Jargon Buster

Confused by all the terminology surrounding spread betting and the financial markets? Check out our clear and concise trading glossary.

The price at which a financial instrument is bought. The ask price is the higher end of the InterTrader.com quote. Also known as the 'offer' price.

The InterTrader.com specification of the price at which a contract (bet) expires.

Someone with a negative view of a particular market or asset. A bear market is accordingly one that is falling or lacking confidence. In financial terms a bear is the opposite of a bull.

The price at which a financial instrument is sold. The bid price is the lower end of the InterTrader.com quote.

A blue-chip stock is that of a well-established company which is considered stable and which pays regular dividends. Typically, the term 'blue-chips' is used to refer to the constituents of the major stock indices. The term derives from the high value of blue casino chips.

Someone with a positive view of a particular market or asset. A bull market is accordingly one that is rising or gaining confidence. In financial terms a bull is the opposite of a bear.

When you buy (or 'take' or 'go long') with InterTrader.com this means you are making an Up Bet (or closing a Down Bet).

The exchange rate between the UK pound sterling and the US dollar. The term is derived from the telegraph cable that was laid across the Atlantic between the UK and the US in the nineteenth century.

The UK tax on profits realised through the sale of assets. Profits from spread betting are exempt from CGT.

Computer Generated Stop Level. See 'Max CGSL' below.

A charge made by brokers and other intermediaries for facilitating certain trades. InterTrader.com takes no commission for spread betting.

A physical substance traded on an exchange. Typical commodities include 'energies' (such as crude oil), 'metals' (such as gold and silver) and 'soft' commodities (foodstuffs such as sugar, wheat and coffee).

The month during which a futures contract expires, and during which delivery may take place according to the terms of the contract.

The premier German stock index, comprising a weighted average of the 30 largest companies on the Frankfurt Stock Exchange.

Opening and closing a contract on the same day. Day traders trade on very short-term market movements.

The Dow Jones Industrial Average is one of the premier US stock indices, comprising a weighted average of the stock prices of 30 of the largest US companies.

If you think the market will fall, you would place a Down Bet. See 'Sell' and 'Short'.

The date and time at which the relevant bet expires.

The study of a company's key economic data, its 'fundamentals', as a guide to its future performance in the stock market. Analysts will consider both quantitative factors such as the details contained in a company's financial statements and qualitative factors such as brand strength, technology and the capability of its board of directors.

The interest you pay to InterTrader.com if you keep a long (bought) Rolling Daily position open overnight, and the interest you receive from InterTrader.com if you keep a short (sold) Rolling Daily position open overnight.

The premier UK stock index, comprising a weighted average of the 100 largest companies on the London Stock Exchange.

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

Where a market moves directly from one correctly quoted price to another, significantly different, correctly quoted price or from one reasonably quoted price by LCG to another reasonably quoted price by LCG in relation to the size required by a client for execution of an order. 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).

The correlation between potential profit/loss against your initial deposit. A highly geared or leveraged position involves substantial risk to your money while increasing the potential return from your capital. Spread betting is a leveraged product in that it allows you to buy (or sell) a financial product with substantially less money than the actual full market value of that financial product. See 'Margin'.

An order valid for the day of placement only.

An order valid until either cancelled or the underlying contract has expired.

You can opt to place a Guaranteed Stop Orders on your positions with InterTrader. 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.

The action of offsetting your exposure in one area by opening an opposite position in a related area. The object of hedging is to reduce your risk. For example, a commercial farmer whose livelihood depends on selling wheat might sell a wheat futures contract to reduce his exposure to fluctuating wheat prices. Similarly, if you had an Up Bet in the FTSE you might enter a Down Bet in the DAX, a related market. Although this is not an exact hedge, it is unlikely that the FTSE will move heavily in the opposite direction to the DAX, so you have reduced your risk on the FTSE.

Initial Margin Requirement. See 'Max IMR' below.

The last day in the contract month on which a customer may deal in the product. (This may differ significantly to the Expiry.)

See 'Gearing'.

The ability of an asset to be converted into cash quickly, without any price discount or restriction to the size of transaction. A liquid market is one with a sizeable flow of buyers and sellers, thus facilitating new transactions.

A limit order is designed to lock in potential profits. It is an instruction to close your position (by buying or selling) should the price hit a specified, more favourable level. The level of a limit order will be higher than the current market level for long positions or lower than the current market level for short positions.

A 'long position' is one that will benefit from a rise in the market price. 'Going long' means that you are placing an Up Bet.

Margin is the amount of money you need on your account to run an open position. It is called margin as it is a fraction of the full market value of your position. Margin is calculated as the amount of money you must have in your account to satisfy InterTrader.com that you are able to honour your debt should your bet lose money.

Your margin requirement will differ from position to position, and is calculated according to the level of your stop-loss order, which determines the most you might expect to lose on the position. In certain cases, for instance where the market 'gaps' (see above), you may lose more than your initial margin requirement. Your margin requirement will also change when you change the level of your stop-loss order.

The times at which InterTrader.com will quote on a given contract.

This is the maximum figure used to allocate an automatic stop-loss on newly opened positions. If you have sufficient funds to cover the CGSL on deposit, the trading system will assign a stop at 80% of the CGSL. Otherwise, the system will allocate a stop-loss at a level to cover 80% of the funds available in your account. For example, if you have £2000 in your account and you trade the Daily FTSE at £10 per point, the system will automatically allocate a stop-loss 100 points away from your opening level, because the Max CGSL for Daily FTSE is 125 and 80% of 125 is 100. The maximum risk on this bet would therefore be £10 x 100 points = £1000, even though you have £2000 on your account. See 'Stop-loss order'.

The minimum bet in pounds (euros or dollars) per point that we will accept for that contract.

The Minimum Initial Margin Requirement. This is how we calculate the minimum funds required to open a new position, by multiplying the bet size by the Min IMR for that market. If the Min IMR on a market is 50 and you wish to bet £5 per point, you would require a minimum of £250 in your account to open this position.

A major US stock index. The NASDAQ-100 is a weighted average of 100 of the largest non-financial companies traded on the NASDAQ.

An order to open a new position (buying or selling) at a level in the market which has not yet been reached. It is not attached to any existing position and is independent of any other instruction. Contingent stop-loss and limit orders may be attached to a new order.

One Cancels Other. A special type of order stating that if one part of the order is executed the other is cancelled. For instance, if you have two instructions to trade a market at different levels and one of the instructions is executed, the other instruction will be cancelled automatically.

Another name for the ask or selling price.

A contract or trade that is currently active.

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

These terms refer to the unit movement required to alter the profit/loss on your bet by the full stake amount. For instance, a bet per point on Vodafone is for each full penny movement in the InterTrader.com price for Vodafone shares. A bet per point on the FTSE 100 is for each full point's change in the relevant InterTrader.com FTSE 100 contract. A 10-point movement from 5100 to 5110 on our Daily FTSE 100 contract would therefore correspond to a win or loss of £100 for a £10 per point bet. The term 'pip' is commonly used in FX to denote the last digit quoted.

A type of contract with no expiry date. Your bet will normally remain open until you decide to close it or an order is triggered. Adjustments are made overnight to account for the cost of interest (and dividends) in holding your position. See 'Financing' and also consult our Product Info Tables.

Rolling over is the practise where a position that is due to expire is closed and transferred into the next relevant monthly or daily contract. We will allow clients to roll positions from the expiring contract to the next contract for a reduced spread. For futures contracts, the original bet is closed (and becomes due for settlement) and a new bet is established.

When you sell (or 'give' or 'go short') with InterTrader.com this means you are making an Down Bet (or closing an Up Bet).

The price at which InterTrader.com settles a position on expiry. The basis of settlement for each contract can normally be found in the Product Info Tables.

A 'short position' is one that will benefit from a fall in the market price. This is also known as a sold position. 'Going short' means that you are placing a Down Bet.

A contract for immediate or 'on the spot' delivery, as opposed to a futures contract with a future expiry date. Used in FX to denote the immediate exchange of currencies.

The difference between the buying and selling ends of our quote.

A UK tax on the transfer of shares and securities. One major benefit of spread betting is that it is not liable to stamp duty (although tax laws can of course change).

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 mandatory and are generated by the trading system but they can 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 by LCG in the relevant underlying market. We also offer Guaranteed Stop Orders which protect you against any market gaps or slippage and there is a premium for this extra protection (see the Market Information).

The study of historical market activity in order to predict future market activity. Technical Analysis, or TA, concentrates on the price chart, attempting to identify recurring patterns and levels of support and resistance, as a basis for creating a trading strategy. Different types of TA employ different technical indicators to process the statistical data.

The standard term for the smallest possible price movement in a contract. For example, one tick of the FTSE 100 is 0.1 of a point (as the FTSE is quoted to one decimal point) while one tick of Wall Street is 0.01 of a point (as the Dow is quoted to two decimal points).

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. 

Our quote is always based upon a price received from an actual financial exchange, a real market for the instrument concerned. We refer to this as the 'underlying' market.

If you think the market will rise, you would place an Up Bet. See 'Buy' and 'Long'.

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 of high volatility and one that is quiet is said to have low volatility.