Daily Bet
A type of spread bet that expires on the same day. The bet is settled as per the rules in the relevant spreadbetting firm’s terms and conditions.
Daily Funded Bet (DFB)
Daily funded bets refer to bets on the daily position of an underlying instrument that is held for longer than one day. Each day the position is held open, a financing/funding charge is applied, and adjusted in your account. Your account is also adjusted for dividend payments relevant to the underlying instrument held.
Dealing Spread
The difference or range of the spread offered, ie the buy price and the sell price. For example if the FTSE is offered at 5501-5500 (buy-sell), the spread is 1.
Deposit
The initial funds required to be placed with a Spread betting/CFD provider before a position can be placed. Note – it is not the total amount that can be lost in Spread betting/CFD trading, because of the leverage offered.
Depreciation
The fall in the value of an asset.
Derivative
A financial instrument whose value is based on the value of an underlying item, such as a commodity, currency, economic variable or other financial instrument.
Discount
The size of the difference between 2 instruments. In forex markets, discount is used to describe the difference between forward currency rates and spot rates.
Dividend
Company’s profits that is distributed to shareholders. Dividend payments are often split into interim dividends (paid at the half year stage) and final dividends (paid at the full year end).
When investing, because dividends are paid based on the number of shares held, the expectation of dividends is factored into the share price. Once the dividend is announced, there is an ex-dividend date. New share-holdings after the ex-dividend date as not entitled to the dividend payment, therefore, all other things being equal, the share price should drop on the ex-dividend date by the size of the dividend per share.
In spread betting, it is important to understand how dividend payments are dealt with by your provider, since there are differences between the different spread betting firms. For example, at some firms, if you have a short daily position in a share that goes ‘ex-dividend’ your spread betting account will be charged 90% of the gross dividend (or 100% of the net dividend). On the flip side, if you are holding a long position, you will receive into your spread betting account 90% of the gross dividend (or 100% of the net dividend). Futures contracts (ie not daily positions) price in the effect of dividends in their quoted price, therefore you don’t normally receive payment or get charged in respect of the dividend payment.
Down Bet (Sell/Short)
A spread bet that the market offered will finish lower than the price (or spread) offered. For example, if the spread offered for the FTSE 100 index is 5800-5805, and you think that it is going to finish below 5800, then you place a down bet/short/sell at 5800.
Downtrend
A trend (in price) distinguished by a series of both lower highs and lower lows.
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