Spread Betting terminology

	Daily bets
	see intraday bets
	Daily settlement
	the official closing price for a particular market on a certain day. Also called daily close
	Day order
	an order that will be filled during the day's trading session or cancelled.
	Day trader
	a trader who establishes and liquidates positions within one day's trading, ending the day with no established position on the market.
	Day trading
	refers to establishing and liquidating the same position or positions within one day's trading, thus ending the day with no established position in the market.
	DAX
	the index for the thirty largest stocks on the German Stock Exchange.


	Dawn raid
	The purchase of a large number of shares early in the morning at the opening of the market. Often the first step in a takeover bid
	Dealing
	Buying and selling shares.
	Debenture
	Stock issued by a company and backed by its assets. It carries a fixed interest rate and is quoted like Government stock in terms of £100 nominal units. Its market value will move in sympathy with interest rates.
	Deep in the money
	an option which is so far in the money that it is unlikely to go out of the money prior to expiration.
	Delta
	the measure of the price-change relationship between an option and the underlying futures price. Equal to the change in premium divided by the change in futures price.
	Deposit
	the funds required as initial outlay for a bet. It is not the total amount that can be lost on a bet. Also called margin.
	Deposit account
	an account that should have enough funds to allow a client to place a bet. The opposite of a credit account.
	Deep out of the money
	an option which is so far out of the money that it is unlikely to go in the money prior to expiration.
	Deposit (NTR)
	the funds required as an initial outlay for a spread bet. With a credit account, the deposit requirement is waived up to your credit limit.
	Depreciation
	Money set aside to pay for the replacement of assets.
	Derivative
	a financial instrument that derives or takes it price from that of an underlying security such as an equity or commodity. The security themselves may not be needed for the trade to take place. Examples of derivatives are options, futures, Contracts for difference (CFDs) and spread bets. Investors often trade derivatives to offset short-term falls in the value of the underlying security.
	Discount
	the amount by which a price of one instrument is lower than that of a similar instrument. As opposed to a premium. 2. the difference between the futures price and the spot price when the future is trading below the spot.
	Dividend
	The part of a company's profits distributed to shareholders, usually on a regular basis. An interim dividend is paid at the half-year stage and a final dividend at the end of the full year.
	Dividend cover
	The number of times the gross dividend could have been paid from the company's profits (after tax and payment of interest and preference share dividends).
	Dividend yield
	To calculate the yield, divide the dividend paid by a company, assuming there is one, into the share price. Any yield above the rates of interest available from the High Street banks tends to attract strong support for the shares.
	Double top, bottom
	A chart formation that signals a possible trend reversal. A double bottom would look similar to a W on a chart and a double top would look similar to an M
	Dow Jones Industrial Average index (DJIA)
	a price-weighted average of thirty actively traded blue chip stocks on the US stock exchange, primarily industrials. The thirty stocks are chosen by the editors of the Wall Street Journal (which is published by Dow Jones and Company). This index is the most widely used indicator of the overall condition of the stock market. More information on the Dow Jones available here.
	Down bet
	a bet that the price of a particular financial instrument will fall. Also referred to as a sell or going short.
	Downtrend
	a price trend characterized by a series of lower highs and lower lows.
	Drawdown
	the equity reduction in a trading account. The maximum drawdown is the largest difference between a relative equity peak and any subsequent equity low. Low drawdowns are a desirable performance feature for a trader, hedge fund or a trading system.
	Earnings
	revenues minus cost of sales, operating expenses and taxes, over a given period of time.
	Earnings-per-share (EPS)
	The EPS figure gives a good indication of a company's profitability and is calculated by dividing the company's net income by its number of shares. For example, if a company has a net income of £100 million and has 500 million shares in issue, the EPS stands at 20p. Using EPS figures to compare the profitability of a range of companies is better than looking at their dividends because some companies may decide to hold back profits to build up the business (and increase the share value), rather than distribute them as dividends to shareholders.
	Economic indicators
	statistical data showing general trends in the economy.
	EFT (Electronic Funds Transfer)
	an EFT or is required for margin calls of £10,000.00 or more.
	Electronic Trading
	trading via computer through an automated, order entry and matching system. GLOBEX which trades 24 hours S&P, DOW and NASDAQ 100 futures is an example of an international electronic trading system.
	Elliot wave theory
	a type of technical analysis that studies price wave sequences based on the theories of Ralph Nelson Elliot. A relatively complex study, the basic theory is based on markets form waves, 5 waves in the general direction of the main trend and 3 in the opposite direction.
	Enterprise value (EV) multiples
	The EV is determined by adding debts to and subtracting cash from a company's market capitalisation to find out what it would cost to acquire the company. This figure is then divided by sales, profits and other performance metrics and is designed to make it easier to compare companies from different industries and geographies.
	Equities
	Ordinary shares as distinct from debenture and loan stock. If the company does badly the dividend to ordinary shareholders is the first to be cut, but if the company does well the ordinary shareholder can expect to receive an increased dividend. The ordinary shareholder takes the greater risk in the expectation of receiving the greater reward.
	Euronext.LIFFE
	international derivatives business of Euronext, made up of the Amsterdam, Brussels, LIFFE, Lisbon and Paris derivatives markets.
	Ex-dividend
	A share bought without the right to receive the next dividend which is retained by the seller.
	Ex-rights
	A share bought ex-rights is not entitled to receive the rights issue previously attached to it.
	Ex-scrip
	A share bought ex-scrip excludes the rights to the scrip issue attached to it.
	Expire
	letting a futures contract or spread bet expire without closing the trade. The contract will be closed out and settled at the EDSP.
	Expiry date
	the date a spread bet ends. The trade is settled automatically on this date unless the trader closes the bet beforehand or instructs the spreadbetting company to roll the bet over to the next expiry date.
	Extraordinary general meeting
	A special meeting called to provide shareholders with an opportunity to consider some special decision or happening concerning the company.
	Fade
	to trade in the opposite direction of a market signal (or analyst) for example a trader who goes short after prices penetrate the upside of a prior consolidation a price development that most technically oriented traders would interpret as a signal to buy or stay long, can be said to be fading the price break-out.
	Extrinsic/time value
	that part of an option's price that is not accounted for by its intrinsic value. The extrinsic value of an option reflects the likelihood that the option will move into, or further into, the money before expiration.
	False break-out
	a short lived price move that penetrates a prior high or low before succumbing to a pronounced price move in the opposite direction. For example a share that has traded between GBP1 and GBP1.50 for some months now rises to GBP1.70 and then quickly falls below GBP1.50 can be termed as a false break-out.
	Fast market
	terminology for a hive of activity. This is when prices change several times in seconds. i.e. unusually hectic market conditions.
	Fibonacci Retracements
	the concept of a prior trend will often approximate 38.2 per cent and 61.8 per cent based on the Fibonacci sequence derived from Leonardo Fibonacci
	Fibonacci sequence
	a sequence of numbers that begins with 1,1 and progresses to infinity. The sequence will be 1,1,2,3,5,8,13,21,34,55,89... The ratio of alternate number in the sequence for example 21 and 55 converges to 0.382 as the numbers get larger. The two ratios 0.618 and 38.2 are used for retracements projections. Most trading software will have these figures pre-programmed.
	Fill
	to execute an order. Used in the term 'Fill or Kill' (FOK) which means you either execute a trade or cancel it.
	Final
	The dividend declared with a company's year-end results.
	Flotation
	When a company's shares are offered on the market for the first time.
	Foreign Shares
	you can buy any share on any recognised stockmarket anywhere in the world. Stockbrokers, however, may charge a higher fee for dealing in foreign shares. And as well as the price of the share being affected by fluctuations in the profitability of a company, there is also a currency risk. The value of sterling in relation to the currency of your shares will affect their value. You will also have to factor in the cost of converting shares and dividends back into sterling.
	Form S-8
	The S-8 Registration Statement is rapidly becoming the weapon of choice for stock scams. It is quick and effective and takes advantages of a glaring loophole in the federal securities laws. Form S-8 allows public companies to register shares that have been, or will be, issued to directors, officers, employees and consultants - instantly, with minimal disclosure. Here is how it works. A company that wishes to register securities begins by filing a Registration Statement with the SEC. In most cases, the SEC reviews that Registration Statement, issues appropriate comments, asks pertinent questions and requires reasonable clarification. Then, after the company provides satisfactory responses to these questions, the SEC allows the Registration Statement to be declared effective, and permits the sale of the securities. This process is designed to protect investors by ensuring that they receive ample information about the company in which they are about to invest. Form S-8 abandons that protection and leaves investors to fend for themselves. An S-8 Registration becomes effective immediately after it is filed with the SEC, before it is reviewed by anyone. In an instant, the shares are registered and may be sold. Let the buyer beware. Rather than provide detailed disclosure, Form S-8 includes fragmentary information, including the number of shares being registered. The company's financial condition is rarely presented in detail. Instead, the Form S-8 incorporates prior financial statements "by reference." As a practical matter, few investors will bother to review those earlier documents. The absence of meaningful disclosure is only one of the disturbing features of Form S-8. Here is another. The company is not required to identify the individuals who will be receiving shares. Instead, the shares may be registered for a generic "Employee Benefit Plan." Which employees will "benefit" from that plan? The company is not required to identify the potential recipients when the Form S-8 is filed. And while companies are supposed to amend each Form S-8 to add the names of the new stockholders as shares are issued, they rarely do. In reality, the recipients of shares may not be employees at all - and that is another distressing feature of S-8. Under the statute that controls this registration form, employees may include "consultants" and "advisors" - opening the possibility for shares to be distributed to a host of individuals with mere marginal connection to the company. And the company is never obligated to account for the services rendered by those consultants in consideration for the stock. Virtually every day, tiny companies issue mounds of shares to unidentified individuals for unspecified services - and it is all within the letter of the law.
	FSA
	Financial Services Authority. The governing body that regulates the financial services industry including spread betting.
	FTSE 100
	An index of the top 100 largest companies in the UK calculated by market capitalisation. As it's the index of the UK's 100 biggest companies, inclusion in the FTSE 100 can be crucial for a company. Some investors, such as institutional investors (including company pension providers), will only consider investing in companies that appear in this index, which includes big blue-chip businesses and household names.
	FTSE 250
	An index of the next largest 250 companies in the UK by market capitalisation. The FTSE Mid 250 is thereby a benchmark for medium-sized companies, and the FTSE Small Cap keeps track of smaller companies. Alternatively, the indices may cover specific sectors, such as the FTSE techMARK, which includes companies from the technology, media and telecomms sectors. As its name suggests, the FTSE All-Share covers every company listed on the LSE.
	FTSE 350
	The above two combined i.e. the top 100 largest companies in the UK combined with the next largest 250 companies in the UK by market capitalisation.
	FT-Actuaries All-Share Index
	FT-Actuaries All-Share Index An index covering over 900 shares. A slightly misleading title.
	Fundamental Analysis
	a method of judging a company's financials and operations. A company's fundamental data is directly related to the company's performance, as opposed to statistical data, which is used in technical analysis.
	Future
	a futures market is an estimation of where the underlying market will trade at some date in the future.
	Futures contract
	a legally binding arrangement where one party commits to buying an asset from another party on a specified date in the future, but at a price agreed previously. The counterparty is obliged to sell the asset at the agreed price and on the agreed date. Because the price is agreed at the outset, the seller (buyer) is protected from a fall (rise) in the price of the underlying asset in the intervening time period. Initially developed to protect agricultural producers from unforeseen market fluctuations.
	Futures style bets
	bets structured like a futures contract, generally expiring at the next quarter ('near month') or the quarter after that ('far month'). Some longer futures style bets now in existence, expiring 9 months or a year out.