Futures and Forex Glossary Dictionary C2

Entity responsible for the monetary policy of a country. Also called Reserve bank Central Bank has supervisory power over other banks within the country. Related Terms: Reserve Bank

A situation where all market orders are routed to one central exchange, with no competing market whatsoever. Example: The New York Stock Exchange is a centralized market where stocks and securities listed in the exchange represent the only price of the financial instrument available to investors. Related Terms: Alternative Trading System

The formation of a pattern when price data is plotted graphically. These patterns repeat over a period of time and signal either reversal or continuation of trend. So when a pattern is complete, traders can know if the price would move in one direction or the other. Examples: Elliott wave, trend lines, head and shoulder, cup and handle etc.

Compilation of normal, unadjusted, data of specific futures contracts plotted over a period of time in the relevant futures market.

An individual who analyzes past currency prices on a chart and predicts future currency price trends. Also called technical analyst Related Terms: Technical Analyst

A member owned non-profit corporation that provides physical infrastructure for futures and options trading, enforces trading rules, provides clearing house facility and provides market information to its members.

Base unit of modern Chinese currency and commonly refers to the renminbi (CNY). Just as pound and sterling are analogous, so is Yuan and renminbi. Related Terms: China Investment Corporation (CIC)

A market wherein a financial instrument can be bought for the same price as it can be sold. In other words the spread between the bid and ask is zero. This is a rare occurrence indicative of extreme liquidity in the markets. Example: Forex markets where some currencies are traded with miniscule spreads. Related Terms: Ask, Bid, Bid-Ask Spread

The unethical practice of overtrading a client’s futures trading account to accumulate excessive broker commissions Related Terms: Bucket Shop, Bucketin

Practice of initiating trading halts and price limits in the futures and derivatives market during periods of large intra-day market movements to offset panic selling by facilitating a cooling off period. Term coined following the market break of 1987 and also referred to sometimes as ‘collar.’ Related Terms: Black Monday, Coll

The consummation of a trade with the buyer releasing funds and the seller delivering the instrument. If both the buyer and seller do not comply with their part of the bargain the trade does not ‘clear’ and is presumed to have faile

Exclusive foreign currency trade settlement system prevalent in the United Kingdom.

A group of major international banks that operate international wire transfer system to facilitate high value payments.

An individual or institution which is a member of a clearing house. As a corollary, all members of clearing house must be members of the exchange too, and all trades have to be settled through clearing members.

An adjunct to a futures exchange, responsible for the process of matching purchases and sales transacted on the floor of the exchange.

A forex position that has been closed by offsetting a previous open position, to bring to zero the market exposure with respect to that transaction.