Spread Betting Glossary: P
1. Pairs trading: A trading strategy used as a hedge where the trader goes long and short on a pair of instruments relating to the same or linked sectors to either minimise losses or guarantee a profit regardless of market movements.
2. Partial closing: A strategy used to partially minimise exposure to a given position, executed by ordering a corresponding closing trade for a proportion (but not all) of an open position, as a means of locking in profits or limiting potential losses.
3. PIP: Percentage in points, used as a unit of measurement for staking and calculating earnings in spread betting. For each PIP a market moves upwards, the trader earns PIP x Stake, with the trader having to pay PIPs x Stake for losing positions.
4. Premium: The difference in price between the value of an underlying asset and the price commanded, usually determined by the supply and demand in the relevant market.