What is Spread betting?

Spread betting is a tax free¹ cost effective alternative to traditional share trading. It allows you to speculate on the movement of stocks and shares without using a stockbroker, therefore you do not have to pay commission or fees. We make a spread around the live, underlying market price and you can bet on whether this market will rise or fall.

Betting on the movement of stocks and shares allows our customers the opportunity to generate substantial profits on both rising and falling markets. Spread betting therefore offers all the advantages of speculating on the stock markets and much more.

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How does it work?

Spread betting is an efficient alternative to traditional trading in the financial markets.

Not only is it more versatile, by allowing you to either go long (buy) or short (sell) a share, it is extremely cost effective, as you do not pay commission or fees. If you are a UK resident, your profits are Tax Free_¹. You can also use Spread Betting as a hedging tool, to protect investments in an existing share portfolio.

The “spread” in the phrase Spread Betting refers to the Sell (Bid) and Buy (Offer) price quoted by a spread betting company. This price is calculated around the live (or the estimated future) market price of a financial product. For example, if the Daily FTSE is trading at 4729 our quote might be 4727-4730.

When you spread bet, you do not buy the stock or share but instead you make a bet as to which way you think the market or share-price will move. You can bet per penny or point movement – the amount you wish to bet is known as the “stake”, and can be as little as £1/€1/$1 per point or penny movement.

This diagram shows how your profit is calculated depending on whether you buy or sell the market, assuming your stake is £1:

At FinancialSpreads.com , only small deposits are required to open a new position (as little as £10-£40 for a £1 bet depending on the market concerned).  Once you have chosen the market on which you wish to bet, you can then bet the stake of your choice, which will represent your profit or loss per point movement in that market (each market has its own individual maximum allowable stake).

You can then bet £1/ $1 / €1 per point/tick/cent on the movement of spread prices that we quote. You can choose to bet that the market will rise, or alternatively, you can bet that it will fall. If you are right, you will make a profit of your stake multiplied by each point that the market moves in your favour. If you are wrong you will make a loss of your stake multiplied by each point that the market moves against you.

For this reason you must be aware that your losses can increase dramatically if the markets move substantially in the opposite direction to your bet (i.e. if you make an Up Bet in the FTSE 100 and instead of going up it goes down).  All spread betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax in the UK.

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Example of a FTSE bet:

If the FTSE 100 Share Index is currently trading at 5278, FinancialSpreads.com may quote 5277 (the sell price) – 5279 (the buy price). This quote (which has a 2 point spread) allows you the opportunity to bet that the value of the FTSE will fall or rise. If you believe that the value of the FTSE will fall, you should Sell (or make a down bet) at 5277 or if you think the FTSE will rally, you would Buy (or make an up bet) at 5279.

Assuming you decide to sell, the following example is based on a bet of £5 per point movement:

The market falls and you decide you would like to realise your profit. The FTSE 100 is trading at 5154 and our quote is 5153-5155. You will need to make a buy bet at 5155 to close your original sell bet. Similarly, if you had opened your position with a Buy bet, you would need to Sell to close.

In the example above if you close your position with a buy bet as quoted by FinancialSpreads.com , your winnings would be calculated as follows: 5277 – 5155 = 122 x £5 = £610

Obviously, if the market begins to rise, you have speculated incorrectly and your trade will begin to incur a loss. This is calculated in the same way as your profit.

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Online Trading

FinancialSpreads.com online trading is easy to master. You can observe our live prices before you trade. Then, select the market of your choice and enter your stake into the appropriate field. A trading ‘ticket’ or pop-up box will be created and a live sell/buy price is quoted. This price will change as the market fluctuates.

If you wish to buy, click on the Buy button. Once your trade is activated, an online ticket will appear on your screen detailing all of the information concerning your trade (the prices, stake, market, action (buy/sell), ticket number, and expiry details) – this information will also be sent to you via email. You can print this information if you wish.

You will also be given an automatic stop level, which indicates where our system will stop and close your position (you may amend this stop level at the time you make your trade). All stops are on an ‘our quote’ basis, which means that your position will be closed at the FinancialSpreads.com price quote and not the live market price level. Stop-Losses are not guaranteed.

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Example of an Online Bet

It is now November and the FinancialSpreads.com Barclays March spread quote might be 499.3-503.0. If you believe that the share-price will rise over the next 3 months, you would “buy” at 503.0. You need to decide your stake and then, click on the Trade button. For this example, lets say you choose a stake of £2 per penny movement.

This means that you will receive £2 for every penny the share price rises. If the share FinancialSpreads.com quote for Barclays rises to 511.0-513.5 you may decide you want to close your position to realise the profit.

A sell bet always closes a buy bet, and vice versa. Alternatively, you can leave the bet to expire in March, when your bet will be automatically closed.

If, however, the share value falls and you do not sell to close, your bet will close if it reaches your CGSL or Stop-Loss level of your choice, ensuring that you do not incur excessive losses².

The previous example shows that you opened your bet at 503p and that when the market fell, the trade was automatically closed by a Computer Generated Stop-Loss (CGSL) at 453p. The maximum loss on this bet was £100 (503.0 – 453 x £2 = £100).

As the graph shows, the share price continued to fall, whilst the Stop-Loss ensured that further losses were not generated.

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Try a Demo Account

If you are new to spread betting, we highly recommend that you sign up for our online Demo Account. The Demo Account mirrors our live trading system in all respects, other than the requirement for depositing funds!  Used in conjunction with our online Beginners Guide you can really get to grips with the concept of Spread Betting or familiarise yourself with our trading platform before you begin Live Trading.

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Why should I spread bet?

Spread betting allows you to bet on a huge variety of financial products in one place and in one currency.  You make your bets in one of 3 currencies (Sterling, US Dollars or Euros), which means you do not have to bother with costly exchange rates and can, in general, trade in your own currency.

Spread bets are margined trading products, which means you need only deposit a small percentage of the full value of your trade leaving your excess capital to continue working hard elsewhere. For example, a £1 bet on a share is the equivalent of buying (or selling) 100 real shares. On most shares our minimum Initial Margin Requirement (deposit) is 3-5% of the underlying value of the shares which means that you can take a bet in a share with as little as 1/30th of the money required to buy the actual real shares from a stock broker.

Also, because FinancialSpreads.com is not a stockbroker, we do not charge commission or fees. We make our profit from the spread we add to the underlying market prices, which result in our quotes. Plus, don’t forget, that UK residents benefit further because your profits do not incur Capital Gains and Income Tax.

Whilst spread betting offers many benefits, it is important to note that it carries a high level of risk to your capital, so you should only bet with money you can afford to lose.  Whilst we offer compulsory stop-losses, it is possible for you to lose more than your initial deposit.  To read more about the risks, please click here.

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What are the advantages?

Bull or Bear
One of the most obvious advantages of spread betting is the unique opportunity to go short of (or sell) a stock or share. You can therefore experience the benefit of either a rising or falling market!

No Commission or Fees
Because FinancialSpreads.com is not a stockbroker, we do not charge commission or fees. The only “fee” is the spread we charge on the prices that we quote.

Gearing
Spread betting also allows you to trade in sizes smaller than those usually available in the underlying market. Similarly, you may also benefit from an opportunity to trade in larger positions than are normally permitted in the underlying market, without depositing large sums of money.

Tax Free Profits
All spread betting profits are recognised as the winnings of a bet, and are therefore free of Capital Gains and Income Tax.

Tight Spreads
At FinancialSpreads.com our mission is to provide value for money plus top quality service. You’ll find our spread quotes far better value that most of our competitors. In some cases, you will find that our spreads are extremely competitive in relation to the live, underlying market quotes.

For example, our Daily Rolling FTSE spread is just 2 points and our Daily Rolling Sterling/Dollar quote is just 4 points. Compare our spreads to that of our competitors

Limit your Risk
Spread Betting is a high-risk activity, but at FinancialSpreads.com we want you to enjoy your spread betting experience. The automated stop-loss facility we provide is an invaluable tool, which encourages you to understand and control your risk. Although you must be aware that stop losses are not guaranteed.

Your stop-loss is set according to the funds available on your account up to a maximum computer-generated level. You can amend your stop-loss to suit your needs. We also hold an additional 25% of your funds to allow for slippage or a market gap.

Risks
Although you can make substantial profits from spread betting, if the markets move against your bet, your loses can also be substantial and although FinancialSpreads.com has a policy of attempting to limit client losses on bets by applying an automatic stop–loss to each bet you make, these stops are not guaranteed. As a consequence, if a market gaps, you may lose more than your initial deposit.

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Why should spread betting interest me?

Spread betting appeals to a wide variety of individuals who want to take advantage of the versatility and great value that spread betting can offer.

Experienced investors use spread betting as an additional trading tool as the spreads we offer rival the prices available in the real market. Alternatively, many investors use spread betting to hedge their existing share portfolio. For example, if you have some shares, which are decreasing in value in the short-term, you could “Sell” the value of the share using a sell bet with FinancialSpreads.com and possibly make a profit to counter-balance the decreasing value of your shares.

You do not need to be an experienced investor to spread bet, but you do need to research the products that you wish to trade and be aware of the risks associated with spread betting. Many individuals new to spread betting use technical analysis to guide their investment decision. FinancialSpreads.com provide charts for every product we quote to assist you with your technical analysis.

One of the problems for spread betting companies is the word ‘betting’ as this gives a false impression to the marketplace. Spread Betting is in fact a highly adaptable trading tool.  With a FinancialSpreads.com account you can trade in many financial products using just one currency – we offer prices on UK, European & US shares, World Indices, Commodities, Foreign Exchange, Bonds and STIRS. You can bet on the Cash, the Future or our new Rolling Daily products.

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What are Rolling Daily bets?

Our innovative Rolling Daily Bets provide a cost-effective solution for short-medium term trading. These bets do not expire at the end of the day but are automatically ‘rolled over’ to the next trading day. The spread on these bets is very tight, increasing the opportunity of profitable trading. The bets never expire – they continue until either you trade out of them, or your stop level is hit.

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How are they priced?

Rolling bets work by just taking the real price in the market and placing a very small spread around it. At the end of the day all open bets are ‘rolled’ over to tomorrow.

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Why use them?

Traders can find cost savings versus longer dated bets as there is no pre-charged interest rate cost involved. Generally for clients with long positions, FinancialSpreads.com will make a charge for every day that the bet is held overnight BUT for short bets FinancialSpreads.com will actually pay you to hold overnight (FX Rolling bets have different financing rules). This is irrelevant of whether the the bet is winning so you could be earning twice over!

For example Rolling FTSE 100 share bets trade on a spread of just 0.1%, this spread is almost certainly less than the commission alone that you would pay your broker, and remember that as they are spread bets they do not attract the 0.5% stamp duty either. You can also trade with as little as 3% margin, leaving your money working hard elsewhere.

You will find the spreads charged on our rolling bets compare more than favourably with our competitors and even in many cases even beat direct dealing costs. Rolling bets are by far the most popular type of bet made by our clients taking over 70% of all trades made.

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What is the difference between ‘cash’ and ‘rolling’ bets?

Rolling Bets will remain open for as long as you want them to, there is no expiry date. This is in direct comparison with our Daily Cash (or Futures) bets which expire at some time during the current trading day. In general the spreads are similar for both products but clients prefer the flexibility of the Rolling product.

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What are the disadvantages of Rolling Bets?

Of course there is a disadvantage to the Rolling Daily bet format and that is when you are looking for a long term position for example when you are using the bet as a hedge (insurance) against something else. After a few weeks the financing costs involved in running a Rolling position start to make the bet unattractive versus quarterly or monthly bets.

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Advantages of Rolling Daily Bets

• Tighter spreads
• Available on indices, equities and FX markets
• Cost-effective solution for short-medium term trading
• Potential payment due to overnight financing
• Automatic order rollover facility
• Familiarity of trading underlying market but with benefits of futures-style trading

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Overnight Financing

Rolling Daily contracts incur a debitcharge or income credit for each day that they are held overnight.

Whilst it is normal for equity and index long positions to incur a debit and for short positions to receive a credit when overnight financing is applied, there are times when you may be debited for a short position, for example when interest rates are very low (NB overnight financing for FX positions is different).

For a position held on a Friday or prior to a FinancialSpreads.com non-business day, financing will be applied according to the number of days until the subsequent FinancialSpreads.com business day.

For example, for a position that is rolled from a Friday to a Monday, financing will be applied for 3 days. Any profits/losses are realised when the bet is closed.

Overnight financing calculations for Rolling Daily Bets?

The overnight financing for a rolling position can be calculated using this formula:

F = [ (price / u) x stake x i ] / b

F = overnight financing

p = closing price

u = bet unit risk

s = stake i = applicable interest rate: long bets:  RFR + 2%

  short bets: RFR – 2 %

b = day basis (365)

Rolling Daily bets, Relevant Funding Rate (RFR):

· Shares & Indices: The RFR is generally equivalent to the base rate of the underlying currency of the country of the market concerned. If you are long of a share/index contract, this equates to real market cash exposure and so interest may be charged on this cash value for each day that the position is held open overnight. If you are short of a share/index contract, an interest return may be paid on these equivalent cash funds.

E.g. the RFR for a short rolling daily bet on Google may be based on the US Fed Funds Rate minus 2%.

· Currencies: The RFR is calculated as the base rate corresponding to the 2nd currency minus the base rate corresponding to the 1st currency. E.g. the 1st currency of GBP/USD is sterling and the second is the US dollar. Therefore, the RFR for GBP/USD can be calculated as follows: 2.0% (USD) minus 4.75% (GBP) = a negative differential of minus 2.75%.

If we assume the base rates as follows:

GBP:  4.75% EUR: 2.0%  USD:  2.0%

The rates used for the examples above are indicative and are not necessarily representative of correct rates.

The RFR of the following currency pairs would therefore be calculated as:

FX Pair RFR  

EUR/GBP 2.75%  (4.75% - 2.0%)

GBP/EUR –2.75%  (2.0% – 4.75%)

EUR/USD 0%  (2.0% – 2.0%)

Note: Remember to add 2% to the RFR for long bets and minus 2% for short bets.

Bet unit risk: The smallest movement on the relevant contract that equates to a profit/loss change that is the same as your stake. E.g. on GBP/USD a movement of 0.0001 in the price would mean a profit /loss shift on your bet of the full stake (bet) amount and so the bet unit risk would be 0.0001.

WORKED EXAMPLES

1. Equities

· UK Equities

BUY £10 Rolling Daily Bet – HBOS

Bet unit risk  1 (4.75% + 2%)

Applicable interest rate  6.75% 

Closing price  750.10p 

A £10 long bet on HBOS which has a closing price of 750.10p would be equal to £7,501 market exposure (this equates your bet to the number of shares you would have to buy from your stockbroker to create the same market risk, a £10 bet = 1000 UK shares).

(750.10 / 1) x 10 x 6.75% = £506.32

This is the annual cost of borrowing £7,501 at 6.75%.

Divide this by 365 to reach the daily charge:

£506.32 / 365 = £1.39

As you are long of an equity, your account would be debited this amount for the overnight funding.

· US Equities

BUY £10 Rolling Daily – Microsoft

Bet unit risk  0.01 (2% + 2%)

Applicable interest rate  4% 

Closing price  $26.49 

[ (26.49 / 0.01) x 10 x 4% ] / 365 = £2.90

Your account would be debited £2.90 for the overnight financing.

2. Indices

· UK Indices

SELL £10 Rolling Daily - FTSE Cash

Bet unit risk  1 (4.75% - 2%)

Applicable interest rate 2.75% 

Closing price  4722 

[ (4722 / 1) x 10 x 2.75% ] / 365 = £3.56

Your account would be credited £3.56 as overnight financing.

· US Indices

LONG £1 Rolling Daily – Wall Street Cash

Bet unit risk  1 (2% + 2%)

Applicable interest rate 4% 

Closing price 10350 

(10350 / 1) x 1 x 4% = £1.14

You are charged £1.13 for holding this position overnight.

3. Currencies

· LONG £10 Rolling Daily GBP/USD

Bet unit risk  0.0001 (2% – 4.75% + 2%)

Applicable interest rate  – 0.75% 

Closing price  1.8550 

[ (1.8550 / 0.0001) x 10 x – 0.75% ] / 365= –3.81

Your account would be credited £3.81 as overnight financing.

Normally, for a buy bet you would be charged the overnight financing but because this calculation has returned a negative number, you will actually receive this amount.

· SHORT £5 Rolling Daily GBP/USD

Bet unit risk  0.0001 (2% – 4.75% – 2%)

Applicable interest rate  – 4.75% 

Closing price  1.8550 

[ (1.8550 / 0.0001) x 5 x –4.75% ] / 365 = –12.07

Your account would be debited £12.07 as overnight financing.

Please note that as with the previous example of a long bet, this has returned a negative number but in this case, as this is a sell bet, instead of you receiving the money you will be paying it!

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Dividend adjustments

The morning after a share goes ex-div the price of the share will drop approximately by the amount of the dividend. Dividend adjustments are credited to long positions and debited from short positions held at the close of business on the day before the ex-dividend date.

If you are long, you will receive 80% of the dividend and if you are short, you will be debited 100% of the dividend.

Payment is credited/debited to your account on the ex-dividend date. Dividend adjustments apply to equity and index bets.

For more information about dividend adjustments please see the FAQ’s section

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Open an account

How do I open an account?

To begin trading today, please complete our online application form. This can be found as a link on the home page (Open an Account). This should take no more than 10 minutes. You will be asked to select the type of currency you wish to trade in, so be sure that you select the currency you require. We then conduct an electronic check to confirm your identity and address.

If you are a UK resident, and we are unable to confirm that you reside at the address you have produced in your application form, we will require additional information in the form of an ORIGINAL, recent bank statement or utility bill. If you are not a UK resident, we will require proof of your address AND a copy of your passport/driving license. You can fax these documents to us on +44 (0)20 7456 7013, but then please post them to us at your earliest convenience.

If you would prefer to receive an application pack and a copy of our brochure, please complete the form. This can be found as a link on the home page (Open an Account).

If you would like to nominate someone to trade jointly on your account or if you would like a corporate account, please contact our customer support team: support@FinancialSpreads.com or +44 (0)20 7456 7061

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What type of account can I have?

FinancialSpreads.com offer deposit accounts, which means that you can begin trading once you have deposited funds into your account.

If you would like to hold an account in another currency (Sterling/US Dollar/Euro) or if you are interested in holding a corporate account, please contact our customer support team: support@FinancialSpreads.com or +44 (0)20 7456 7061.

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Can somebody else trade on my account?

Yes, you can nominate a family member or friend by completing a Power of Attorney form. Please contact us for further details.

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What hours can I trade?

We are open for trading from 07:00am until 21:15pm, Monday to Friday. You can find details of the trading hours for individual products if you click on the “I” information button to the right of each product or you can find a full, detailed list of all contract specifications if you click here.

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What products do you offer?

We offer a full range of products including Indices, shares, commodities, currencies, bonds and interest rates. You can find full details of the products we offer if you click here.

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How can I fund my account?

Once your account is open, you can deposit funds securely online using a debit or credit card (2% charge for credit cards). Alternatively you can pay by telephone, send a cheque made payable to FinancialSpreads.com or directly into our bank account. Please contact us for our bank details: support@FinancialSpreads.com or +44 (0)20 7456 7061

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How do I get my money back?

Please email us instructing with instructions to make a refund your card. We will require your FinancialSpreads.com account number and the last 4 digits of your card as confirmation of this transaction. You can also make this instruction by telephone +44 (0)20 7456 7061

We can also arrange to send you a cheque or make a direct payment into your bank account. Please see the FAQ's section for more information.

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Making a Bet

For details of how to make an online bet, please refer to our Online User Manual

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Markets

Range of Markets

FinancialSpreads.com offers the facility to spread bet on a wide range of products from the UK and international financial markets. These include major indices, currencies, equities, commodities and treasuries.

We quote Futures markets as well as Daily and Rolling Daily bets. Please click here to see a full list of the products we offer.

This file is a PDF and you will need Adobe Acrobat to access the details in this file. If you do not have Adobe Acrobat on your machine, you can download it free of charge if you click here: http://www.adobe.com/products/acrobat/readstep2.html

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How do you calculate your Daily FTSE and Wall Street prices?

This is a common question for Spread Betting companies as it does cause some confusion with clients.

All major indices quoted by FinancialSpreads.com have a Futures market related to them (i.e. the FTSE 100 has the LIFFE FTSE Futures market). This Future trades at a price which reflects the underlying market plus some adjustments. These adjustments are calculated from the theoretical value of dividends payable between today and the expiry of the Future AND the cost of carry for the index over the same period.

This Adjustment is called the 'Fair Value'. FinancialSpreads.com will adjust the Daily Cash price of each index by it's own Fair Value number each day. FinancialSpreads.com links the 'Daily Cash' quote to the relevant future concerned and offsets the quote by the current Fair Value. Therefore the Cash Daily price is moved by the Futures price and not vice versa, this is because the cash price is a lagging market indicator which does not react in a timely manner to market moving news.

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Terminology

For full details of the terminology that we use, please click here to see our Glossary. Alternatively, we have explained some frequently used terms below:

What is margin?

Margin is the amount of money you must have in your account to satisfy FinancialSpreads.com that you are able to honour your debt should your bet lose money. The amount of margin required can be calculated simply by using our Product Information sheets, which you can access here.

What is the Min IMR?

The Min IMR refers to the Minimum Initial Margin Requirement or initial deposit required to open a bet. It is a way of calculating the minimum funds required to open a new position. If the Min IMR on a market is 50 and you wished to make a bet £5/point, you would require a minimum of £250 in your account to open a new position.

We will then generate a stop-loss that reflects 80% of the funds available on your account or 80% of the Max CGSL, (see details below). You can adjust/amend your stop-loss to whatever level you desire (subject to the funds on your account). Every product has a minimum stop level that limits how close you may place any stop.

What is the Max CGSL?

The Max CGSL (Computer Generated Stop Level). This is the maximum figure used to automatically allocate a 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 a point 80% of the funds on your account, up to the CGSL. Otherwise, the system will allocate a stop-loss calculated as 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 of 100 points (because the Max CGSL for Daily FTSE is 125 and 80% of 125 is 100). The maximum risk on a £10 bet would therefore be £1000, even if you have £2000 on your account. You can always amend your stop-loss (move it further away, or bring it closer) assuming you have sufficient funds on your account.

Please note that we hold an additional 25% of your funds to allow for slippage or a market gap. We do not offer guaranteed stops and therefore you could lose more than your initial deposit should a market gap through your stop level due to volatile markets or because of movements in the underlying markets during the hours when FinancialSpreads.com is closed and does not subsequently offer a quote. If you require more information, please contact us.

What is the “Net Change” figure displayed on your website?

This figure is based on our spread bet quotes and not the underlying market value. It shows the number of points that our quote for that product has moved since the close of business the previous day.

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Glossary of Terms

Basis of Expiry : The FinancialSpreads.com specification of the price at which a contract (bet) expires.

Bid : The price at which FinancialSpreads.com buys and therefore at which a customer can sell the contract (bet) quoted.

Buy : (‘Take’, ‘go long’) means you make an up bet (or close a down bet).

FinancialSpreads.com Market Hours: The times at which FinancialSpreads.com will quote on a given contract.

CGSL : Computer Generated Stop Loss - 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, and during which delivery may take place according to the terms of the contract.

Down Bet : (‘Sell’ ‘Give’ ‘Go Short’) If you think the market will fall, you would place a Down Bet.

Expiry : The date and time on which the relevant bet expires.

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

Gapping: This is the term used to express the situation where any market moves directly from one correctly quoted price to another, significantly different, correctly quoted price. There can be many reasons for gapping; economic figures, company announcements, political events, natural disaster etc., but the effect is that any stop-loss, limit or new order will be subject to a gap in the price. One of the main reasons for gapping a spread bet is a movement in the underlying market price overnight, during which time FinancialSpreads.com does not quote a price.

Gearing (or Leverage): 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 FinancialSpreads.com the initial deposit is normally at least the IMR.

GFD - Good For the Day : An order valid for the day of placement only.

GTC - Good Till Cancelled : An order valid until either cancelled or until the underlying contract has expired .

Hedging : The action of reducing the risk of an outright position in one Market by taking an opposite position in a similar or derivative market, e.g. if you had an up bet in the FTSE you might enter a down bet in the DAX. In this case although the Hedge would not be exact, it is unlikely that the FTSE will move heavily in the opposite direction to the DAX (but, of course, not impossible).

IMR: Initial margin requirement

Last Dealing Day : The last day in the contract month on which a customer may deal in the product.(May be a significant difference to the Expiry).

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

Limit Order : An optional order against and 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.

Long : means you have an up bet .

Margin : Clients who hold open positions require what is called margin. Margin is calculated as the amount of money you must have in your account to satisfy FinancialSpreads.com that you are able to honour your debt should your bet lose money.

Maximum CGSL(Computer Generated Stop Loss):
This is the maximum figure used to automatically allocate a 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 a point 80% of the funds on your account, up to the CGSL. Otherwise, the system will allocate a stop-loss calculated as 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 of 100 points (because the Max CGSL for Daily FTSE is 125 and 80% of 125 is 100). The maximum risk on a £10 bet would therefore be £1000, even if you have £2000 on your account. You can always amend your stop-loss (move it further away, or bring it closer) assuming you have sufficient funds on your account. If you require more information, please contact us.

Minimum Bet : The minimum bet in pounds ( euros/dollars) per point that we will accept in that contract.

Minimum IMR: The Min IMR refers to the Minimum Initial Margin Requirement. It is a way of calculating the minimum funds required to open a new position. If the Min IMR on a market is 50 and you wished to make a bet £5/point, you would require a minimum of £250 in your account to open a new position. We will then generate a stop-loss that reflects 80% of the funds available on your account or 80% of the Max CGSL, (see details below). You can adjust/amend your stop-loss to whatever level you desire (subject to the funds on your account). Every product has a minimum stop level that limits how close you may place any stop.

New Order: An order to open a new bet at a level in the market which has not yet been reached. It is not attached to any existing bet and is independent of any other instruction

OCO : ‘One Cancels Other’ 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.

Offer : The price at which FinancialSpreads.com sells and therefore at which a customer (you) can buy.

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 FinancialSpreads.com Vodafone share price. A bet per point on the FTSE is for each point move in the relevant FinancialSpreads.com FTSE contract. E.G. a 10 point movement from 5100 to 5110 on a FinancialSpreads.com 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.

Rollover : Rolling over is the practise where a position that is due to expire is closed and transferred into the next monthly 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.

Sell : (‘Give’, ‘go short’) means you make a down bet (or close an up bet).

Settlement price : The price at which FinancialSpreads.com settles a position at expiry date. The basis of settlement for each contract can normally be found in the FinancialSpreads.com Product Information Sheets.

Spot : For immediate delivery.

Spread : The difference between the buy and sell sides of our quote.

Stop Order : A mandatory order to either buy above the current market level or sell below that level at a price specified by you.

Tick : The standard term for the smallest price movement in a contract.

Underlying Markets : 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 : (‘Buy’ ‘Take’ ‘Go Long’) If you think the market will rise, you would place an Up Bet.

Volatility : A term to describe, and quantify, the relative movement of a given market in the recent past. A market that moves a great deal is said to be of high volatility and one that is quiet is said to have low volatility.

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Other Questions

If you have any other questions about Spread Betting or FinancialSpreads.com , please review the Frequently Asked Questions section of our site, or click here

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