Glossary

Below is a list of some of the more popular trading terms which are used throughout this site. If you need further help or support regarding the explanation of any of these terms, please contact us and we will be happy to assist. 

AIM-listed company

The Alternative Investment Market is a sub-market of the London Stock Exchange, which allows smaller companies to float. Sometimes referred to as the “Penny Market” or “Penny Share Market”.

A

Basis of Expiry

The specification of the price at which a contract (trade) expires.

Bear Market

A market distinguished by declining or falling prices

Bid

The price at which a customer can sell the contract (trade) quoted. One side of the bid/offer quote.

Bonds

The bond market is where participants buy and sell debt securities. UK Gilts, German Bunds and US Treasuries are all collectively known as Bonds. The prices which we quote are derived from the underlying futures markets of the relevant contracts.

Bull Market

A market distinguished by increasing or rising prices.

Buy ("take" or "go long")

Buying means you have gone long in anticipation of a market rising i.e. the market will need to rise in order for you to profit. You would also make a buy to close out an existing sell (short) position.

Buy Limit / Stop

If you wish to go long (buy) at a price below the current market price you use a Buy Limit  

If you wish to go long (buy) at a price above the current market price you use a Buy Stop

B

Commodity Markets

These are markets where raw or primary products are exchanged (like gold and oil). These commodities are traded on regulated exchanges, in which they are bought and sold in standardised contract sizes. The prices which we quote are derived from the underlying futures markets of the relevant contracts.

Contract Month

The month during which a futures contract expires and during which delivery may take place according to the terms of the contract. When trading CFD’s, you are trading on a derived price of these contracts, so you will never have to take delivery of or deliver the underlying product.

Currency/Forex/FX markets

The foreign exchange markets trade one state or economic bloc's currency versus another's (commonly called a cross rate). These markets are traded in 'pairs' of two separate currencies (i.e. USD/GBP is the US Dollar versus Sterling currency pair). When a buy trade is made in a currency pair the client is anticipating that the first quoted currency is going to rally versus the second. Therefore if a client buys the USD/GBP cross he wants the USD to strengthen, so that you can buy more GBP for your USD.

C

Dividend

The part of a company's profits distributed to shareholders, usually on a regular basis. If you have an open buy position on an equity (excluding quarterly equity contracts) that goes ex-Dividend you will be credited with 80pc of the relevant dividend if you have an open sell position you will be debited 100pc of the relevant dividend.

Derivative

A security whose price is derived from an underlying asset (e.g. a share, currency, commodity or index) and may not give the holder any actual rights to the underlying asset.

D

ECB (European Central Bank)

The Central Bank of the European Union. The Chairman of the ECB is Mario Draghi.

EFT (Electronic Funds Transfer)

Also known as a wire transfer, or telegraphic transfer (t/t), this is the process of moving money from bank to bank electronically (online).

Equities (shares, stocks)

Equities represent a share of ownership in a company. Equities are traded via the stock market (e.g. the FTSE, the Dow Jones, the Nikkei etc.), a public market for the trading of company shares and derivatives at an agreed price. As you are trading on derived share prices, this does not give you ownership of the shares nor does it give you, at any time, the right to require or request delivery of those shares from us. You have no voting rights over the shares represented by your trade.

Euro

The official currency of the Eurozone, which consists of 17 of the 28 member states of the EU.

European Central Bank (ECB)

The Central Bank of the European Union. Mario Draghi is the current Chairman of the ECB.

Expiry Date

The date and time on which the specified contract expires.

E

Fill

The execution of an order. For example “My order to buy Gold was filled”.

Financial Conduct Authority (FCA)

The FCA is an independent body that regulates the financial services industry within the UK.

Fixed Exchange Rate

Official rate set by monetary authorities for one or more currencies.

Floating Exchange Rates

The value of a currency as decided by the fundamental market forces of supply and demand.

Foreign Exchange

The exchange of foreign currency. On the foreign exchange market, foreign currency is bought and sold for immediate / spot delivery (most common) or forward delivery.

Forex (FX)

Industry term. Same as Foreign Exchange.

Forward Contracts

Forward contracts allow the client to agree an exchange rate for their currency and fix it for up to 24 months. Clients are asked for an agreed deposit in order to secure the specified rate. The client then has access to their funds at the fixed rate given on entry at any time. This is ideal for a variety of property transactions.

Futures

A standardised, transferable, exchange-traded contract that expires on a specified future date.

Futures Contract

A futures contract is an agreement to conduct a transaction at some specified time in the future where the price is agreed now. Therefore, it means that the expiry date is at some point in the future. Our future contracts are settled in cash so you will never be required to actually deliver, or take delivery of, the physical product.

F

Gap ("gapping" or "slippage")

Where a market moves directly from one correctly quoted price to another, significantly different, correctly quoted price in relation to the level required by a client for execution of an order, leaving a noticeable “gap” in the market’s chart. There can be many reasons for gapping: economic figures; company announcements; political events; natural disasters etc. but the effect is that any fill on a stop loss, limit or new order may be at a different level from that requested by the client (unless you have requested your Stop to be guaranteed).

Gearing (or Leverage)

Clients can buy or sell a financial product with substantially less money than the actual full market value of that financial product. A position in a contract with high gearing or leverage stands to make or lose a large amount from a small percentage movement in the underlying instrument.

Good For The Day (GFD)

An order to buy or sell a market at a set price that is active until the close of business on the day the order is placed or until the order has been filled.

Good Till Cancelled (GTC)

An order to buy or sell a market that remains active until the order is executed or is cancelled.

Guaranteed Stop Orders

You can opt to place a Guaranteed Stop Orders on your positions with us. With a Guaranteed Stop Order you can trade safe in the knowledge that, should a market gap through your stop level, you will not suffer any extra losses from slippage and you will be stopped out at the level you requested. This typically costs slightly more via a wider spread, than placing a “normal”, non-guaranteed trade.

G

Hedging

The action of reducing the risk of an outright position in one market by taking an opposite position in a similar or derivative market, e.g. if you had a long trade in the DJ30 you might enter a short trade in the FTSE. In this case although the hedge would not be exact, as it is unlikely (but not impossible) that the DJ30 will move heavily in the opposite direction to the FTSE.

H

IBAN

International Bank Account Number

Indices

Indices are a customised basket of securities that track a particular market or segment. Each index has its own calculation methodology and its own specific process in order to select particular securities. We offer prices on all of the major financial indexes, such as the FTSE (UK), CAC (France), DAX (Germany), Dow (USA) and Nikkei (Japan).

Interbank Rates

The Foreign Exchange rates at which large international banks quote other large international banks.

International Bank Account Number (IBAN)

A standardised format adopted by European Union member nations to facilitate cross-border money transfers within the European Union.

I

Last Dealing Day

The last day in the contract month on which a customer may deal in the product. This may be a significantly different date to the Expiry date.

Limit Order

An order to close an existing open position at a better price than that which is currently available.

Limited Risk Account

With a Limited Risk Account all your positions will have an associated Guaranteed Stop Order attached to them. This means that, should the market move against you, there will be a guarantee to close all your positions at a pre-specified exact point. In other words, for every trade you open with a Limited Risk Account you must specify a stop to cover the maximum possible loss in your account. As mandatory Guaranteed Stop Orders are essentially a form of insurance against market gaps, they do come at a small cost. This will be a premium that will be debited from your account when you place a trade, normally via a wider spread. You should also note that by opting for a Limited Risk Account your Stop will need to be placed further away from your entry level than if you selected a standard account where Guaranteed Stop Orders are not mandatory.

Liquidity

The ability of an asset to be converted into cash quickly, without any price discount and any restriction to size of transaction.

Leverage (or Gearing)

Clients can buy or sell a financial product with substantially less money than the actual full market value of that financial product. A position in a contract with high gearing or leverage stands to make or lose a large amount from a small percentage movement in the underlying instrument.

Long Position

A client is said to be long if he/she has an open buy position.

L

Margin

Margin is a form of collateral or security and the term is used to describe funds being used to support existing trades. Clients who hold open positions require what is called margin. Margin is calculated as the amount of money you must have in your account to satisfy us that you are able to honour your debt should your trade lose money.

Market Hours

The times at which we will quote on a given contract i.e. when the specific market is open.

M

OCO (One Cancels Other)

Where you have two orders, one above the current market price and one below the current market price and when one order is executed the other is automatically cancelled.

Offer

The price at which a customer can buy the contract (trade) quoted. One side of the bid/offer quote.

Order

An order is an instruction to place a Trade at a price that is not currently available in the CFD but might be available at some future time. There are three types of orders: 'Limit', 'Stop Loss' and 'New'. We also offer guaranteed stop losses which protect you against any market gaps or slippage and there is a premium for this extra protection (see the Market Information).

O

Pip / Tick / Point

A pip / tick / point are the general terms for the smallest incremental move possible in any market quoted by us. Clients should always be aware of what the underlying stake or unit risk is for all markets in which they wish to trade.

P

Quarterly Contracts

These contracts expire prior to or on their expiry date in March, June, September or December. They can be closed out at any time before the expiry date.

Quote

An indicative market price, normally used for information purposes only.

Q

Rate

The price of one currency in terms of another, typically used for dealing purposes.

Risk Management

The employment of financial analysis and trading techniques to reduce and/or control exposure to your specified trading markets

R

Slippage ("gap" or "gapping")

Where a market moves directly from one correctly quoted price to another, significantly different, correctly quoted price in relation to the level required by a client for execution of an order, leaving a noticeable “gap” in the market’s chart. There can be many reasons for gapping: economic figures; company announcements; political events; natural disasters etc. but the effect is that any fill on a stop loss, limit or new order may be at a different level from that requested by the client (unless you have requested your Stop to be guaranteed).

Spot deals

A trade is agreed based on the current market rate in the live market. A client can access their account online and place their trade instantly. 

Spot Rate

The current rate for a spot transaction.

Spread

The difference between the buy and sell price of our quote. A customer may sell at the lower price or buy at the higher price of the quote. The difference between the bid price and offer price.

Stop Loss Order

A pre-determined order to close an open position in a contract at a given price should that contract reach the price designated at some point in the future. An open sell would have a buy stop above the current quoted price and an open buy would have a sell stop below the current quoted price. Stop losses are voluntary and can be generated by the trading system. They can also be amended by you (subject to availability of sufficient 'Trading Resources' on your account). If a market gaps your stop loss may not be filled at the level you requested. In this event we always endeavour to close your trade at the best price reasonably achievable in the relevant underlying market. We also offer

Sell Stop / Sell Limit

If you wish to go short (sell) at a price below the current market price you use a Sell Stop

If you wish to go short (sell) at a price above the current market price you use a Sell Limit

S

Telegraphic Transfer (T/T)

The old terminology for what is now called an electronic funds transfer (EFT) or wire

Trailing Stops

Trailing stops are a risk management tool that allow you to manage your risk without restricting your potential profit. Trailing stops help you to secure your gains as the market moves in your favour, giving you added flexibility as they will automatically track your profitable positions so that you don't have to continuously monitor your position and move your stop manually.

T

Volatility

A term to describe and quantify, the relative movement of a given market in the recent past. A market that moves a great deal is said to be volatile.

V

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