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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, that area of the chart is not shaded.

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 organisation 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.

Clearing

The process of settling a trade.

Closed Position

Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will ‘square’ the postion.

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.

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 Pair

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

Currency Risk

The probability of an adverse change in exchange rates.

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.

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 account.