Master the market terminology

Bid price
This is the price at which you will sell (go short) a CFD.

Break orders
An order to buy the market higher than its current value based on technical levels (resistance) with the view that should resistance be broken the market will rally. The inverse applies for support levels or downside breaks on a short position

Charting
Tracking price movements on graphs or charts so that you can see at a glance how the markets are moving. Coupled with various studies technical analysis can be conducted in an attempt to anticipate market direction

Closed position
A long or short position that has been liquidated – i.e. the margin returned +/- the Profit or Loss

Equity
Another name for stocks or shares.

Gearing
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, GT247.com 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

Hedging
The practice of undertaking one investment activity in order to protect against loss in another, e.g. selling short to nullify a previous purchase, or buying long to offset a previous short sale. While hedges reduce potential losses, they also tend to reduce potential profits.

Illiquid
A market that doesn't have much volume. It can be moved disproportionately by a small amount of business and often results in wide bid/offer spreads.

Long
Opening a purchase (buy) position because you expect the underlying market to rise. If you go long, you will buy at the opening price and expect to sell at a profit when the price rises.

Margin
A margin is the cash deposit you are required to make when you enter into a geared (leveraged) transaction. The margin provides collateral to cover any losses that may result from your trade.

Margin call
In the event that you suffer losses on your trade upon Mark to Market, 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. The margin call is the phone call from your broker to tell you how much is due.

Offer price
This is the price at which you will buy (go long) a CFD.

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

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

SENS
Securities Exchange News Service

Short
Opening a sell position because you expect the underlying market to fall. When you go short, you will sell at the opening price and expect to buy back when the price drops, retaining the difference as your profit.

Stop loss order
An action executed to limit ones downside/loss should the market move unfavourably against the trader/ investor. A trailing stop enables one to automatically move their stop loss with the market should the position be running favourably for the trader/ investor

Take profit order
An action executed to sell/liquidate a long (buy) position above current market levels or buy back a short position (sell) below current market levels hence automatically locking in a profit

Volatility
When price movements rise and fall rapidly and react strongly to influences in the market, the market is said to be volatile. Volatility is the statistical measure of price movements over time, calculated by using standard deviation. Volatile markets or financial instruments are associated with a high degree of risk.