Trader s A- Z Backwardation A market condition in which a future price is lower in the distant delivery months than in the near delivery months. This therefore causes the spreads to show positive rather than negative prices. Bearish- When an analyst/trader s sentiment is that a market is more likely to move in a downward direction. Bid A price that people want to buy at. Bid on Prices The best possible price you could buy based on the current outright prices. The bid of the front outright contract minus the offer of the following outright contract equates to the bid on prices price. Bracket a type of order which when filled will send a profit order to the exchange and start to work a stop order automatically. Both new orders are pre determined by a traders bracket settings set up in their trading default settings. Bullish- When an analyst/trader s sentiment is that the market is more likely to move up. Butterfly A hedged position. When a trader has a long and a short position on in consecutive spreads. Candle Stick chart A candle stick chart is a combination of a line chart and a bar chart, in that each bar represents the range of price movement over a given interval. Clip The number of lots a trader is allowed to trade with. This will change depending on the market and spread. Close The time each day a market ceases trading and no more orders will be filled/executed. Combo When a trader has a position that equates to being long and short adjacent flies. Alternatively they could be short and long adjacent flies. Completed Order book- A window that shows a traders completed orders for the current trading day. Conditional Order An order that will only be sent to the exchange once the parent order has been filled/executed. Condor A hedged trading strategy similar to a butterfly. Involves having a long and short position within the same market but different spreads. Cross Prevention A Stellar strategy aimed at preventing wash trades. 1
Cross prices When the same price is shown as bid or offered. A common occurrence when a market is closed or in pre open. Should never occur in an open market. Cross Trade a pre- arranged trade between traders that enables them to artificially increase their volume without exposing themselves to the risk. This can also report a misleading price which is a clear breach of the market rules. No person should pre- arrange or pre- negotiate any purchase or sale or noncompetitively execute any transaction. Curve Also called the yield curve. Is the term used to refer to a curve showing several yields or interest rates across different contract lengths. ECB European Central Bank. Responsible for setting European interest rates and economic policies. Exchanges - A marketplace in which securities, commodities, derivatives and other financial instruments are traded. The core function of an exchange - such as a stock exchange - is to ensure fair and orderly trading, as well as efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments and other groups a platform to sell securities to the investing public. An exchange may be a physical location where traders meet to conduct business or an electronic platform. Exchange examples include ICE and LIFFE. Fat Finger An unintentional or accidental trade generally caused by submitting an incorrect ticket to the market. Figure Sheet A daily list of times relating to the release of economic, political and commodity announcements/reports that will affect the markets. Each figure sheet will give an expected figure and a previous figure is relevant. Traders should receive each days figure sheet on the previous working day. Fill Timestamp This can be found in the completed order book that shows what time an order was filled. Flat When a trader has no positions in the market. Fly see Butterfly Free trade A trade that can be done to give you on onside position for zero risk. Greens The 9 th, 10 th, 11 th and 12 th outrights and the resulting spreads in the STIR markets. Considered less volatile than the reds but more volatile than the purples. Group limits Define the maximum amount of lots we as a collective office are able to have long or short at any one time. The maximum limits will vary depending on market. GFD Good For Day. These orders will remain in the market until the close of the current day when they will automatically be pulled. GTC Good Until Cancelled. Such orders will remain in the market until executed or pulled. GTD Good Until Date. These orders will remain in the market until the close of the specified day when they will automatically be pulled. 2
Hedge Considered a safer position than a simple long or short. When a trader has both a long and a short position in the same market but in different spreads. Held Orders Orders that are not actually in the market. Traders commonly use them as visual markers for significant outright and spread prices. Hitting Selling a bid. Iceberg A type of order whereby a trader submits and identical order each time the previous one has been filled. Traders use it to execute volume in a market without exposing their full size to the market in one go. Implied Volume Volume that is implied off other spreads/outrights. Keys - A key is used to uniquely identify traders on an exchange level. They are also used for connecting order routers to the exchanges for authorizing order management. Kyte The Clearing House used by OSTC. The Kyte Group Limited is an integrated clearing, broking and investment service provider for professional traders and investors around the world. Kyte is a member of GFI Group of companies. GFI Group (NYSE: GFIG) is a leading provider of wholesale brokerage, electronic execution and trading support products for global financial markets including fixed income, financial, equity and commodity instruments. Ladder A way to view the depth of a spread/outright in more detail than on a matrix view. Shows not only the prices and volume on the market but the bids, offers and volumes on each above and below the market. A ladder can also offer other columns such as last quantity traded, queue position, quantity traded, own bid/offer quantity Lifting Buying an offer. Limit stop A type of stop that is commonly used to allow a trader to stop out of the market when the selected price trades below a certain volume threshold. In order for the stop to trigger it must trade below the volume set by the trader. If the volume is pulled it is common that a trader can miss their stop as the conditions are not met for that stop to trigger. Unlike a market stop it will not stop the trader out on the next price if the stop misses. However, it will enter the order on the original stop price. Limits A limit is the maximum size of position a trader can have in each individual outright or spread. Long When a trader has bought but not yet sold a spread or outright, they are long. Market stop A market stop submits a stop ticket when a traders pre- defined stop criteria e.g. volume, has been met to sell or buy the next available price on the market. Often used in thin or volatile markets, where a traders original preference in stop price could easily be missed due to large volume trading. Please note some exchanges and markets do not support market stops e.g. Eurex. 3
Minimum Volume orders A type of order. Only begins working at the exchange when the volume on the bid/offer reaches a minimum volume determined by the trader in their trading defaults/ticket. When this volume criteria is not met the order will not be working at the exchange but will appear on the traders matrix/ladder. If a minimum volume order is entered and pulled from the market ten times, due to the volume fluctuating, the order will be pulled for good. Missed Stop Occurs when a stop order fails to get filled because the price traded out to quickly for a stop order to be filled or if a trader failed to send a manual ticket to the market quick enough. A failed stop will start to work as a normal bid/offer even though it has missed. Mnemonic A series of four letters unique to each trader, used to associate each trader with their account and trades. OCO One Cancels the Other Order. A pair or grouping of orders stipulating that if one order is executed, then the other order is automatically cancelled. Experienced traders use OCO orders to mitigate risk. Off the market A price that is not the current bid or offer on the market. Offer A price in the market that people are attempting to sell. Offered on Prices - The best possible price you could sell based on the current outright prices. The offer of the front outright contract minus the bid of the following outright contract equates to the offered on prices price. Offside When you are long a price that is currently offered or short a price that is currently bid. An offside position cannot be immediately scratched and is considered undesirable. On the market The lowest priced offer available to be purchased and the highest priced bid available to be sold immediately are defined as the prices on the market. Onside When you are long a bid or short an offer. A trader can also be onside better than the value of the bid/offer on the market. Open the time of day when the market/exchange will allow trading to begin. Opening times are set per market. Open Interest - The total number of options and/or futures contracts that are not closed or delivered on a particular day. OTC Over The Counter. This is to trade financial instruments such as stocks, bonds, commodities or derivatives directly between two parties. It is contrasted with exchange trading, which occurs via facilities constructed for the purpose of trading. Outright An outright is a single dated contract. A long or short trade on an underlying futures contract that has the potential for unlimited profit, but also carries the risk of unlimited losses. Outright futures are also called naked futures because they leave the investor highly exposed. Paper Volume in the market that represents traders bids or offers on a particular price that is not implied from elsewhere. 4
Pars this refers to a price quoted as 0 or 0.00 in an outright or spread and usually represents a significant level in markets. Pre- Open - Orders can be placed or pulled/amended (if they are from the previous day). No trades take place just a chance for order management to take place. Generally gives a good indication during this time as to which price the market will open on i.e. trade first. Minimum volume orders become effective too during this time Price Ticker The is a Stellar function designed to show traders the paper that is trading in each market and also shows the timestamp of each traded lot, which spread/contract traded and whether the price was bought or sold. Priority All markets hold traders orders in a market in some sort of queue. Some markets are based on pure FIFO priority (First In First Out) and therefore all orders are filled based on a first come first served basis. Other markets such as STIRS use a PRO RATA system which takes into account a traders clip size. Pull when a trader chooses to remove an order (bid or offer) from the market and therefore their order book. Real time report A traders real time reports are available on their Kyte client login pages. They display a traders real time risk and position. If there is ever a problem with Stellar or an exchange a trader can check their real time report to get an accurate reflection on the prices and positions they have. Rebate A rebate is a partial refund from an exchange. When a trader completes a certain number of round trips in a market or on a certain exchange they are rewarded by a rebate making their costs per trade lower. Reds - The 5 th, 6 th 7 th and 8 th outrights and resulting spreads in the STIR markets. Considered less volatile than the whites but more volatile than the greens. Residual Volume- This is amount of volume left unfilled from an order, it can be seen in the completed order book. If a trader has a five lot order and gets filled on three the residual volume would be two. Rolls A strategy/spread used by traders to swap a position in the front outright of a market to the next successive outright before the front outright expires. Needs to be done by everyone (open interest) who has a position in the front/expiring outright who does not want physical/cash delivery in that market. Round trip A round trip is the consequence of executing a single lot trade in a market. For spread trading each lot bought and sold to get in and out of the market requires a round trip and therefore the minimum round trips per spread trade is 2. In an outright trade a single lot in and out trade will result in 1 round trip. Round Tripping yourself off When the cost of executing a trade is higher than the profit reward gained for doing the trade. If the number of round trips (which each incur a cost) is too high it can cause the trade to be considered a loss even if the trader got a better price out of the market. 5
Scores This means your round trips and p&l performance for that day at that point in time. Scratch To scratch a trade is to enter and exit the market at exactly the same value therefore not incurring a loss or a win in terms of p&l. A scratched trade will still incur the costs of the round trips it took to execute the trade. Settlement A price defined by exchanges at each markets individual settlement time. Typically the price that trades the most within that period. It is used to determine a price for calculating daily statements when a position is held overnight and a p&l value must be attributed to the trade even though the trader has not exited or flattened their position. Shatter To shatter an order is to remove the synthetic functionality link this order has with another. The orders will still remain working at the exchange and no priority will be lost however the OCO settings will no longer be active. It is possible to shatter and re OCO orders. Short - When a trader has sold but not yet bought a spread or outright, they are short. Spread A spread is derived from the difference in value between two outrights. A spread position involves shorting one outright and longing another. Matrix - A fixed- income trading strategy that looks for discrepancies in the yield curve, which an investor can capitalize upon by instituting a bond swap. Made up of the spreads derived from the outrights, a matrix helps to highlight discrepancies which come about when current yields on a particular class of bond (corporate, municipal, etc.) don't match up with the rest of the yield curve or its historical norms. Squawk a 24 hour real time news announcer and information service, also called Batesy Stale order A stale order is a previously active order that is no longer actively working at the exchange but is still appearing on a traders matrix/ladder/order book. This occurs when Stellar gets disconnected from the exchange. Statement Produced by Kyte showing a traders P&L on a day by day basis. Status Bar This is a Stellar function designed to show a trader an update of each order submitted in the corresponding market. If an order has been submitted, filled or rejected by the exchange for some reason the trader can be made aware of this through the status bar. They are located at the base of each Stellar window. STIRS Short Term Interest Rates Stop The worst case price a trader wishes to get out of a trade at. A trader needs to define what conditions they want to be met before they trigger their stop and get out of their position. It is usually sent if the volume on the desired bid/offer the trader wants to exit the position at dips below a certain amount. Stops can be automatically triggered if they are active stops resting in the market or manual stops which a trader will send to the market themselves. A stop price does not always equate to a price that incurs a loss for the trade. 6
Supplement Ask Volume This is a Stellar function which involves a column, available in a price ladder or a price view which gives you an indication of where your offer is in the queue to get filled. This is a Stellar function to give you information on your priority in a market. It is not exchange provided information but an estimate from Stellar based on the volume changes and the entry timestamp of the order. Supplement Bid Volume - This is a Stellar function which involves a column, available in a price ladder or a price view which gives you an indication of where your bid is in the queue to get filled. This is a Stellar function to give you information on your priority in a market. It is not exchange provided information but an estimate from Stellar based on the volume changes and the entry timestamp of the order. Synthetic Order An order that is not actually working at the exchange but will only be sent when the set conditions are met. Tick This is the term used for incremental price increases or decreases in any traded product. Some markets prices increase by 0.25, 0.5 & whole ticks. Ticket This is a Stellar function designed to allow a trader to send an order to trade to the exchange. There are default settings available for tickets but traders can alter each individual ticket appropriately before they are sent and executed. Trades Window - A window that can be brought up in stellar to show a traders executed trades. This is commonly used when looking at trades executed during previous days trading and not the current one. The fills will be shown as outright trades and not spread fills. Traded Out this refers to when the volume on a price (bid or offer) trades or is pulled completely i.e. there are no more people offering or bidding that price. Wash Trade is the action of creating a misleading appearance of activity occurring in the market and/or causing an exchange to report a misleading price or volume level which is strictly against market rules and standards. Traders may also not execute trades in which there is no change in beneficial ownership (i.e. the buyer and seller is the same person in the hope of creating a false impression of market activity). Webrisk A real time reporting tool which is designed to allow traders to see their p&l s based on last price traded. Whites The front four spreads and outrights of the STIR markets. Considered the most volatile. 7