Forex Signals from the Leading Forex Alert Provider! :: Forex Signals

Cable - A term used in the foreign exchange market for the U.S. dollar /British pound rate.

Cambist - An expert trader who rapidly buys and sells currency throughout the day.

Capital Risk - The risk arising from a bank having to pay to the counter party without knowing whether the other party will or is able to meet its side of the bargain.

Carry - The interest cost of financing securities or other financial instruments held.

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

Cash - Normally refers to an exchange transaction contracted for settlement on the day the deal is struck. This term is mainly used in the North American markets and those countries which rely for foreign exchange services on these markets because of time zone preference i.e. Latin America. In Europe and Asia, cash transactions are often referred to as value same-day deals.

Cash and Carry - The buying of an asset today and selling a future contract on the asset. A reverse cash and carry is possible by selling an asset and buying a future.

Cash Settlement - A procedure for settling futures contract where the cash difference between the future and the market price is paid instead of physical delivery.

Candlestick Chart - A chart that displays the daily trading price range (open, high, low and close).

Central Bank - A bank which is responsible for controlling a country's monetary policy. It is normally the issuing bank and controls bank licensing and any foreign exchange control regime.

Central Rate - Exchange rates against the ECU adopted for each currency within the EMS. Currencies have limited movement from the central rate according to the relevant band.

Chartist - An individual who studies graphs and charts of historic data to find trends and predict trend reversals which include the observance of certain patterns and characteristics of the charts to derive resistance levels, head and shoulders patterns, and double-bottom or double-top patterns which are thought to indicate trend reversals.

Clean Float - An exchange rate that is not materially affected by official intervention.

Closed Position - A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency.

Closing a Position - The process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position.

Closing Market Rate - The rate at which a position can be closed based on the market price at end of the day.

Commission - The fee that a broker may charge clients for dealing on their behalf.

Commodity Block Currency - A currency that belongs to a country whose economy is strongly correlated with the price fluctuations of a certain commodity.

Compound Option - An option on an option. Examples include a call on a call, a put on a put, a call on a put, and a put on a call.

Confirmation - A memorandum to the other party describing all the relevant details of the transaction.

Constant Currencies - Financial performance numbers that exclude foreign currency translation effects.

Contract - An agreement to buy or sell a specified amount of a particular currency or option for a specified month in the future

Conversion - The process by which an asset or liability denominated in one currency is exchanged for an asset or liability denominated in another currency.

Conversion Account - A general ledger account representing the uncovered position in a particular currency. Such accounts are referred to as position accounts.

Conversion Arbitrage - A transaction where the asset is purchased and buys a put option and sells a call option on the asset purchased, each option having the same exercise price and expiry.

Convertible Currency - A currency that can be freely exchanged for another currency (and/or gold) without special authorization from the central bank.

Correspondent Bank - The foreign bank's representative who regularly performs services for a bank which has no branch in the relevant center, e.g. to facilitate the transfer of funds.

Counterparty - The customer or bank with which a foreign exchange deal is executed.

Countervalue - Where a person buys a currency against the dollar, it is the dollar value of the transaction.

Contry Basket - A derivative security designed to mimic the major index of an international exchange.

Country Risk - The risk attached to a borrower by virtue of its location in a particular country. This involves examination of economic, political and geographical factors. Various organizations generate country risk tables.

Cover - To take out a forward foreign exchange contract.

Covered Arbitrage - Arbitrage between financial instruments denominated in different currencies, using forward cover to eliminate exchange risk.

Covered Margin - The interest rate margin between two instruments denominated in different currencies after taking account of the cost of forward cover.

Crawling Peg - A method of exchange rate adjustment; the rate is fixed/pegged, but adjusted at certain intervals in line with certain economic or market indicators.

Credit Risk - The risk that a debtor will not repay; more specifically the risk that the counterparty does not have the currency promised to be delivered.

Cross Currency - A pair of currencies traded in forex that does not include the United States dollar.

Cross Deal - A foreign exchange deal entered into involving two currencies, neither of which is the base currency.

Cross Rate - An exchange rate between two currencies, usually constructed from the individual exchange rates of the two currencies, measured against the United States dollar.

Currency - Money issued by a government.

Currency Pair - The two currencies that make up a foreign exchange rate. IE: USD/YEN.

Currency Basket - A selected group of currencies whose weighted average is used as a measure of the value or the amount of an obligation.

Currency Carry Trade - A strategy where an investor borrows in a foreign country with lower interest rates than their home country and invests the funds in their domestic market, usually in fixed-income securities.

Currency Forward - A forward contract that locks-in the price an entity can buy or sell currency on a future date.

Currency Futures - A transferable futures contract that specifies the price at which a specified currency can be bought or sold at a future date.

Currency Option - A contract that grants the holder the right, but not the obligation, to buy or sell currency at a specified price during a specified period of time.

Currency Overlay - The outsourcing of currency risk management to a specialist firm, known as the overlay manager. This is used in international investment portfolios to separate the management of currency risk from the asset allocation and security selection decisions of the investor's money managers.

Currency Risk - A form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.

Currency Swap - A swap that involves the exchange of principal and interest in one currency for the same in another currency.

Current Account - The net balance of a country's international payment arising from exports and imports, together with unilateral transfers such as aid and migrant remittances. It excludes capital flows.