CFD trading will introduce you to some terms with which you may not be familiar.
If you’re unsure just refer to our handy guide below, which cuts through all the jargon.
The ask price is the price at which you can buy a market. It is the upper end of the spread. Also known as the offer price. See also: bid.
The bid price is the price at which you can sell a market. It is the lower end of the spread. See also: offer.
Stands for Contract For Difference. A CFD is a contract to exchange the difference in value of a financial market over a period of time. It replicates the exposure created by making the equivalent trade but without the need to make a physical purchase (or sale). You can also open a CFD without having to pay the full contract value.
For each market you can plot a chart of price movements over a specific time period. This is an important tool, allowing traders to analyse historical prices and forecast future activity.
When you want to end your exposure on a CFD position you close the position. The profit or loss on the position is not realised until it is closed.
The contract value of a CFD position is the full cost of the equivalent physical purchase (or sale). For instance, the contract value of 1000 Vodafone CFDs, supposing the price of Vodafone is 160p, would be 1000 x 160p, or £1600.
A Demo Account is a risk-free trading account that allows you to make virtual trades on the online platform. It is a great way to find out more about CFD trading without risking your funds.
The date/time at which your CFD will be closed and settled automatically, i.e. the end of the contract period. If you want to extend your position you can specify that you want it to rollover. There is no expiry date/time if your position is a Rolling Contract.
When a market moves to a new price without moving through the prices in between, for instance in response to shock news.
The ability, when trading on margin, to gain exposure without making the full contract value. For example, when you open a position with a value of £10,000 by putting down a margin deposit of £1000 you have a gearing ratio of 10:1. Also known as leverage.
An order to close your position should the market hit a specified price more favourable to you than the current price. You use a limit order to take your profit on a position automatically when the price reaches your target.
You go long when you buy a market, expecting the price to rise. See also: short.
The deposit you pay to open your CFD position. This represents the most you might expect to lose on your position, although it is important to note that you may lose more than your initial deposit.
A CFD provider that mirrors every bet it takes from clients by trading in the underlying market will be market-neutral. This is because the provider has no financial interest in how the market performs. InterTrader is a market-neutral provider. Find out more about market-neutral execution .
This figure is used by InterTrader to determine your initial margin requirement when you open a CFD position. On our web-based platform you can reduce your margin requirement by attaching a stop-loss order to your position. Find out more.
An order to open a position automatically should the market hit a specified price level. If the price level is not reached the position will not be opened.
No Dealing Desk
Most CFD providers operate a Dealing Desk model, where they stand on the other side of your trade. With a No Dealing Desk model, your broker automatically offsets your trade in the underlying market, so they carry no exposure on your position. Find out more.
The offer price is the price at which you can buy a market. It is the upper end of the spread. Also known as the ask price. See also: bid.
The software you use to deal via the internet. With InterTrader you don’t have to download this software, you simply go to our website and use your unique login details to access the platform. Or you can use the popular MT4 download platform.
When you buy or sell a market you open a CFD position. This gives you exposure to the market until you close the position.
For forex markets, one unit of the price is known as a pip. Your profit/loss is determined by the change in pips times your unit stake. (Where forex is priced to an extra digit one pip will be the penultimate digit quoted.)
For non-forex markets, one unit of the price is known as a point. Your profit/loss is determined by the change in points times your unit stake.
The price offered for any individual market on the online platform (or over the phone) is known as our quote. This will be changing constantly as the market price changes.
This happens when a provider cannot open your position at the price quoted, for example if the market price is moving quickly and the provider gives you a revised quote. InterTrader never uses requotes, either on our web-based platform or the MT4 platform. If we can’t open your position we will simply reject your trade.
A Rolling Daily position will stay open from one trading day to the next, unless you choose to close the position. This may incur a debit or credit for every day the position is held overnight. Find out more.
The act of extending your position beyond its expiry date/time. This involves closing your old position and creating a new position for the new contract period. Specific rollover terms apply. Find out more.
The process of realising profit or loss on individual positions. When you close your position, or it is closed automatically on expiry, the final profit or loss on the position is determined and your account adjusted accordingly.
You go short when you sell a market, expecting the price to fall. See also: long.
The amount you wish to bet per point or pip movement in the price. For example, £10 per point on UK 100 is a bet size of £10.
Slippage can occur during periods of high volatility, when your stop-loss order cannot be executed at your exact level due to excessive price movements in the market.
The gap between the bid price and the offer price for a particular market. The smaller the spread, the less your cost of trading that market.
A way to bet on the movements of financial markets with variable returns. This is another form of margin trading offered by InterTrader. Find out more.
An order to close your position automatically when the price reaches a specified level. A stop-loss order is an important risk management tool, although you should note that stops can be subject to gapping and slippage in volatile market conditions.
A volume discount programme operated by InterTrader. You receive a rebate of up to 10% of your trading costs at the end of the month, based on your volume of trading over the month.* (Please read our full TradeBack Terms and Conditions.) Find out more.
*Your Loyalty Rebate is calculated on our spread on opening trades only. The rebate calculation differs for spread betting and CFD trading. Excludes opening trades on equities.
A special kind of stop-loss order used to lock in your profit on successful positions. Your stop level moves automatically, by set increments (say 10 points), when the market moves in your favour. When the market moves against you it works just like a normal stop to close your position.
The futures market or exchange price upon which our quote is based. Each CFD price we offer is derived from a real-world market.