Forex Glossary 3

Forex Glossary (PART 3 )

• Capital Markets
  Markets intended for medium- to long-term investment, such as US government bonds and Eurobonds

•  Central Bank
  A government or organization that manages a country's monetary policy. For example, the US central bank is the Federal Reserve, while others include the ECB, BOE and BOJ
  
  
• Chartist
  An individual who interprets historical data to find trends, predict future movements and aid in technical analysis
   
• Clearing
  The process of settling a trade
   
• Close a Position (Position Squaring)
  To eliminate an investment from one's portfolio by either buying back a short position or selling a long position.

• Commission
  The fee a broker charges for a transaction
   
• Confirmation
  A document exchanged by participants in a transaction that confirms the terms of said transaction
   
• Contagion
  The tendency of an economic crisis to spread from one market to another. For example, in 1997, financial instability caused high volatility in Thailand's domestic currency. This triggered a contagion that affected other emerging East Asian currencies and spread as far as Latin America. This event is now referred to as the "Asian Contagion."
    

Forex-Glossary

• Convertible Currency
  A currency which can be exchanged freely for other currencies at market rates, or gold
   
• Contract (Unit or Lot) 
  The standard unit of trading on certain exchanges.
  
  
• Cost of Carry
  The cost associated with borrowing money in order to maintain a position. It is based on the interest parity, which determines the forward price
   
• Counter party
  The opposite party in a given transaction; eg, the buyer as opposed to the seller or vice versa
   
• Country Risk
  The risk run by a currency trader that a given country's government may intervene in the market (does not include central bank intervention). This may occur during extreme political situations such as war or civil unrest
   
• Credit Checking
  A check performed to be sure both parties have the credit to cover the trade they wish to transact
   
• Credit Netting
  An arrangement that maximizes free credit and speeds the dealing process by reducing the need to constantly re-check credit. Large banks and trading institutions may have agreements to net outstanding deals
   
• Cross Rates
  An exchange rate between two currencies. The cross rate is said to be non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/CHF quote would be considered a non-standard rate; whereas in the UK or Switzerland, GBP/CHF would be one of the primary currency pairs traded
   
• Currency
  A countryâ??s official unit of exchange, issued by its government or central bank, whose value is the basis for trade
   
• Currency Risk
  The risk of incurring loss due to an adverse change in exchange rates