Ask 

The price a seller will accept for a security

Bear Market

A Bear market is one where the majority of share prices across the entire market are falling. Opposite a to Bull Market

Bid-Offer Spread  

The difference in price between, buying (bid) and selling (offer).

Blue Chip 

This term is used to categorise companies as being a safe investment. The majority will definitely be large and money-making.

Bonds

Bonds are usually fixed interest securities often issued by governments, but can come in a variety of forms. With a fixed-interest bond, the borrower normally makes interest payments on specified dates, often twice yearly

Bull Market

A Bull market is one where the majority of shares across the entire market are rising. Opposite to a Bear Market.

Cable

Trader’s language of the Sterling/US Dollar exchange rate.

Call

A Call is a type of option granting the right to buy as a fixed price, known as the strike.

Cash price (also see Spot Rate)

The price of an asset for immediate delivery; in other words the actual price of an instrument right now. The term is often used for stock indices, whereas the term of spot rate is more often used for Forex and commodity prices

Closing Price 

The closing price is the last price for a tradable instrument at the time the market closes.

Close Out

To prevent a CFD account from moving into debt it must always remain above the Close Out level. It is falls below this the CFD trades are at risk of being liquidated.

Contingent Order

An order that is only executed when another order is executed first.

Contracts for Difference (CFD's)

An agreement between two people to settle at the close of their contract, the difference between the price of a company’s share when the market opens and when it closes. Neither people own the underlying share.

Currency Pair

The two currencies that comprise a Forex rate. A Forex rate is the amount that the first currency in the pair is worth, expressed in terms of the second currency.

Day Order

The order will only be active for the day.

Derivative

A security where the price is dependent upon or derived from one or more underlying assets

Dividends 

The name given to the percentage of after tax profit distributed to the shareholders of a company.

Fill

The execution of an order.

Fixed Income

When an investments dividend is regular or fixed.

FSA  

The UK Financial Services Authority. The regulators of the UK’s financial system.

FTSE Index

The three UK indexes- FTSE100, FTSE Mid 250 & FTSE Small Cap.

Future

An exchange-traded contract that requires delivery of a share or commodity at a specified price, on a specified future date. Unlike options, futures convey an obligation to buy.

Gapping

A risk involved with volatile markets. It is a sudden shift in price where there may not be an opportunity to place or execute an order between the two price levels. This can result in stop loss orders being executed at unfavourable prices, either higher or lower than wanted.

Good till Cancelled (GTC)

An order that is active until it is filled or cancelled.

Hedging 

A way of reducing or eliminating the risk of loss, by placing another position to cover yourself.

Holding Costs

If you hold a position open overnight or longer you may be required to pay holding costs. They are incurred on a daily basis and can exceed the amount of any profits or increase losses. You could lose more than you have deposited.

Illiquid

The difficulty of selling your positions for cash due to a lack of demand of your holding.

Leverage

Depositing a small percentage of the total value of the underlying asset in order to open a position. However, your risk is the same as if you had bought the same number of shares at face value.

Limit Order 

An order to buy or sell a share at a target price.

Liquid Market

A liquid market is one with many buyers and sellers, where dealing is easier and share have a narrow bid-offer spread.

Liquidity

The degree of ease with which an asset can be turned into cash.

Long 

Buying an investment with expectations of the price going up (opposite of short).

Margin

The amount of cash required from a client to hold a position.

Market Capitalisation

Market capitalisation is the number of shares in the market multiplied by the share price at the time the market capitalisation was calculated.

Mid Price

The mid point between the bid and offer prices. It is used for many valuations and ratio calculations and is the price shown when companies are reported in newspapers.

Net Asset Value

The assets of a company, minus its liabilities, divided by the number of shares in issue.

Offer Price

The price shown by a market maker at which an investor may buy shares as long as the number of shares does not exceed the indicated market size..It is not a guaranteed buying price when a transaction is outside the market size.

Order Book

FTSE 100 stocks are traded on an electronic order book. When bid and offer prices match, new incoming orders are automatically against orders on the book.

Pip

A ‘Percentage In Point’ is normally the fourth decimal place, that is 0.0001. Traditionally, it was the smallest point by which a Forex trade could move, although this is no longer the case with modern technology.

Portfolio

A set of securities owned by an investor.

Spot (or cash) price

The price of a share, currency or commodity for immediate settlement or delivery.

Put

A Put is a form of option, giving the right to sell at a fixed price (the strike).

Short

To sell. A position taken in anticipation of a falling market. Opposite of long.

Stop Loss

An order to sell a position when it reaches a certain price, in order to control or reduce risk

Yield

The annual income from a share based on its current price. Yield for an individual investor will depend of the price they have paid for the share.