GLOSSARY

Technical Glossary

Account Limit - The maximum amount of money that an account is allowed to have in it.
After Hours Trading - Trading on a market after the underlying market has closed.
AML - Anti Money Laundering. Refers to legal controls placed on companies to prevent and report money laundering.
Arbitrage - Trading on a price differential between two or more markets.
Ask Price - The price at which you can buy at or bet that a market will go up. Back Office - Administration software to monitor your account, trades, positions etc.
Base Currency - The first currency in a currency pair. For example in GBP/USD, GBP is the base currency. It is this currency that the exchange rate refers to, so if the exchange rate was 1.6350 then 1 unit of the base currency equals 1.6350 units of the second currency.
Base Rate - Refers to the official rate of interest set by the Bank of England.
Basis Points - One hundredth of a percent. ie 0.01 %. So half a percent is 50 basis points.
Bear Market - A market in which the prices are in general decline.
Bid Ask Spread - The difference between the bid price and the offer price.
Bid Price - The price at which you can sell at or bet that a market will go down.
Bull Market - A market in which the prices are in generally rising.
Buy - When you BUY when you believe a market will rise or when you want to close a position that you have previously SOLD. Cable -The global nickname give the currency pair GBP/USD. It derived from the cable laid under the sea from London to New York in 1850 which enabled currency prices to be sent telegraphically.
Cash Price - The price of the underlying market which another market may be based on.
Central Bank - The Government of a country's banker who implements monetary policy.
Closing Only - When positions may only be closed and not opened.
Closing Price - The last price that a market trades at. The 'Official Close' maybe a different to this.
Charting - A visual representation of the historic price movement of a market which can be used in an attempt to predict the future movement.
Cover - To reduce or close an open position.
CFD - Contract for Difference. Margin trading on financial markets.
Corporate action - When a company structure changes or a dividend is issued etc.
Cost of Carry - The actual cost to run a position from one day to the next. E.g. financing.
Cross Rate - Normally refers to non major currency pairs. E.g. Aud/Cad.
Counter currency - The second currency in a currency pair, also known as the contra currency. Day trading - Trading throughout the day without leaving positions on to run overnight.
Delivery - A trade which is allowed to expire and which a physical delivery of a product occurs.
Deposit - The amount that you have credited into your account.
Derivative - A market that is priced using another market as its bench mark.
Dividend - A share of a company's profits that is distributed to its shareholders.
ECB - European Central Bank
Economic Indicator - A statistic usually issued by a Government department indicating the financial state of the economy.
Equity - Another word for a share.
ETF - Exchange Traded Fund. Quoted on stock markets and mimics an underlying index, commodity or bonds etc.
Ex Dividend - When a share is traded with no rights or obligations to the due dividend.
Expiry - When a market will close and end permanently. Fair Value - The difference between the underlying price and the theoretical Futures price.
Fast Market - When a market is so volatile and heavily traded that it can trade outside of the current 'screen' price.
Fed - Federal Reserve. The central bank of the USA.
Fill - An order that has been completed.
Flat - When you have no position.
FOMC - Federal Open Market Committee. Part of the Fed reserve that controls US interest rates.
Front Month - The main Futures contract of a market in which most trading takes place.
Futures - A contract to buy or sell something at a specified rate on a given date.
FX - Foreign exchange. Gap - When a market price 'jumps' significantly from the previously traded price.
Gearing - A means of placing a large trade with only a small deposit through leverage.
Grey Market - A market that we may quote even when the actual underlying market is closed.
GFD - Good For the Day. Usually refers to when an order is no longer valid.
GT - Good Till. Usually refers to when an order is no longer valid.
GTC - Good Till Cancelled. Usually refers to when an order is no longer valid. Hedging - A trade that reduces your exposure or risk to another trade.
High - The highest point at which a market traded.
Historical Trading Range - The price history of a market. Index - A basket of weighted markets.
Indication Price - A guide price. Not an actual tradable price.
Initial Margin - The amount of up from deposit required to place a particular trade.
Inflation - The rate at which general price levels are rising.
Interbank Rates - The interest rates that large banks quote to each other.
Illiquid - Very little volume can be traded without moving the price by a lot.
IPO - Initial Public Offering. When a company first sells stock to the public. Junk Bond - High yielding bonds issued by companies to raise funds. KYC - Know Your Customers. An obligation on companies to know the identity, experience and requirements of their customers. Last Trading Day - The last day in which trading is permitted before a market expires.
Leverage - A means of placing a large trade with only a small deposit through gearing.
Libor - London Interbank Offered Rate. The interest rate that commercial banks lend to each other in the UK. There is a fixing everyday at 11am which is used for a lot of global calculations.
Limit Down - The maximum that a market is allowed to fall at any one time by its regulators.
Limit Order - An order to buy or sell at a more advantageous level than where the market last traded.
Limit Up - The maximum that a market is allowed to rise at any one time by its regulators.
Liquid - When a market has a lot of buying and selling volume going through, not affecting the price.
Low - The lowest point at which a market traded.
Long Position - When you have a position in which you benefit from a rising price.
Lot - A preset trading amount. On MT4 platform this is 100,000. Manifest Error - When a wrong price has been dealt on.
Margin - The amount of deposit required to fund a position.
Margin Call - When you are called for additional margin as you do not have enough to allow for the adverse price movement in the position you hold.
Market Capitalisation - The value of a company.
Market Order - An instruction to buy or sell at wherever the price is at the moment.
Mark to Market - The value of a position based on the current price.
MIS - Market Information Sheets.
Maximum trade size - The maximum stake that can be traded at any one time. Net position - Total position held.
Normal market size - The usual volume that is traded in particular market.
Notional - The nominal or face value of something. OCO - One Cancels Other. Two orders placed, where if one is completed it cancels the other.
Offer - The price at which you can buy at.
Open position - Any current trades which have been opened and not yet closed.
Order - An instruction to initiate a trade when a specific price is reached.
OTC - Over The Counter. A market not traded on a recognised exchange.
Our quote - The price at which GKFX is willing to buy or sell at.
Over bought - When a market has been aggressively bought causing the price to move to unsustainably high levels.
Over Sold - When a market has been aggressively sold causing the price to move to unsustainably low levels. Pip - A term usually used in FX to refer to the smallest increment that a price can move by.
Point - A term used in any market referring to the smallest increment that a price can move by.
P&L - Profit and Loss.
Position - Any current trades which have been opened and not yet closed. Quote - A two-way market price containing the bid price and the offer price. Realised P&L - The actual profit or loss made after a position has been closed.
Resistance - A level where technical analysts believe selling will occur.
Retail Investor - Someone who invests or trades in a non-professional capacity.
Rights issue - Where a company sells new shares to raise capital.
Risk - The exposure to something where the outcome is unknown to varying degrees.
Rollover - A procedure when a position which is approaching expiry is moved to the next contract expiry date.
Running P&L - Your current profit or loss based on up to date prices. Sell - When you SELL when you believe a market will fall or when you want to close a position that you have previously BOUGHT.
Settlement - When a market will close and end permanently.
SEC - Securities and Exchange Commission (US regulatory authority).
Short position - When you have a position in which you benefit from a falling price.
Slippage - The difference between the level which an order was left at and the actual price it was filled at. This amount may increase during times of extreme volatility.
Spot - The underlying main cash price, usually referring to FX.
Spread - The difference between the Bid price and the Offer price.
Stamp Duty - A government tax imposed on the purchase of shares.
Stop - An order to sell or buy at a worse level than at present. This will normally open a new position, but could be used to close a position (but it is not linked to anything).
Stop Loss - An order linked to an open position that will close it at a predetermined level which is further away than at present, thus limiting your loss.
Support - A level where technical analysts believe buying will occur. Takeover - The transfer of ownership from one group to another.
Technical Analysis - Analysing charts and information to look for patterns or trends to help make predictions on future price movements.
Terms of Business - Your legal contract with GKFS and ours with you.
Tick - A term used in any market referring to the smallest increment that a price can move by.
Trading range - The high and low prices that have actually traded during a given time.
Trailing stop - A stop loss order which automatically moves if you are in profit so that you keep reducing your potential loss. Up Bet - When you BUY when you believe a market will rise or when you want to close a position that you have previously SOLD.
Underlying asset - The core market from which other prices may be linked or related to. Volatility - The amount something moves in proportion to time. Warrant - An option to buy a stock at a given price at some time in the future. Yard - A slang term usually referring to a billion.
Yield - The rate of return from an investment.