Forex Terms With "C"

Cable
Term used to describe the exchange rate between the US dollar and the British Pound.

Candlestick Chart
Chart depicting the daily high, low, opening and closing price, similar to that of a bar chart. If the close is lower than the open than the body of the candlestick is filled in, and if the open is lower than the close the body is left empty.

Capital Markets
Markets in which capital (stocks, bonds, etc.) are traded. Usually for medium or long term investing.

Carry Trade
An investment position of buying a higher yielding currency with the capital of a lower yielding currency to gain an interest rate differential.

Central Bank
A banking organization, usually independent of government, responsible for implementing a country's monetary policy and for printing money.

Chartist
Refers to a technical analyst or one who analyses charts/graphs and data to uncover potential trends.

Clearing
Refers to the settlements/confirmations of trades.

Close a Position (Position Squaring)
Refers to getting rid of a position, either by buying back a short position or selling a long position.

Commission
A fee charged by broker or agent for carrying out transactions/orders.

Confirmation
A written document verifying the completion of a trade/transaction to include such things as date, fees or commissions, settlement terms and the price.

Contagion
Term used to describe the spread of economic crises from one country's market to other countries within close geographic proximity. This term was first used following the Asian Financial Crisis in 1997, which began in and soon spread to other East Asian economies. It now is used to refer to the recent crisis in and its effects on other Latin American countries.

Contract (Unit or Lot)
The standard trading unit on certain exchanges. A standard lot in the forex market is $100,000.

Convertible Currency
Currencies that can be exchanged for other currencies or gold.

Cost of Carry
When an investor borrows money to sustain a position. There is a cost for borrowing derived from the interest parity condition, which is used to determine the forward price.

Counterparty
A participant, either a person or an institution, involved in one side of a financial transaction. With such transaction there is an associated risk (counterparty risk) involved that the counterparty will not be able to meet the terms outlined in the contract. This risk is usually default risk.

Country Risk
The risk that a government might default on its financial commitments/contracts, which typically causes harms to other areas of the financial sector, as well as those in other countries.

Cover on a Bounce
A recommendation to exit trades on a bounce out of a support level.

Cover on Approach
A recommendation to exit trades for profit on approach to a support level.

Credit Checking
Before making a large financial transaction, it imperative to check whether the counterparty has enough available credit to carryout/honor the transaction. Credit checking refers to the process of verifying that counterparty has enough credit. The check is initiated after the price has been determined.

Credit Netting
Agreements that are made to avoid having to continually recheck credit, usually established between large banks and trading institutions.

Cross Rate
Refers to the exchange rate between two countries' currencies. Cross rates usually refer to pairs quoted that do not include the domestic currency. For example, in the US, the EUR/JPY rate would be called a cross rate.

Currency
Notes and coins issued by the central bank or government, serving as legal tender for trade.

Currency Pair
Currencies are quoted in pairs, such as EUR/USD or USD/JPY. The first listed currency is known as the base currency, while the second is called the counter or quote currency. The base currency is the "basis" for the buy or the sell. For example, if you BUY EUR/USD you have bought euros and simultaneously sold dollars. You would do so in expectation that the euro will appreciate (increase in value) relative to the US dollar.

Currency (Exchange Rate) Risk
Risk associated with drastic changes/fluctuations in exchange rates in which one could incur a major loss.