Glossary of terms in Derivatives Trading -The Panagora Blog

Bid/Bid Price - this is the price at which clients can place a Sell Trade. It is always the lower of the two prices quoted and is called the bid or the bid price;    Buy - buying means the client has ‘gone long’ normally in anticipation of a market rising. The client would also make a Buy trade to close out an existing 

Sell (Short) position;    Gapping –an extreme move in the price of a market with little or no liquidity, normally gapping occurs overnight or following the release of economic data;    Business Day - means any day on which a particular market is quoted;   

 Closing Price - means the closing price of the Spread Trade in good faith based on current and anticipated market conditions;    

Dividend - refers to the payment made to shareholders by a company representing the distribution of company profits. Such payments are usually made on a regular basis. If you have an open Buy position on an equity that goes ex-Dividend you will be credited with the 90% of the gross Dividend. If you have an open Sell position you will be debited 100% of the gross Dividend;    

Long Position - a client is said to be long if he/she has an open Buy position;   

Initial Margin Rate – forms part of the required Trading Resources available on a client’s account to open a Spread Trade or to maintain an existing position;    Margin Call - means the additional Margin required to ensure that total funds held in the account is sufficient to cover all open positions;    

Market Information Sheets - refers to the document that details all the information and specifications pertaining to all products offered on the Cloud Trade trading platform;    Offer/Offer Price - this is the price at which clients can play a Buy Trade. It is always the higher of the two prices quoted and is called the offer or the offer price;    

Order - an Order is an instruction to make a trade at a price that is not currently available but might be available at some time in the future. There are different types of Order: 'Limit Order to open or close a trade at a price that is better than the current market level', 'Stop Order to open or close a trade at a price that is worse than the current market level', 

Guaranteed Stop Loss to close an open trade without the risk of price slippage and a Trailing Stop Loss where the level of the order changes in line with a favourable market move.     

Quote - The price quoted on the Cloud Trade trading platform or over the telephone by one of the Trading Support team. All Quotes are based upon an Underlying market that is sourced from either a recognized global Exchange or from a wholesale counterparty;    

Overnight - refers to the time at which the client is deemed to be holding an open position for the purposes of Overnight Financing;    Overnight Financing - means a financing adjustment made on a client’s account when they hold an open position Overnight including Overnight on a non-Business Day, a Saturday or Sunday and any bank or public holiday;     

Point/Tick - a Point or Tick is the general term for the incremental move in a market which represents the unit risk;    

Sell - selling means the client ‘goes short’ normally in anticipation of a market falling. The client would also make a Sell to close out an existing long position;   

Short - a client is said to be short if he/she has an open Sell position;  

 Slippage - a situation when a price jumps from one level to another without trading, typically when the market reopens after a period of closure or following the release of market sensitive news; 

  Spread - represents the difference in points between the buying price (the higher price, the Offer price) and the selling price (the lower price, the Bid price) of a market;    Spread Trade - means a transaction in a market which constitutes a contractual arrangement between the client and broker to pay the difference between the client’s traded open price and the eventual close price, multiplied by the client’s nominated Stake size;    

Stake – means the amount per Point/Tick movement in the market which the client wishes to trade;    

Trading Hours - means, in respect of each product, the hours during which Cloud Trade provides a Quote for a particular product as detailed in the Market Information Sheets or in the information tab on the trading platform;    

Trading Resources - represents the amount of cash that the client has available at any given time to withdraw from their account or place an order to open a Spread Trade;    

Underlying - Means the asset or instrument (generally quoted on a recognized exchange or, in the case of some markets, is provided by a quoting liquidity provider) upon which the price of a Spread Trade is derived.