AIM

The Alternative Investment Market. This is a 'junior' stock market run by the London Stock Exchange. It tends to have smaller, younger companies than the Full List. It also has less regulation.

Bid Price

This is the price at which you can sell your shares. Remember: it's "bid to get rid".

Certificates

In days gone by, legal title to a shareholding was denoted by a paper share certificate. They are easy to lose. It is more common these days for brokers to offer a nominee service.

Consideration

This is the total amount of the transaction. The amount required to purchase the shares and pay the commission and stamp duty.

Contract Note

When you deal in shares, your broker should send you one of these in the following days to confirm what you traded, how much of it you traded, and how much you paid (if buying) or were paid (if selling).

CREST

A settlement system that allows you to hold share certificates in an electronic form.

Cum-dividend

If you buy a share that is cum-dividend then you are entitled to receive the last dividend that was declared by the company. See also ex-dividend.

DRiP

Stands for Dividend Reinvestment Plan. These schemes are more common in the US but some UK companies operate them as well. As the name suggests, they allow you to automatically reinvest your dividends with low or no transaction costs.

Easdaq

A European version of Nasdaq.

EPIC

Stands for Exchange Price Information Code. Also referred to as a "symbol" or "ticker". This is a three or four letter code, unique to each company. It saves you having to type out the company name in full.

Ex-dividend

Or xd. If you buy a share that is ex-dividend then you are not entitled to the last dividend it declared. There is normally a gap of a few weeks or even months between the time a company declares and pays its dividends. The cut-off date as to who gets the dividend, should the share change hands, is known as the ex-dividend date. See cum-dividend.

Flotation

The process by which a company lists on the market for the first time. Also referred to as an Initial Public Offering (IPO).

Full List

This is the main market of the London Stock Exchange, where you find the likes of BT, Vodafone and Marks & Spencer. Also known as the Official List.

ISA

An Individual Savings Account. Allows you to hold investments within a tax shelter.

Limit Price

When you ask a broker to buy or sell shares you can set a limit price. This will represent a maximum price you want to pay, if you are buying, or the minimum you would like to receive, if you are selling. It's best to check with your broker how they handle limit prices. For example, some will cancel your trade after a certain time if they can't do better than your limit price.

Margin Trading

Essentially, this is investing financed by short-term borrowings.

Market Makers

These are the people who ensure that there is a market in a particular share. They are the people who set the bid and offer prices.

Mid Price

The mid price is the price you see quoted in the financial pages and in your portfolio. It is the halfway point between the bid and offer prices.

Nasdaq

A US market dominated by large technology stocks such as Microsoft, Cisco Systems and Yahoo!. It stands for National Association of Security Dealers Automated Quotations.

Nominee

The most common type of account for holding shares, especially with online brokerages. Essentially the broker will hold everyone's shares in one big pot, rather than issuing certificates for each individual holding.

Normal Market Size

This is the maximum number of shares in which you can trade in one transaction, and be guaranteed to get a price between the indicated bid and offer prices.

OFEX

A market for small UK companies run by a broker, and not by the London Stock Exchange. It can be very difficult to trade in shares on the OFEX market.

Offer price

The price at which you can buy shares. See also bid price, mid price.

Pooled

Another name for a nominee holding.

Rights Issue

A method by which a company raises cash for an acquisition or expansion. If you already hold shares in a company you will be entitled to buy more at a set price, on a pro rata basis.

Settlement

This is the time when the money relating to a share transaction actually changes hands. See T+3, T+5.

Spread

Or bid/offer spread. Simply the difference between the bid price and the offer price. As a rule, the bigger the company, the smaller the spread. The smaller the spread, the better deal you get.

Stamp Duty

A tax, currently 0.5%, which you have to pay on all share purchases.

T+3, T+5 etc

This denotes the amount of business days between the date of your transaction and when the cash relating to the transaction changes hands. Also known as the settlement period. T+3, i.e. three business days is now standard.

Transfer Form

If you sell a share for which you have the share certificates, then the broker will send you this form, which you sign to authorise the transaction.