NASDAQ - National Association of Securities Dealers Automated Quotations System |
The second largest stock exchange in the US, specialising in high-tech and internet-related companies, such as Microsoft. The movements of the NASDAQ can have a significant effect on the UK markets, particularly the recently-launched techMARK index of technology, media and telephony companies. |
New Issue |
A company that is floated on the stock market for the first time. Offering shares to the investment public is a way of raising capital for further expansion. Also known as the Initial Public Offering (IPO). |
New York Stock Exchange (NYSE) |
An open outcry market allowing for equity trades to be dealt in a liquid environment. |
Normal Market Size |
Calculated on the previous year's average daily turnover of each individual stock, this is currently 2.5% of the total volume of shares for each company. Market makers are not obliged to give a quote for a transaction above normal market size. |
NYSE - New York Stock Exchange |
The largest and oldest US stock exchange |
OCO - One Cancels the Other |
If you place a sell limit and a sell stop order in the same stock at the same time. When either order is executed the other will automatically be cancelled. Also applies to a buy limit and buy stop order. |
OFEX |
An unregulated 'off exchange' market for small UK companies to raise finance. Due to lack of liquidity, it is often the case that if you want to sell an OFEX stock, there must be someone prepared to buy it, known as dealing on a matched bargain basis. |
Offer price |
Sometimes referred to as the ask price; it is the price at which an investor can buy from the market. |
Open Position |
A long or short position which has not been closed out by an equal and opposite position. |
Option |
The right, but not the obligation, to buy (call option) or sell (put option) a specific amount of a given stock, commodity , currency, index, or debt, at a specified price (the strike price) during a specified period of time. For the holder, the potential loss is limited to the price paid to acquire the option. When an option is not exercised, it expires. No shares change hands and the money spent to purchase the option is lost. For the buyer, the upside is unlimited. For the writer, the potential loss is unlimited unless the contract is covered, meaning that the writer already owns the security underlying the option. There are two types of options: American style and European style. American options can be exercised at any time between the purchase date and the expiry date and European options can only exercised on a single day, usually its expiry date. |
Order Book |
Introduced on 20 October 1997. FTSE 100 stocks are traded on an electronic order book (inside the SEAQ quote system). When bid and offer prices match, new incoming orders are automatically against orders on the book. |
OTC - Over The Counter |
A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. |
Our Quote |
The order level specified is being quoted by a Financial Spreads Dealer. |
Out of Hours Trading |
The spread betting company will allow clients to trade selected major stocks and indices outside the normal trading hours. |
Overbought |
Market prices that have risen too steeply and too quickly. |
Oversold |
Market prices that have declined too steeply and too quickly. |
Par value i.e. face value |
In the case of a bond, it means that the bond is trading at the same price as its face value, which is one hundred pounds. |
Pegged Currency |
A currency is pegged or fixed when its country’s Central Bank decides to tie its value to a stronger currency, in an effort to stabilize its own currency. Currencies such as the Hong Kong Dollar have historically pegged to the US Dollar. |
Penny shares |
Term used to describe shares priced below one pound, deemed as speculative investments. Many stocks on smaller exchanges such as AIM are penny shares. |
Plaza Agreement |
Agreement made between the US, France, Germany, Japan and the UK in 1985, to work together on influencing exchange rates. |
Point |
Depending on the context, normally one basis point, i.e., 0.0001. |
Portfolio |
A collection of securities owned by an investor. |
Position |
The value (quantity) of a tradable item held by a trader. |
PPP - Purchasing Power Parity |
The theory that identical tradable goods and services ought to be priced the same across two different countries, otherwise arbitrage opportunities would arise. PPP states that over the long term, the exchange rate between two currencies adjusts to eliminate these arbitrage opportunities. PPP theory ignores transportation costs, tariffs and transaction costs. It also assumes competitive markets in both countries. |
Premium |
Opposite of a discount, refers to the increase in price of a newly issued stock. If used in the context of futures and options, the premium is the lump sum payable when purchasing a contract. |
Pricemaker |
An individual or a firm that quotes prices on which it is prepared to trade a currency pair. |
Pricetaker |
A market participant looking to enter a trade, who has no ability to make the market. Pricetakers can only trade at prices offered by pricemakers. For instance, a pricetaker hoping to sell immediately would have to submit a sell order at the market (the current bid). The majority of retail partcipants in the FX market are pricetakers. |
Profits Warning |
Usually in the form of a surprise announcement with respect to a company's balance sheet. |
Pullbacks |
A retreat of a FX pair’s exchange rate from a recent top. A pullback may be a brief reversal of the current upward trend, signaling a pause in upward momentum. After major upward moves, pullbacks can provide buying opportunities. Pullbacks though, may also represent trend reversals. |
Put |
A financial derivative instrument used in options trading. A 'put' would give an investor the right, but not the obligation, to sell shares at a fixed price up to a predetermined date. The opposite of a 'put' is a 'call'. |
Indices
