GLOSSARY

Account Limit – The maximum amount of money that an account is allowed to have in it.

After Hours Trading – Trading on a market after the underlying market has closed.

AML : Anti Money Laundering 

Arbitrage – Trading on a price differential between two or more markets.

Ask Price – The price at which you can buy at or bet that a market will go up.

Back Office – Administration software to monitor your account, trades, positions etc.

Base Currency – The first currency in a currency pair. For example in GBP/USD, GBP is the base currency. It is this currency that the exchange rate refers to, so if the exchange rate was 1.6350 then 1 unit of the base currency equals 1.6350 units of the second currency.

Base Rate – Refers to the official rate of interest set by the Bank of England.

Bear Market – A market in which the prices are in general decline.

Bid Ask Spread – The difference between the bid price and the offer price.

Bid Price – The price at which you can sell at or bet that a market will go down.

Bull Market – A market in which the prices are in generally rising.

Buy – When you BUY when you believe a market will rise or when you want to close a position that you have previously SOLD..

Central Bank – The Government of a country’s banker who implements monetary policy.

CFD – Contract for Difference. Margin trading on financial markets.

Closing Only – When positions may only be closed and not opened.

Closing Price – The last price that a market trades at. The ‘Official Close’ maybe a different to this.

Corporate action – When a company structure changes or a dividend is issued etc.

Cost of Carry – The actual cost to run a position from one day to the next. E.g. financing.

Counter currenc – The second currency in a currency pair, also known as the contra currency.

Cover – To reduce or close an open position.

Cross Rate – Normally refers to non major currency pairs. E.g. Aud/Cad.

Day trading – Trading throughout the day without leaving positions on to run overnight.

Deposit – The amount that you have credited into your account.

Derivative – A market that is priced using another market as its bench mark.

Dividend – A share of a company’s profits that is distributed to its shareholders.

ECB – European Central Bank

Economic Indicator – A statistic usually issued by a Government department indicating the financial state of the economy.

Equity – Another word for a share.

ETF – Exchange Traded Fund. Quoted on stock markets and mimics an underlying index, commodity or bonds etc.

Ex Dividend – When a share is traded with no rights or obligations to the due dividend.

Expiry – When a market will close and end permanently

Fair Value – difference between the underlying price and the theoretical Futures price.

Fast Market – When a market is so volatile and heavily traded that it can trade outside of the current ‘screen’ price.

Fed – Federal Reserve. The central bank of the USA.

Fill – An order that has been completed.

Flat – When you have no position.

FOMC – Federal Open Market Committee. Part of the Fed reserve that controls US interest rates.

Front Month – The main Futures contract of a market in which most trading takes place.

Futures – A contract to buy or sell something at a specified rate on a given date.

FX – Foreign exchange.

Gap – When a market price ‘jumps’ significantly from the previously traded price.

Gearing – A means of placing a large trade with only a small deposit through leverage.

Grey Market – A market that we may quote even when the actual underlying market is closed.

Hedging – A trade that reduces your exposure or risk to another trade.

High – The highest point at which a market traded.

Historical Trading Range – The price history of a market.

Illiquid – Very little volume can be traded without moving the price by a lot.

Index – A basket of weighted markets.

Indication Price – A guide price. Not an actual tradable price.

Inflation – The rate at which general price levels are rising.

Initial Margin – The amount of up from deposit required to place a particular trade.

Interbank Rates – The interest rates that large banks quote to each other.

IPO – Initial Public Offering. When a company first sells stock to the public.

KYC – Know Your Customers. An obligation on companies to know the identity, experience and requirements of their customers.

Last Trading Day – The last day in which trading is permitted before a market expires.

Leverage – A means of placing a large trade with only a small deposit through gearing.

Libor – London Interbank Offered Rate. The interest rate that commercial banks lend to each other in the UK. There is a fixing everyday at 11am which is used for a lot of global calculations.

Limit Down – The maximum that a market is allowed to fall at any one time by its regulators.

Limit Order – An order to buy or sell at a more advantageous level than where the market last traded.

Limit Up – The maximum that a market is allowed to rise at any one time by its regulators.

Liquid – When a market has a lot of buying and selling volume going through, not affecting the price.

Long Position – When you have a position in which you benefit from a rising price.

Lot – A preset trading amount. On MT4 platform this is 100,000.

Low – The lowest point at which a market traded.

Manifest Error – When a wrong price has been dealt on.

Margin Call – When you are called for additional margin as you do not have enough to allow for the adverse price movement in the position you hold.

Margin – The amount of deposit required to fund a position.

Market Order – An instruction to buy or sell at wherever the price is at the moment.

Maximum trade size – The maximum stake that can be traded at any one time.

MIS – Market Information Sheets.

Net position – Total position held.

Normal market size – The usual volume that is traded in particular market.

Notional – The nominal or face value of something.

OCO – One Cancels Other. Two orders placed, where if one is completed it cancels the other.

Offer – The price at which you can buy at.

Open position – Any current trades which have been opened and not yet closed.

Order – An instruction to initiate a trade when a specific price is reached.

OTC – Over The Counter. A market not traded on a recognised exchange.

Over Sold – When a market has been aggressively sold causing the price to move to unsustainably low levels.

Overbought – When a market has been aggressively bought causing the price to move to unsustainably high levels.

Pip – A term usually used in FX to refer to the smallest increment that a price can move by.

Point – A term used in any market referring to the smallest increment that a price can move by.

Position – Any current trades which have been opened and not yet closed.

Price – The price of the underlying market which another market may be based on.

Quote – A two-way market price containing the bid price and the offer price.

Realised P&L – The actual profit or loss made after a position has been closed.

Resistance – A level where technical analysts believe selling will occur.

Retail Investor – Someone who invests or trades in a non-professional capacity.

Rights issue – Where a company sells new shares to raise capital.

Risk – The exposure to something where the outcome is unknown to varying degrees.

Rollover – A procedure when a position which is approaching expiry is moved to the next contract expiry date.

Sell – When you SELL when you believe a market will fall or when you want to close a position that you have previously BOUGHT.

Settlement – When a market will close and end permanently.

Short position – When you have a position in which you benefit from a falling price.

Slippage – The difference between the level which an order was left at and the actual price it was filled at. This amount may increase during times of extreme volatility.

Spot – The underlying main cash price, usually referring to FX.

Spread – The difference between the Bid price and the Offer price.

Stop Loss – An order linked to an open position that will close it at a predetermined level which is further away than at present, thus limiting your loss.

Stop – An order to sell or buy at a worse level than at present. This will normally open a new position, but could be used to close a position (but it is not linked to anything).

Support – A level where technical analysts believe buying will occur.

Takeover – The transfer of ownership from one group to another.

Technical Analysis – Analysing charts and information to look for patterns or trends to help make predictions on future price movements.

Terms of Business – Your legal contract with Finveo and ours with you.

Trading range – The high and low prices that have actually traded during a given time.

Trailing stop – A stop loss order which automatically moves if you are in profit so that you keep reducing your potential loss.

Underlying asset – The core market from which other prices may be linked or related to.

Up Bet – When you BUY when you believe a market will rise or when you want to close a position that you have previously SOLD.

Volatility – The amount something moves in proportion to time.

Warrant – An option to buy a stock at a given price at some time in the future.