Trading terms glossary
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C

Cable
Cable in forex is the nickname of the GBP/USD currency pair, which is one of the most popular currency pairs on the market. 

Calendar Spread
A calendar spread is a trading technique, which involves buying a derivative of an asset in one month and selling a derivative of the same asset in another month. The calendar spread represents the difference in the price of the same asset from one futures contract to another. 

Call option
A call option is an option to buy an asset at a given price by a specific date.

Learn more about Call Options

Capital expenditure
Funds spent on physical assets. 

Capital gains
Capital gains are the profits made from the buying and selling of assets, when the sale of an asset exceeds the original cost. 

Capital gains tax
Capital gains tax (or CGT), is the tax levied by the government on the profits made from selling any financial assets.

Capital loss
Opposite of capital gains. When the sale of an asset is less than the original cost to the owner. 

Cash flow
Cash flow is the amount of money coming into and going out of a company, and the resulting availability of cash. It can refer to a single project or the entire business.

Cash Price
Not to be confused with Prompt or Spot price, the cash price refers the price paid or received for immediate delivery of a good or asset. The cash price and spot futures price should converge the closer you get to the spot futures contract expiry.

Cash rate
Also known as a bank rate or base interest rate, the cash rate is the interest rate charged by a central bank for loans to other banks. 

Chartist
A chartist trader relies predominantly on charts to help them understand historical data in order to better speculate on future price movements. Also commonly known as technical analysts, or technical traders.

Closing price
The price of a security on a financial market at the end of the trading day. Closing prices can be used as a marker when looking at long-term historical movements, or they can be compared to the opening price to review the movement over a single day. 

Commission
Commission is a service charge by an investment broker for making trades on a client’s behalf. 

Commodity
A commodity is a basic physical asset, which can be bought and sold. Commodities can often be categorised as a raw material, used in the production of other goods or services.

Contracts for difference
Contracts for difference (CFDs) are a type of financial derivative where your gain or loss is based on the price of the asset when the contract opens and closes. It is an arrangement made where the differences in the settlement between the open and closing trade prices is cash settled and there is no delivery of physical goods or securities.

Learn more about CFDs

Contract (Lot)
A Lot is a trading unit, representing a set amount of a particular asset. A standard lot in the forex market is $100,000. A mini lot is $10,000.

Convexity
Bond convexity is a measure of the “degree of the curve” or difference, between a bond’s price and a bond’s yield. It is a risk management tool used to assess the impact that a rise or fall in interest rates can have on a bond’s price – which highlights a bond holder’s exposure to risk.

Contango
Typically seen when the market is well supplied, contago is when the futures price of a commodity or security is higher than the spot price (present price). Here we would expect the higher price of the futures contract to reflect the commodity cost of carry.

Cost of carry
Cost of carry is the amount of additional money you need to hold a position. This can include overnight funding charges, interest payments, or the costs of storing any commodities on the delivery of a futures contract. These charges are an important consideration when trading, as they will affect your net return. 

Covered call
A covered call is a call option trading strategy, where you hold an existing long position on a tradeable asset and write (sell) a call option against the same asset to generate extra income. The aim is to increase the overall profit that a trader will receive.

Learn more about Covered Calls

CPI
CPI stands for consumer price index, which measures the change in average prices paid by US consumers, month to month.  

Learn more about CPI

Crystallisation
Crystallisation is the act of realising a profit or loss, by selling a position and immediately reopening it again. 

Currency appreciation
The increase in value of one currency compared to another. The ‘strengthening’ of a currency in Forex trading means that it would cost more to buy, or that it can buy more of another currency when sold.

Learn more about currency appreciation

Currency depreciation
A decrease in a specific currency’s value, relative to another currency in a floating exchange rate system. In a floating exchange rate system, a currency’s value is set by the forex market, based on supply and demand.

Learn more about currency depreciation

Currency peg
A fixed exchange rate of its currency, set by a national government or central bank. It can sometimes also be referred to as a fixed exchange rate or ‘pegging’.

Learn more about Currency Pegs

Currency Swap
Sometimes referred to as a cross-currency swap, this is an agreement between two parties to exchange principal and fixed rate interest payments in two different currencies to an agreed rate of exchange.

Learn more about Currency Swaps.

 

 

 

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