|If done orders|
This is a more complex order type allowing spread betters to link two separate orders known as an if/then condition, which makes it possible to automate the entire trade including the entry, exit and risk management.
Take the example of someone who thought that a move above 13,500 on the Dow would herald a big rise. They could use an If-Done order to buy should the market rise to 13,500 with a stop then put in place at 13,400 and a limit at 13,800.
See also contingent orders.
|A market which lacks volume, usually characterised by wide bid-offer spreads. If shares are illiquid you should generally avoid them as it be expensive to trade them. Illiquidity is the phrase used to describe a stock or security whose shares trade very rarely or in very low volume. The opposite of illiquidity is Liquidity.|
|Initial Margin Requirement (IMR) is the amount of funds you need to have in your spread trading account to open up a £1 stake on a particular security.|
|A UK tax on income. The Inland Revenue has however unfortunately left the rule regarding Income Tax on Spread Betting rather a grey area. Our best understanding is that profits are free of Income Tax if you can demonstrate you have another source of income on which you are able to support yourself - such as a salary or pension. If you rely solely on your profits from Spread Betting to live, you may have to pay Income Tax on those profits. If you are unsure of your tax position you should contact an accountant.|
|Examples, FTSE, Dow Jones, Hang Seng or Nikkei. A statistical indicator that represents the total value of the stocks that constitute it. It often serves as a barometer for a given market or industry. It also acts as a benchmark against which financial or economic performance is measured. More information available here This is a way of summarising a group of similar assets into one number (e.g. the top 250 UK shares are combined into the FTSE 250 index). An index is a statistical indicator which measures the performance or provides the value of the securities which make up the index in question. An index usually consists of a weighted average of a group of shares in the market, such as the Wall Street index or FTSE 100, commonly used as a barometer of how that market is faring, also an instrument which you can spread trade.|
|Index linked gilt|
|Government stock with interest and final redemption payment tied to the Retail Price Index.|
|A quote that is not a firm dealing price.|
|Betting on an event as it happens, with prices updated constantly.|
|A term used to cover all the insurance companies, banks, building societies, unit trusts, investment trusts, pension funds and similar large investment organisations. Institutional buying or support is sometimes given as a reason for a share 5 rise.|
|In the money|
|An option where the strike price is below the current level for a call, or above the current level for a put. In other words, a term used to describe an option when the current price for the underlying security is above the exercise for price for a call and below the price for the exercise for a put.|
|aka as Notional Trading Amount or Deposit Factor. The amount of upfront money or credit that is needed to place a spread bet. For instance if the Notional Trading Requirement was 80 on the FTSE and you wanted to place a bet of £1 you would need to have £80 in your account to open the trade.|
|Big City funds and insurers.|
|Measures how easily or otherwise a company is able to repay the interest on its loans. Its usually used in conjunction with the debt to equity ratio.
Interest cover = EBIT / Interest expenses
A value above 3 times is considered safe. Note: Interest cover is also called 'interest coverage' and 'times interest earned'.
|The cost or charge for the use of money over a period of time.|
|Half year results.|
|The dividend payment made by a company on a quarterly or half yearly basis is referred to as its Interim Dividend.|
|bets that must be settled on the day they are made unless that are rolled over to the next day or the next expiry date. Also called daily bets.|
|American equivalent of a merchant bank. Issues and underwrites shares, buys and sells shares and bonds and other financial instruments..|
|Collective name for hobby investors.|
|This terms applies to a number of different investment products including an investment trust which consists of a company listed on the stock exchange with a certain number of shares in circulation. The market valuation depends on the price of its shares and those of the companies in which the trust invests. Unit trusts refer to a fund that contains a number of different companies with investors buying units in the fund and the provider issuing or withdrawing units to satisfy demand.|
Investors try an predict cash flows of a company into the future. They estimate growth rates etc to conduct this. Once they have have their future figures, they then discount these figures back to get the present value ( i.e. today's value). Therefore, if their calculated figure is higher than the current market price, the share is undervalued by the market and you should buy. If the calculated figure is lower than the current market price, the share is overvalued by the market and you should sell. A perfect example of this was the time of the dot-com, where the intrinsic value for so many companies was below the market value, indicating a sell. As we all know, as time elapsed, these dot-coms crashed.
In the case of a call option, an option has intrinsic value if the strike price is lower than the current value of the underlying market. In the case of a put option, an option has intrinsic value if the strike price is above the current level of the underlying market. The intrinsic value is the difference between the current level of the underlying and the strike price.
|a low-risk bond because the bond issuer had a good credit rating. The bond issuer is usually the government of a country, which is highly unlikely to default on the debt such as the US or the UK. Due to the low risk involved, this bond has a low yield. As opposed to a junk bond.|
|Investment fund that is quoted on the stock exchange. An investment trust is a company which invests in shares. It differs from a unit trust because its own shares are quoted on the stock exchange.|
|Initial Public Offering of shares. Refers to a company floating on the stock market. An Initial Public Offering (IPO) is when a company offers a proportion of its shareholding for sale on the open market for the first time. An IPO (initial public offering) is a way for a private company to go public and acquire a stock market listing. An IPO is when a company first issues shares and investors are offered the chance to buy shares at a set launch price. How many you can buy will depend on how popular they are. An IPO is very expensive, so the company may only extend the opportunity to institutional investors. Larger companies may make shares available to the public. The scope of an IPO is two-fold: 1) to raise cash for the company and 2) it will enable the founders and venture capitalists to sell some of their holdings for a profit.|