Forex Glossary

Cable

Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800\’s.

Canadian Ivey Purchasing Managers (CIPM)

A monthly gauge of Canadian business sentiment issued by the Richard Ivey Business School.

Candlestick Chart

A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, t

Carry Trade

Refers to the simultaneous selling of a currency with a low interest rate, while purchasing currencies with higher interest rates. Examples are the JPY crosses such as GBP/JPY and NZD/JPY.

Cash Market

The market in the actual financial instrument on which a futures or options contract is based.

Central Bank

A government or quasi-governmental organization that manages a country\’s monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.

Chartist

An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.

Cleared Funds

Funds that are freely available, sent in to settle a trade.

Closed Position

The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and t

Collateral

Something given to secure a loan or as a guarantee of performance.

Commission

A transaction fee charged by a broker.

Confirmation

A document exchanged by counterparts to a transaction that states the terms of said transaction.

Construction Spending

Measures the amount of spending towards new construction, released monthly by the U.S. Department of Commerce\’s Census Bureau.

Contract

The standard unit of trading.

Counter Currency

The second listed Currency in a Currency Pair.

Counterparty

One of the participants in a financial transaction.

Country Risk

Risk associated with a cross-border transaction, including but not limited to legal and political conditions.

Cross Currency Pairs

A pair of currencies that does not include the U.S. dollar. For example: EUR/JPY or GBP/CHF.

Currency symbols

AUD – Australian Dollar
CAD – Canadian Dollar
EUR – Euro
JPY – Japanese Yen
GBP – British Pound
CHF – Swiss Franc

Currency

Any form of money issued by a government or central bank and used as legal tender and a basis for trade.

Currency Pair

The two currencies that make up a foreign exchange rate. For Example, EUR/USD

Currency Risk

probability of an adverse change in exchange rates.

Current Account

The sum of the balance of trade (exports minus imports of goods and services), net factor income (such as interest and dividends) and net transfer payments (such as foreign aid). The balance of trade is typically is the key component to the current accou