QUICK NAVIGATION
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
ADR
American Depository Receipt. Allows US investors to trade foreign companies listed on non-US stock exchanges.
AEX
Amsterdam Stock Exchange.
AFO
Austrian Futures and Options Exchange.
After Hours Dealing
Spread Betting Companies may provide a market on different products even when the underlying exchanges have closed. For example, trading on shares listed on the FTSE after it closes at 4.30pm or before it opens next morning.
AIM
Alternative Investment Market – a sub-market of the London Exchange used by smaller companies to raise finance.
Analyst
Someone working for a bank, broker or fund manager whose job it is to study companies and make recommendations to buy or sell
Arbitrage
This is where a trader tries to take advantage of a difference in market prices between different exchanges or spread betting companies. By buying with one and selling with another, the trader can guarantee a profit.
ASE
Athens Stock Exchange
Ask Price
Also called the Offer Price. The price at which someone can buy.
Auction
Buyers and sellers enter bids and offers during fixed time frame (normally five minutes). One of the most common is the Post Market Auction on the FTSE 100, which happens after the market closes and which decides the official closing price.
Authority to Deal
With written notification and an identity check, you can authorise someone else to spread bet for you.
B
BACS
Bankers Automated Clearing System. Allows electronic fund transfers take place.
Backwardation
When the price of delivery of a commodity gets cheaper as time goes on. Opposite to Contango.
Base Rate
The official rate at which central banks like the Bank of England or European Central Bank lends to retail banks.
Basis Point
A term relating to short term interest rates – one basis point is equivalent to 0.01%, so if the interest rate goes from 2% to 2.25% it is said to have increased 25 basis points (bps).
Bear
An investor who expects a market to decline. Opposite to Bull.
Bear Market
A market with falling prices. Opposite to Bull Market.
Bet Size
How much you make or lose for every point of movement in the market
Bet Size Factor
The number used to determine the margin required to do a trade. It is multiplied by your stake. For example, if your stake is £5 and the bet size factor is 10 your margin is £50.
Bid Price
The lower of the two prices in the spread. The one at which you “sell”.
Bid-Ask Spread
The difference between the bid price and the offer price. Tight spreads mean you begin to win or lose more quickly. Wider spreads mean trading is more expensive.
Binary Betting
In this bet, there are only two possible outcomes – win or lose. They are a fixed odds bet like in traditional sports betting – in that they pay out either 100% or 0%. For example, you could bet on the FTSE to be up at the end of the day. If that happens you win, if it doesn’t you lose. The amount you stand to win or lose is known from the outset, in contrast with regular spread betting.
Blue Chip companies
Large, well-established companies, often household names that are conservatively managed. They form the basis of many pension funds and share portfolios, as they usually considered safe investments. But changes in their share price tend to be slow. ( The “blue chip” is the most valuable one in poker, and that’s where the term comes from.)
Bonds
Bonds are essentially IOUs from a government or company. These debt securities are issued as a way of raising money. The issuer promises to repay the bond together with a fixed interest amount at some specified point in the future. Bonds are often traded on the bond markets after they have been issued.
BOBL
Medium term German Government Bond with about 5 years before the final repayment date.
Bull
Someone who expects market prices to rise. Opposite to Bear.
Bull Market
A market where prices are rising. Opposite to Bear Market.
Buy
You “buy” in anticipation of the market rising. Either when opening a bet, or to close an existing “sell” bet. Also referred to as “going long”, an “up bet”.
BUND
Long term German Government Bond – 10 years.
C
CAC 40
An Index listing 40 of the top companies on the French Stock Exchange
Cable
Trader’s jargon referring to the USD/GBP exchange rate.
Call Option
The right, but not the obligation, to buy at a specified price on a future date. A “put” is the opposite of a “call”. There are two types of options – American options and European options, with the main difference being that American options can be exercised any time before expiration, whereas European options can only be exercised on the expiration date.
Capital Gains Tax
Tax on profits made from an asset that has been held for a period of time. It applies to profits made from share dealing. Spread Betting is exempt from CGT.
Carry Trade
A foreign exchange strategy where you borrow a low-interest rate currency, and lend a high interest rate currency with the intention of pocketing from the difference in interest rates. A trader who does this strategy is exposed to movements in the exchange rate of the currencies against him.
Cash Call
A demand from the spread-betting company that an investor deposit more money to cover the exposure to a bet that is losing. Also known as a Margin Call.
Cash Price
Also known as Spot price. The current market price of the actual physical commodity or share for immediate delivery. Usually called cash price in share dealing and spot price in currency or commodity dealing.
CBOT
Chicago Board of Trade
CFD
(or Contract for Difference) A leveraged share trading product similar to spread betting, but without the tax-free advantages.
CHAPS
Clearing House Automated Payment System. A UK payment system where funds can be sent to a bank account on the same business day.
Charts
Visual representations of raw data. Investors can spot trends to help them make more informed decisions about a company or a market.
Chartist
Someone who engages in technical analysis of markets using charts.
Closing
Ending a trade and crystallising the profit or loss. You close a “buy” bet by selling, and vice versa.
Closing Price
The price at which the bet was ended. May also refer to the price of the last transaction in a day’s trading session.
Contango
When the cash price for immediate delivery is lower than the price for a future date. This is normally this case in commodity trading. Opposite to “Backwardation”
Contingent Order
An order which is to be triggered only if another one is executed first. It’s used as a way of managing the risk associated with a bet. An if/when proposition, sometimes called an “if done” order.
Contract Note
A document sent, usually by email, to confirm a trade.
Contact Month
The month in which a futures trade must be settled.
Controlled Risk Bet
A bet where the maximum loss is limited in advance. That is a bet with a guaranteed stop loss.
Commodities
Physical goods such as oil or coffee which are bought and sold in regular commerce. Soft
commodities like soya, coffee are grown, and hard commodities like gold or oil are extracted through mining. Many commodities are traded on the financial markets.
COMEX
Commodity Exchange Inc (New York)
CME
Chicago Mercantile Exchange
Credit Account
An investment account where the trader is given credit terms without the need to cover margins. Only offered by some companies, at their discretion based on the financial status of the client and proof of funds.
Credit Limit
The total loss a credit account holder can run up, before the spread betting company issues a margin call, i.e. insists on extra funds being deposited.
Crude Oil
Unrefined petroleum. One of the most important and liquid markets in the world.
CSCE
Coffee, Sugar, Cocoa Exchange (New York )
Currencies
Also known as Forex/FX or Foreign Exchange. The markets are traded in pairings of two separate currencies eg USD/GBP or EUR/USD. When you make a buy trade you expect the first currency to rise in value compared to the other one.
Currency cross
The exchange rate between two currencies.
Cut and Reverse
Closing an open position and opening a new position at the same time. Also called overclosure.
D
Daily Bet
Bets which are settled on the day they are made. Usually against the price at the end of the day’s trading.
Daily Settlement
The official closing price for a particular market on a certain day.
Day Trader
A trader who buys and sells the same security multiple times during the same trading day.
DAX
Germany’s main stock exchange, made up of 30 largest listed German companies
Deposit
The initial amount of money that needs to be paid into a trading account to make a trade – covers the margin but not the limit of what can be lost.
Deposit Account
A trading account to which no credit is extended. Sufficient funds must be in the account to meet stake and margin requirements before bets can be opened.
Derivative
A financial instrument that derives its value from an underlying security like a commodity or share. Spread betting is a derivative product. Others include CFDs, futures and options.
Differential Markets
Some firms will offer bets on the difference in price between markets, such as Wall St vs FTSE.
Discount
The amount by which a price for one instrument is less than that of an almost identical instrument. For example, airline shares in Europe could be trading at discount to airline shares in the US because of supply and demand differences between Irish and US investors. The term is also used in Forex markets to describe how much forward currency rates are less than spot rates.
Dividend
The portion of a company’s profit that is distributed among its shareholders, normally on a regular basis. Dividends are generally not paid on spread betting, but the original spread bet price will be lower by the amount of the dividend to compensate the buyer of the spread bet.
DJIA
Dow Jones Industrial Average, reflects the performance of the top US blue chip stocks.
Down Bet
A bet that a price will fall. Also known as a “sell bet”, or “going short”.
Downtrend
A price pattern characterized by a series of lower highs and lower lows.
Deutsche Borse
Germany’s main securities market, including the Frankfurt Stock Exchange.
E
ECB
European Central Bank
Economic Indicators
Statistics and data showing trends in the economy, issued by governments or agencies. Traders use them to try to predict which direction the economy in general is heading. They include employment rates, GDP, Auto Sales, etc…
EFT
Electronic Fund Transfer. Usually required for larger margin or cash calls.
EPS
Earnings per Share. It’s a ratio used to compare stocks
Equities
Ordinary shares in a company. Also called Stocks in the US.
EUREX
European Derivatives Exchange, based in Frankfurt
Euribor
The 3 month European interest rate. Short for Euro Interbank Offered Rate. This is the rate at which large prime banks borrow and lend to themselves in the Euro currency.
Ex-Dividend
Shares that are traded the day after the most recent dividend has been paid. Shares will normally drop in value on the ex-dividend date by the value of the dividend.
Expiry date
The date a spread bet ends. The bet is automatically closed and settled on this date unless the investor closes it beforehand, or instructs the company to roll it over to the next period. Also known as the Expiration date.
Exposure
How much your portfolio is invested in a particular sector or market as a portion of your overall capital.
F
False Break Out
A breakout that turned out to be temporary. For example, if the Euro trades between $1.21 and $1.25 for some months, and then one day rises above $1.25, before quickly falling back down to below $1.25 again.
Fast Market
A market with abnormally high levels of trading causing prices to change rapidly. Can cause a delay in electronic updating.
Federal Reserve
The Fed is the central bank of the US.
Fill
To execute an order.
FINEX
Financial Instrument Exchange, New York
FOREX
Foreign Exchange of FX. The exchange rate between two currencies.
FSA
Financial Services Authority. The government appointed body that regulates all financial trading and spread betting in the UK.
FTSE
The “footsie” is the leading securities exchange in the UK. The indices are maintained by the Financial Times and London Stock Exchange.
FTSE 100
An index of the top 100 largest and most widely-traded companies listed in the UK. It includes blue chip, household names such as Boots, BP, Tesco, Vodafone. These are the most widely owned securities, and the index is used as an economic indicator.
FTSE 250
An index of the next largest 250 companies by market capitalisation. The “mid-250” is an indicator of medium-sized companies.
FTSE 350
An index combining both the FTSE 100 and FTSE 250 – The biggest 350 listed companies in the UK by market capitalisation.
FTSE All Share
An index covering over 800 shares and representing 98% of UK market value.
Futures
A contract to buy or sell for a fixed price at some date in the future. The price of a futures contract will be different from the cash price to reflect the value of any interest foregone by the delayed payment of the cash, and also any dividends that are due to be paid before the expiration date.
G
Gapping
When a market opens or trades at a price away from the previously traded price without trading at intervening prices. When a client has specified an order at an intervening price, the market is said to have gapped through. Also known as slippage, it can often happen at times of high volatility. Guaranteed Stops can protect the spread bettor from gapping.
Gearing
The ability to make large profits or losses from a small initial outlay. A position with high gearing stands to make or lose a large amount from a small outlay. It can also refer to the ratio of a company’s borrowing to its assets – a highly-geared company has high ratio of borrowing relative to its assets.
Gilts
UK Government Bonds
GFD
Good for the Day orders. If they are not filled, they will be cancelled at the end of the business day.
GTC
Good Till Cancelled. An order that is valid until it has been filled or cancelled.
Grey Markets
Betting on the value of a share before trading begins on a stock market – for example some spread bet companies offer trading on the price of an IPO before it has officially started to trade.
Guaranteed Stop
A stop-loss order that guarantees you will close the bet at the specified price if the price hits that level, or if the price gaps through that level. It works the same as a regular stop loss order, but guarantees an exit price for your trade, protecting against slippage or gapping. It protects against an unexpected and rapid movement in price. While non-guaranteed stops are free, spread betting companies will generally charge a fee for guaranteed stop losses.
H
Hang Seng Index
The index of the 33 largest companies on Hong Kong stock exchange.
Hedging
Reducing the risk in one market by taking an offsetting position in another market. For example, if you hold shares in companies whose earnings are in dollars, you could hedge your dollar risk by making a spread bet that the dollar would fall. Any fall in value of the companies’ earnings caused by the fall in the dollar would be offset by your winnings on the spread bet. Other hedging strategies used by traders include hedging individual share positions (such as a long position in Vodafone) against an index (short FTSE).
Hedge Fund
A professionally managed pooled investment vehicle. Hedge funds are privately owned, and generally charge a management fee of 2% and 20% of any profits. Hedge funds are potentially very volatile as they often heavily leveraged.
HKFE
Hong Kong Futures Exchange.
I
Index
An arithmetic indicator representing the total value of stocks of a country or a sector, and reflecting the overall movements in price of a market. For example, the Dow Jones or FTSE are Indices.
Index futures
A futures contract on an index in the futures market.
Indicative Price
A quote that is not a firm dealing price, used for information purposes only. There is no obligation for the spread betting company to honour an indicative quote or price.
In the Money Option
This is where the strike price is below the current level for a call, or above the current level for a put. If the option were to expire immediately then the owner of the option would be “in the money” because there would be a value to his option.
Interest Rate
The cost of borrowing or financing a position expressed as a percentage of the total sum.
Interbank Rates
Foreign exchange rates at which large international banks lend to each other
Intraday Bets
A bet opened and closed during the course of one trading day.
IMM
International Money Markets
IMR
Initial Margin Requirement. The amount of money required to be in a trading account before the bet can be made. Also known as notional trading requirement (NTR). It varies from company to company and market to market, and covers the minimum potential loss as required by the spread betting company.
IPE
International Petroleum Exchange, London
IPO
Initial Public Offering. The offering of a company’s shares prior to its market debut.
L
Last Trading Day
The last day on which you can open or close a bet in a market. This can differ from the expiry date. Also known as the Last Dealing Day.
Last Dealing Time
The latest time on the last day that you can open or close a bet in a market.
Leverage
Also known as Gearing. It’s the degree to which you are exposed in the underlying market based on the initial outlay. Spread betting is by it’s nature a leveraged product – profits or losses can be multiples of the initial deposit.
LIBID
London Interbank Bid Rate. The rate at which one London banks are willing to pay for deposits to each other.
LIBOR
London Interbank Offer Rate. The rate at which London banks lend to each other.
LIFFE
London International Financial Futures Exchange
Limited Risk
A bet which has a strictly limited maximum loss.
Limit Order
An order to buy or sell a product when it hits a certain, more favourable price. It is used to secure a specified profit or loss.
Limit Up or Down
The maximum or minimum price a product is permitted to trade at by some exchanges during one day of trading.
Liquid/Illiquid Market
A liquid market has enough trade on both the supply and demand sides for trading to occur without affecting prices dramatically. In an illiquid market, a small amount of business often moves prices by a disproportionate amount, leading to wide spreads.
Long Position
Going Long means you buy in anticipation of the market rising in price.
Lot size
A lot is the minimum number of contracts that can be traded in a futures or options exchange.
LME
London Metal Exchange
LSE
London Stock Exchange
M
Margin
The amount of money required by spread betting companies to be in a client’s account to keep their positions open after a price moves adversely against them. Sometimes called variation margin.
Margin Call
When a company requests more money be lodged when the market moves against you.
Margin Trading
Where you can open a position by just putting down a fraction of your total exposure. In effect, the spread betting company is lending you the money until the outcome is known.
Market Capitalisation
The market value of a company. The total number of shares multiplied by the share price.
Market Hours
The normal opening hours for a market. Can vary depending on market and local timings. Usually 8.00am to 4.30pm. Although some indices and shares may trade 7.00am to 5.00pm. They set a start and end date for one day trading.
Market Maker
Companies that quote a two-way spread in relation to securities. They set the price of stocks and shares.
Market Order
An order that opens your position at the current market price.
MIB 30
Italian stock market index
Mid Price
The average of the bid and offer prices.
Minimum Trade Requirement
The lowest amount required on deposit or credit to fund a trade or maintain an open position. Also known as notional trading requirement.
MOC order
Market on Close. An order to cover the spread bet on close.
Market on Open order
An order to trade at the opening price of a market.
MSE
Milan Stock Exchange
N
NASDAQ
One of the world’s most important indices, featuring 100 of the largest US high tech firms. Short for “National Association of Securities Dealers Automated Quotation System”.
NIKKEI 225
The main index in Japan, made up of 225 stocks in the Tokyo Stock Exchange.
Notional Trading Requirement
Same as Minimum Trade Requirement or Initial Margin requirement. The amount of money needed on deposit to fund a leveraged position or keep open an existing losing position.
Nominal Value
The face value of share or stock as opposed to its market value.
NYBOT
New York Board of Trade
NYCE
New York Cotton Exchange
NYFE
New York Futures Exchange
NYMEX
New York Mercantile Exchange
NYSE
New York Stock Exchange
O
Offer Price
The cost in spread betting of buying or going long. The higher price of the spread quote. See Bid Price.
OCO (One Cancels Other)
Two orders in one market, one of which is cancelled when the other is traded.
OMLX
London Securities and Derivatives Exchange
Open Positions
Bets that are currently active across a trading portfolio.
Open Trade Equity (OTE)
Unrealised profit or loss in an open bet.
OTE Inclusion Rate
The proportion of OTE which can be used to finance a future or current bet.
Option
A contract giving you the right, but not obligation, to buy or sell a commodity or security at a given price within a certain time.
Order
The command issued to open or close a bet, either immediately or at some other point in the future. For example, a spread bettor might place an order to sell if prices rise to a certain level.
Orders Aware Margins
A way of setting margin requirements that take into account active stop orders.
Ordinary Stop Loss
Used to minimize losses, this is an order to close the bet at a certain level to prevent sudden big losses.
OSE
Osaka Securities Exchange
Over trading
Opening and closing too many bets in a short period of time.
P
Par Value
The face value of a security, usually a bond. Can also refer to when a security trades at a price of 100.
Pairs trading
A hedging strategy where a trader goes long and short on a pair of instruments in the same or similar sector to minimise the loss or guarantee a profit no matter how the market moves. For example, going long Tesco and short Vodafone.
Partial Closing
Closing a portion of an open bet by making an opposing one. It locks in some of the profit or loss while leaving some of the bet open.
PIP
Percentage in Points. Also called “per point” or a tick. In foreign Exchange trading it is usually the fourth decimal point (0.0001) and the smallest point by which the currency moves. In spread betting, it’s the size of the movement you are betting on relative to its starting position.
Premium
The difference in price between an asset’s value when it is trading across different exchanges or spread betting companies.
Pull an Order
Cancel an Order
Put or Put Option
The right, but not obligation, to sell shares at a fixed price, known as the strike, within a certain period.
Q
Quote
The prices at which traders can buy or sell a particular financial instrument.
Quarterly Bets
A spread bet which rolls over to the end of three month periods – March, June, September, December.
R
Range Trading
Markets often trade within a certain price range. Range trading is a trading strategy where you buy when the market is trading at the lower end of the range, and sell at the higher end.
Real Time
A computer system which shows the most up-to-date data is said to be operating in real time. A real-time quote gives the most recent price of a security. Opposite to a delayed quote
Rebound
When the price starts to recover.
Recession
Two consecutive quarters of negative economic growth as measured by a country’s GDP.
Reduced Spreads
Smaller gaps between buy and sell price
Resistance
A price level that an asset supposedly struggles to break through. Technical nalysts will identify resistance levels – their charts might show that a share never rises above $3.60 or falls below $2.50. Then the resistance level is $3.60 and the support level is $2.50. It often happens because when it gets to near $3.60 investors tend to sell, or close their bets.
Retail Investor
Small individual investors using money from their personal accounts.
Rights Issue
Existing shareholders are given the opportunity to buy more shares in the company before they are offered to the public.
Risk Management
Protecting a trading account from incurring large losses when the market moves against the positions held. Risk management tools include stops and limit orders.
ROCE
Return on Capital Employed. A ratio that shows the profitability of a company’s investment.
Rolling Daily Bet
A spread bet that closes at the end of one day’s trading and opens again at an almost identical price the next day. The difference in prices will be due to interest carrying costs, dividends and other corporate actions.
Rollover
Where a position that is due to expire is transferred into the next available expiry date. It usually incurs a small charge.
Running Profit/Loss
How your bets are doing. How much the positions in your account would be worth if you closed everything at the current market prices.
S
S&P 500
Standard and Poor’s American Stock Market Index comprised of the 500 biggest companies on the New York Stock Exchange.
SAF
South African Futures Exchange
Sell
You sell a market if you think it will fall. A bet that the price will go down. Also called going short, or a down bet.
Settlement Price
The price at which a position is closed, determining your profit or loss.
SETS
Stock Electronic Trading Service – allows access to trading on stock markets without physical presence
SFE
Sydney Futures Exchange
Shares
A unit of ownership of a company, also known as equities or stocks.
Short position/Shorting
Selling in anticipation of a falling market. To go short means to sell. Having a down bet in the hope of making a profit from falling prices. One of the big advantages of spread betting over trading in a regular brokerage account.
Short Sterling
The three month interest rate contract traded on the London exchange. Most spread betting companies offer bets on this rate.
SGX
Singapore Exchange
Slippage
This refers to the difference between where a stop loss order was placed, and the price where it was possible to fill the order. Sometimes prices fall quickly and never trade at the exact price where the stop loss was placed.
SOQ
Special Opening Quotation. The settlement price mechanism on some US futures.
SOFFEX
Swiss Options and Financial Futures Exchange.
Spot
The market price for a commodity or other financial instrument for immediate delivery. The opposite is a futures price, where the market price quoted represents the price for delivery on the expiration date.
Spread
The difference between the buy and sell price.
Stake
The amount of money you are betting per pip/point movement.
Stop Loss
An instruction to deal if the price moves against you, usually used to prevent big losses due to sudden price movements. It sets a price at which the position will be closed to protect you. It’s very important for spread betting that stop losses are used properly.
Strike Price
The price at which the holder of an option can buy or sell the underlying asset.
Support Level
A price at which a share supposedly never trades below, because investors tend to start buying when it falls to near that price. The support level will be judged by analysts. Opposite of resistance.
T
Takeover
When one company takes control of the majority of another company’s voting shares.
T-Bonds
Treasury bonds with a maturity date of more than ten years
Technical Analysis
An attempt to forecast price movements by looking at and analysing data, including historical trends on pricing charts, and using the analysis to make smarter bets.
Tick
The minimum incremental price movement of a market.
Trading Resources
The total available capital of an investor in his account, including cash balance, available credit, open profit or loss positions and initial margin.
Trading Tools
Charts, news reports, and other tools used to assist predict price movements.
Trading Range
Where the price range is bound by a higher and lower price band, usually when there is little news.
Trailing Stops
Special Stop Loss orders available from some spread bet companies, where the stop orders move automatically if the price moves in your favour, locking in your gains and keeping your position open.
TSE
Tokyo Stock Exchange – the world’s second largest securities exchange and operator of the main Japanese indices.
U
Underlying Markets
The actual markets from where the price of a spread bet is derived.
Up bet
Another term for a long position – where you buy in anticipation of a rising market, and make money from the price of an instrument going up.
Universal Stock Futures
Futures contracts on individual shares, traded on Euronext and LIFFE.
V
Variation Margin
The money on deposit with a spread-betting company that is currently being withheld to cover losses on a position above and beyond the initial margin.
Virtual Trading
Some spread betting companies have demonstration accounts where you can spread bet without risking real money. They use the same trading platforms and tools so bettors can practice and get used to how everything works before investing.
Volatility
The extent to which prices swing up and down over time. Higher volatility means bigger returns and bigger potential losses. A market that has seen a lot of movement in prices recently is said to be highly volatile, whereas a market where prices have not changed much at all has low volatility.
W
Wall Street
The street in New York where the NYSE is located. When someone refers to Wall Street they usually mean all financial institutions in New York including stock exchanges and banks.
Waived Deposit limit/NTR
This is where the spread betting company effectively advances you credit. Clients can open or maintain postions without putting money on deposit. They can keep all positions open as long as they stay within the Waived Notional Trading Requirement limit.
Watch List
A list of markets selected for special surveillance
Wireless Dealing
The ability to trade remotely via mobile phones, smartphones, or PDAs
Working order
An order that remains open, and has yet to be filled or closed
Y
Year End
The notional end date of a company’s trading year, when the accounting books are closed.
Yield
The rate of return on investment.
Z
Zero Coupon Bond
A bond that pays no interest but is bought at a price lower than the face value.