Trading Glossary

The Alternative Investment Market is a sub-market of the London Stock Exchange, allowing smaller companies to float.

Our specification of the price at which a contract expires.

A market distinguished by declining prices.

This is the price at which you can sell. It is always the lower of the two prices quoted and is called the bid.

The bond market is where participants buy and sell debt securities. UK Gilts, German Bunds and US Treasuries are all Bonds. We quote prices derived from the underlying futures markets of the relevant contracts.

A market distinguished by rising prices.

Buying means you have gone long in anticipation of a market rising. You would also make a buy to close out an existing sell (short) position.

These are markets where raw or primary products are exchanged (like gold and oil). These commodities are traded on regulated exchanges, in which they are bought and sold in standardised contract sizes. We quote prices derived from the underlying futures markets of the relevant contracts.

The month during which a futures contract expires and during which delivery may take place according to the terms of the contract. Since you are trading on a derived price of these contracts, you will never have to take delivery of or deliver the underlying product.

The foreign exchange markets trade one state or economic bloc's currency versus another's (commonly called a cross rate). These markets are traded in 'pairs' of two separate currencies (i.e. GBP/EUR is the Sterling versus Euro currency pair). When a buy trade is made in a currency pair the client is anticipating that the first quoted currency is going to rally versus the second. Therefore if a client buys the EUR/YEN cross he wants the Euro to rally versus the Yen.

A security whose price is derived from an underlying asset (e.g. a share, currency, commodity or index) and may not give the holder any actual rights to the underlying asset.

The part of a company's profits distributed to shareholders, usually on a regular basis. If you have an open buy position on an equity (excluding quarterly equity contracts) that goes ex-Dividend you will be credited with 80pc of the relevant dividend if you have an open sell position you will be debited 100pc of the relevant dividend.

Equities represent a share of ownership in a company. Equities are traded via the share market, a public market for the trading of company shares and derivatives at an agreed price. As you are trading on derived share prices, this does not give you all the ownership rights of the shares nor does it give you, at any time, the right to require or request delivery of those shares from us. You have no voting rights over the shares represented by your trade.

The date and time on which the relevant contract expires..

The execution of an order.

The FCA is an independent body that regulates the financial services industry in the UK. London Capital Group (LCG) is an FCA regulated company. This means you can trade safely and securely, knowing your money is protected by some of the toughest financial regulations in the world.

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

A futures contract is an agreement to conduct a transaction at some specified time in the future where the price is agreed now. Therefore, it means that the expiry date is at some point in the future. Our future contracts are cash settled so you will never be required to actually deliver, or take delivery of, the physical product.

Clients can buy or sell a financial product with substantially less money than the actual full market value of that financial product. A position in a contract with high gearing or leverage stands to make or lose a large amount from a small percentage movement in the underlying instrument.

An order to buy or sell a market at a set price that is active until the close of business on the day the order is placed or until the order has been filled.

An order to buy or sell a market that remains active until the order is executed or is cancelled.

You can opt to place a Guaranteed Stop Orders on your positions with Capital 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.

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).

Indices are a customised basket of securities that track a particular market or segment. Each index has its own calculation methodology and its own specific process in order to select particular securities. We offer prices on all of the major financial indexes, such as the UK 100, DAX 30, Dow and S&P 500.

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

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.

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.

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

A client is said to be long if he/she has an open buy position.

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 Capital Spreads that you are able to honour your debt should your bet lose money.

The times at which Capital Spreads will quote on a given contract.

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

Where you have two orders, one above and one below the current market price and were the first to be executed the other is automatically cancelled.

The price at which Capital Spreads sells and therefore at which a customer (you) can buy.

An order is an instruction to make a bet 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).

A pip/ tick/ point are the general terms for the smallest incremental move possible in any market quoted by us. Clients should always be aware of what the underlying stake or unit risk is for all markets in which they wish to trade.

These contracts expire prior to or on their expiry date in March, June, September or December. They can be closed out at any time before the expiry date.

A price level which is supposedly difficult for a particular market to rise above.

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.

Selling means you have gone short in anticipation of a market falling. You would also make a sell to close out an existing buy position.

The price at which Capital Spreads settles a position at expiry date. The basis of settlement for each contract can normally be found in the Capital Spreads Market Information Sheets.

For immediate delivery.

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

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).

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

A price level which is supposedly difficult for a particular market to fall below.

Analysis of a financial market by the utilisation of historical price data (usually charts) in an attempt to predict future price activity.

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

A market where prices are range bound by a higher and lower price band. Normally markets will range trade when there is little or no news. Relates to Technical Analysis.

Trading Resources are the funds you have available to make new trades or to move any of your existing stop loss orders on any open trades further away from the current quoted price.

Trailing stops are a risk management tool that allow you to manage your risk without restricting your potential profit. Trailing stops help you to secure your gains as the market moves in your favour, giving you added flexibility as they will automatically track your profitable positions so that you don't have to continuously monitor your position and move your stop manually.

It has always been possible to move your stop order manually if the market has moved in your favour, but now you can set our system to do this automatically for you.

Our quote is always based upon the prices received from the various financial exchanges around the world. These prices are the 'underlying markets'.

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

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 volatile.