| BACS | |
| Bankers Automated Clearing System. A system set by a group of banks and building societies to allow electronic transfer of funds to take place. | |
| Back Month | |
| The traded future or option that is due to expire latest. | |
| Backwardation | |
| Referring to commodity markets. In the stock market it is a phenomena whereby the bid price is higher than the offer price. This is a situation where the price for immediate delivery of a commodity is higher than the price for some future date. In other words a situation within futures markets where the cash price is greater than the price for future delivery. As such a market is said to be in backwardation if the spot price of a commodity (price for immediate delivery) is higher than the future price (price for delivery at a future date). Often associated with the current and future price of Crude Oil. The opposite of Backwardation is Contango. Such a scenario often occurs when supply of a particular commodity is short but the futures price remains low because the expectation remains that further supply will come online in the near future. See Contango. | |
| Balance sheet | |
| A statement of assets and liabilities that must form part of a company's accounts. In other words this document details the company's assets and liabilities and can be used to help value the firm. | |
| Balance of Payments | |
| The Balance of Payments (BOP) is the method countries use to monitor all international monetary transactions at a specific period of time. Usually, the BOP is calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP in order to determine how much money is going in and out of a country. If a country has received money, this is known as a credit, and, if a country has paid or given money, the transaction is counted as a debit. Theoretically, the BOP should be zero, meaning that assets (credits) and liabilities (debits) should balance. But in practice this is rarely the case and, thus, the BOP can tell the observer if a county has a deficit or a surplus and from which part of the economy the discrepancies are stemming. | |
| Balance of Trade | |
| The largest component of a country's balance of payments. It is the difference between exports and imports. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports, foreign spending in the domestic economy, and foreign investments in the domestic economy. The US merchandise trade balance has been in a deficit since the mid-1970s. Rising deficits can be reflective of increased consumption, which can be a sign of a strengthening economy. Release Date: Around the 12th of each month Release Time: 13:30 GMT |
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| Baltic Dry Index | |
| The Baltic Dry Index (BDI) tracks the cost of shipping various cargoes on four different size of ships on 22 sea routes. The 'dry' refers to the kind of cargo, ranging from commodities such as iron ore, coal, steel, cement and food-stuffs, as opposed to oil which makes up 'wet' cargoes. These raw materials are commonly used to generate power, building materials and finished goods so they are a useful indicator of production and overall global trade flows and economic activity. The index is based on the responses of shipping companies to the Baltic Exchange. It is not a tradeable instrument and consequently is free from speculative manipulation, theoretically improving its accuracy as a prediction tool. | |
| Bank of England | |
| Sets interest rates, keeps inflation low, issues banknotes and maintains a stable financial system. | |
| Bargain | |
| The term for any deal on the stock exchange, purchase or sale. | |
| Barking Mad or Mult-Traps | |
| A sports spread beting term. Cumulative market based on the multiple of the first two dogs home in each race at a meeting. So if in the first race dog five beats dog six, 30 is contributed to the on-going score. Barking Bananas works in a similar way, but with the first three dogs multiplied together (so four beats five and six means 120 contributed from one race). | |
| Basis of Expiry | |
| The specification of the price at which a contract (bet) expires. | |
| Base Change | |
| A fundamental change in the way that an event - either a whole sport or a specific game - will be played and how it will affect spread betting markets. | |
| Base Rate | |
| Interest rate set by the Bank of England. | |
| Basis Point (bp) | |
| Short interest rate spread bets are traded in basis points. One basis point is equivalent to 0.01% so if the interest rates decrease from 3% to 2.5% this is referred to as having decreased by 50 basis points. | |
| Bear | |
| No, not the big fury variety. An investor, dealer, or bank that is negative on shares. i.e. omeone who believes that share prices in the market are going to go down. The term given to someone who bets (down) against an asset, taking a negative view on its outcome. The opposite to a bear is a 'bull'. As such a bear is a client who makes a 'down bet', hoping the market will fall. When we are in a bear market that means that the Bears are in control which in turn leads to prices falling. The opposite of a Bear is a Bull. | |
| Bear Market | |
| The term given to markets when they experience heavy, sustained losses over a relatively short period of time. As such a bear market is a period in time when most stocks in that market are declining in price. An investor who is essentially pessimistic about the fundamentals of a given market. So called because a bear fights on its hind legs, moving its paws in a downward motion. | |
| Bear Raid | |
| The attempt to push down the price of a security, most often by SHORT SELLING. A bear raider is an investor who sells shares. It's often stock he doesn't own (see short selling). | |
| Bearer stocks | |
| Stocks which are not registered in the name of the owner. They are therefore transferable by delivery like a currency note and should always be kept in a safe place, preferably in the bank. | |
| Bear Trap | |
| The belief that the market will start to fall having risen significantly, there by leaving short sellers trapped by increasing prices, forcing them to cover their positions by buying stock at higher prices. | |
| Bed and breakfast deal | |
| Selling shares one day and buying them back the next in order to establish a profit or a loss for tax purposes. In other words a transaction where by stock is sold and subsequently bought back after the end of the tax year, allowing shareholders to register either or a loss or a profit for tax purposes. | |
| Bells and Whistles | |
| Feature sadded to a security put up for sale to attract investors or reduce the costs assumed by the issuer. | |
| Beta | |
| Measure of volatility of a share. | |
| Bet size | |
| The amount of money bet per point. | |
| Bet size factor | |
| the number used, multiplied by your stake size, to determine the margin required to do a particular trade. For example, if your stake size is £10 and the bet size factor is 10 then the margin required is £100. | |
| Bid | |
| the price at which a client can make a 'down bet' (sell) with the spread betting firm. Also, the price at which you can sell a share. | |
| Bid price | |
| How much a market maker - a professional share dealer - will pay for your shares. As such the bid price is the price you sell your stocks or shares. In spread betting this is basically another term for describing a brokers's buying price on a spread bet. As such when you are spread trading, this is the same as the 'buy' price of your chosen instrument. | |
| Bid-Ask Spread | |
| Aka as Bid-offer spread or Bid to offer spread. This is the difference between the bid price and the offer price, tighter spreads are usually best as this decreases the cost of doing business. In other words the difference between the price at which a dealer is prepared to buy and the price at which they will sell. The spread between the best bid and the best ask (or offer) is sometimes known as the touch. Naturally the wider the bid-offer gap, the more expensive the trade. | |
| Big bang | |
| New Stock Exchange regulations with effect from 27th October 1986. Briefly, it means the end of the closed shop whereby stockbrokers could only deal with jobbers (the market wholesalers of shares). Now all Stock Exchange firms can combine the job of stockbroker and jobber in which case they are known as market-makers. Information technology will expand. A market-maker will be able to display his current prices on terminals accessible anywhere in Britain - and indeed the world. Deals must be reported to a central computer within five minutes by the market-maker. You will not only be able to tell what the latest prices are, but also the volume of business being done. |
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| Big Board | |
| New York Stock Exchange | |
| Binary Bet | |
| A binary bet is a simple bet offering a 'yes/no' out come. In spread betting, this might be whether you believe the FTSE 100 will be above a certain value at a given time. Your maximum potential profit/loss will be known ahead of time due to the nature of the bet. As such these are fixed odds financial bets that either win or lose (quoted as a spread bet) - i.e. either finish with a payout of 100% or 0% - that's why they are referred to as 'binary' (only two outcomes are possible). With a 'FTSE to Rise' Binary Bet for instance, you would go long if you expected the FTSE to rise, or short if you expected it to fall, and you would either win or lose accordingly. The maximum potential loss on a Binary Trade is always limited and known from the outset. | |
| Biowoff Volume | |
| a very high volume trading session occurring suddently in an uptrend signaling the end of the trend. | |
| Black Box Trading (Automatic Trading) | |
| refers to trading using computer-based software systems with buy/sell instructions generated and activated by a proprietary program, along with calculation of appropriate stake sizes in relation to balances held. You can extend it to calculate and prepare related tax returns. Automatic Trading systems have become enormously popular in recent years, because they offer a consistent, unemotional approach to the markets, and because some of them do work. For many, Black Box Trading presents an easy way of taking advantage of professional trading expertise; buying into a tried and tested system without having to know how it works. Trouble is, the average ones will cost you several thousand quid. The good ones will likely cost a five figure sum. |
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| Blue button | |
| A stockbroker's clerk who is allowed on the trading floor. | |
| Blue chip | |
| The shares of large well established companies. Blue Chips are considered to be the most highly valued, largest and safest companies. Examples would include Coca Cola, McDonalds, Microsoft, IBM to name a few. Most pension funds will invest a significant proportion of their fund in Blue Chips as they are believed to be less risky than other shares and offer good growth rates. The term comes from poker where blue chips are the most highly valued chips in the game. | |
| Blue Chip Company | |
| A long established company with a long and strong record of profitability and endurance. The term is taken from the most expensive chip on a poker table. See also Blue Chip Stocks | |
| Blue Chip Stocks | |
| The term blue chip comes from the stakes in poker. It refers to shares which are often issued by big companies and household names. Blue chip companies are large, well established and typically conservatively managed. Usually used to refer to FTSE 100 firms, or large well-regarded private companies. These companies are usually valued at a minimum of £5 billion. They often form the basis of pension fund and insurance company portfolios. They are often, but not necessarily, in the FTSE 100 list. The chief advantage is that it is easy to track the performance and prospects of blue chip shares because a lot is written about them in the press. The disadvantage is that changes in the share prices are gradual. The secret of making a great deal of money by betting on blue chip shares is to spot or anticipate something coming up which could unexpectedly rise or lower the share price, as in the case of the Burtons example, which we have already looked at. |
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| Bollinger Bands | |
| Bollinger Bands are a technical analysis tool invented by John Bollinger in the 1980s. They are used to measure the highness or lowness of a share's price relative to previous trades. They work off the standard deviation from a simple moving average, with an upper and lower bollinger band depicting how far from the simple moving average selected the current share price is trading at. | |
| Bond | |
| A certificate of debt issued by a company or government. i.e. a government or corporation issued debt certificate. An investor will typically purchase a bond certificate (lend money to said government/corporation) and expect to be paid back in full plus the interest agreed on the bonds maturity date. As such a bond is essentially a certificate of debt issued by a government or corporation that guarantees payment of the original investment plus interest by a specified future date. The purchaser of a bond effectively lends money to a company or government in return for a fixed level of income (the 'coupon') and the return of their investment at the end of the bond's life ('the maturity date'). The price a bond trades at will vary based on the yield it offers and the credit rating of the issuing company or government. | |
| Bookmaker | |
| a company that will take on the opposite side of a bet that a client makes. A loose term to refer to a spread betting company. Usually, a spread betting company will hedge its client's bet by making a similar bet. | |
| Book Value | |
| Very rough valuation of a company based on its assets and liabilities. | |
| Book Building | |
| The process of pricing a new share issue. | |
| Bolting | |
| This is when you close a spread bet before expiry. An up-bet is closed out pre-expiry by placing an equivalent down-bet from the sell rate at the time. A down-bet is closed out by placing an equivalent up-bet from the buy rate at the time. Profit/loss is based on the relative buy/sell prices at commencement and closure. | |
| Bottom Fishing | |
| The practice of buying shares when they lie at a level the investor believes is unlikely to decline further. The same term is also used with respect to companies buying competitors that are cheap or failing. | |
| Bonus issue | |
| A free issue of shares to shareholders in proportion to their existing holdings. For example, if you hold 200 shares in Lucky Days PLC who give a bonus issue of one for one you will receive another 200 shares. You now hold 400 shares, but you may be no better off initially because the price of the shares in the market can halve. The object of the exercise is to divide the company's capital into more manageable units. Also known as scrip issue or capitalisation issue. | |
| Bottom Up | |
| An investment strategy whereby investors pick stocks, rather than rely upon achieving a balanced weighting in each sector. Such a strategy is based upon the management of individual companies rather than market or economic trends. The opposite of Top Down. | |
| Breakdown | |
| A breakdown occurs when a price breaks down below a support level. This is a bearish sign. | |
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| Breakout | |
| A breakout occurs when a price breaks out above a significant resistance level. This is a bullish sign but it needs to be accompanied by other bullish indicators in order for it to represent a buying situation. | |
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| Breakaway gap | |
| a gap in prices that signals the end of a price pattern and the beginning of an important market move. | |
| Break even | |
| the point at which an option or futures buyer or seller experiences no loss and no profit on an option. Call break even equals the strike price plus the premium. Put break even equals the strike price minus the premium. | |
| BRIC | |
| BRIC stands for the following emerging economies - Brazil Russia India China. | |
| Broker | |
| Stockbroker. | |
| Bucket Shop | |
| A brokerage, often from overseas, that sells shares with little underlying value at, by definition, elevated prices. | |
| Buffer Stock | |
| A stock of commodities held by an international entity, which seeks to buy and sell from its stockpile as a means of maintaining price stability. | |
| Bull | |
| The term given to someone who takes a positive view on an asset, betting on their rise. Someone who believes that share prices in the market are going to rise. When we are in a bull market that means that the Bulls are in control which in turn leads to prices rising. As such a bull is an investor who is positive, or 'bullish' on a share. The opposite to a bull is a 'bear'. As bull is a client who makes an 'up bet', hoping the market will rise. In other words, an investor who believes that the market will rise. So called because the raising of the head (denoting a command to buy a security) is redolent of the action of a bull raising its horns before attacking. A 'bull market' is a term used to describe a rising market, or one that is trending higher. The opposite of a 'bear'. | |
| Bull market | |
| A market in which prices are rising; a steadily rising share market. In practice mainly makes reference to a market where prices have risen significantly over a prolonged period of time. The opposite of a Bear Market, a Bull Market sees strong growth in assets due to overall investor confidence and wider expectations that the current pricing of assets are undervalued. | |
| Bullish key reversal | |
| a bar chart formation that occurs in a down trending market when the day's high is higher, low is lower and close is above the previous days, can signal an up coming up trend. | |
| Bund | |
| The name given to German government's bond. The European bond contract commonly referred to as the German Bund. | |
| Business expansion scheme | |
| A scheme for allowing investors to put money into shares which are not quoted at the stock exchange or the Unlisted Securities Market. Buyers get tax relief if they hold the shares for at least five years. The aim is to help small companies obtain finance. | |
| Buy | |
| An up bet on a spread. i.e. here you predicting that the result will be higher than the quote offered by the spread firm. When you Buy (or go Long) this means you are buying a security (or taking a long position) with the expectation that it is going to rise in price. You can also Buy at the lower of the two spread prices when you want to close out an exisiting short position. | |
| Buyback | |
| Share repurchase designed to boost earnings per share and reward investors. | |
| Buy price | |
| In spread betting the buy price is the price at which you intend to buy (go long) into a market. This will be the higher of the two prices quoted (the opposite of the 'Sell Price'). | |
| Buy on opening | |
| to buy at the beginning of a trading session at a price within the opening range. | |
| Business Day | |
| for margin purposes, a business day is classified as any day excluding Saturdays, Sundays and any UK Bank/Public holiday. | |
| Business expansion scheme | |
| A scheme for allowing investors to put money into shares which are not quoted at the stock exchange or the Unlisted Securities Market. Buyers get tax relief if they hold the shares for at least five years. The aim is to help small companies obtain financetd | |
