What is Financial Spread Betting?

Ask price - The higher price of a quoted spread. The level at which a customer would buy or "go long" of a market.

Bear - Used to describe someone who expects a market to decline, commonly referred to as being "bearish."

Bear market - Used to describe a market that is either expected to decline or is already in the process of declining.

Bid price - The lower price of a quoted spread. The level at which a client would sell or "go short" of a market.

Blue-chip company - A term derived from the most valuable chip used in poker; it implies a large, long-established (and almost certainly profitable) company considered to be conservatively managed.

Bull - Used to describe somebody who expects a market to rise, commonly referred to as being "bullish."

Bull market - A market that is either expected to rise or is already in the process of rising.

Buy - To place an opening trade at the offer price of a spread in anticipation of the underlying market rising, commonly referred to as an "up trade," "taking a long position," or "going long." You can also buy at the offer price to close an existing short position.

CBOT - Chicago Board of Trade.

Charting - A visual method of trading, or analysis of the markets using price information to form a picture of previous price movements.

Closed position - A long or short position that has been liquidated.

Commissions - Fees that brokers charge a client for buying/selling of a financial product. Commissions range from broker to broker, and can be charged as a percentage or as a flat rate. GFT Global Markets does not charge commissions on spread bets.

Contango - When the price for immediate delivery of a commodity is lower than the price of delivery for a future date.

Contract month - The specified month to which a futures or options contract refers. This is the month when the specified instrument is delivered in exchange for cash settlement.

Cover - To sell a long position, or buy back a short position.

CME - Chicago Mercantile Exchange.

COMEX - Commodity Exchange Inc. (New York).

CSCE - Coffee, Sugar & Cocoa Exchange. (New York).

Dividend - A cash bonus or other distribution made by a company to its shareholders and applicable to every share that they hold in relation to that company. Spread bets in relation to individual equities do not qualify for dividends.

Down trade - See "sell."

Expiry date - The date on which a contract will expire, and after which can no longer be traded.

Expiry price - The official price at which the trade expires on the expiry date, commonly referred to as the "make-up" or "settlement price."

FINEX - Financial Instrument Exchange, New York.

Float / flotation - The first public offering of a company's shares or securities on a regulated exchange.

FPL - Federal poverty level. The set minimum amount of income that a family needs for food, clothing, transportation, shelter and other necessities. In the United States, this level is determined by the Department of Health and Human Services. The number is adjusted for inflation and reported annually in the form of poverty guidelines.

FSA - The Financial Services Authority. The government-appointed body responsible for regulating spread betting within the U.K.

FTSE - Financial Times Stock Exchange, London.

FTSE 100 - The index of the UK's top 100 public quoted companies as rated by market capitalization.

FTSE Mid 250 - The index of the next 250 companies rated below the top 100.

FTSE 350 - The UK's top 350 public quoted companies by market capitalization; a combination of the FTSE 100 and the FTSE Mid 250.

Fundamental analysis - Looking at revenues, earning, management and prospects for successful products in order to evaluate a company's stock. When applied to a market or industry, it takes economic conditions and statistics such as unemployment and interest rates into account.

Futures trade - Buying or selling a contract at an agreed opening price and for a set expiry date and time in the future.

GFD (Good for the day) - Applicable to market orders, it signifies that the order can only be filled on the day it is lodged and if not executed will expire at the close of the relevant underlying market on the specified day.

GTC (Good 'til cancelled) - Applicable to market orders, it signifies that the order will be open and carried forward indefinitely until it is either filled or cancelled by the client.

Gray market - Quotes that are offered where there is no underlying market, for example an Initial Public Offering.

Guaranteed order - An order that, for a small premium, is guaranteed to limit a client's losses, both during and outside of market hours, to the amount specified.

Hostile takeover - One company bidding to buy another against the wishes of the latter.

Initial Margin Credit Allocation - Applicable to Standard and Premier Credit Accounts only, it is the amount of Initial Margin that GFT Global Markets UK Limited has agreed to waive. The amount is normally the equivalent of the level of Variation Margin Credit Allocation but can be greater.

IPE - International Petroleum Exchange, London.

Insider dealing - Refers to any use, for purposes of financial gain, of any price sensitive information that is not already public knowledge. Insider dealing, if proven, is punishable by unlimited fines and a possible term of imprisonment.

Interim dividends - When a company distributes profits to shareholders at stages during the financial year.

Interim report - The requirement for each stock exchange quoted company to release interim reports periodically during their financial year.

Initial Placement Offer (IPO) - The offering of a company's shares prior to its market debut.

LIBOR - London Inter Bank Offer Rate. Published at www.bba.org.uk.

LIFFE - London International Financial Futures Exchange.

Limit order - An instruction to either buy or sell at a level that is more favorable than the current price of the specified financial instrument. The possibility exists that the order will never be filled.

Limit up / limit down - When an exchange enforces a temporary price ceiling or floor, suspends, restricts or closes the stock index for a set period of time in order to maintain a fair and orderly market and reduce the risk of large and sudden price movements.

Liquid market - A market with sufficient volume so as to avoid wide bid/offer spreads and volatile price movements.

LME - London Metal Exchange.

Long position/go long - Holding or opening a "buy" position in anticipation of the underlying market rising. See "buy."

Lot - The minimum amount that can be traded in the underlying futures or options exchange. Commonly referred to as the "lot size" or "contract size."

LSE - London Stock Exchange.

Market capitalization - Calculated by multiplying the number of shares issued in respect of the company by the current share price.

Market maker - Exchange registered companies that quote a two-way spread in relation to securities.

Market order - An order to buy or sell at the current bid or offer price.

Market quote - Commonly used to describe market orders that are based on the price of the underlying market actually trading at the market level as opposed to the level of the GFT Global Markets quote. Also commonly stated as being left "basis screen" or simply "basis market."

Merger - When two companies combine in order to form one entity in all respects.

MSE - Milan Stock Exchange.

NYCE - New York Cotton Exchange.

NYFE - New York Futures Exchange.

NYMEX - New York Mercantile Exchange.

Noise - Normal everyday market movement, up and down without really going anywhere. The ebb and flow of everyday market movement.

OMLX - London Securities & Derivatives Exchange.

Open position - Any unexpired position that you hold on your account.

OSE - Osaka Securities Exchange.

Put option - The right, but not the obligation, to sell at a fixed price on or before a predetermined date.

Securities - See "equity."

Sell - To place an opening trade at the bid price of a spread in anticipation of the underlying market falling, commonly referred to as a "down trade," "taking a short position," or "going short." You can also sell at the bid price to close an existing long position.

Settlement Price - See "expiry price."

SETS (Stock Exchange Electronic Trading System) - The electronic order driven trading system employed to deal in the FTSE 100, ex FTSE 100 and reserve UK equities.

SFE - Sydney Futures Exchange.

SGX - Singapore Exchange.

Shares - See "equity."

Short / go short - Holding or opening a "sell" position in anticipation of the underlying market falling. See "sell."

Slippage - The price difference between where an order is placed, and where it is actually filled. Can occur in extremely volatile markets.

SOFFEX - Swiss Options & Financial Futures Exchange.

Spot - The actual price of a financial instrument for immediate settlement or delivery.

Spot market - The market in the underlying financial instrument (shares, indices, commodities, etc.) on which a futures or options contract is based. Also known as a cash market.

Spread - The difference between the sell (bid) and buy (offer) prices.

Stake - The amount of money that you specify and which you wish to risk per "tick" movement on your chosen financial market.

Stamp Duty - U.K. government tax of 0.5 percent paid by the buyer on share transactions. There is no Stamp Duty on CFDs, spread bets or forex transactions.

Stocks - See "equity."

Stop loss - A market order that can be employed in an attempt to limit potential losses, but is not guaranteed either during or outside of market hours.

Stop order - An instruction to either buy or sell at a level that is less favorable than the current price of the financial instrument in question.

Support - The price point that prices will have difficulty moving below. Used in technical analysis.

TSE - Tokyo Stock Exchange.

Variation margin - The amount of money that is immediately due from you in the event that when holding open positions, your overall account position is a negative figure. The amount of variation margin due is equal to the amount of the negative figure combined with 25 percent of the total IM of your open positions at that time. Please refer to the GFT Global Markets UK Limited Customer Agreement for a comprehensive explanation.

Volatility - A measure of the amount by which the price of an instrument is expected to fluctuate over a given period.