Education & Links

Market Terminology

Selling Short

This is practice of selling shares that you do not own in the hope that the share price falls before you have to settle the contract. If the price does fall you can then buy the shares at the lower price and pocket the difference.

Settlement Period

The time taken to process the transfer of stock from seller to buyer and arrange the corresponding movements of money.

FSA

The Financial Services Authority. The self regulating organisation responsible for the conduct of brokers and dealers in securities, options share CFD's and futures.

Share Certificate

Legal proof that you own shares in a company. With the rise of electronic trading and settlement systems (see CREST), share certificates are being gradually phased out, and investors who insist on having them will have to pay more for their share deals.

SONIA

Sterling over-night interest average. This is used to calculate the overnight financing costs of UK stocks.

Spread Betting

A type of bet that gives punters the chance of making unlimited winnings (and losses), in contrast to the conventional fixed-odds type of bet, where the potential winnings and losses are known before the event. They generally quote spreads wider than the market. Share CFD's are a more sophisticated way of trading.

S&P – Standard and Poor’s Stock Index

US performance index of the country's top 500 companies.

Stockbroker

An exchange member firm which provides advice and dealing services to the public as well as trading on its own account.