101. CME

Chicago Mercantile Exchange

102. Co-Owner

A secondary account holder. See Owner.

103. Collateral

An asset that has value, given to secure a loan.

104. Commission

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

105. Commodities Exchange

An exchange where various commodities and derivatives products are traded, including wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals, and so on. The Chicago Board of Trade and New York Mercantile Exchange are the largest and most well-known commodity exchanges in the world.

106. Commodity Futures Trading Commission

The United States regulatory agency for commodity futures trading (www.cftc.gov).

107. Compound Option

An option for which the underlying is another option. Therefore, there are two strike prices and two exercise dates. Examples include a call on a call or a put on a put.

108. Confirmation

Written statement that acknowledges a trade occurred, providing important information such as date, quantity, price, and total amount involved. On most brokers systems, confirmation is done through pop-up boxes and the activity log.

109. Consumer Price Index

A month to month economic indicator which gauges changes in the cost of living by measuring price changes in a common basket of goods and services that most people use, such as food, clothing, transportation, and entertainment.

110. Contagion

When an economic crisis spreads from one market to another. An example is the fall of the Indonesian Rupiah in 1997 and its subsequent effect on other Asian and Latin economies.

111. Contango

Term used in the futures market to describe an upward sloping forward value curve. An upward sloping curve results when the future price of a commodity is higher than the current or spot price or if the far future price is greater than the near future price. In either case, the commodity is said to be “contangoed”.

112. Continuous Linked Settlement

A means of settling foreign exchange transactions between major banks so as to eliminate settlement risk

113. Contract

A formal agreement to buy or sell a specific amount of a certain currency.

114. Conversion Rate

The value of one currency exchanged for another currency.

115. Convertible Currency

A currency that can be exchanged for another without special permission. Today, most of the currencies which were previously unconvertible are now convertible, such as the Polish Zloty.

116. Copey

Traders’ term for the Danish Krone.

117. Corporate Yields

The return on an investment, usually calculated in percentage terms.

118. CORRA

Canadian Overnight Money Market Rate – The rate used by financial institutions to borrow money to cover a shortage of funds (primarily for end-of-day settlement) from those institutions with a surplus of funds.

119. Correlation

A statistical term that refers to a relationship between two seemingly independent things. In forex for example, one could argue that the Euro and the Sterling have a higher correlation than, for example, the Euro and the Brazilian Real.

120. Correspondent Bank

A foreign bank that performs services for another bank that has no branch in the foreign location. Wiring funds through correspondent banks usually results in higher charges as the correspondent bank’s fees would be deducted from the amount sent.

121. Cost of Carry

The cost of keeping a position open overnight. Each currency has a different interest rate associated with it. You are paid interest on the currency you are long in, and must pay interest on the currency you are short. The difference is the carry, sometimes referred to as the cost of carry. This method of calculating interest rates which is more fair to traders.

122. Counter Currency

The second currency of two in a currency pair. For the EUR/USD, USD is the quote currency. The exchange rate quoted is how many units of the second currency you will receive for one unit of the base currency. See Base Currency.

123. Counterpart

The other party in a forex deal. In online spot forex, the counterparty is the market maker.

124. Counterparty

The other party in a forex deal. In online spot forex, the counterparty is the market maker.

125. Countervalue

In a deal where one buys a currency against the US Dollar, the US Dollar value of the transaction is known as the countervalue.

126. Country Risk

By virtue of economic, political, and geographical factors, some countries are more stable than others. Country risk in reference to forex means the stability of the currency and the creditworthiness of its bonds.

127. Cove

Closing a short position by buying the exact units of the currency that was previously shorted.

128. Covered Call

A call option sold by someone who owns the underlying asset.

129. CPI

See Consumer Price Index

130. Crack Spread

The difference – or profit margin – between the price of a barrel of crude oil and the earnings that can be obtained from the products derived from the barrel of crude.

131. Crawling Peg

A method of exchange rate adjustment in which the rate is fixed/pegged, but adjusted at certain intervals in line with the results of various economic or market indicators.

132. Credit Risk

The risk that a debtor will not repay

133. Cross Currency Contract

A contract to buy or sell one foreign currency in exchange for another foreign currency, neither of which is the US Dollar.

134. Cross Deal

A foreign exchange deal in which neither currency is the US Dollar.

135. Cross-Rate

The exchange rate involved in a cross deal. Quite often, the rate is derived from exchanging one currency for the US Dollar and then exchanging US Dollars for the second currency.

136. Cryptology

The process or science of deciphering coded text or messages.

137. CSR

Client Service Representative

138. Currency

The legal tender for a particular country which is issued by that country’s government.

139. Currency Pair

In a foreign exchange transaction, the two currencies involved. For example, USD/EUR.

140. Currency Risk

For many businesses, the movement of forex rates presents a risk which may erode profits from foreign sources held in foreign currency.

141. Currency Swap

A contract between two counterparties to exchange interest streams from two different currencies and then also exchange the lump sums at a future date.

142. Custodian

A bank (Custodian bank), agent, or other organization responsible for safeguarding an individual’s financial assets

143. Customer

A person that holds an account to trade through the services of a forex dealer

144. D-MARK

See Deutschmark

145. Daily Cut-Off

A particular point in the day chosen by a dealer to demarcate the end of one trading day and the beginning of the next, for administrative and logistical reasons.

146. DAX

Deutsche Aktien Xchange, Germany’s primary stock index

147. Day Order

A buy or sell order to automatically expire at the end of the current trading day

148. Day Trade

A trade that is opened and closed on the same trade date

149. Day Trader

A trader who tries to profit from short-term price movements, often taking and closing a position within the same trade day.

150. Day Trading

The trading style of a Day Trader.

151. Deal Blotter

A list of all the deals that were done in a trading day.

152. Deal Date

The date a transaction is entered.

153. Deal Slip

See Deal Ticket.

154. Deal Ticket

A record of the basic details of a transaction that a dealer keeps, as opposed to the statements that customers receive.

155. Dealer

An individual or firm that buys and sells assets from their own portfolio, acting as a principal or counterparty to a transaction.

156. Dealing Desk

Used loosely as the place where dealers facilitate pricing and executing trades.

157. Dealing Systems

Computer networks that link up banks to create the forex market. Examples of dealing systems are Reuters terminals and Bloomberg machines.

158. Default

A term for breaching a contract

159. Deficit

In economics, when the balance of trades or payments are negative

160. Deflation

A deep and long-lasting decrease in the price of goods and services within an economy. It is the opposite of inflation which is an escalation in prices. An extended period of deflation can lead to a deflationary spiral – this is a decrease in prices resulting from reduced demand for goods and services which leads to lower employment. With fewer people earning wages, demand falls even more and further perpetuates the cycle.

161. Deflator

The equivalent of the effect of inflation when one considers the difference between real and nominal GDP. See Gross National Product.

162. Delivery

Date When a forex contract matures, usually two days after the transaction is entered. In the scope of online forex trading, delivery of the actual currencies is not taken. Rather, profits and losses are credited or debited from one’s account balance.

163. Delivery Risk

Risk where a counterparty is not able to fulfill his side of the deal even though he is willing to do so

164. Depreciation

When the value of a particular currency falls substantially

165. Depth of Market

The volume of buy and sell orders waiting to be transacted for a particular currency pair at a particular point in time

166. Derivative

A financial contract whose value changes in relation to an underlying security. For example, an option changes value according to the asset that underlies it.

167. Desk

See Dealing Desk

168. Details

The information necessary to facilitate a forex transaction. For example, the currency pair, rate, time and date, and the quantity

169. Deutschmark

The former currency of Germany, replaced by the Euro when Germany joined the European Union.

170. Devaluation

When a government allows the value of its currency to weaken in relation to other currencies.

171. Digital Option

See Binary Option

172. Direct Quotation

Quoting in variable units of domestic currency per fixed units of foreign currency.

173. Dirty Float

Exchange rate policy where the value of a currency is allowed to fluctuate, but the central bank will intervene from time to time.

174. Discount Spread

Refers to the situation where the bid price of a forward spread rate is less than the ask price.

175. Discretionary Account

An account where a customer allows the institution to make trading decisions and buy and sell on his or her behalf.

176. Diversified Carry Basket

A portfolio of carry trade positions that is distributed among different carry currencies and funding currencies in order to limit losses in one particular carry trade position.

177. DM

See Deutschmark.

178. Dollar Rate

The amount of foreign currency quoted against one US Dollar. Some currencies are quoted in the amount of US Dollars per foreign currency unit, like the British Pound.

179. Domestic Rates

The interest rates that apply to deposits or borrowing of a particular foreign currency. These rates are similar to those offered within the foreign country to citizens who keep money in deposit accounts.

180. Done

The term used by traders to signal that a contract has been agreed upon.

181. Dot-com boom

The period from roughly 1995 to 2001 that was marked by the founding (and, in many cases, spectacular failure) of a group of new Internet-based companies commonly referred to as dot-coms.

182. Drawdown

The size of a drop in the value of an account from its peak to its low.

183. Durable Goods Order

An economic indicator that marks the change in sales levels of products that have a lifespan of three years or more.

184. Easing

Refers to either a small price decline in a currency or when a central bank engages in monetary policy to spur spending. An example of central bank easing would be lowering of interest rates.

185. ECB

See European Central Bank

186. ECB Conferences

The top functionaries of the European Central Bank (ECB) hold regular press conferences in which they outline Central Bank decisions and concerns.

187. Economic Indicator

A statistic that is used to gauge current economic conditions. See Consumer Price Index and Durable Goods Order as examples.

188. Economic Indicator

A statistic that is used to gauge current economic conditions. See Consumer Price Index and Durable Goods Order as examples.

189. ECU

See European Currency Unit.

190. Effective Exchange Rate

Explanation of a country’s currency strength or weakness entirely on its trade balance.

191. EFT

Electronic Funds Transfer.

192. Either Way Market

A condition in the Euro interbank deposit market where both bid and offer rates for a particular period are the same

193. Elliot Wave Principle

An attempt to explain market activity by ascribing a pattern of eight waves to any complete cycle. The eight wave patterns consists of a five-stage advance and a three-stage correction.

194. EMS

See European Monetary System

195. End of Day Mark to Market

The value of all open positions in a dealer’s book based on the closing market rates. In addition, any profits or losses are recorded.

196. Entity Trading Account

A trading account that does not belong to an individual, but rather to a company that has designated a person to be responsible for its trading decisions.

197. Equities

Ownership interest in a corporation in the form of common stock or preferred stock.

198. Equity

Total assets minus total liabilities; also called net worth.

199. Equity Curve

The value of a trading account graphed over a period of time.

200. Escrow Account

A segregated account where customer money is kept separate from a dealer’s operating funds.