Glossary Of Trading Terms
American Depository Receipt
The simultaneous buying and selling of a security at two different prices in two different markets, with the aim of creating profits without risk
The quoted offer at which someone can buy; also called the offer price
At a price equal to the face value of a security
Many auctions occur in the financial markets; such as the post market auction on the UK 100. This occurs from 1630 to 1635, after which the official settlement is declared.
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Any realised profits or losses, adjustments, fees or charges- that are denominated in a currency not of your base Currency- will be automatically converted back to your Base Currency.
This occurs when the bid price exceeds the offer price for a stock. This is a market distortion usually when stock is suspended or under a share repurchase scheme
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.
The official lending rate at which the bank of England offers to the market
Basis point is a way of expressing variations in bond yields. One basis point is 0.01 percentage point. Basis points also are used for interest rates.
Someone who believes that prices in the stock market are going to decline. Opposite of a bull.
The measure of an asset’s risk in relation to the market
Same as tick size. The minimum point movement in each market, for example the UK 100 has moved 10 ticks this equates to a 10 index point move in the UK 100.
The difference between what buyers are willing to pay and what sellers are asking for in terms of price
Black-Scholes option pricing model
A model for pricing call options based on arbitrage arguments. Uses the stock price, the exercise price, the risk-free interest rate, the time to expiration, and the expected standard deviation of the stock return.
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 prices break out of the band, this is considered a significant move.
Bonds are debt and are issued for a certain period of time
Someone who believes that prices in the stock market are going to rise. Opposite of a bear.
Same as taking a long position
An instruction to buy at a different price to where the market is currently trading
A commonly used term to describe the exchange rate between British pound sterling and the U.S dollar
An option that gives the holder the right to buy the underlying asset. Opposite of a put
Centrally Cleared Trades
Trades that are sent through to a Clearing House, which acts as a central counterparty, which assumes the counterparty risk to trades which are registered with it and by doing so underpins many important financial markets.
Contract for Difference
Person who analyses markets with the use of charts
A clearing house is an organisation that assumes the counterparty risk to trades which are registered with it and by doing so underpins many important financial markets
The price at which a product was traded to close the open position. Also refers to the price of the last transaction in a day’s trading session
Contingent if done order
Instructions you give us to attach a stop loss and/or limit order to your opening order if it is triggered and filled
The confirmation of your trade describing the market, the unit of trading, the action (buy or sell), the price and the expiry date
Cost of Carry
The interest intrinsic in our share futures prices, excluding any dividends payable during the contract period
Consumer Price Index, used as a measure of inflation
Foreign exchange rate between two currencies other than the US dollar
A financial future contract for the delivery of a specified foreign currency
A Daily Funded Trade (DFT) is typically a short term financial spread trade with some of the tightest spreads on offer. Daily Financing and dividends are not included in the calculation of Our Price but appears as separate charges or credits to your account. Each DFT has a long term settlement date. As with all spread bets, profits and losses are crystallised only when you close or partially close the trade.
Opening and closing of a position in the same contract in one day
To remove a stock’s listing on an exchange
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.
Date by which a seller must fulfil the obligations of a forward or futures contract
The ratio of the change in price of an option to the change in price of the underlying asset
A financial contract whose value is based on or derived from, a traditional security (such as a stock or bond), an asset or a market index
Portion of a company’s earnings paid to stockholders.
Double Witching Day
The last trading day before expiry of options and futures on the same underlying asset
European Central Bank
Exchange Delivery Settlement Price. Used by many markets to arrive at the Expiry Price
Date at which a contract will be expired. Not to be confused with Last Day of Trading
Price at which contracts are settled if they are left to expiry
The ratio of a change in the option delta to a change in the price of the asset on which the option is written
Where the market trades through a level specified by the client in an order. Market gaps are common during the times of volatility. Guaranteed orders protect against gapping.
The use of debt to increase exposure to high risk/reward. Gearing is also known as leverage.
For a small fee you can protect an order against the risk of any market gaps
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A transaction that reduces risk
International Monetary Market
A futures contract on an index in the futures market
Indices, either positive or negative, which indicate the strength and significant trends in our nation’s economy. Inflation, interest rates and employment figures are examples
The rate at which the general level of prices for goods and services is rising
Initial Margin Requirement
Amount needed as available trading resources in your account in order to open a position. This may be reduced by placing a stop loss on a market, where Orders Aware is available and this amount may increase depending on the size of your CFD or Financial Spread Trade. See Step Margin.
Initial Public Offering. Private company’s first offer of stock to the public
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
The value of an option if it were to expire immediately with the underlying stock at its current price
Issued Share Capital
Total amount of shares that have been issued.
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Economic indicators that follow rather than precede a country’s overall pace of economic activity
Last Day of Trading
The last day on which you can open or close a trade in a particular market. Not to be confused with Expiry Date.
A clearing house formed by a merger between The London Clearing House Limited and Clearnet
Economic indicators that change before the economy changes
Live pricing system that provides market depth
Debt, financial obligation, or potential loss
London Interbank Offered Rate
Minimum selling or maximum buying price as instructed by the client. A limit order is an order to buy or sell a better price to where the market is currently trading
Limit up, limit down
Price change, up or down, a product is allowed to make during one day of trading
A market characterized by the ability to buy and sell with relative ease
Opening a buy position in expectation that the market price will rise
The deposit or available credit needed on your account in order to have your positions open
A call from the credit department for further funds to be deposited in the account to support additional exposure from running losses
The number of shares of a company in issue, multiplied by its share price
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A system that categorizes the size of transactions that are normal for a particular security and forces market makers to deal within these sizes.
The price offered at which someone can buy; also called the ask
One Cancels the Other (OCO)
OCO orders you can leave two separate opening in the same market so that if one of them is triggered and filled, the other is cancelled. This leaves you with just one open position.
A long or short position whose value will change with a change in prices.
A financial derivative instrument that gives the right to purchase (call) or sell (put) a fixed amount of stock at a specified price and within a certain time limit.
Also called the option seller; the party who grants a right to trade a security at a given price in the future
Buy or sell instruction given by a client to a dealer
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.
The Barclays Stockbrokers dealing quote. Orders can be left based on our quote, meaning they will not be triggered or filled until the Barclays Stockbrokers buy or sell price hits the specific level.
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.
Where the client has specified that they wish only part of their stake filled on a closing order
Face value of a security
A collection of investments, real and/or financial
Power of Attorney
Authorising someone to act on your behalf
Price Tolerance is the amount of slippage that you are prepared to accept in order for your trade to be executed, even if at the time of execution, the price has moved away from that selected by you. This is commonly referred to as slippage, though the benefit of Price Tolerance is that you can control the amount of slippage you are prepared to accept.
A financial derivative instrument used in options trading. A put would give an investor the right, but not the obligation, to sell the underlying instrument at a fixed price up to a predetermined date. The opposite of a put is a call.
A quote will incorporate the spread which is the difference between the buying and selling price.
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A real-time stock or bond quote is one that states a security’s most recent price as opposed to a delayed quote. Barclays Stockbrokers dealing prices are updated in real-time,
Securities and Exchange Commission
Used to characterize a group of securities that are similar with respect to industry
Same as taking a short position
A figure determined by the closing price
Opening a sell position in expectation that the market price in that underlying product will fall
Market in which commodities are bought and sold for cash and immediate delivery
The difference between buy and sell price
Step Margin is the process by which the amount of initial margin charged per trade may increase depending on the size of your financial spread trade or CFD trade. The amount of initial margin charged for any additional trades (within the same market), occur at specified step margin levels.
Stop Loss Order
An order to close a position at a particular level when the price moves against you
An opening or closing order to buy or sell at a worse price to where the market is currently trading
Purchase or sale of an equal; number of puts and calls with the same terms at the same time
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.
The stated price per share for which underlying stock may be purchased or sold by the option holder upon exercise of the option contract
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; can be identified on a technical basis by seeing where the market has stopped falling in the past.
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
Refers to a type of short term (one day to a couple of weeks) trading, triggered by technical analysis, for example, momentum
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Acquiring control of a corporation by stock or purchase or exchange
Analysis of a financial market by charting its performance, using historical patterns, and focusing on trends
The minimum point movement in each market
Time to Maturity
The time remaining until a financial contract expires
Portion of an option price that is in excess of the intrinsic value, due to the amount of volatility in the stock; sometimes referred to as premium. Time value is positively related to the length of time remaining until expiration.
Range between the highest and lowest prices at which a stock is traded.
The security or market that Barclays Stockbrokers Index prices are based on (derived from).
Same as open P+L e.g. any running 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.
Situation that changes rapidly or suffers from extreme fluctuations.
A derivative product that is a certificate giving authority to the holder to buy securities at a certain price. Warrants are like call options, but with longer time spans- sometimes years.
An order that remains working until it is filled or cancelled.
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CFDs can magnify your return on investment. However, losses can also be magnified and so CFDs should only be used by experienced traders who are comfortable with the risks associated.
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