Glossary - C

Trading terms that begin with the letter C

Cable
What Does Cable Mean?

Slang used among forex traders referring to the exchange rate between the U.S. dollar and the British pound sterling. Because it is the norm in forex for most major currencies to be quoted against the U.S. dollar on a regular basis, "cable" is a commonly used term.

"Cable" can also be used to refer simply to the British pound sterling.

Closing Price
What Does Closing Price Mean?

The final price at which a security is traded on a given trading day. The closing price represents the most up-to-date valuation of a security until trading commences again on the next trading day.

Commission Broker
What Does Commission Broker Mean?

Someone who gets paid by the brokerage company for which he works for each order of securities he executes on a customer's behalf. The commission structure can encourage unethical behaviour by unscrupulous commission brokers. For example, a dishonest commission broker may engage in a practice called churning, which means executing multiple trades in a customer's account for the sole purpose of generating more commissions. The additional trades do not benefit the customer.

A broker who charges a flat fee for his or her services rather than earning a commission based on order size has more incentive to put the customer's best interest first. A flat-fee broker will not have an incentive to push a customer into certain securities because they are paying a high commission. Instead, he or she will have an incentive to get the customer into the best-performing investments so the customer will be loyal to that broker and be a steady source of business.

Contagion
What Does Contagion Mean?

The likelihood that significant economic changes in one country will spread to other countries. Contagion can refer to the spread of either economic booms or economic crises throughout a geographic region.

Contagion has become a more prominent phenomenon as the global economy has grown and economies within certain geographic regions have become more correlated with one another. An infamous example is the "Asian Contagion", which occurred in 1997 and started in Thailand. The economic crisis in Thailand spread to bordering Southeast Asian countries and then eventually spilled over to Latin America.

Churning
What Does Churning Mean?

  1. An unethical practice employed by some brokers to increase their commissions by excessively trading in a client's account. This practice violates the NASD Fair Practice Rules. It is also referred to as "churn and burn", "twisting" and "overtrading".
  2. A period of heavy trading with few sustained price trends and little movement in stock market indexes.

Crash
What Does Crash Mean?

A major decline in a financial market.

Credit Crisis
What Does Credit Crisis Mean?

A crisis that occurs when several financial institutions issue or are sold high-risk loans that start to default. As borrowers default on their loans, the financial institutions that issued the loans stop receiving payments. This is followed by a period in which financial institutions redefine the riskiness of borrowers, making it difficult for debtors to find creditors.

Cross Currency
What Does Cross Currency Mean?

A pair of currencies traded in forex that does not include the U.S. dollar. One foreign currency is traded for another without having to first exchange the currencies into American dollars

Cross Rate
What Does Cross Rate Mean?

The currency exchange rate between two currencies, both of which are not the official currencies of the country in which the exchange rate quote is given in. This phrase is also sometimes used to refer to currency quotes which do not involve the U.S. dollar, regardless of which country the quote is provided in.

Currency Pair
What Does Currency Pair Mean?

The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The first currency of a currency pair is called the "base currency", and the second currency is called the "quote currency". The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.

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