There are no hard and fast rules about where the cut-offs are and different investors use the 'cap' terms in different ways.

Level 2 is the term given to enhanced market information that was once only available to the professional investment market, but which is now available to private investors through some web sites.

Level 1 screens just show Bid/Offer/Volume information but don't show how the prices are arrived at. Level 2 screens provide much more information about the stock, including details of the current bid and offers of individual Market Markers.

An order to buy shares up to a maximum price or sell down to a minimum price.

For example an investor may place a limit order to buy shares at £12 where the current price is say £15 and falling. If the price levels at £13 and goes up again the order would not be placed. If the price fell to £12 or below, the investor's order would be placed and the maximum he/she would pay would be £12. The point about a limit order is that the client knows what his exposure is.

In contrast when a client places an 'at best' order, the broker will complete the purchase at the best price available on the 'order book' at the time, and the client cannot be sure what that price is going to be.

This is the simplest form of chart available to the technical analyst. An example would have time presented along the X-axis and price on the Y-axis. The actual time function that you plot will depend on your position in the market - a market maker will be interested in price fluctuations on a minute-by-minute basis, whilst the average investor will only be interested in a price on a daily or even weekly basis. Any price may be plotted on a line chart, but the most common is the closing, mid-price.

The main attraction to the analyst of drawing line charts is their simplicity. They present an uncluttered picture of price movements and are very easy to understand.

When a company's debts and other liabilities exceed its assets, it is technically insolvent. If the company's directors are unable to shore up its finance by, for example, raising new equity or debt finance, one of its creditors may appoint a receiver to the company. The receiver's job is to take over the running of the company, doing whatever he thinks best to help the appointing creditor get its money back. This may result in the company being sold as a going concern or, it may result in the company going into liquidation.

When a company goes into liquidation, the receiver will sell its assets as best he can and distribute the cash proceeds in a strict order. Ordinary shareholders of the company come very low down the pecking order, behind trade creditors, but they may eventually recover some or all of their investment. The process of liquidation can last several years.

For CGT purposes, a notification by the Stock Exchange that a company's shares have 'negligible value' means that shareholders of the company can establish losses and set them off against gains on other investments.

In financial markets, 'liquidity' refers to the ease of dealing in a security - whether shares, options, warrants or some other instrument. Another way of looking at it is - how easily can the shares can be bought and sold without significantly moving the price?

In general, large companies, with hundreds of millions of shares in issue, and high numbers of shares changing hands every day, have good liquidity. If you are selling or buying a parcel of 5,000 shares in AstraZeneca, for instance, your broker won't have any trouble dealing the order.

In contrast, small companies with few shares in issue and thin trading volumes, can have very poor liquidity. If you try to sell 5,000 shares in a small company trading on AIM or OFEX, you may have difficulty actually getting the trade done.

Associated with liquidity is the concept of the 'spread' which is the difference between the bid and offer price quoted by market makers. The bid price is what the market maker will pay for your shares if you want to sell them. The offer is the price at which you can buy them from him. Large, liquid, stocks have narrow spreads (a good thing). Small, illiquid, stocks have wide spreads (a bad thing).

The process by which a company's shares become tradable on a stock exchange. Also known as a 'flotation'.

An unlisted company's shares are tradable privately between the shareholders and the pricing of the shares is difficult to determine.

Listing on the London Stock Exchange changes the situation. The shares get a daily price quotation, any member of the public can buy and sell the shares through brokers and market makers, and if the company wishes to raise new capital it has the option of issuing new shares.

Details which a company is obliged to publish about itself together with any securities it issues before it obtains a listing on a recognised stock exchange.

The listing rules of the London Stock Exchange are issued in a yellow binder and commonly known as the Yellow Book. Separate listing rules exist for the Alternative Investment Market.

Details which a company is obliged to publish about itself together with any securities it issues before it obtains a listing on a recognised stock exchange.

The listing rules of the London Stock Exchange are issued in a yellow binder and commonly known as the Yellow Book. Separate listing rules exist for the LSE's junior market - the Alternative Investment Market.

The organisation founded in 1888 to clear sugar and coffee trades in London, originally known as the London Produce Clearing House. Once LCH has registered a trade, it becomes the buyer to every LCH Member who sells and seller to every LCH Member who buys, thereby guaranteeing that the financial obligations of trades are met.

The LCH clears trades conducted on the International Petroleum Exchange (IPE), the London International Financial Futures Exchange (LIFFE) incorporating the London Commodity Exchange (LCE), the London Stock Exchange and the London Metal Exchange (LME). It is owned by the major UK clearing banks (Barclays, LloydsTSB, HSBC, NatWest, Royal Bank of Scotland and Standard Chartered) and is a Recognised Clearing House under the regulatory supervision of the Financial Services Authority (FSA).

Formerly known as London Fox (London Futures and Options Exchange), the exchange was renamed London Commodity Exchange and was a futures and options exchange, dealing in soft commodities including cocoa, sugar, coffee, wheat, barley, potatoes, and also dry cargo freight futures as a result of its merger with BIFFEX (Baltic International Freight Futures Exchange) in 1991.

On 16th September 1996 the LCE merged with the London International Financial Futures and Options Exchange (LIFFE) where trades of the merged company are guaranteed by the London Clearing House (LCH).

The rate of interest at which banks lend money to each other - in a sense, the wholesale price of cash rather than the retail price (which is what individuals pay if they want to borrow money).

The base rate which banks charge to their retail customers changes in response to changes made by the Bank of England to the Official Rate. LIBOR, on the other hand, changes continuously to reflect supply and demand within the cash and currency markets.

The world's third largest stock exchange by market capitalisation of domestic stocks listed, after the New York Stock Exchange and Tokyo Stock Exchange. The LSE also lists foreign companies, and its turnover of foreign shares is the largest in the world.

• Over 7,000 securities are bought and sold, including shares, Treasury stocks (gilts) and bonds.
• In order for a company to be admitted to the Exchange it must make application for a place on the 'Official List'. This involves providing extensive data regarding its financial status and trading history etc.
• As well as the Official List of large companies, the LSE also regulates the Alternative Investment Market (AIM) for smaller companies.
• Trading in securities is done through the The Stock Exchange Electronic Trading System (SETS) and the Stock Exchange Automated Quotation system (SEAQ).

http://www.londonstockexchange.com

1. In the USA, a bond with a maturity of ten years or more.
2. The US 30 year Treasury bond.

The expressions 'short term', 'medium term' and 'long term' mean different things in different contexts and, indeed, they mean different things to different people. In general, the stock market uses the terms as follows:

• short term - anything from 1 week to 2 years
• medium term - anything from 2 years to 5 years
• long term - anything from 5 years to 30 years!

1. Redeemable gilts or bonds with a redemption date beyond fifteen years.
2. Securities (for example, shares), commodities or financial instruments (for example, indices, currencies etc) held in a long position. The purchaser believes that the price will increase, and hopes to sell at a higher price than he bought at and thus make a profit.