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Look up the meaning of hundreds of trading terms in our comprehensive glossary.

  • Cable
    The GBP/USD (Great British Pound/U.S. Dollar) pair. Cable earned its nickname because the rate was originally transmitted to the US via a transatlantic cable beginning in the mid 1800s when the GBP was the currency of international trade.
  • CAD
    The Canadian dollar, also known as Loonie or Funds.
  • Call option
    Call options are financial contracts that give you the right, but not the obligation, to buy a market at a specified price within a specific time. The buyer of a call option can profit when the underlying market rises in price.
  • Canadian dollar

    The Canadian dollar is the currency of Canada. Managed and overseen by the Bank of Canada, it is frequently traded as part of pairs such as USD/CAD, GBP/CAD and EUR/CAD.

    Although not as popular as its US counterpart, the Canadian dollar is still one of the most commonly traded currencies in forex and is often known as a ‘commodity currency’ due to the correlation between its value and commodity prices.

    It was first used in 1858 as a replacement for the Canadian pound, and the Canadian dollar has since become a benchmark currency that is kept in reserve by countries across the world. The nickname ‘Loonie’ is used in trading to refer to the currency, with the deriving from the aquatic bird ‘the loon’ that is featured on the nation’s $1 coins.

    What is the symbol for the Canadian dollar?

    The symbol for the Canadian dollar is $. However, C$ or CAN$ can also be used to distinguish between the US dollar and other dollar currencies that use the $ symbol. One Canadian dollar is made up of 100 cents, and the abbreviation ‘CAD’ is used to denote the Canadian Dollar when shown in forex currency pairs.
  • Candlestick chart
    A candlestick chart is a type of chart used to analyse a market’s price in trading. Unlike bar charts, candlestick charts show the market’s high, low, open and closing price within each period.
  • Capitulation
    Capitulation is the act of surrendering or giving up. In financial market trading, the term indicates when investors and traders have decided to stop trying to recapture lost gains or maintain their positions, due to falling or rising prices.
  • Cash market

    A cash market is a marketplace where securities are immediately paid for and delivered at the point of sale. For example, a stock exchange is classed as a cash market – because investors receive their shares as soon as they have paid for them.

    Cash markets are also called spot markets, because the transactions get settled on the spot. They differ from futures markets, where buyers pay for the right to receive goods at a specific future date.

    Cash market transactions may take place on exchanges like stock markets or via over-the-counter (OTC) methods.

    Regulated exchanges offer institutional and structured protection against counterparty risks. OTC markets, on the other hand, allow the parties involved to customise their contracts.

    What is the difference between cash and futures markets?

    A cash market is where financial instruments get traded and where, for example, the delivery of stock/shares occurs. The total amount of the transaction value must be paid in cash when buying the shares.

    In contrast, a futures market is where only futures contracts are bought and sold on agreed dates in the future and at predefined prices.

    Trading in futures doesn’t involve owning shares, and no delivery occurs as the contract expires on the expiration date.

    Traders can trade on margin with futures, and they don’t have to pay cash at the point of sale. With futures contracts, settlement takes place on a contract’s expiration date.

    Futures contracts don’t have dividend pay-outs, and they’re used more for hedging, speculation or arbitrage purposes, unlike buying shares for investment reasons
  • Central banks
    A central bank is a financial institution with special authority to issue government-backed currency. It is often responsible for formulating monetary policy and regulating member banks. Examples of central banks include the Bank of England in the UK and the Federal Reserve in the US.
  • Chartist

    A chartist is a trader that analyses a market’s price history to determine future price trends. A chartist will use a range of analytical tools, as well as indicators, to conduct technical analysis on a market’s price chart.

    Chartists look for patterns in a market’s price behaviour. By identifying these patterns, chartists can then try to predict future price movement and make trades to capitalise on them. For example, they might try to identify a trend as it forms, then profit from the resulting move.

    A chartist’s trading strategy relies heavily, but not always exclusively, on technical analysis. Sometimes, a chartist can incorporate fundamental analysis along with technical analysis into their trading strategy.

    Chartists vs fundamental analysts

    The difference between a chartist and a fundamental analyst is that a chartist will look at the history of a market’s price to influence their trading decisions. Fundamental analysts, on the other hand, will attempt to calculate a market’s intrinsic value by evaluating a number of factors, including overall economic strength and specific industry conditions.

    Let’s say you’re trading Amazon. As a chartist, you might use tools and indicators to try to work out how Amazon’s price will move. As a fundamental analyst, you would look at several factors, such as company management, earnings, future projections, industry performance and company assets to try to determine whether Amazon’s current market price is a true representation of its value.

    If you see a discrepancy between Amazon’s stock price and its intrinsic value, you will exploit this imbalance and trade to take advantage of its current stock price.

  • Choppy

    A choppy market is when an asset’s price shows no clear trend but instead experiences many smaller fluctuations. 

    A choppy market can occur when buyers and sellers of a market are at an equilibrium. If there is high liquidity (large trading volumes) in a market and neither bears nor bulls can dominate, the result is often a choppy market.

    Choppy markets are associated with rectangular price ranges. A rectangular price range is a pattern that occurs on charts that continuously hits the same support (the lower limit) and resistance (the upper limit) levels. This prevents the market from breaking out into a trend, as its price is instead confined between these two levels – creating a rectangle.

    Traders often look to profit from price trends, so can find it difficult to successfully trade a choppy market. Those who do trade choppy markets to try take advantage of small price movements over a short-term period, but more volatile markets are likely to present greater opportunities for most traders.

    What are good technical indicators for choppy markets?

    A good technical indicator to use to identify choppy markets is the Average Directional Index (ADX). The ADX indicator will not only help to identify whether a market is experiencing a price trend, but it will also show the strength of the trend.

    The main characteristic of a choppy market is that there is little or no trend, so in this case we can use the ADX indicator to identify the strength of a trend in a market. If it indicates there’s no trend, we know a market is choppy and can trade accordingly.

    The ADX works by using the positive (+DI) and negative (-DI) direction indicator to help traders determine whether they should go long or short on a market based on the direction and strength of the trend. When the ADX is above 25, this shows that the trend is strong. If the ADX is below 20, this implies a non-existent trend – at which point a choppy market has been identified.
  • Cleared funds

    Cleared funds refers to the balance in a trading account and means that these funds are ready to be traded with. Once funds have cleared, they are free from any obligation and can be used to either make a trade or be withdrawn. If funds aren’t cleared, they might be pending, which will limit what a trader can do with them.

    On occasion, a deposit of funds can take some time to arrive in a trading account. As a result, a £100 deposit could show up in the account but just not be cleared. At that point, restrictions on how the funds can be used are also likely to apply until the funds are fully cleared.

    What is the difference between cleared funds and available funds?

    The difference between cleared funds and available funds is that cleared funds carry no further obligations and can be traded or withdrawn freely, whereas available funds often come with certain restrictions.

    Let’s say a deposit might be pending. Funds from that deposit might be available to be used to place a trade, but until it has been finalised and the funds have been cleared there might be withdrawal restrictions.

    In the context of banking, banks are legally obligated to make a certain amount of a deposit available to be used as regular funds.
  • Clearing
    The process of settling a trade.
  • Clearing house

    A clearing house is an organisation, institution or third party that settles a financial obligation between a buyer and seller. It’s the job of a clearing house to ensure that all parties in a financial transaction honour the agreements that they’ve committed to and settle them as such.

    Clearing houses ensure that transactions run efficiently. The buyer receives what they paid for, and the seller receives the amount of money agreed on for the sale.

    The idea of a clearing house has been around for centuries. Various forms existed in Japan, Italy and France before the first modern-day clearing house as we know them was established in London in 1773.

    They make up an integral part of financial ecosystems and play a vital role in instilling financial stability.

    What is the role of a clearing house?

    The role of the clearing house is to act as the independent third party, or middleman, between a buyer and a seller in a financial transaction. It’s the job of the clearing house to ensure all the necessary steps are undertaken by both buyer and seller for the transaction to be settled.

    Clearing houses are particularly important on futures markets because these take time to be filled. The clearing house must ensure that the contract is settled at the time originally agreed by both parties, at the price agreed.

    Although clearing houses act for their own financial gain, profiting from clearing and transaction fees, they’re a pivotal part of the financial ecosystem. They maintain fairness by upholding any contract or agreement of sale between a buyer and a seller. More significantly they maintain the industry’s integrity and instil confidence for those who may be worried about the opposing party upholding their part of the financial obligation.
  • Closed position

    A closed position is a trade that is no longer active and has been closed by a trader. To close a position, you need to trade in the opposite direction to when you opened it.


    For instance, if you take a long position on a stock, you would have to sell an equal amount of stock to close your position. Once a position is closed, it cannot be reopened. At the point of closure, any profit or loss is realised, and your account balance will be updated accordingly.


    Closing a position is not always a manual task. Stop-loss and take-profit orders, for example, automatically close your position if a market’s price falls or rises to a certain level 


    When should you close a position? 


    There’s no definitive answer to when you should close a position as it depends on several different factors. Your trading strategy, for instance, could be key in making that decision.


    Timing when to close out a trade is a critical aspect of becoming a profitable trader. A common mistake made by inexperienced traders is closing out trades too soon if they start incurring a loss. Fluctuation and, depending on the market traded, volatility are frequent in the markets, so it’s not uncommon for a trade to enter the red. However, closing out too early and taking the loss can be a mistake as there’s no chance for the market to recover.


    Equally, it can be difficult to close out a position when it’s up significantly. The mentality shifts and there’s that expectation that if it’s currently in profit, it will continue to rise further. Again, this is not always the case, so closing out positions and securing that profit is crucial to being successful.


    The best way to close positions at the correct level is to make a trading plan. Before opening a trade, decide when you’ll close it at a profit and at a loss – then try to stick to your decision.
  • Closing
    The process of stopping (closing) a live trade by executing a trade that is the exact opposite of the open trade.
  • Closing price

    A closing price is a market’s final price level before it closes for the day. A market’s closing price is used as the price level shown on a typical line chart.

    Closing prices are the benchmark used to measure a market’s daily performance. A market’s price can fluctuate during the day, but a close price is a fixed number that can not only be compared with previous close prices, but also compared with close prices of other markets.

  • Collateral
    Collateral is something pledged as security for the repayment of a loan, which can become forfeited in the event of loan default. Examples of collateral include real estate, vehicles, cash, and investments.
  • Commodity trading advisors

    A commodity trading advisor (CTA) is a type of financial advisor that only supplies advice on commodities trading: typically the buying and selling of futures contracts, commodity options or swaps.

    US commodity trading advisors must be certified. Registration requires CTAs to advise on all forms of commodity investments.

    To register as a CTA, the applicant must pass proficiency requirements, such as the Series 3 National Commodity Futures Exam – although alternative tests can also prove proficiency.

    CTA finance explained

    Investments in commodities can involve significant leverage, requiring a high level of expertise. Regulations came in from the 1970s onwards to help avoid the potential of substantial losses for firms and individuals, including moves to regulate CTAs.

    A CTA fund is a hedge fund that uses futures contracts to reach its investment targets. CTA funds typically use various trading strategies to meet their investment goals, such as automated and trend-following systems.

    Some fund managers might apply discretionary strategies, such as fundamental analysis, combined with systematic trading methods.

    These fund managers run different strategies using futures, options on futures contracts and FX forwards. CTA funds were originally commodity-focused, but they’ve now expanded their expertise to invest in all futures markets: including commodities, equities and currencies.

  • Components
    The dollar pairs that make up the crosses (ie EUR/USD and USD/JPY are the components of EUR/JPY). Selling the cross through the components refers to selling the dollar pairs in alternating fashion to create a cross position.
    Symbol for NASDAQ Composite Index.
  • Confirmation
    A document signed by counterparts to a transaction that states the terms of said exchange.
  • Consolidating market

    In technical analysis, a consolidating market is a market that is neither continuing nor countering a long-term trend. Instead, its price is only experiencing rangebound price activity.

    This is also seen as market indecisiveness. A market’s price during a period of consolidation will still fluctuate, but it won’t break out of a certain price range.As soon as the market breaks out and moves either above or below the stagnant trading pattern, the period of consolidation ends.

  • Consolidation
    A period of range-bound activity after an extended price move.
  • Construction spending

    Construction spending is the amount of money the government or businesses have spent on construction, labour and materials over a monthly period. This can refer to either residential and non-residential construction and also includes engineering costs. 

    Residential construction refers to the construction of housing and other forms of accommodation. This is significant to traders as the housing market can often reflect the economic health of a country.

    Non-residential construction refers to businesses and corporations spending money on infrastructure like new factories, offices or branches. Non-residential construction has an even stronger correlation with economic performance as gross domestic product (GDP) is derived from the output of these businesses, which is a direct measure of economic strength.

    Although construction spending is not the strongest economic indicator, its relation to GDP makes it significant to traders. If construction spending is high, this implies economic growth as new infrastructure is being built – increasing the capacity of an economy.

    How do changes in government spending impact construction?

    Changes in government spending should indirectly impact construction in an economy. This is because there’s a relation between spending and economic strength.

    The purpose of the government increasing spending is often to stimulate demand in the economy. If done successfully, an economy will grow as consumer spending also increases. This rise in demand can cause the need to raise economic capacity. One way this is facilitated is by increases construction. If government spending leads to an increase in wages, people will have more money and might be more likely to spend rather than save. For example, high consumer confidence off the back of an increase in government spending could subsequently increase the demand for housing[PF4] .

    This is because, in theory, consumers are more financially stable and in a better position to purchase a home. If the demand for housing rises, the construction industry will benefit as more houses will need to be built.

    Alternatively, a fall in government spending could have an adverse effect on construction, as the fall in demand would take away the need for new infrastructure. In a weaker economic environment, businesses are less likely to invest in new branches or factories, consumers will be more hesitant with making substantial purchases like buying houses and the construction industry could contract.
  • Contagion
    The tendency of an economic crisis to spread from one market to another.
  • Contract size

    Contract size is the deliverable amount of a market that makes up a futures or options contract, spot forex or CFDs. These vary between markets and assets.

    For instance, in forex the standard size of one contract is typically 100,000 units of the currency. Whereas for stocks, the typical size of a futures contract is 100 shares.

    A benefit of having contract sizes is that traders and investors know how much of a market they are trading. The size of the contract is a definitive quantity that is often standardised across the board, meaning regardless of the broker, the size of one contract for a market is usual the same.

    It’s crucial to know the size of the contract you are trading as this will help you know exactly how much exposure you have. This is also significant when thinking about risk management, as you’ll need to know how much you might potentially lose based on the amount you are trading.

    How do you determine contract size?

    To determine the total contract size, all you need to do is simply look at the market information for the market you’re trading. This information will be available directly from your trading platform.

    You can then use this to work out the total size of your trade. Let’s use an Apple CFD as an example. One Apple CFD is equivalent to one stock of Apple. If Apple’s price is $120 and you purchase 100 CFDs on Apple shares, the total cost of the trade is $12,000 ($120 x 100 CFDs).

    With this long position, if Apple’s stock rises to $130, you would make a profit of $1,000 ($10 x 100) by closing out the position.

    Contract sizes are standardised across the industry. For instance, a standard contract size for forex is 100,000 units of the base currency. However, ‘mini’ and ‘micro’ contracts are also available. In forex, a mini contract is 10,000 units and a micro contract is 1,000.

  • Contracts for difference (CFD)
    A contract for difference (CFD) is a financial contract in which you agree to exchange the difference in the settlement price between the open and closing trades on a particular asset. CFDs enable traders and investors to speculate on whether a market will go up or down, and profit from the price movement without owning the underlying asset.
  • Controlled risk
    Controlled risk is where the amount of risk on a trade is capped at a certain level, typically through a guaranteed stop-loss order. This enables you to set the maximum possible amount you can lose on a trade, giving you full control of your risk.
  • Convergence of mas
    A technical observation that describes moving averages of different periods moving towards each other, which generally forecasts a price consolidation.
  • Corporates
    Refers to corporations in the market for hedging or financial management purposes. Corporates are not always as price sensitive as speculative funds and their interest can be very long term in nature, making corporate interest less valuable to short-term 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.
  • CPI (Consumer Price Index)
    CPI stands for Consumer Price Index. It is the most popular reference for day-to-day inflation. CPI gets calculated as a measurement of price change using a weighted average basket of consumer goods and services purchased by households.
  • Crater
    The market is ready to sell-off hard.
  • Crown currencies
    Refers to CAD (Canadian dollar), Aussie (Australian dollar), Sterling (British pound) and Kiwi (New Zealand dollar) – countries off the Commonwealth.
  • Currency
    Currency is the money underpinned by the legal tender system unique to a particular country or economic area. Currency gets used as a medium of exchange for goods and services.

    Currency in the form of paper or coins gets issued by governments and central banks and is usually accepted at face value as a payment method.
  • Currency pair
    A currency pair is a price quote of the exchange rate for two different currencies traded in FX markets: known as the base currency and the quote currency. The exchange rate of a currency pair indicates how much of the quote currency is needed to purchase one unit of the base currency.
  • Currency risk

    Currency risk is the danger of losing capital due to changes in forex prices. In the context of trading, this is the risk to a trader’s portfolio if currency markets experience strong price changes.

    Trading forex itself can be risky, but it’s not just the forex markets that can be directly affected by currency risk.

    Due to the interconnectivity of the financial markets, a significant price change in one currency can impact several other currencies, or even other markets such as shares, indices or gold. Imagine you’ve bought gold in USD. If a Federal Reserve interest rate decision causes a depreciation of the dollar, you will lose money on your position as a result of currency risk.

  • Currency symbols
    A three-letter symbol that represents a specific currency. For example, USD (US dollar).
  • 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 the key component to the current account.