Trading Glossary
AIM-listed Company
The Alternative Investment Market is a sub-market of the London Stock Exchange, allowing smaller companies to float.
Basis of Expiry
Our specification of the price at which a contract expires.
Bear Market
A market distinguished by declining prices.
Bid
This is the price at which you can sell. It is always the lower of the two prices quoted and is called the bid.
Bonds
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.
Bull Market
A market distinguished by rising prices.
Buy ("take" or "go long")
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.
Commodity Markets
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.
Contract Month
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.
Currency/Forex/FX markets
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.
Derivative
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.
Dividend
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 (shares, stocks)
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.
Expiry Date
The date and time on which the relevant contract expires.
Fill
The execution of an order.
Futures Contract
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.
Financial Conduct Authority (FCA)
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.
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.
Gearing (or Leverage)
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.
Good For The Day (GFD)
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.
Good Till Cancelled (GTC)
An order to buy or sell a market that remains active until the order is executed or is cancelled.
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 a long (buy) position in the FTSE you might enter a short (sell) position in the DAX. In this case although the hedge would not be exact, it is unlikely that the FTSE will move heavily in the opposite direction to the DAX (but, of course, not impossible).
Indices
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 FTSE 100, DAX 30, Dow and S&P 500.
Last Dealing Day
The last day in the contract month of which a customer may deal in the product (may be a significant difference to the Expiry).
Limit Order
An order to close an existing open position at a better price than that which is currently available.
Liquidity
The ability of an asset to be converted into cash quickly, without any price discount and any restriction to size of transaction. Liquidity also refers to a market that is regularly traded.
Long Position
A client is said to be long if he/she has an open buy position.
Margin
Margin is the term used to describe funds being used to support existing trades. 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 us that you are able to honour your debt should your trade lose money.
OCO (One Cancels Other)
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.
Offer
This is the level at which you can buy and is always the higher of the two prices quoted and is called the offer.
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.
Pip/Tick/Point
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.
Quarterly Contracts
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.
Resistance Level
A price level which is supposedly difficult for a particular market to rise above.
Sell ("give" or "go short")
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.
Settlement Price
The price at which we settle a position at the expiry date.
Short Position
A client is said to be short if he/she has an open sell position.
Spread
The difference between the buy and sell price of Our Quote. A client may sell at the lower price or buy at the higher price 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. 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.
Support Level
A price level which is supposedly difficult for a particular market to fall below.
Technical Analysis
Analysis of a financial market by the utilisation of historical price data (usually charts) in an attempt to predict future price activity.
Trading Range
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
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.
Underlying Market
Our quotes are always based upon the prices received from the various financial exchanges around the world. These prices are said to represent the underlying market.
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 volatile.
