Spread Betting Information Glossary

Back Month B: The month or months available to trade that aren't the front month.
Basis Point (bp): 0.01%. For example, if an interest rate rises from 6% to 6.5%, it is said to have increased by 50 basis points. All interest rate contracts such as short sterling, are traded in basis points.
Basis of Expiry: The Tradefair specification of the price at which a contract (bet) expires.
Bearish: Expectation of a fall in price of an underlying security.
Bet Size: The amount of money bet per point (also known as bet stake).
Bid: The price that a spread betting client can sell to cover a long position or to 'go short.' All spread bets are quoted in a two-way price, bid and offer.
Bid-Offer Spread: The difference between the bid and the offer. The smaller the spread, the cheaper it is to trade.
Bullish: Expecting prices to rise.
Bund: A European long dated bond contract.
Buy: ('Take', 'go long') means you make an up bet (or close a down bet).
Cash Price C: The price of a security traded on a recognised Exchange such as Tesco on the London Stock Exchange.
Catch a Falling Knife: Phrase used to describe trading on a share or industry that has suffered significant price declines. Buying these stocks could be very profitable if the industry/stock rebound but it is very dangerous (like trying to catch a falling knife) as they could also lose all their value, such as in the case of bankruptcy.
Charting: A visual method of trading or analysis of the markets using price information to form a picture of previous price movements.
Closed Position: Ending one's exposure to movements in the markets. An equal and opposite transaction, i.e. Havng bought (gone long) £1 per point on the FTSE is closed by selling £1 per point on the FTSE..
Computer Generated Stop Loss (CGSL): This is the maximum figure used to automatically allocate a Stop-Loss on newly opened positions. In the event that a client has sufficient funds to cover the CGSL on deposit, the Trading System will assign a stop at a point 80% of the CGSL away from the opening price of the trade. Otherwise, the system will allocate a stop according to funds available in your account.
Contract Month: The month during which a futures contract expires.
Daily Bet D: A daily bet is a spread bet that expires at the close of that day and is normally used by a spread betting client who does not want exposure to a market overnight.
Dax 30: The top 30 stocks in the German stock market.
Dead Cat Bounce: A temporary recovery after a prolonged decline in price. The market shows signs of life but this is short lived and soon starts falling again (hence dead cat).
Deposit Factor: See Initial Margin.
Derivative: Something that gets (derives) its value from something else. For example, the price of the Barclays spread bet market is derived from the price of Barclays shares in the cash market. A spread bet is therefore a derivative contract.
Discount: If the price of a spread bet is lower than the cash market price of the product, the spread bet is deemed to be trading at a 'discount to cash'.
Dividend: A share of a company's earnings paid to each ordinary shareholder. Dividends are paid bi-annually and are determined by the company's board of directors.
Down-Bet: Another way to describe a short position or a position which will make money in a falling market.
Euribor E: 3 month European interest rates.
EuroSwiss: 3 month Swiss interest rates, known also as 3 month money or short rates.
Euro: European currency.
Eurodollar: 3 month US interest rates, not to be confused with the Euro against the Dollar exchange rate also known as the eurodollar.
EuroStoxx 50: 50 largest European stocks, denominated in Euros.
Fill or Filled F: A completed order as in 'that order is filled, Sir'.
Fixed Income: Another name for the Bond market.
Flat: Having no position.
Front Month: The next expiry month.
FTSE: An index of the share prices of the 100 largest companies (by market capitalisation) in the UK.
FX or Forex: Foreign Exchange.
Futures: A standardised, transferable, exchange-traded contract that expires on a specified future date.
Gap ("gapping" or "slippage") G: 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).
Gearing or Leverage G: This term refers to the fact that spread betting allows the client to buy (or sell) a financial product with substantially less money than the actual full market value of that financial product. So gearing is the correlation between potential profit or loss against initial deposit. A highly geared or leveraged bet involves substantial risk to your money (but also gives the possibility of high returns) At Tradefair Spreads the initial deposit is normally at least the IMR.
Gilt: Risk-free bonds issued by the British government. They are the equivalent of U.S. Treasury securities.
GFD: Good For the Day : An order valid for the day of placement only. This has to be a new order and not used for a stop loss.
GTC: Good Till Cancelled : An order valid until either cancelled or until the underlying contract has expired.
Guaranteed Stop Orders H: You can opt to place a Guaranteed Stop Orders on your positions with Tradefair Spreads. 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.
Hedging H: Minimising risk by being simultaneously long and short. Perhaps someone is long £50,000 of stock in the cash market and wants to protect this from potential downside risk. To hedge he would sell £50,000 of futures or spread bets, and if the market did go lower any loss on the stock positions would be offset by profits on the short position.
Illiquid I: A market that doesn't have much volume, usually characterised by a wide bid-offer spreads. They are therefore usually expensive to trade.
Indication Price: A quote that is not a firm dealing price. Perhaps a client has a spread bet position in the FTSE but only wants to check a price without dealing.
Initial Margin: Also called Notional Trading Amount or Deposit Factor. The amount of cash that is needed to open a spread bet.
Last Dealing Day L: The final day of dealing in a spread bet before it expires. Be aware that not only can the last dealing day be different for certain spread bets but so can the actual time of expiry.
LIBOR: London Interbank Offered Rate, the 3 month money rate set at 11.30am every day.
Indication Price: A quote that is not a firm dealing price. Perhaps a client has a spread bet position in the FTSE but only wants to check a price without dealing.
Limit Order: An optional order against an existing position to either sell above the current market level or buy below that level at a price specified by you, that will take profits.
Liquidity: The ability of an asset to be converted into cash quickly, without any price discount and any restriction to size of transaction.
Long Position: A long position is entered with the aim of profiting from an increase in price.
Market Order: An order to buy or sell a spread bet at the current bid or offer.
Mark to Market: Recording the price of a spread bet on a daily basis to calculate profit or loss or to confirm margin requirements are met.
Mib 30: Italian stock market index.
Minimum Bet: The minimum bet per point that we will accept in that contract.
OCO O: 'One Cancels Other' is a market term where you have two orders, one above and one below, the current market price and where the first to be executed automatically cancels the other.
Open Position: A spread bet position long or short that has not been closed out.
Opening Range: Markets, especially busy ones never really open at one price, rather they are given an opening range (usually the first 2 minutes) where opening orders are filled in.
Order: 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).
Overbought: Technical analyst term for believing a market has risen to the point where there will be a technical pullback.
Oversold: Opposite to above.
Pairs Trade P: The strategy of matching a long position with a short position in two stocks of the same sector. This creates a hedge against the sector and the overall market that the two stocks are in. The hedge created is essentially a bet that you are placing on the two stocks; the stock you are long in versus the stock you are short in.
Per Point/Pip/Tick: A term used to clarify the bets placed. For instance, a bet per point on Vodafone is for each penny movement in the Tradefair Spreads Vodafone share price. A bet per point on the FTSE is for each point move in the relevant Tradefair Spreads FTSE contract. E.G. a 10 point movement from 5100 to 5110 on a Tradefair Spreads Daily FTSE contract would therefore correspond to a win or loss of £100 per £10 placed as a bet. Tick is usually used for futures contracts with a base of 100 such as Short Sterling or Bunds. Pip is used in FX trades. All these terms are applied to refer to the unit movement required to alter the profit/loss on your bet by the full stake amount.
Pre-market Trading: Tradefair Spreads will make a market on certain products even before they have opened in the cash market. For example the London Stock Exchange opens at 8am but Tradefair Spreads will normally quote their prices from 7am. Not all markets are offered in pre-market, usually only the biggest and most popular ones.
Presidential Election Cycle Theory: This theory states that the stock markets are weakest in the year following the election of a new US President. The market then improves until the next election when the cycle starts over again. This theory played out well until the mid 90's but has since been disproved. FD Roosevelt, Truman and Eisenhower's terms all started with down years but Clinton and George W Bush's first years were both up years in the market.
Recession R: Two or more quarters of negative economic growth measured by GDP. This is visible as a significant decline in economic activity across the entire economy affecting employment, real income, production and retail trade.
Resistance: The inability of a financial instrument to break up above a certain price see 'support'.
Rollover: Rolling over is the practice where a position that is due to expire is closed and transferred into the next available contract.
Sell: ('Give', 'go short') means you make a down bet (or close an up bet).
Settlement Price: The price at which Tradefair Spreads settles a position at expiry date.
Short Position: A short position is entered with the aim of profiting from a price decline.
Slippage: Relates to stop losses and is the difference between where the stop loss or oreder level is placed and where the order was actually filled.
Spot: The cash price.
Spread: The difference between the buying price (offer) and the selling price (bid).
Stamp Duty: Stamp duty is a UK government tax of 0.5% paid by the buyer on all share transactions. There is NO Stamp Duty with spread bets (correct at the time of writing and could change in the future).
Sterling: The British Pound.
Stop Loss: A predetermined price at which a position will be closed to protect against further loss.
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 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).
Support: In technical analysis, a price at which a security has difficulty falling below.
Technical Analysis T: A popular way to spot trading opportunities. It involves looking for trends on price charts and using them to try to trade in the right direction.
Trading Range: A market where prices are range bound by a higher and lower price band. Normally markets will range trade when there is little or no news. Relates to Technical Analysis, see above.
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.
Underlying Markets U: Our quote is always based upon the prices received from the various financial exchanges around the world. These prices are the 'underlying markets'.
Up-Bet: Another way to describe a long position or a position which will make money in a rising market. Often referred to as a Long Position.
Volatility V: 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.

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