Spread Betting Glossary

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. A class of share, often used by companies based outside America to create a listing in the USA.
AEX
Amsterdam Stock Exchange. An Index of 25 of the largest stocks traded on the Euronext Amsterdam Stock Exchange.The main index that investors trade is the AEX aka “Netherlands 25”
AFO
Austrian Futures and Options Exchange. The main index that investors trade is the ATX aka Austria 20.
After Hours Dealing / After Hours Trading
Securities trading after regular trading hours on organised exchanges. Also see 24 Hour spread betting guide.
Analyst
Employee of a bank, brokerage or fund manager who studies companies and makes buy-and-sell recommendations.
App
Mobile phone and tablet apps that can be used to trade the markets. Also see mobile phone apps spread betting guide.
Arbitrage
The process where a gap between two Market Makers prices is exploited by buying from one while simultaneously selling to the other to lock in a risk free profit.
ASE
Athens Stock Exchange. The main index that investors trade is the FTASE aka Greece 20.
Ask or Ask Price
The quoted price at which an investor can Buy a share, index or commodity. The higher price of a quoted spread. Also called the Offer Price. Eg if the FTSE 100 is 6130 – 6132, then 6132 is the Ask or Offer Price.
ASX 200
aka Aus 200 aka Australia 200. A stock market index of 200 Australian companies. Also see Australian Stock Market Spread Betting Guide
At Par
At a price equal to the face value of a security.
Auction
Many auctions occur in the financial markets. The most common is the Post Market Auction on the FTSE 100. This occurs from 1630 to 1635 and then the official settlement is declared.
Authority to Deal
Allowing someone to spread bet on your behalf. This will require your written notification and in some cases an identity check.

Backwardation
This occurs when the bid price exceeds the offer price for a share. This is a market distortion which usually occurs when stock is suspended or under a share repurchase scheme.
Base
A technical analysis tool. A chart pattern depicting the period when the supply and demand of a certain stock are in relative equilibrium, resulting in a narrow trading range. The merging of the support level and resistance level.
Base Rate (Europe)
The official rate at which The European Central Bank will lend to the retail banks.
Base Rate (UK)
The official rate at which the Bank of England will lend to the retail banks.
Basis
The difference between the price of a futures contract and the underlying market.
Basis of Expiry
The specification of the price at which a spread bet (contract) expires.
Basis Point / bp
Basis Points are a way of expressing variations in bond yields and interest rates. One basis point is a hundredth of one per cent (0.01 per cent). 1bp = 0.01%. If an interest rate rises from 4.5% to 5.0% it has increased by 50 basis points.
Bear
A person (bear) is someone who is pessimistic about the market and expects it to fall. Opposite of a ‘bull’.
Bear Market
A ‘bear market’ is a term used to describe a falling market, or one that is trending lower. Opposite of a ‘bull market’.
Bet Per
The minimum movement you can bet on. This may differ from the underlying market tick size. See Unit Risk.
Beta
The measure of an asset’s risk in relation to the market.
Bid or Bid Price
The quoted price at which an investor can Sell a share, index or commodity. The lower price of a quoted spread. Eg if the FTSE 100 is 6130 – 6132, then the 6130 is the Bid Price.
Bid-Ask Spread
The difference between what buyers are willing to pay and what sellers are asking for in terms of price.
Black Friday
The original Black Friday occurred on September 24, 1869, when prospectors attempted to corner the gold market.
Black Monday
Refers to October 19, 1987, when the Dow Jones Industrial Average fell 508 points on the heels of sharp drops the previous week. On Monday, October 27, 1997, the Dow dropped 554 points. While the point drop set a new record, the percentage decline was substantially less than in 1987.
Black-Scholes Option Pricing Model
A model for pricing call options based on arbitrage arguments. Uses the share price, the exercise price, the risk-free interest rate, the time to expiration, and the expected standard deviation of the share return.
Blue Chip
Blue Chip companies are large, well established and conservatively managed. The term refers to the highest valued poker chip.
BOBL
Medium term (5 year) German Government Bond.
BoE
The Bank of England. The central bank of the UK. Also see www.bankofengland.co.uk.
BoJ
Bank of Japan. The central bank of Japan. Also see http://www.boj.or.jp/en/.
Bollinger Bands
Plus or minus two standard deviations where the standard deviations are calculated historically in a moving window estimation. Hence, the bands will widen if the most recent data is more volatile. If the prices break out of the band, this is considered a significant move. Bollinger Bands can be a useful predictor of imminent market movement. When they are contracting, look for a break out and when they are expanding, look for consolidation.
BSE
Brussels Stock Exchange.
Bull
A Bull is someone who thinks the market will rise. The opposite of ‘bear’. Somebody who expects a market to rise is commonly referred to as being ‘bullish’.
Bull Market
A ‘bull market’ is one that is rising, or is trending higher. The opposite to ‘bear market’.
Bund
Long term (10 year) German Government Bond.
Buy / Buy Bet
A bet that the price of a particular market / financial instrument will rise. Also called an Up Bet or Going Long.
Buy Order
An instruction to Buy at a different price to where the market is currently trading.

Cable
Market nickname for Sterling/US dollar exchange rate.
CAC 40
A Share Index of 40 of the largest companies listed on Euronext Paris (the largest stock exchange in France). Also see French stock market spread betting guide.
Call or Call Option
A ‘call’ option gives the purchaser the right, but not the obligation, to buy at a pre-arranged fixed price. A ‘put’ is the opposite of a ‘call’.
Capital Gains Tax
A tax on investment profits. Spread betting winnings are free of any UK Capital Gains Tax under current UK laws*.
Cash or Spot
The current level of an underlying market.
Cash Price
The price for immediate settlement, also known as the ‘spot price’.
CBOT
Chicago Board of Trade. An exchange where futures and options are traded. In 2006 the Chicago Board of Trade was purchased by the Chicago Mercantile Exchange.
CFD
See Contract For Difference.
Change
The change represents the difference between the current market price and the closing price of the previous day.
Charting
A visual method of trading or analysis of the markets using price information to form a picture of previous price movements. Also referred to as technical analysis. Also see Introduction to Technical Analysis.
Chartist
Person who analyses markets with the use of charts. Also see introduction to spread betting charts.
City Index
A spread betting and CFD company, also see City Index Review.
Closing Price
The price at which a product was traded to close the open position. Also refers to the price of the last transaction in a days trading session. Also known as the Settlement Price.
Closing Trade
A second bet of equal size to the initial bet but in the opposite direction, therefore closing out the trade and resulting in a profit or loss.
CMC Markets
aka CMC. One of the largest spread betting and CFD firms, see CMC Markets Review.
CME
Chicago Mercantile Exchange. An exchange on which a number of different products such as futures and options are traded.
COMEX
Commodity Exchange (part of NYMEX).
Commissions
Fees that brokers charge a client for buying / selling of a financial product. Commissions range from broker to broker, and can be charged as a percentage or as a flat rate. Rarely charged by spread betting companies.
Commodities / Commodity Markets
Physical products whose prices are subject to supply and demand. These are usually traded via Futures Contracts. Commodities are split into three categories ‘Energies’ (e.g. crude oil and natural gas), ‘Metals’ (eg gold and silver) and ‘Softs’ (e.g. Cocoa, Sugar, Wheat). Also see Commodities spread betting guide.
Compliance Department
A department in all organised stock exchanges employed to ensure that all companies, traders and brokerage firms comply with the Financial Conduct Authority.
Contango
When the price for immediate delivery of a commodity is lower than the price of delivery at a future date.
Contingent If Done Order
Instructions you give to attach a stop loss and/or limit order to your opening order if it is triggered and filled. Also known as an If Done Order.
Contract For Difference
CFD. A leverage based share trading product with similar characteristics to a spread bet.
Contract Month
The month during which a futures spread bet expires.
Contract Note
The confirmation of your trade describing the market, the unit of trading, the action (buy or sell), the price and the expiry date. Can be e-mailed or sent by post.
Controlled Risk Bet
A bet which has a maximum permissible loss.
Cost of Carry
The interest cost associated with keeping a geared or leveraged trade open for a period of time / the interest intrinsic in share futures prices. The Cost of Carry excludes any dividends payable during the contract period.
Cover
To sell a long position or buy a short position.
CPI / Consumer Price Index
An index which is used as a measure of inflation.
Credit Account
A Credit Account is often available to clients subject to their financial status and original proof of funds. Approval of a credit account will be at the discretion of the Operator and will be subject to certain financial conditions.
Credit Allocation
The credit allocation will allow a client to maintain unrealised losses without paying margin. As the markets move up and down positions will acquire unrealised profit or loss, as long as the clients open positions remain within the credit allocation then no funds will be due.
Cross Rates
Foreign exchange rates between two currencies.
CSCE
Coffee, Sugar and Cocoa Exchange (New York).
Currencies
Money in public circulation. Also see Foreign Exchange.
Currency Future
A financial futures contract for the delivery of a specified foreign currency. See Foreign Exchange.

Daily Funded Bet
aka DFB. A spread bet that has an expiry date many years in the future but designed for short-term trading. Normally seen on the IG platform. Very similar to a Rolling Cash or Daily Rolling spread bet. Investors are charged a small overnight financing fee when they keep their DFB open from one day to another. Also see guide to Daily Funded Bets.
Daily Spread Bet
A spread bet without an expiry date that is designed for short-term trading. Investors are charged a small overnight financing fee when they keep the trade open from one day to another. Also known as a “Rolling Daily” and “Rolling Cash” spread bet. Also see Daily spread bets guide
DAX
Dax 30 or DAX. The index of the Germany’s top 30 companies, in terms of order book volume and market capitalisation. Also see German stock market spread betting guide.
Day Trading
Opening and closing of a position in the same contract in one day.
Dealing Desk / Trading Desk
You phone a Dealing Desk in order to trade.
Delist (de-list)
To remove a stock’s listing on an exchange.
Deliver
The sale of a futures contract may require the seller to deliver the commodity during the delivery month, if the short position is not offset prior to that time.
Delivery Date
Date by which a seller must fulfill the obligations of a forward or futures contract.
Delivery Month
The specified month in which a futures contract is delivered or expires. These are normally March, June, September and December but may also be on a 1-2-3 month cycle e.g. January, February, March.
Delta
The ratio of the change in price of an option to the change in price of the underlying asset.
Demo Account
aka Demonstration Account aka Practice account. A free account offered by the spread betting and CFD companies where you can practice trading on live markets but with virtual money. Also see guide to demo accounts.
Deposit
Funds that need to be on your account in order to place or hold a bet. It is not the total amount that can be lost on a trade.
Derivative
A financial contract whose value is based on or derived from, a traditional security (such as a share or bond), an asset (such as a commodity) or a market index. Financial spread betting is a derivative product.
Deutsche Borse
Germany’s major securities market, including the Frankfurt Stock Exchange.
DFB
See Daily Funded Bet.
Differential Market
Some companies will quote some Differential prices such as the difference between Wall Street and the FTSE.
Discount (i)
The amount by which one contract month differs from another month in the same instrument, eg December FTSE is trading at 6300 whilst March is at 6350; thus, December is at a discount of 50 to March.
Discount (ii)
When a derivative is trading below the current market price it is said to be trading at a discount. A futures market that is trading below the level of the spot market is said to be trading at a discount.
Dividend
Portion of a company’s earnings paid to shareholders. Clients who have Spread Betting Buy positions in share contracts are not entitled to dividend payments. Dividends are paid at a company’s discretion.
DJIA
See Dow Jones Industrial Average.
Double Witching Day
The last trading day before expiry of options and futures on the same underlying asset. Double witching days can have high volatility. Also see Triple Witching Day.
Double Witching Hour
The final hour of trading on Double Witching Day.
Dow Jones Industrial Average
DJIA. The index that reflects the performance of the top 30 US stocks. Often referred to as the Dow, Dow Jones or Dow 30. In spread betting rather than being called the Dow or Dow Jones or Dow 30, the Dow 30 market is often called ‘Wall Street’.
Dow or Dow 30
The Index of the top 30 US traded stocks. In spread betting rather than being called the Dow or Dow Jones or Dow 30, the Dow 30 market is often called “Wall Street”. Also see Dow Jones spread betting guide.
Down Bet / Down Trade
A bet taken in anticipation of a falling market. If you think a market will fall, you would Sell or Go Short or place a Down Bet.

ECB
The European Central Bank. Also see the http://www.ecb.int.
Economic Indicators
The key statistics of the economy that reveal the direction the economy is heading in.
EDSP
Exchange Delivery Settlement Price. Used by many markets to arrive at the Expiry Price. The average traded price over a set period that determines the settlement price for some futures contracts.
Energy / Energies
Refers to Commodities products relating to crude oil and natural gas.
Equity
Also commonly referred to as holdings, securities, shares or stocks. They are the right to a specified percentage stake of the company by whom they are issued.
ETF
see Exchange Traded Funds.
ETX Capital
aka ETX. A spread betting and CFD broker, also see ETX Capital Review.
EUREX
European derivatives exchange formed in 1998.
Euro
European Currency unit introduced on January 1, 1999.
Eurodollar
Exchange rate difference between the Euro and the US dollar. Also see EUR/USD guide.
EURONEXT
European securities and derivatives exchange.
Ex-Dividend
Without dividend, that is, the purchase of share will not receive the most recent declared dividend. Shares paying a dividend often drop in value on their ex-dividend date.
Ex-Dividend Date
The date on or after which, if a share is purchased, the purchaser will not receive the most recent dividend
Exotics
Forex pairs that are less broadly traded than any of the Major and Minor currencies eg USD/MXN Spread Betting USD/CZK, GBP/HUF, EUR/PLN etc.
Expiry Date
The date that a spread bet expires. The trade is settled automatically on this date unless the trader closes the bet beforehand or instructs the bookmaker to roll the bet over to the next expiry date. Not to be confused with Last Day of Trading.
Expiry Price
Price at which contracts are settled if they are left to expiry also referred to as the ‘make-up’ or ‘settlement price’.
Exposure
Describes how much of your portfolio is invested in a particular sector.

Fair Value
This is the theoretical price at which a futures contract should trade. Fair values for share indices are determined by differentials in interest rates and dividend payments.
FANG
Acronym for the four big tech stocks of Facebook, Amazon, Netflix and Google (Alphabet).
Fast Market
Excessively rapid trading in a specific security that causes a delay in its electronic updating.
FCA
The Financial Conduct Authority. The governing body that regulates the financial services industry including spread betting. Enforces strict rules on the conduct of spread betting in the UK. Superseded the FSA. The FSA superseded SFA on the April 29, 2000. Also see www.fca.org.uk.
Fed
See Federal Reserve.
Federal Reserve
The central bank of the United States. Also see www.federalreserve.gov.
FIFO
First In, First Out. This is how multiple positions are arranged meaning that if more than one position is open in the same contract, the trade that was made second cannot be closed until all of the first contract is closed.
Fill
The execution of an opening or closing order and the price it is executed at.
Financial Spreads
A spread betting and CFD broker. Not to be confused with “Finspreads” which is part of a separate company. Also see Financial Spreads Review.
FINEX
Financial Instrument Exchange, New York.
Finspreads
A spread betting platform which is part of GAIN Capital. Not to be confused with “Financial Spreads” which is a separate company. Also see Finspreads Review.
Flat
Indicating neither growth nor decline. Term is often used when a particular market is trading in a tight range.
Float / Flotation
When a company’s shares are offered to investors and quoted on an exchange for the first time.
Foreign Exchange
The market for a currency pair where one currency is sold in order to buy another. Also see Forex.
Forex
Trading Foreign Exchange markets, i.e. two currencies against each other e.g. euro/dollar or dollar/yen. Also see Forex spread betting guide.
Forward Bet
aka Futures Bet, also see What is a Forward Spread Bet?
France 40
The CAC 40.
FTSE
Financial Times Stock Exchange. These firms are jointly responsible for the compilation and maintenance of the main stock indices reflecting the performance of the UK’s top shares. Also used as an abbreviation for the FTSE 100
FTSE 100
aka UK 100. The index that highlights the performance of the UK’s top 100 companies, as ranked by their market capitalisation. Also see FTSE 100 spread betting guide.
FTSE 250 or FTSE MID 250
aka UK 250. The index of the next 250 biggest listed UK companies after the 100 biggest listed UK companies, i.e. does not include FTSE 100 companies.
FTSE 350
The index of the top 350 UK companies by market capitalisation. It is a combination of the FTSE 100 and FTSE 250.
FTSE ALL SHARE
An index covering about 800 shares representing 98% of UK market value. There are indices for business sub-sectors as well. This is the aggregation of the FTSE 100, FTSE 250 and FTSE Small Cap Indices.
FTSE Small Cap
The FTSE companies outside the FTSE 350 Index. Represents about 2% of the UK market capitalisation.
Fundamental Analysis
Examination of a company’s financials, assets, management, market niche, and products to determine value.
Futures / Futures Trade
See Futures Bet
Futures Bet
aka Futures Contract aka Forward Bet, a type of trade that has a defined expiry date. Buying or selling a trade at an agreed opening price and for a set expiry date in the future. With spread betting and CFDs, the expiry date is normally within the next 1-6 months. Also see What is a Futures Spread Bet?
FX
See Foreign Exchange.

Gamma
The ratio of a change in the option delta to a small change in the price of the asset on which the option is written.
Gap
Where the market trades through a level specified by the client in an order. Market gaps are common during volatile markets. Also see Gaps and Slippage guide
Gaps Through
The market trades through the level specified in your order, without actually trading at that given level. See Gap
Gearing
The use of debt to increase exposure. This can result in high risks / rewards. Gearing is also known as leverage. Gearing is the ratio of a company’s borrowing to its assets. A highly geared company is one that has a lot of debt as a proportion of its total assets. Gearing also relates to the Notional Trading Requirement when compared to the total underlying value of a trade. Financial Spread Betting is a leveraged product because you do not have to fund your total exposure when opening a position, only part of it, which is referred to as Trading on Margin. Gearing in spread betting results in magnified profits and losses.
Germany 30
The DAX 30.
GFD
See Good For The Day.
Gilts
UK Government Bonds. So called because the certificates were originally gilt edged.
Good For The Day / GFD
An order, which if not filled, expires at close of business on the day it is received, ie an order that can only be filled on the day it is lodged and if not executed will expire at the close business on the day in question.
Good Till Cancelled / GTC
An order that will be carried forward indefinitely until it is either filled or cancelled by you.
Good Till Date
An order, which if not filled, expires at close of business on a date specified by you.
Grey Market ( Gray Market – US)
A term for informal markets that are not listed on any exchange, for example IPOs and political bets. In spread betting firms will often make a market even after the relevant underlying market has closed, or before it has opened (the ‘pre-market’). Eg the FTSE 100 closes at 4:30pm however it is often possible to trade after that. In this case known as ‘Out of Hours Trading’. Note that the spreads are often wider with Out of Hours Trading.
GSL
See Guaranteed Stop
GTC
See Good Till Cancelled.
Guaranteed Order
For a small fee you can protect an order against the risk of any market Gaps. Also see Guaranteed Stop.
Guaranteed Stop / Guaranteed Stop Loss
An order you attach to a spread bet or CFD to close your trade, when the market hits a level that you set, so that your trade is closed to limit your losses. Similar to a “Stop Loss” but “guaranteed”, i.e. the order will be filled even if the market “gaps” lower. You may incur a small initial charge (or wider spread) when using this type of order. Also see Guaranteed Stop Loss guide.

Hedge or Hedging
Reducing the risk of an outright position in one market by the buying or selling of contracts in a similar or derivative market, eg ‘hedging a Short FTSE position by Buying a FTSE Call option’.
HK40 – HK45
Hong Kong stock market indices. Also see Hong Kong stock market spread betting guide
HKFE
Hong Kong Futures Exchange. Also see Hong Kong Index.
Hostile Takeover
When one company bids to buy another against the wishes of the latter.

ICE
Intercontinental Exchange. A London based exchange on which futures and options on energy products are traded. One of these, Brent Crude Oil, is a world benchmark for oil prices. ICE was formerly known as the International Petroleum Exchange.
Ichimoku Cloud
A popular charting pattern. Also see Ichimoku Cloud guide.
If Done Order
An instruction you give to a Spread Betting Company to attach a Stop Loss and/or a Limit Order to your new Order if it is filled. The ‘if done’ order only becomes active if the opening order is triggered. This is also known as a Contingent Order.
IG
Used to be called IG Index and IG Markets. The largest and oldest spread betting and CFD company, also see IG Review.
Illiquid
A market that is lightly traded ie does not have much trading volume. It is usually characterised by a wide bid-offer spread and is therefore usually expensive to trade.
IMM
International Monetary Market.
IMR
See Initial Margin Requirement.
In-the-Money Option
A Put Option that has a strike price higher than the underlying future price, or a Call Option with a strike price lower than the underlying futures price.
Index / Indices
A statistical indicator that represents the total value of the shares that constitute it eg the FTSE and Dow Jones are both indices. It often services as a barometer for a given market or industry and acts as a benchmark from which financial or economic performance is measured.
Index Futures
A Futures Bet based on a stock market index e.g. a Futures Bet on the FTSE 100.
Index Rolling Bet
A Daily Spread Bet aka Rollling Daily Bet based on a stock market index e.g. the Daily spread bet on the Dow Jones.
Indicators
Indices, either positive or negative, which indicate the strength and significant trends in a nation’s economy. eg inflation, interest rates and employment figures are all indictors.
Inflation
The rate at which the general level of prices for goods and services is rising.
Initial Margin Requirement
This is the amount needed on deposit or credit in order to place a trade. This can be reduced by placing a stop loss. The Initial Margin Requirement is a way of calculating the minimum funds required to open a new position. If the minimum IMR on a market is 50 and you wished to stake £2 per point, you would require a minimum of £100 trading resource to open a new position, ie you would need a £100 deposit or £100 in available credit with your spread betting company before you could place the spread bet. Also known as Notional Trading Requirement (NTR). Also see Margin Calculation.
Initial Public Offering (IPO)
A private company’s first offer of shares to the public.
Inside Information
Material information about a company that has not yet been made public. It is illegal for holders of this information to make trades based on it.
Insider Dealing
Refers to any use, for purposes of financial gain, of any price sensitive information that is not already public knowledge (Inside Information). Insider dealing is punishable by unlimited fines and a possible prison sentence.
Interest Rate
Cost for the use of capital expressed as a percentage of the sum of money borrowed.
Interim Dividends
A company’s distribution of profits to shareholders halfway through the financial year.
Interim Report
Financial statement that reflects only a limited period of a company’s financial statement, not the entire fiscal year. All companies quoted on the London stock exchange must release an interim report after the first 6 months of their financial year. It tends to concentrate on profitability, and may be used to justify an interim dividend.
InterTrader
A spread betting and CFD platform, also see InterTrader Review.
Intrinsic Value
The value of an option if it were to expire immediately with the underlying market at its current price.
IPE
International Petroleum Exchange, London.
IPO
See Initial Public Offering.
Issued Share Capital
Total amount of shares that have been issued.

Japan 225
See Nikkei 225.

Lagging Indicators
Economic indicators that follow rather than precede a country’s overall pace of economic activity.
Last Day of Dealing
The last Day on which you can open or close a trade in a relevant market. Not to be confused with Expiry Date.
Last Trade
Normally the last traded price in a particular market.
Last Trading Day
The final day of dealing in a spread bet before it expires. Note that the Last Trading Day is often different for different products and the actual time of expiry also varies depending on the product.
LCG
A spread betting and CFD company, also see LCG Review.
Leading Indicators
Economic indicators that change before the economy changes.
Leverage
Leverage is the ratio between the initial outlay and the equivalent position in the underlying market. Leverage is the realisation that a large return can be obtained from a relatively small outlay with risks attached. Also known as Gearing. Also see Leveraged trading guide.
Liability
Debt, financial obligation or potential loss.
LIBOR
London Inter Bank Offer Rate. The reference level fixed daily at which London banks will lend money to each other.
LIFFE
London International Financial Futures and Options Exchange.
Limit Down
The maximum amount by which the price of a futures contract may fall in a trading day. This happens when an exchange enforces a temporary price floor, suspends, restricts or closes the market for a set time in order to maintain a fair and orderly market and reduce the risk of large and sudden price movements.
Limit Order
aka Take Profit Order. An order to buy or sell a product when it hits a certain price. A limit order is placed when you want to do a trade at a better price than the current quote. Limit orders can be filled at better levels than expected. This can occur when markets do not move smoothly. They ‘gap’ from one price to another at times and your limit order will be filled at the next price.
Limit Up
The maximum amount by which the price of a futures contract may rise in a trading day. This happens when an exchange enforces a temporary price ceiling, suspends, restricts or closes the market for a set time in order to maintain a fair and orderly market and reduce the risk of large and sudden price movements.
Liquid / Illiquid
The volume of business that can be transacted in the market. Highly liquid markets typically have narrow spreads and can accommodate large deal sizes. Illiquid markets have wide spreads, small deal sizes and are often erratic.
Liquidity
A measure of activity in the market. In an illiquid market, a relatively small transaction can significantly move the price. This is unlikely to happen in a liquid market.
Listing
When a share is traded on an exchange it is said to be Listed or have a Listing.
LME
London Metal Exchange (also London Mercantile Exchange).
Long
A bet taken in anticipation of a rising market. Also known as an ‘up bet’, to ‘Go Long’ or to ‘Buy’.
Long Position
Having bought, but not yet sold. A long position is entered with the aim of profiting from an increase in price.
Lot
The minimum amount that can be traded in the underlying futures or options exchange. Also referred to as the ‘lot size’ or ‘contract size’.
LSE
London Stock Exchange. Also see FTSE 100.

Majors
Refers to the most active and widely traded currency pairs eg EUR/USD, USD/JPY, EUR/JPY, GBP/USD, EUR/GBP, USD/CHF etc.
Make-up
See Expiry Price.
Margin
The deposit or available credit needed on your account in order to start / maintain your positions open.
Margin Calculation
Margin is often calculated as £ / point x (Stop Loss + Initial Spread) eg a spread bettor buys £10 per point of Vodafone Futures with a stop loss of 50 points. The Margin Required = £10 x (50+6) = £560. ie spread bettor would need £560 on deposit or in available credit to place this bet.
Margin Call or Margining
The practice by which an Operator can request that you deposit further funds to run a larger or loss making position.
Mark to Market
The value adjustment of an asset or liability to reflect the current market price, in spread betting this occurs in real time.
Market Capitalisation
The market value of a company. The total number of shares in issue multiplied by the share price. Often abbreviated to ‘Market Cap’.
Market Gap
A term used when the price of a market rapidly increases or decreases in a direction away from its last price range, see ‘Gap’.
Market Maker
Exchange registered companies that quote a two-way spread in relation to securities.
Market on Close Order
A specific order to open or close a position at the price that a market closes, but is not guaranteed.
Market on Open Order
A specific order to open or close a position at the price that a market opens, but is not guaranteed.
Market Order
An order to have a position opened or closed when the underlying market trades at the specified price. Market orders are then filled at the current market price. Also known as a Market Price Order.
MATIF
March Terme International de France (Paris futures market).
Maturity Date
The date and time at which a bet expires.
Maximum Trade size
The maximum stake that can be placed at any point in time.
Merger
When two companies combine in order to form one entity in all respects.
Metals
Commodities relating to the Metals and Precious Metals eg gold, silver and Copper.
Mid Price
The price half-way between the buy and sell prices.
Minimum Size / Minimum Stake
The minimum bet size or stake per point in a particular market. Most spread betting companies offer a minimum bet size of £1 per point (or currency equivalent).
Minors
Refers to less active and less liquid currency pairs which are less popular than the Majors and more popular than Exotics. Eg GBP/CAD, AUD/NZD, AUD/JPY, USD/DKK, USD/NOR.
MSI
Milan Stock Exchange.

NASDAQ
National Association of Securities Dealers Automated Quotation System. Also see NASDAQ 100.
NASDAQ 100
A composite index that reflects the performance of high tech stocks in the US. An Index of 100 of the largest domestic and international securities listed on the NASDAQ Stock Market based on market capitalisation. Also see NASDAQ spread betting guide.
Nikkei 225
Aka Japan 225. Refers to the price-weighted average of 225 stocks of the first section of the Tokyo Stock Exchange. Also see Nikkei 225 spread betting guide.
Normal Market Size / NMS
The amount that can be traded on a typical market price quote. For shares this is calculated on the previous year’s average daily turnover of each individual share – currently 2.5% of the total volume of shares for each company. Market makers are not obliged to provide a quote for a transaction above normal market size.
Notional Trading Requirement
This is the amount needed on deposit or available credit in order to place a trade. See Initial Margin Requirement.
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.

OCO
see One Cancels the Other.
Offer / Offer Price
The price at which you can Buy a share, index or commodity. Also called the Ask. It is the higher price of a quoted spread and the level at which you would Buy or Go Long of a market.
OMX 30
aka Sweden 30. A stock market index of 30 Swedish companies. Also see Sweden stock market spread betting guide
One Cancels the Other / OCO
Two linked orders where, if one is filled, the other is automatically cancelled. With One Cancels the Other (OCO) orders you can leave two separate opening orders in the same market so that if one of them is triggered and filled, the other is cancelled. This leaves you with just the one open position.
Open Position
A long or short position whose value will change with a change in prices ie trades that are currently running within a portfolio and are yet to be closed (settled).
Open Trade Equity / OTE
Unrealised profit or loss on an open position.
Opening Range
Markets, particularly highly liquid ones often do not have any opening price but rather they are given an opening range (usually for the first two minutes) where opening orders are filled.
Operator
A company that offers trading eg a Spread Betting firm like FinancialSpreads.com.
Option or Options
A financial derivative instrument that gives the right, but not obligation, to purchase (call) or sell (put) a fixed amount of share at a specified price and within a certain time limit. Also see spread betting options.
Option Writer
Also called the Option Seller; the party who grants a right to trade a security at a given price in the future.
Order
A Buy or Sell instruction given by a client to a dealer. A pending trade that is only executed as a trade when the trader’s conditions are met. eg a spread bettor might place an order to buy an index future if its price falls to a certain level. Types of order include Stop Loss Orders, Limit Orders, If Done Orders and OCO Orders.
Order Book
A term used for the SETS system employed in London. Orders to buy and sell are allowed to collect on an order book where they can match and execute against one another.
OSE
Osaka Securities Exchange.
OTE Inclusion Ratio
The proportion of Open Trade Equity (OTE) that can be used to finance current or future trades.
Our Quote
The two-way (bid/offer) price made by the Operator on which you can trade. Orders can often be left based on the ‘Our Quote’, meaning they will not be triggered or filled until the Operator Buy or Sell price hits the specific level.
Our Quote Order
A stop, or limit, is usually placed on the basis of Our Quote. An order will be filled if it matches the Buy or Sell price of the Operator.
Out-of-the-Money Option
A call option is out of the money if the strike price is greater than the market price of the underlying security. That is, you have the right to purchase a security at a price higher than the market price, which is not valuable. A put option is out of the money if the strike price is lower than the market price of the underlying security.
Overbought
A term used to describe a market that has appreciated very quickly and that has an overly bullish sentiment. A near-term decline or correction is often likely.
Oversold
A term used to describe a market that has declined very quickly and that has an overly bearish sentiment. A near-term rally or correction is often likely.

Pairs Trade
2 equities spread bets placed (normally) in the same sector but in opposing directions. Eg buying RBS and selling Barclays, the Pairs Trade makes money if RBS outperforms Barclays in either a bull or bear market. Also see Introduction to Pairs Trading.
Par Value
Face value of a security.
Partial Fill or Part Fill
Where the client has specified that they wish only part of their stake filled on a closing order.
Penny Shares
Firms with a low market capitalisation. Many shares on smaller exchanges such as AIM are penny shares.
Pip
Percentage in Point. This is normally used in FX trades and refers to the last “Bet Per” or “Unit Risk” of a foreign exchange rate.
Point / per Point
Also referred to as a pip or tick. These terms refer to the smallest unit movement required to alter the profit/loss on your bet by the full stake amount. A bet per point on the FTSE is a bet for each point the FTSE moves. A bet per point on Shell is a bet for each penny the Shell share price market moves. A bet per point on Gold is a bet for each $0.10 (10¢) the Gold market moves. Also see Unit Risk.
Portfolio
A collection of investments.
Power of Attorney
Authorising someone to spread bet on your behalf. Same as Authority to Deal.
Practice Account
see Demo Account.
Pre-market
Spread betting companies will make a market on certain products even before they have opened in the underlying market. For example the FTSE 100 opens at 8am but spread betting companies may quote their prices from 7am. Not all markets are offered in pre-market, usually only the biggest and most popular ones. These markets often come with wider spreads.
Premium (i)
The amount by which one contract month differs from another month in the same instrument, eg December FTSE is trading at 6300 whilst March is at 6350 thus March is at a premium of 50 over December.
Premium (ii)
When a derivative is trading above the current market price it is said to be trading at a premium. A futures market that is trading above the level of the spot market is said to be trading at a premium.
Product Group
This describes the type of market eg Equities, Indices, Commodities, Forex etc.
Profit Warning
Normally an unexpected announcement of negative news in relation to a company’s balance sheet.
Pull an Order
Cancel an order.
Put or Put Option
A financial derivative instrument used in options trading. A put would give an investor the right, but not the obligation, to sell shares at a fixed price up to a predetermined date. The opposite of a ‘put’ is a ‘call’.

Quarterly Bets
A type of “Futures Bet”. A Bets that remain valid for up to 3 months, but which can be closed out any time before the expiry date.
Quote
see Our Quote.

Real Time
A real-time share or bond quote is one that states a security’s most recent price as opposed to a delayed quote.
Recession
Downturn in a country’s economy, as measure by a decline in GDP.
Resistance Level
A price level above which it is supposedly difficult for a security or market to rise. According to Technical Analysis theory this occurs because a share whose price was rising has reached the level at which sellers of the share meets or exceeds buyers. Also see ‘Support Level’.
Retail Investor
Small individual investors who commit capital for their personal account rather than on behalf of another.
Reuters
International news and quotation service based in London.
Rights Issue
A privilege allowing existing shareholders to buy shares shortly before they are offered to the public at a specified and usually discounted price. This is usually in proportion to the number of shares already owned.
Risk Adverse
Someone who seeks the least risky products.
Risk Lover
Someone who seeks the most risky products.
ROCE
Return On Capital Employed.
Rolling Cash
See Daily Spread Bet.
Rolling Daily
See Daily Spread Bet.
Rollover
Transferring a trade that is near expiry into the next contract period. For example, a daily bet will expire at the end of the trading day. However a rolling daily bet will be transferred from one daily bet to another until the user closes the bet or a stop loss is hit. Rolling bets have a daily charge associated with them. Also see Rolling spread bets.
Russ 2K
See Russell 2000.
Russell 2000
An Index composed of 2000 US Companies. Unlike the Dow and the S&P 500 which track large companies, this Index is useful for tracking medium and smaller companies. Also known as the Russ 2K.

S&P 500
“S&P” stands for Standard & Poor’s (an international credit rating company). It defines the broader US equity market, tracking the performance of the top 500 US companies. S&P 500 spread betting guide.
SAF
South African Futures Exchange.
Schatz
A bond issued by the German Government which matures in 1.75 and 2.25 years.
SEAQ
Stock Exchange Automated Quotations. The quote driven system for trading UK shares.
Sector
Used to characterise a group of securities that are similar with respect to type and industry.
Securities
The collective name given to stocks and shares.
Sell / Sell Bet / Selling
A bet on a market to fall, i.e. a bet that will be profitable if the market falls. Also called a Down Bet, Going Short or Taking a Short Position. A Sell bet can also be used to close an existing Buy (or Long) position. See Short.
SETS
Stock Exchange Electronic Trading System. The order driven system used to trade FTSE 100, ex-FTSE 100 and reserve shares.
Settlement Price
The price at which a bet is closed. Also know as the ‘expiry price’.
SFE
Sydney Futures Exchange. Also see ASX 200 (Australia 200).
SGX
Singapore Exchange.
Shares
Shares represent ownership of part of a company. Also referred to as “Equities” and “Stocks”. Also see Shares spread betting guide.
Short
A bet on a market to fall, i.e. a bet that will be profitable if the market falls. With a Short you trade on the lower price in the spread, aka Bid price. Also called a Down Bet, Going Short, Taking a Short Position or Selling. Also see Shorting / Short Selling Guide.
Shorting
Refers to selling an asset that you do not own with the aim of buying it back at a lower price, at a later date, in order to make a profit on the price difference. In spread betting, it refers to placing a ‘Sell’ trade in anticipation of a falling market. See Short.
Slippage
See Gap or Market Gap.
SOFFEX
Swiss Options and Financial Futures Exchange.
Softs
Commodities that are grown rather that mined e.g. Coffee, Cotton, Soybean etc.
SOQ
Special Opening Quotation. The settlement price mechanism for some US future contracts.
Spike
Sharp up or down movement in a market.
Spot market
aka Cash Market aka Cash Price. Traditionally a Spot Market is one in which commodities were bought and sold for cash for immediate delivery rather than a Futures Market which the delivery would be sometime in the future. Now, “Spot market” and “cash market” are often used to mean the “current” price of the market. In spread betting this is often the same thing as a Daily Spread Bet, Rolling Daily Spread Bet and Rolling Cash bet.
Spread
The difference between the Sell and Buy (bid and offer) prices. Also see What is Spread Betting?
Spreadex
A spread betting company, also see Spreadex Review.
SPX 500
The S&P 500.
Stake
The bet size per unit of movement. In Spread Betting this is NOT the total amount you could lose. Also see What is Spread Betting?.
Stamp Duty
Stamp duty is a UK Government tax of 0.5% paid by the buyer on all share transactions. An investor purchasing £5,000 of UK shares would pay Stamp Duty of 0.5% x £5,000 = £25. In Ireland the current rate is 1%. There is no Stamp Duty on CFDs or spread bets. Note that tax laws can change.
STIRs / Short Term Interest Rates
While Bonds provide a way of trading longer-term interest rates you can also spread bet on STIRs (Short Term Interest Rates) eg Short Sterling or Eurodollar.
Stock
See shares.
Stop
see Stop Loss.
Stop Loss
A pre-determined level at which a bet will be closed to limit your loss if the price moves against you. Stop Losses are not always guaranteed and can be filled at worse levels than expected. This can occur when markets do not move smoothly ie when they “Gap” from one price to another. When this happens your stop loss will be filled at the next price. Also see guide to Stop Loss orders.
Stop Order
Stops are Orders to Sell below, or Buy above, the current price. Stop orders are normally placed to close an existing position and restrict losses in the event of an adverse market movement. They can also be used to initiate a new position if the price breaks through a perceived support/resistance level. A “Stop Loss” and “Guaranteed Stop Loss” are both types of Stop or Stop order.
Straddle
Purchase or sale of an equal number of puts and calls with the same terms at the same time.
Strangle
Buying or selling an out-of-the-money put option and call option on the same underlying instrument, with the same expiration. Profits are made only if there is a drastic change in the underlying instrument’s price.
Strategy
Plan of action for achieving a goal. Also see spread betting strategies.
Strike Price
The stated price per share for which underlying shares may be purchased or sold by the option holder upon exercising an Option Contract.
Supply and Demand
Economic theory that simply states price is a function of the market supply and demand.
Support Level
A price level below which it is supposedly difficult for a security or market to fall. That is, the price level at which a market tends to stop falling because there is more demand than supply. This can be identified on a technical basis by seeing where the shares have bottomed out in the past. Also see Resistance Level.
Suspended Trading
Temporary halt in trading in a particular security, in advance of a major news announcement or to correct an imbalance of orders to buy and sell.

Take Profit Order
see Limit Order.
Takeover
Acquiring control of a corporation by share purchase or exchange.
Taking a View
Forming an opinion as to where market prices are headed and acting on it.
Target Price
Maximum retail price for a product under development. In the context of takeovers, the price at which an acquirer aims to buy a target firm. In the context of options, the price of the underlying security at which an option will become ‘in the money’. In the context of shares, the price that someone hopes a share will reach in a certain time period.
Tax
Under current UK legislation, any Capital Gains made through spread betting is tax free*.
Technical Analysis
A method of forecasting market movements / analysis of a financial market by charting its performance, using historical patterns and focusing on trends. Also see Introduction to Technical Analysis.
Tic or Tick or Tick Size
The standardised minimum price movement of a spread bet, also referred to as a ‘point’. Also see ‘Unit Risk’.
Time to Maturity
The time remaining until a financial contract expires.
Time Value
Portion of an option price that is in excess of the intrinsic value, due to the amount of volatility in the shares. Sometimes referred to as premium. Time value is positively related to the length of time remaining until expiration of the contract.
Trade Balance
Overall difference between a country’s imports and exports.
Tradefair
A spread betting and CFD platform run by GAIN Capital for PaddyPower Betfair. Also see Tradefair Review.
Trading Range
Range between the highest and lowest prices at which equities are traded.
Trailing Stop
A type of risk management order used in spread betting and CFD trading. Also see guide to Trailing Stop orders.
Triple Witching Day
A day on which at least three types of derivative contracts, eg Stock Index Options, Stock Options and Stock Index Futures, expire. Also known as Freaky Friday, Triple Witching Days and often produces high volatility in the markets. Triple Witching Days are most common on the third Friday of March, June, September and December.
Triple Witching Hour
The final hour of trading on Triple Witching Day.
TSE
Tokyo Stock Exchange. Also see Nikkei 225.

UK 100
In spread betting the FTSE 100 is sometimes referred to as UK 100. See FTSE 100.
Underlying Instruments
Financial spread betting prices are based upon the prices of financial assets traded on various financial exchanges around the world. These financial assets are the ‘underlying instruments’ eg the FTSE 100 is an underlying instrument.
Unencumbered Funds
Funds that trading margin is not using ie available trading resources.
Unicorn
A private start-up valued at more than US$1bn – see our guide to Unicorns.
Unit Risk
The smallest movement on the relevant contract (spread bet) that would lead to a change in your profit/loss. Eg the FTSE 100 Futures spread betting market could be quoted as 6200 – 6204 and has a unit risk of 1 point. If you had a position with a stake of £5 per point, every change in the FTSE 100 Futures price of 1 point would result in a profit / loss of £5. However the AEX Futures markets could be quoted at 550.5 – 551.5. This spread bet has a unit risk of 0.1 point ie if you had a position with a stake of £5, every change in the AEX Futures price of 0.1 points would result in a profit / loss of £5. In the Gold Spread Betting markets the Unit Risk is $0.10 (10¢). Also known as “Bet Per”.
Up Bet / Up Trade
A bet taken in anticipation of a rising market. Also called Buying and Going Long.
US Tech 100
The NASDAQ 100.

Valuation price
The price used for the revaluation of open positions.
Variation Margin
Also known as Open Trade Equity (OTE) eg profit from an open position can be used as additional margin. Conversely, any running loss will need to be funded, especially if there is no stop loss in place.
Volatility
Describes the propensity of a market price to change rapidly.

Wall Street
Refers to the index of the Top 30 US traded stocks. In spread betting this is also known as The Dow or Dow 30. Also see Wall Street (Dow Jones) spread betting guide
Warrant
A derivative product that is a certificate that authorises the holder to buy securities at a certain price. Warrants are like call options, but with much longer time spans, sometimes years.
Watch List
A customised list of markets that you can create and manage.
Working Order
An order remains working until it is filled or deleted.

AuthorAlex Turner

Senior Editor, SpreadBetMagazine