and explanations for over 2600 financial market terms. These definitions are constantly kept up-to-date with current topical examples from the markets. They are also updated for changes in legislation and current events like COVID19 and the July 2021 civil unrest.

The terms in the Glossary are directly linked to all PDSnet articles, confidential reports, lecture modules and other material. This means that a client reading one of our publications can immediately see which terms are defined in the Glossary and click through to read the definition. Terms within the definitions in the glossary are similarly linked, which gives the Glossary an enormous educational depth share market investors.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Numeric


DAILY DEALS
One of the pieces of information supplied by the JSE for each listed company after each trading day. There are no indicators which utilise this piece of information, but it can be useful to distinguish... read more
 
DAILY FLUCTUATIONS

Charles Dow in his "Dow Theory" proposed that share prices, and especially indexes, move in three distinct patterns -... read more

 
DAILY RANGE

The difference between the high and low price during one trading day. This range shows the degree of uncertainty prevailing... read more

 
DARK CLOUD COVER

A top reversal candlestick formation which consists of a long green candle followed by a red candle. Confirmation of this signal would... read more

 
DARK POOL LIQUIDITY

Trade which takes place between institutional investors on private confidential exchanges which are not open to the public. Institutions do this... read more

 
DATA MINING

The process of using super-computers to sift through the massive quantities of data produced every day by the securities markets to establish potentially... read more

 
DATA PREPROCESSING

Altering data to some extent to be more accurately analysed; smoothing, reducing unwanted data, removing trend. Processing data is mathematically transforming... read more

 
DATA SMOOTHING
Removing the variability and market noise in a chart to reveal the correct underlying trend. This can be done by using a moving average, among other mathematical algorithms.
 
DATA STREAM

A data stream is any continuous flow of end-of-day financial data which can be displayed as a chart. The most common forms of this are the end-of-day... read more

 
DATE ISSUE CLOSES

The date on which a rights issue closes. A rights issue is a corporate action in terms of which a company issues additional shares... read more

 
DATE OF DECLARATION

The date on which a dividend is declared by a company's board of directors once they have seen the results from the interim... read more

 
DATE OF FOUNDING
The date on which a company was founded. You should bear in mind that this date is often long before the date that the company was listed on the JSE. Your stock exchange handbook gives the year... read more
 
DATE OF INCORPORATION

The date on which a company was granted its certificate of incorporation by the Companies and Intellectual Property Commission (CIPC). Every company... read more

 
DATE OF LISTING
The date on which a company was listed on the JSE. Most listing are accompanied by an initial public offer (IPO) whereby the company raises capital from the public to fund its business. One of... read more
 
DATE OF PAYMENT

One of the dates associated with the payment of a dividend by a listed company. The dates are the date of declaration when the board... read more

 
DATE OF RECORD

The date on which a dividend payout or rights issue is based. These "corporate actions" apply to shares which are in the company register... read more

 
DAVID LI
A Chinese actuary and quatitative analyst who is best known for his application of gaussian copulas for securitised mortgage bonds leading to the "sub-prime" crisis of 2007/8. Li's formulae justified... read more
 
DAX
This is a simple index of the thirty largest shares trading on the German stock exchange, based in Frankfurt. The DAX is a Paasche index which began on 30-12-1987 at a base... read more
 
DAY ORDER
An order that, if not executed, expires automatically at the end of the last trading session on the day it was entered.
 
DAY'S MOVE

The extent to which a share moves during the course of the trading day on the Stock Exchange. You will find the day's move quoted as a separate... read more

 
DBSA

This is a state-owned enterprise which focuses on supporting projects which will enhance the standard of living and infrastructure of South Africa... read more

 
DCM
A division of the JSE which was folded into the Alt-X. This division was originally for smaller companies requiring less capital and no history of profits.... read more
 
DE-LISTING

The removal of a security from an organised exchange - after which it can no longer be traded on that exchange. This typically happens in the share... read more

 
DEAD CAT BOUNCE

A rebound in a market that sees prices recover from a very sharp fall and come back up somewhat. Usually this occurs during a bear market... read more

 
DEAL

In the context of the share market this means a transaction whereby shares are exchanged for cash, either in the primary market or the secondary... read more

 
DEALER

An individual or firm acting as a principal or counterparty to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing... read more

 
DEALING COSTS

The costs of trading in shares are brokerage - which varies according to the stockbroker you are dealing through, STRATE settlement... read more

 
DEATH CROSS

In technical analysis when the 50-day moving average crosses down through the 200-day moving average on any data stream (i.e. a share, commodity,... read more

 
DEBASEMENT

The reduction of a commodity currency by adding a base metal - such as lead. During the time of the Roman empire, periodically the gold coins... read more

 
DEBENTURE

This is a form of long-term loan. A company issues debentures, usually at R1000 each, at a fixed percentage return. Debentures are then redeemable... read more

 
DEBIT BALANCE

A stockbroking account with no positions and a negative adjusted total equity. A debit balance typically arises as a result of a trader losing... read more

 
DEBSWANA

Debswana Mining Company Limited (Debswana) is a 50/50 joint venture formed in 1969 between the government of Botswana and De beers. De beers is 85% owned by Anglo... read more

 
DEBSWANA DIAMOND MINING COMPANY LTD

Debswana Mining Company Limited (Debswana) is a 50/50 joint venture formed in 1969 between the government of Botswana and De beers. De beers is 85% owned by Anglo... read more

 
DEBT

Money owed by one person (natural or juristic) to another. Debt which is expected to be repaid withing normal commercial periods of 30, 60 or 90 days is... read more

 
DEBT CEILING

A debt ceiling is a legally imposed limit to the amount of debt which the treasury of a country can uncur. In America the constitution (article 1,... read more

 
DEBT COVENANT

An agreement reached by a company with its creditors for the repayment of principal and interest on its outstanding debts. Debt... read more

 
DEBT INSTRUMENT

A form of long-term debt whereby the borrower agrees to pay the lender annual interest (the "coupon") until the debt is settled or converted into... read more

 
DEBT LIMIT

A debt ceiling is a legally imposed limit to the amount of debt which the treasury of a country can uncur. In America the constitution (article 1,... read more

 
DEBT MORATORIUM

A period of grace on the repayment of debt and the interest due on it. If a company is placed under business rescue, then it is immune... read more

 
DEBT TO GDP RATIO

This refers to the ratio between a country's government debt and its Gross Domestic Product (GDP). A low debt to GDP ratio suggests that a... read more

 
DEBT TO INCOME RATIO

This is the ratio of an individual's monthly debt repayments and other expenses to their gross income. In South Africa, we have an average... read more

 
DEBT TRAP

A debt trap is when a borrower is in a cycle of re-borrowing or rolling over their debt. This can occur because of high interest rates or because... read more

 
DEBT/EBITDA RATIO

The ratio of a company's debt to its earnings before interest, taxation, depreciation and amortisation (EBITDA).... read more

 
DEBT/EQUITY RATIO

The ratio of shareholders' equity in the company (share capital and reserves) to the company's borrowing. The company... read more

 
DEBTOR

An item on the balance sheet which shows the amount the company is owed, and which is to be paid over the short term. It is common for companies... read more

 
DEBTORS DAYS OUTSTANDING RATIO

The average number of days that it takes for a company to collect its debts. This can be calculated by dividing the debtors figure and then multiplying... read more

 
DEBTORS' BOOK

Amounts owing to the company, usually by customers who have bought products on credit. This is another term for "debtors" and appears in the balance... read more

 
DEBTORS' BOOK

A debtors' book is a collection of all the receivable invoices, i.e the cash that is due or owing to a business from it's clients.

 
DECLARATION DATE

The date on which a dividend is declared by a company's board of directors once they have seen the results from the interim... read more

 
DEEP-IN-THE-MONEY

A deep-in-the-money call option has the strike price of the option well below the current price of the underlying instrument. A deep-in-the-money... read more

 
DEFAULT
 
DEFENSIVE SHARES

Some JSE-listed companies perform well even in a recession and they are known as "defensive shares". Typically they are in sectors... read more

 
DEFERRED DELIVERY MONTH

The distant delivery months in which futures trading is taking place, as distinguished from the "nearby" futures delivery month which refers to the next futures... read more

 
DEFERRED SHARE

This is a share which has even less rights than an ordinary share. Preference shares receive their dividends and payments on liquidation... read more

 
DEFERRED TAXATION

When a company computes income tax expense, it bases that computation on taxable income per the Income Statement. The income taxes... read more

 
DEFICIT

This is the difference between government revenue and expenditure. Typically, governments spend more than they receive from taxes and other types... read more

 
DEFLATION

The opposite of inflation. A period where the purchasing power of money increases in terms of a basket of goods and services.

 
DEFLATIONARY CRASH

A crash which is caused or exacerbated by a shortage of money within the economy. There has only been one deflationary crash in recorded history... read more

 
DELAYED PRICES

Market quotations which are delayed by the various futures exchange's required time period, usually 10-20 minutes. The JSE provides... read more

 
DELAYED QUOTES

Market quotations which are delayed by the various futures exchange's required time period, usually 10-20 minutes. The JSE provides... read more

 
DELEVERAGED
The opposite of "geared". Gearing in companies refers to the relationship between their borrowings and their equity. An ungeared company is one that has no debt. The... read more
 
DELINQUENT DIRECTOR

This refers to a director of a company that has done something in contradiction of the Companies Act. Directors are expected to act in the... read more

 
DELIVERY

The transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Each futures exchange has specific... read more

 
DELTA
The amount by which the price of an option changes for every dollar move in the underlying instrument.
 
DEMAND

An economics term which refers to the extent to which a good or service is needed in the economy. When the good or service is widely needed... read more

 
DEMAND INDEX
 
DEMATERIALISATION

The replacement of physical share certificates with an electronic record. In South Africa this record is maintained by STRATE (Share TRAnsactions... read more

 
DEMATERIALISED SCRIP
 
DEMERGER

The breaking up of a company into smaller component companies. This is usually done to improve focus and to give each operating unit autonomy over decision... read more

 
DEMURRAGE

This was originally a cost of not off-loading a chartered ship within an agreed time period. Shipping charters typically include an amount of "laytime" which is... read more

 
DEPENDENCE

In modern portfolio theory the central concept is that share prices are impossible to predict because there is no "dependence" between today's... read more

 
DEPRECIATION

The process of charging the value of a fixed asset against the company's profits at the same rate at which it is expected to wear out or become... read more

 
DEPRESSION

A economic term which refers to an extended period of very low economic activity. A depression is considerably worse and deeper than a recession. Recessions... read more

 
DEPTH OF THE MARKET

The depth of the market for a particular share is a display of the best three bids and the best three offers for that share which have... read more

 
DERIVATIVE

A financial instrument, traded on or off an exchange, the price of which is directly dependent upon the value of one or more underlying securities,... read more

 
DESIGNATED ADVISOR

When a company wishes to list on the Alt-X market it must appoint a designated advisor. The main role of a Designated Adviser is to... read more

 
DESTOCKING

The reduction in a company's inventory levels. Inventory or stock is a part of a company's working capital and as such it means money tied... read more

 
DETREND
To remove the general drift, tendency, or bent of a set of statistical data as related to time.
 
DEUTSCHER AKTIENINDEX
This is a simple index of the thirty largest shares trading on the German stock exchange, based in Frankfurt. The DAX is a Paasche index which began on 30-12-1987 at a base... read more
 
DEVALUATION

The reduction of a currency's value in a fixed exchange rate system. Most currencies are allowed to float and are freely traded with market... read more

 
DEVELOPING COUNTRY

An economy which is in a development phase - as opposed to a first-world economy which is said to be fully developed. Emerging economies generally... read more

 
DEVELOPMENT BANK OF SOUTHERN AFRICA

This is a state-owned enterprise which focuses on supporting projects which will enhance the standard of living and infrastructure of South Africa... read more

 
DEVELOPMENT CAPITAL MARKET
A division of the JSE which was folded into the Alt-X. This division was originally for smaller companies requiring less capital and no history of profits.... read more
 
DIAGONAL SHARE

A share whose price chart goes from the bottom left-hand corner to the top right-hand corner. There are very few shares which can be described... read more

 
DIAMOND

A solid crystalline form of carbon with the greatest hardness and heat conductivity of any natural substance. Diamonds have both industrial and jewellery use.... read more

 
DIFFUSION INDEX

An index that measures how many shares are positive or increasing in price. It can be used to tell the underlying strength of the market,... read more

 
DILUTED HEADLINE EARNINGS PER SHARE

This is headline earnings per share (HEPS) calculated using the number of shares in issue at the end of the financial period rather than the... read more

 
DILUTION

In the context of the share market, dilution occurs where a company issues additional shares without receiving commensurate earnings... read more

 
DIRECT COST
A cost in the books of a company which increases and decreases with their sales level. The main variable cost (also known as a "direct cost") is cost of sales. The cost of... read more
 
DIRECTIONAL MOVEMENT INDEX (DMI)

Developed by J. Welles Wilder, DMI measures market trend. The concept of Directional Movement is based on the assumption that in an upward trend... read more

 
DIRECTOR

All public companies are required to have at least two directors and all private companies at least one. The directors are appointed (and confirmed... read more

 
DIRECTOR DEALINGS

The directors of a company are allowed to deal in the shares of their company, but in terms of the JSE rules, they must... read more

 
DIRECTORATE OF MARKET ABUSE (DMA)

The DMA was formed in terms of the Insider Trading Act (135 of 1998) to investigate and take legal action where appropriate in cases of financial market... read more

 
DIRECTORS' REPORT

The Companies Act requires companies to put before the Annual General Meeting (AGM) a directors' report with respect to the state of affairs of the... read more

 
DISCLAIMED OPINION

An audit opinion where the auditor refuses to give an opinion because he feels that he can place no reliance on the underlying financial accounts.... read more

 
DISCLAIMER

This is an audit opinion given when the auditor cannot obtain sufficient documents and information to support their opinion. This can happen because management... read more

 
DISCLOSURE

The concept of disclosure is entrenched in the Companies Act. The Act is concerned to ensure that shareholders are properly informed of all the information... read more

 
DISCONTINUED OPERATIONS

Companies are always trying to be focused on their core business. To achieve this they may decide from time to time that a particular division or... read more

 
DISCOUNT BROKER

This is a stockbroking firm that does not undertake research into listed companies or give advice. For this reason the dealing costs... read more

 
DISCOUNT WINDOW

The mechanism by which the central bank provides short-term funds to commercial banks and other eligible institutions. Originally, central banks... read more

 
DISCOUNTED CASH FLOW

A process whereby a future flow of incomes is reduced to a current value by applying an "internal rate of return" (IRR). For example, if you are... read more

 
DISCOUNTING

The price of a share is the average of all investors' discounted cash flows of the future dividends of the company. If... read more

 
DISCOURAGED WORKER

This is an adult person who is part of a country's labour force but who has not been able to find work for an extended period of time. Such people would like to... read more

 
DISCRETIONARY STOCKBROKING ACCOUNT

An account opened with a stockbroker where the client has entered into an arrangement with the stockbroker that authorises the stockbroker to conduct transactions... read more

 
DISINVESTMENT

This term is usually applied to investors in South Africa who decide to withdraw their investment. Disinvestment impacts directly on the capital... read more

 
DISPOSABLE INCOME

The income which is left for a consumer after all his main expenses have been met - such as his rent or mortgage bond repayment, money for food and clothing,... read more

 
DISSENTING SHAREHOLDER

In terms of the Companies Act, a dissenting shareholder is one who disagrees with a fundamental transaction being contemplated by the majority shareholders.... read more

 
DISSOLUTION
The process whereby a company is dissolved. The court, the company itself, a shareholder, the Master of the court, the business rescue practitioner, a creditor, or the minister may initiate such... read more
 
DISSOLVED
To settle the affairs of a company/firm by selling assets in order to pay creditors. When a company is liquidated, ordinary shareholders are entitled to receive their... read more
 
DISTRESSED COMPANY

This refers to a company which does not have sufficient short-term cash flow to meet its immediate expenses. When a company is in "financial distress",... read more

 
DISTRIBUTABLE RESERVES

A concept from the old Companies Act which aimed to preserve the capital of companies. In terms of that Act, dividends could only be... read more

 
DISTRIBUTED LEDGER TECHNOLOGY

Distributed Ledger Technology (DLT) is a computer technique which is used to create a completely reliable and and 'unhackable' database. The most common use is... read more

 
DISTRIBUTION
  1. The payment of a dividend.
  2. Any set of related values described by an average (that is, mean), which... read more
 
DISTRIBUTION

That portion of a company's earnings which is paid out to shareholders - also sometimes called a "distribution". Most blue chip companies... read more

 
DISTRIBUTION AREA

A sideways to downward market, usually at the top of a bull trend where shares are being sold off by the "smart money"... read more

 
DIVERGENCE
When two or more averages or indices fail to show confirming trends.
 
DIVERSIFICATION

The process whereby a company (or individual) spreads its investments among a number of different enterprises so as to reduce its exposure... read more

 
DIVESTITURE

Companies are always trying to be focused on their core business. To achieve this they may decide from time to time that a particular division or... read more

 
DIVIDEND

That portion of a company's earnings which is paid out to shareholders - also sometimes called a "distribution". Most blue chip companies... read more

 
DIVIDEND COVER

The number of times the dividend could be taken out of the earnings. For example, if a company has earnings (profits) of R50 000 and pays... read more

 
DIVIDEND EQUALISATION RESERVE

A distributable reserve which is specifically set up to ensure that dividends remain stable despite changes in earnings. If a company normally... read more

 
DIVIDEND POLICY

Most of the larger listed blue chip companies pay two dividends each financial year - an interim and final. They also usually have... read more

 
DIVIDEND REINVESTMENT PLAN

A program offered by a publicly held company in which dividends are used to buy more shares of the company. This process reduces the number... read more

 
DIVIDEND STRIPPING

This occurs where a share is bought just before the last day to register (LDR) for its dividend and then sold immediately afterwards. The... read more

 
DIVIDEND WITHHOLDING TAX

A 20% tax (as per the 2017 budget speech) on dividends paid by all South African taxpayers, but withheld by the company paying the dividend. DWT... read more

 
DIVIDEND YIELD

Dividends per share expressed as a percentage of the current market price. For example, if a company pays a dividend of R10 000 and it has... read more

 
DIVIDENDS PER SHARE

The ordinary dividend of a company for the most recent financial year divided by the number of shares in issue. The DPS is calculated... read more

 
DJIA

Charles Dow was the first person to construct an index. His first index was the "transportation average" which he constructed in 1884 and then maintained... read more

 
DLT

Distributed Ledger Technology (DLT) is a computer technique which is used to create a completely reliable and and 'unhackable' database. The most common use is... read more

 
DMA

The DMA was formed in terms of the Insider Trading Act (135 of 1998) to investigate and take legal action where appropriate in cases of financial market... read more

 
DOJI

A candlestick charting term which describes a trading session in which the opening price and closing price for a share are the same... read more

 
DOJI STAR

A Doji Star is a trend reversal pattern which is composed of a long black body followed by a doji (a pattern with the same opening and closing... read more

 
DOMESTIC UNIT TRUST

A unit trust which is focused on investments into the local equity market. In other words, excluding overseas investments. Profile Media has... read more

 
DORE

An alloy of gold and silver usually created at the mine before being moved to the refinery. Dore is usually cast in bars of bullion. At the refinery... read more

 
DOT COM

Technology shares, specifically those which deal with internet based products or telecommunications. From 1997 to 1998, these shares did particularly well... read more

 
DOUBLE BOTTOM

The price action of a security or market average where it has declined twice to the same approximate level, indicating the existence... read more

 
DOUBLE COUNTING

An economics term which means counting the same item twice so producing an erroneous result. This can happen with the calculation of gross domestic product... read more

 
DOUBLE SMOOTHING

Double smoothing in the context of the share market and technical analysis simply means making a moving average of a moving average. This... read more

 
DOUBLE TAXATION AGREEMENT

An agreement between two countries the objective of which is to avoid double taxation. For example, South Africa and the UK have a double taxation agreement which... read more

 
DOUBLE TOP FORMATION

A price pattern seen on a chart at the top of a trend. The pattern occurs when prices rise to a resistance level on significant... read more

 
DOUBTFUL DEBT

A debt which may not be collectible. Companies usually distinguish between bad debts, which they know they cannot collect, and doubtful debts... read more

 
DOVE

A member of a country's monetary policy committee (MPC) who is in favour of reducing interest rates to stimulate the economy. The monetary policy... read more

 
DOW CHARLES

Charles Dow was one of the founders of Dow Jones & Co. and the originator of the famous Dow Jones indexes. He developed the "Dow Theory" of market... read more

 
DOW JONES INDUSTRIAL AVERAGE

Charles Dow was the first person to construct an index. His first index was the "transportation average" which he constructed in 1884 and then maintained... read more

 
DOW THEORY

The Dow Theory was the first technical analysis idea to be invented in Western markets (the Japanese invented candlestick charts much earlier).... read more

 
DOWNSIDE BREAK

In technical analysis, this occurs where a security's price encounters a support level which prevents it from going lower for a period.... read more

 
DOWNTREND

A period when the price of a share (index or other security) falls. Normally a downtrend can be clarified with the addition of a downward... read more

 
DOWNWARD TAIL

A candlestick charting term which refers to the extent to which a share's price trades below its open, in a green candle or... read more

 
DOWNWARD TREND

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

 
DOWNWARD TREND

A period when the price of a share (index or other security) falls. Normally a downtrend can be clarified with the addition of a downward... read more

 
DPS

The ordinary dividend of a company for the most recent financial year divided by the number of shares in issue. The DPS is calculated... read more

 
DRAGONFLY DOJI

A candlestick charting term used to describe a type of doji which signifies indecision. The dragonfly doji has a long lower shadow... read more

 
DRAWDOWN
The reduction in account equity as a result of a trade or series of trades.
 
DTA

An agreement between two countries the objective of which is to avoid double taxation. For example, South Africa and the UK have a double taxation agreement which... read more

 
DUAL CAPACITY TRADING

Dual capacity trading was introduced following the deregulation of the JSE in 1995. It means that a stockbroker may act as a principal and as an... read more

 
DUAL LISTING

This is where a company is listed on two stock exchanges. On the JSE there are dozens of companies which are also listed on at least one other... read more

 
DUE DILIGENCE

The checking of the books of account of a prospective acquisition to ensure that what was held out by its directors corresponds with the reality.... read more

 
DUMPLING TOP
A cycle top on a chart which drifts out and down in a gradual loss of momentum. This is as opposed to a "V" top which is very sharp and sudden. Also called an Umbrella Top, a Frying Pan Top,... read more
 
DURABLE GOODS

Products, offered to consumers, which are expected to last for a considerable period of time and which are generally more highly priced. Examples range from "white... read more

 
DUTY

The tax paid on the import of foreign-made products into a country according to a specific import tariff. In general, countries try to avoid having too... read more

 
DWT

A 20% tax (as per the 2017 budget speech) on dividends paid by all South African taxpayers, but withheld by the company paying the dividend. DWT... read more

 
DY

Dividends per share expressed as a percentage of the current market price. For example, if a company pays a dividend of R10 000 and it has... read more