Futures and Forex Glossary Dictionary C1

A popular slang for exchange rate between US dollar and British Pound. Another word for the British Pound Sterling, originating from the fact that dollars/pound sterling exchange rate used to be transmitted through transatlantic cable in the 1800s. Related Terms: Bank of England (BOE)

A call option confers on the investor to ‘call in’ or ‘buy’ a futures instrument at a stipulated price within a pre-ordained period. However it is not obligatory for the investor to do so. Related Terms: Buy-Write,

Currency of Cambodia. One Cambodian Riel is divided into 100 centimes. Cambodia had no monetary system from 1975 to 1980 under Khmer Rouge Regime. Related Terms: Base Currency, Authorized Forex Dealer

Currency of Canada represented by the symbol C$. Each Canadian dollar is made up of 100 cents and is reckoned as a benchmark currency, which means it is kept as reserve currency by other central banks. Related Terms: Base Currency

Bank of Canada estimate of the rate at which major dealers can arrange financing of securities for a term of one business day. A reference interest rate solely for money market accounts, and also reckoned as the weighted average rate of overnight non-specific collateral repo trades.

A price display chart over a period of time denoting the daily high, low, opening and closing prices of a financial instrument such as currency. Related Terms: Bearish Harami, Bullish Harami

A foreign exchange currency position carried overnight entailing a cost of income, which depends on the currency pair having different interest rates for the same period.

Currencies that have high interest rates attributed to them. Example AUD

A combination of order parameters including open orders, take profits and stop losses representative of a carry trading strategy

The holding of two offsetting positions by an investor amongst which one position produces a cash inflow that exceeds the obligations of the other. Related Terms: Arbitrage, Basis Risk

Selling a currency with a low interest rate, and using those funds to buy another currency with a higher interest rate yield, taking advantage of substantial interest rate differentials that could occur depending on leverage. However, uncertainty of interest rate is a risk associated with carry trade.

A futures commission merchant who is a predominantly larger player in the commodities market and who provides trade clearing services to smaller participants. Related Terms: Associated Person, Broker

The difference between the cost of funds to buy a futures instrument and the materialisable yield on that cash futures instrument. Also referred to as ‘carry’ or ‘cost of carry” Related Terms: Carry, Cost of C

The underlying commodity in a futures contract. Example: Coffee is the cash commodity in a coffee futures contract. Interchangeable with “actual’ and ‘spot’ commodity Related Terms: Spot Commo

The market for cash commodities. In these markets you can buy the physical commodities than just the futures contract. Related Terms: At-the-Market

Funds deposited in a forex trading account by a client. These trading accounts are normally kept with forex brokers.

Futures and option settlement method whereby on expiry or in exercise of the terms of the contract, the futures / options seller transfers the cash position and not actual material. Example: In coffee futures, the purchaser need not take ownership of coffee beans but only pays the difference between spot price of coffee and the future price. Related Terms: Approved Delivery Facility