The Language of Spread Betting for Beginners

LONDON, September 30, 2010 /PRNewswire/ -- Test your trading knowledge and boost your spread betting vocabulary with this starter guide to the language of financial trading, brought to you by spread betting provider Finspreads (http://www.finspreads.com).

Bear

The name given to a spread bettor who believes that prices in the stock market are going to decline.

Bull

A spread bettor who believes that prices in the stock market are going to rise.

Commodity

A commodity is food, metal, or another fixed physical substance that traders buy or sell.

Derivative

A financial contract whose value is based on - or derived from - a traditional security (such as a stock or bond), an asset (such as a commodity) or a market index. Financial spread betting is one such derivative product.

FTSE

The FTSE 100 Index, a share index of the 100 largest companies (by market value) listed on the London Stock Exchange.

Fundamental Analysis

An examination of a company's financials, assets, management, market niche and products in order to determine its value.

Initial Margin Requirement

The amount needed on deposit or credit in order to open a position. This can be reduced by placing a stop loss.

Limit order

A minimum selling or maximum buying price as instructed by you, the spread bettor. A limit order is an order to buy or sell at a better price than where the market is currently trading.

Long

The opening of a 'buy' position in expectation that the market price will rise.

Margin

The deposit or available credit needed on your spread betting (http://www.finspreads.com/about_spread_betting.aspx) account in order to keep your positions open.

Market Gap

A term used when the price of a stock rockets or dives in a direction away from its last price range, therefore jumping a number of points in a single movement. Guaranteed stop losses will protect you against market gaps.

Short

The opening of a 'sell' position in expectation that the market price will fall.

    Spike
    A sharp upward or downward movement in a particular value.
    Spread
    The difference between the buy and sell price for a spread bet.
    Stop Loss Order

A standard stop loss order is an order given by you to automatically close a spread betting position at a particular level when the price moves against you.

A guaranteed stop loss order requires a small charge but provides an additional level of certainty, ensuring that even during market gapping your spread bet will close at the exact level at which you set your stop loss.

Tax-free*

Under current UK legislation, any profits made through financial spread betting are free of stamp duty and Capital Gains Tax.

Technical Analysis

A chart-based analysis of a financial market, using historical patterns to identify trends. Spread bettors can learn more about technical analysis at one of Finspreads' spread betting seminars ( http://www.finspreads.com/learn_to_spread_bet/spread_betting_seminars.aspx).

Wall Street

The index of the top 30 US traded stocks.

Watch List

A list of markets selected for surveillance. Watch lists can be created quickly and easily in a Finspreads spread betting account ( http://www.finspreads.com/apply_for_an_account.aspx).

Now that you know the basics, find out more about financial spread betting at http://www.finspreads.com

*Spread betting is a leveraged product which can result in losses greater than your initial deposit. Ensure you fully understand the risks. Spread betting is exempt from UK stamp duty and UK Capital Gains Tax. However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.

SOURCE Finspreads