The quoted price at which the broker/dealer is willing to sell.

Benchmark Rate
The reference rate (or "base rate") against which interest charged on borrowing, or paid on short sales, is linked. See LIBOR and the RBA cash rate.

The quoted price at which the broker/dealer is willing to buy.

Bid/Ask Spread
The difference between the bid and ask prices. In thinly traded markets, this spread may be wide.

CFD (Contract For Difference)
A CFD is a financial instrument (derivative) used to trade stocks on margin and has the same price movement as the underlying stock. You do not own the physical stock. The CFD is merely a contract with the CFD provider whereby you will be paid if price moves in your favour and where you will pay the CFD provider if price moves against you.

Closing a Trade
Placing a second order of equal size in the opposite direction to your first order on a contract, in order to establish your final profit or loss.

Contract Note
A document sent by the CFD provider confirming trades and orders.

Credit Allocation
The maximum level to which a client can trade.

Currency Futures
Futures contracts traded on an exchange, most typically the Chicago Mercantile Exchange. Always quoted in terms of the currency value with respect to the US Dollar.

Direct Market Access (DMA)
Orders placed by the client are executed directly on the relevant exchange — the CFD provider does not act as market maker.

Expiry Date
The date at which a contract can no longer be traded.

Execution of an order.

Forex Trading
Foreign exchange (or currency) trading.

Frequent Trader Discounts
Fees & commissions are reduced if trading turnover exceeds a prescribed monthly level.

Good for the day order.

Good until cancelled order.

Gapping Through
If the market falls below a level specified by you in a stop loss order, without actually trading at that level. Likewise, if the market rises above a level specified by you in a stop entry order, without actually trading at that level.

Guaranteed Stop Loss
A stop loss order with a guaranteed exit price, eliminating the risk of the stop order not being filled.

Last Day of Dealing
The last day on which the client can open or close a trade in a relevant contract.

The ability to establish a large exposure with a relatively small outlay. Also known as "gearing".

London Interbank Bid Rate (normally one-eight per cent below LIBOR)

London Interbank Offer Rate. The overnight lending rate between major international banks.

Limit Order
An order to buy a stock, but with an upper price limit, or an order to sell stock with a lower price limit.

Take a position where you will benefit from a price rise.

The minimum cash deposit that you are permitted to hold against an open position, normally expressed as a percentage of the total exposure.

Margin Call
The cash amount required in order to maintain an open position when prices move against you. If you do not respond to the margin call, your position will be closed out.

Market Maker
A CFD provider who generates their own quotes, rather than reflecting the market bid or ask. Traders may encounter wider bid-ask spreads than the actual market — an additional cost — unless the market maker guarantees straight through processing.

Market Order
An order to buy or sell stock at whatever market price is quoted at the time your order is received.

Minimum Distance
The closest distance (normally a percentage) that a guaranteed stop loss can be set to the market price at time of placement.

Price at which broker/dealer is willing to sell. The "Ask" price.

The right, but not the obligation, to buy or sell an underlying financial instrument on or before a specific date at a given price (the "strike price").

Roll Over
Transfer of a trade that is near to expiry into the next contract period.

The official expiry level of a market at which any open positions will be closed.

Short Position
A position taken in anticipation of a falling market. To go short means to sell.

Spot Forex
Refers to currencies traded between two counterparties, often major banks, and frequently referred to as the "interbank" market. Spot Foreign Exchange is generally traded on margin and is more liquid and widely traded than currency futures.

Difference between the buy ("bid") and sell ("ask") quotes in a market.

Spread Widening
Where the CFD provider acts as market maker, bids may be lower and asks may be higher than the actual market. The wider spread is an additional cost of trading.

Stop Entry
A buy order set above the current market price which is only triggered if market price rises to the specified buy price.

Stop Loss
A sell order set below the current market price which is only triggered if market price falls to the specified selling price.

Straight Through Processing
The Market Maker guarantees that bids and asks will match actual market prices.

The minimum price increment in a market.

CFD trader is a trading name of IG Markets Limited, a company registered in England and Wales no. 04008957. Registered Office: Cannon Bridge House, 25 Dowgate Hill, London, EC4R 2YA. Authorised and regulated by the Financial Conduct Authority, Firm No.195355.

SVS Securities Plc. Registered in England and Wales no. 04402606. Registered Office: 20 Ropemaker Street, London, EC2Y 9AR. Authorised and regulated by the Financial Conduct Authority, Firm No. 220929. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

Risk Warning: Remember that Contracts for Difference are a leveraged product and can result in losses that exceed your initial deposit. CFD trading may not be suitable for everyone, so please ensure that you fully understand the risks involved. Trading in CFDs carries a high degree of risk, and prices may change quickly and go down as well as up. Past performance will not necessarily be repeated and is no guarantee of future success. CFD contracts can only be settled in cash. Transactions in CFDs may also have a contingent liability. Contingent liability investment transactions, which are margined, require you to make a series of payments against the purchase price, instead of paying the whole purchase price immediately. You may sustain a total loss of the margin you deposit with a firm to establish or maintain a position. If the market moves against you, you may be called upon to pay substantial additional margin at short notice to maintain the position. If you fail to do so within the time required, your position may be liquidated at a loss and you will be responsible for the resulting deficit.

The information on this site is not directed at residents of the United States or any particular country outside the UK and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Read our Terms of Business.