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.
| OBV |
This was the first volume-based technical method developed by Joseph Granville. The method begins with an arbitrary total like 100 000 to which the... read more |
| OCTOBER EFFECT |
A name given to the fear which investors have for October month which has been associated with three major crashes - 1907, 1929 and 1987. Ironically, September has more major downtrends... read more |
| ODD LOTS |
This refers to transactions in shares in quantities other than round hundreds. With the advent of on-line trading and the further computerisation of the... read more |
| OECD |
An organisation of 37 mostly developed countries formed in 1961 to improve world trade. The OECD maintains a tax convention for taxation rights between countries and it publishes books, reports... read more |
| OFF BALANCE SHEET |
Commitments and potential liabilities and assets which are not reflected on a company's balance sheet. These would be leases which are reflected in the books of account as an expense but because... read more |
| OFF BALANCE SHEET FINANCING |
A dubious accounting practice whereby a company seeks to hide the true state of its indebtedness by either using operating leases to acquire the equipment it needs to manufacture or by forming... read more |
| OFF FARM |
The amount of stock held by non-producers including supplies held at mills, elevators, terminals, and processors. |
| OFF SETTING |
This means acquiring an opposite contract to completely eliminate obligations in the current contract. Thus a person with a put option could buy the equivalent call option and and then step out... read more |
| OFFER |
An indication of willingness to sell a a share at a given price; the opposite of Bid. |
| OFFER PRICE |
The price at which an investor who is holding a share (or other security) is willing to sell. Also referred to as the "offer price." The JSE's... read more |
| OIL |
A hydro-carbon liquid deriving originally from the fossilised remains of ancient forests of trees. These are petro-chemical oils that are used to make petroleum... read more |
| OLIGOPOLY |
An industry which is dominated by a few very large players who co-operate on the fixing of prices and allocation of contract work. Price fixing and work allocation agreements are a contravention... read more |
| ON FARM |
The amount of stock held by producers. |
| ON-BALANCE VOLUME |
This was the first volume-based technical method developed by Joseph Granville. The method begins with an arbitrary total like 100 000 to which the... read more |
| ONLINE TRADING |
Buying and selling of securities over the Internet. A number of stockbroking firms are offering the ability to buy and sell shares over the internet. Brokerage is usually less than for trades... read more |
| OPEC |
Commonly known as OPEC, this consists mostly of Arab countries that control the bulk of the world's oil exports. OPEC has managed in the past to increase oil prices by restricting supply, but... read more |
| OPEN |
The price of the first transaction of the day in any share or security. The opening price is critical to the drawing of candlestick charts.... read more |
| OPEN ECONOMY |
This is an economy which allows free trade both internally and externally with its trading partners. Such an economy has the minimum of trade barriers such as tariffs and quotas. In economic... read more |
| OPEN ENDED FUND |
A mutual fund which has no limit on the number of investors who participate or the amounts which they invest. This is as opposed to a closed fund where theer are limits on the number of investors... read more |
| OPEN INTEREST |
The total number of futures or options contracts of a given commodity that have not yet been offset by an opposite futures or option transaction nor fulfilled by delivery of the commodity or... read more |
| OPEN MARKET OPERATIONS |
The buying and selling of government securities (mainly bonds) in the open market by the Reserve Bank in order to control the money supply. Doing this allows for the amount of money in the banking... read more |
| OPEN ORDER |
An order still pending or on the books to buy or sell securities, but not yet executed. An open order will remain in effect until it is either executed or cancelled or subject to validity constraints... read more |
| OPEN OUTCRY |
A method of public auction for making bids and offers in the trading pits of futures exchanges. Stock exchanges also used to operate this way, but today most are electronic, with the notable... read more |
| OPEN POSITION |
An investment or derivative contract which is currently held or owned, often known as an "open position". An open position implies that the investor is exposed... read more |
| OPEN TRADE EQUITY |
The gain or loss on open futures positions. |
| OPENING CALL |
A period at the opening of a futures market in which the price for each contract is established by outcry. |
| OPENING PRICE |
The price of the first transaction of the day in any share or security. The opening price is critical to the drawing of candlestick charts.... read more |
| OPENING PRINT |
The first price of a stock that comes across the ticker for a trading session. |
| OPENING RANGE |
The range of prices that occur during the first 30 seconds to five minutes of trading, depending on the preference of the individual analyst. |
| OPENING STOCK |
The stock which is in a company's warehouse at the beginning of the accounting period - which should be the same as the closing stock of the previous period. The calculation of the company's... read more |
| OPERATING CASH FLOW |
The amount of cash which a company brings in from its sales or turnover minus interest, taxation and dividends paid, and excluding income from investments. This is used to calculate the company's... read more |
| OPERATING EXPENSES |
These are the expenses that a business incurs to keep it running such as salaries and office supplies. They do not include cost of goods sold, direct labour or capital expenditures, like buildings... read more |
| OPERATING INCOME |
An income statement item usually immediately following the statement of turnover, but not directly linked to it by calculation. Because finance costs are normally shown on the face of the income... read more |
| OPERATING PROFIT MARGIN |
A financial ratio calculated by taking the operating profit as a percentage of turnover. This shows how profitable the company is - in other words how much of each rand of sales ends up being... read more |
| OPERATING UPDATE |
A report on its recent operational acitivites given by a listed company in the interests of keeping its shareholders up to date. Unlike... read more |
| OPERATIONAL UPDATE |
A report on its recent operational acitivites given by a listed company in the interests of keeping its shareholders up to date. Unlike... read more |
| OPPORTUNITY COST |
Income foregone by the commitment of resources to another use. For example, if you use some of your capital to buy shares then you suffer the opportunity cost of not being in a fixed interest... read more |
| OPTIMISATION |
A methodology by which a system is developed with rules tailored to fit the data in question precisely. A computer program can test every moving average from 1-day to 200-day, buying and selling... read more |
| OPTION CONTRACT |
An option contract which gives the buyer the right, but not the obligation, to buy or sell a specified quantity of a commodity or a futures contract at a specific price within a specified period... read more |
| OPTION HOLDER |
An investor who holds (owns) an option. |
| OPTION PREMIUM |
The price a buyer pays (and a seller receives) for an option. Premiums are arrived at through open outcry. There are two components in determining this price -- extrinsic (or time) value and... read more |
| OPTIONAL CASH PURCHASE |
Buying additional shares made through the dividend reinvestment account. |
| ORDER |
... read more |
| ORDINARY RESOLUTION |
A resolution which requires the approval or 50% or more of the voting shares of a company. Typically this would be the appointment of directors, approval of employment equity schemes and other... read more |
| ORDINARY SHARE |
Also sometimes called "equity" shares, these shares share in the profits and risks of the company. Unlike the fixed dividend paid to preference shareholders, the ordinary dividend is decided... read more |
| ORDINARY SHARE CAPITAL |
Capital of a company represented by the number of its ordinary shares. |
| ORDINARY SHAREHOLDERS' FUNDS |
The funds which the ordinary shareholders have in a company. This can normally be calculated by subtracting the company's liabilities from its assets. Shareholders' funds is a critical element... read more |
| ORE GRADE |
The number of grams per ton of ore milled, usually in a gold mine or other precious metals mine. Mines are categorised by their average grade and it is a key component of their results. Low grade... read more |
| ORGANIC GROWTH |
This is growth from within the company's existing businesses - as opposed to growth by acquisition. Both types of growth can be good, but growth by acquisition is generally more... read more |
| ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT |
An organisation of 37 mostly developed countries formed in 1961 to improve world trade. The OECD maintains a tax convention for taxation rights between countries and it publishes books, reports... read more |
| ORGANISATION OF PETROLEUM EXPORTING COUNTRIES |
Commonly known as OPEC, this consists mostly of Arab countries that control the bulk of the world's oil exports. OPEC has managed in the past to increase oil prices by restricting supply, but... read more |
| ORGANISED EXCHANGE |
A securities exchange that is properly formulated and run in accordance with an Act of Parliament. The Johannesburg Securities Exchange (JSE) is... read more |
| OSCILLATOR |
A statistical term which refers to an indicator which moves above and below a set level - usually zero. Many line indicators are oscillators - like the Overbought/Oversold (OB/OS) and the MACD.... read more |
| OTC MARKET |
Over-the-counter market - a market which is normally not licensed or an informal market for the trading of securities. There is therefore no formal settlement through a clearing house nor is... read more |
| OUT-OF-THE-MONEY OPTION |
... read more |
| OUTCOMES APPROACH BUDGET |
An approach to budgeting adopted by the South African government which identifies 12 key outcomes. Those outcomes are: (1) Improved quality of basic education (2) Longer and healthier life for... read more |
| OUTPUT |
The productivity of various sectors of the economy. Outputs are measured mostly by Statistics SA on a regular basis for each sector of the economy and show the contribution of that sector to... read more |
| OUTSIDE DAY |
A bottom candlestick reversal signal, this is a two candlestick pattern consisting of a large green candle enveloping a preceding red candle. This pattern implies that the trend... read more |
| OUTSIDE REVERSAL MONTH |
A month in which the recent monthly trading range exceeds the previous month's range and closes opposite (reverses) the previous month's close.
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| OUTSIDE SHAREHOLDERS |
A shareholding of less than 50% of the total issued share capital of a company. Companies work on the principle of majority rule - decisions are made by the majority... read more |
| OVER INVESTING |
Beginners in the share market are typically guilty of over-investing in two ways - either they put too great a percentage of their available funds into a single trading idea, or they commit more... read more |
| OVER TRADING |
Beginners in the share market are typically guilty of over-investing in two ways - either they put too great a percentage of their available funds into a single trading idea, or they commit more... read more |
| OVER-PRICED |
This describes a share which has a market price in excess of its "real" value - in the opinion of the person who uses the term. The real value of... read more |
| OVER-REACTION |
A situation which arises after news concerning a share is disseminated and investors push the price to levels beyond reasonable discounting of the news - i.e. they over-react. Such situations... read more |
| OVER-SUBSCRIBED |
When a company raises new capital by selling shares to the public they invite applications for a limited quantity of shares. If the company is perceived as having a bright future, then sometimes... read more |
| OVER-SUBSCRIPTION |
This occurs where the applications for a new issue of shares exceed the number of shares available for issue. This often happens because the shares are offered to the public at a price below... read more |
| OVER-THE-COUNTER |
Trading of shares which are not listed on a formal stock exchange. In America there are about 80 000 companies that trade their shares in this manner - mostly small "mom-and pop" outfits which... read more |
| OVER-VALUED |
This describes a share which has a market price in excess of its "real" value - in the opinion of the person who uses the term. The real value of... read more |
| OVERALL INDEX |
All stock exchanges have indexes which provide averages of the prices of their listed shares. These averages are normally... read more |
| OVERBOUGHT |
A technical analysis term which indicates the degree to which a share's price has risen above its "real value". The real value of a share is a matter of opinion and... read more |
| OVERBOUGHT/OVERSOLD INDICATOR |
An indicator that attempts to define when prices have moved too far and too fast in either direction and thus are vulnerable to a reaction. The OB/OS... read more |
| OVERDRAFT |
A facility offered by commercial banks to their credit-worthy clients. Most companies finance their working capital requirements with an overdraft, even if they... read more |
| OVERFITTING |
The parameters of a trading system are selected to return the highest profit over the historical data. |
| OVERHANG |
The value of unexecuted sell orders in the market at the close of trade. An excessive overhang of sell orders can be an indication of a crash if it is very large. On Monday 19th October 1987... read more |
| OVERHEAD |
A fixed expense which must be paid irrespective of the level of sales. Good examples are rent, salaries and telephones. These expenses are sometimes referred to as "indirects" or fixed costs.... read more |
| OVERHEADS |
These are costs which a company has to pay whether or not they sell anything. So expenses like rent, telephone, salaries and so on. This is as opposed to "variable costs" which go up and down... read more |
| OVERSOLD |
Market prices that have declined too steeply and too fast. |
| OWNER'S EQUITY |
That portion of share capital which carries risk, and shares in profits through dividends that are dependent on profitability.... read more |