Glossary
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.
aFutures : A standardised, transferable, exchange-traded contract that expires on a specified future date.
Gap ("gapping" or "slippage"): 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): 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 .
Guaranteed Stop Orders: You can opt to place a Guaranteed Stop Orders on your positions with Financial 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 : 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 UK 100 you might enter a down bet in the DAX. In this case although the Hedge would not be exact, it is unlikely that the UK 100 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.
Limited Risk Account: With a Limited Risk Account all your positions will have an associated Guaranteed Stop Order attached to them. This means that, should the market move against you, we will guarantee to close all your positions at a pre-specified exact point. In other words, for every trade you open with a Limited Risk Account you must specify a stop to cover the maximum possible loss in your account. As mandatory Guaranteed Stop Orders are essentially a form of insurance against market gaps, they come at a small cost. This will be a premium that will be debited from your account when you place a trade. You should also note that by opting for a Limited Risk Account your Stop will need to be placed further away from your entry level than if you selected a standard account where Guaranteed Stop Orders are not mandatory.
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 UK 100 at £10 per point, the system will automatically allocate a stop-loss of 100 points (because the Max CGSL for Daily UK 100 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.
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).
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 UK 100 is for each point move in the relevant FinancialSpreads.com UK 100 contract. E.G. a 10 point movement from 5100 to 5110 on a FinancialSpreads.com Daily UK 100 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 Market Information Sheets.
Spot : For immediate delivery.
Spread : The difference between the buy and sell sides of our quote.
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).
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.