Cable
Nickname for the Great Britain Pound.
Candlestick Charts
This is a form of price presentation similar to bar charts which is used to identify localized price patterns that represent market psychology that Japanese originated in the 1600s to analyze the price of rice contracts. As with bar charts, Candlestick charts use an open, high, low and close in which the high and low are plotted as a single vertical line while the range between the open and the close is plotted as a rectangle and is referred to as the body. The lines above and below the body are referred to as “shadows”. If the close is above the open, the body is white. If the close is below the open, the body is black.
Capital Account
Measures short and long-term movements of financial assets between countries.
Capital Risk Limit
Limits on the amount of trading capital that is risked.
Central Bank
Controls a country’s money supply and is responsible for monetary policy and the maintenance of financial stability within a country. The U.S. Federal Reserve Bank is an example of a central bank.
Channel
Used to identify price resistance or support areas for short-term profit taking and to initiate positions. Channels are formed by drawing a standard trendline with a parallel line. In the case of an uptrend the parallel line runs along price highs forming a channel; in the case of a downtrend the parallel line runs along price lows.
Channel Line
A line parallel to the standard trendline that shows potential areas of price resistance or support.
Chart-Based Stops
Signal when to exit a trade, often by a break in a trendline, moving average, or other key measure of support or resistance.
Closed Trades
Signal when to exit a trade, often by a break in a trendline, moving average, or other key measure of support or resistance.
Commercial Banks
Signal when to exit a trade, often by a break in a trendline, moving average, or other key measure of support or resistance.
Commission
Brokerage fees.
Comparative Relative Strength
This is a method of measuring the relative performance of one price against another. It is normally used to compare the performance of one price item against its index or to another item.
Congestion Area or Pattern
A sideways trading range with no follow through buying or selling. It is generally characterized by short, sharp movements in price that are then reversed in a choppy, volatile manner. These will often provide support or resistance once price has broken away from the pattern.
Consolidation
A leveling off of prices, often after a swift price move up or down. Consolidation is generally comprised of one of a range of price patterns such as triangles, flags or pennants representing a pause or correction in the current trend of the market.
Continuation Patterns
Price patterns associated with market pauses or price consolidations. Continuation patterns are created by sideways price action that often narrows as the market consolidates. Continuation patterns have names like their shapes; wedges, triangles or flags. (See Congestion Area of Pattern.)
Contract
A standard trading lot, typically 100,000 units of the base currency.
Coppock
Developed by Edwin Sedgwick Coppock in 1962 as a long-term price momentum indicator for the Dow Jones Industrial Average or any other index.
Correction
A retracement of the previous major trend. When prices climb or fall too far too fast, a market often retraces part of the trend move. This situation is described as a market correction. Often the degree of the retracement is measured utilizing a Fibonacci Ratio.
Corrective Wave
Corrective waves are those that form corrective patterns against the main direction of the trend. For example, wave 2 corrects wave 1 and wave 4 corrects wave 3. Once a 5-wave pattern has been completed there will be a simple, or complex, correction of the entire move that will develop as a single or multiple three-wave move. The numbered phase of A-B-C waves are also corrective.
Correlation Coefficient
This is a measurement of the relationship between two variables that varies between +1 (highly correlated) and -1 (highly uncorrelated).
Counter Trend
A minor trend move that runs against the direction of the underlying major trend.
Cover
To close out a foreign currency trading position.
Credit Spread
The difference in value of two options, where the premium of the option sold exceeds the cost of the option purchased.
Cross Rate
An exchange rate between two non-U.S. Dollar currencies. Popular cross rate currency pairs include EUR/GBP, EUR/JPY and AUD/CAD.
Cup and Handle
A period of accumulation observed as a price pattern on bar charts that lasts from seven to 65 weeks. The initial price pattern is the shape of a cup or shallow ‘U’. The handle typically lasts for just one or two weeks. The handle is a slight retracement of the last rally with low trading volume during the right-hand side of the formation.
Currency
Foreign Currency (see Currency Pairs). Paper money or banknotes. Also the section of a trading screen that provides currency reference information, such as the high and low prices for a trading day.
Currency Nicknames
Many currencies and currency pairs are referred to by shortened versions of their names, or by nicknames. Examples include: Sterling, Pound & Cable (for Great Britain Pound), Kiwi (for the New Zealand Dollar), Aussie (for the Australian Dollar), Euro (for the European Currency).
Currency Pairs
FX trading is always conducted using currency pairs, with one currency priced in terms of another. The first currency in the pair is called the base or traded currency; the second currency is called the pricing or quote currency.
Currency Prices
In FX, currencies are priced in pairs. The first currency shown in the pair is referred to as the base or traded currency, and the second is the pricing or quote currency.
Current Account
The net result of a country’s Trade Balance and its Services Account.
Curve-Fitting
The process during the development and testing of a mechanized system where rules are created that map every event in the historical data of a security. However, since these are not applied to a previously untested section of data history the risk is for losses to occur due to the failure to ensure the system’s rules are not generic. The rules are accurate in hindsight only.
Cycle
A repetitive wave form that attempts to measure the time measurements of price highs to price highs, price lows to price lows and price highs to price lows.