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Trading Glossary: C

These are common terms used in the financial services industry


A term referring to the sterling/US dollar exchange rate: the rate was originally transmitted between the London and New York exchanges via the transatlantic telegraph cable beginning in the mid-1800s, hence the name.

CAC 40

A market capitalisation weighted index of the largest 40 companies listed on the Paris stock exchange. The CAC index is published by the Societe des Bourse Francaises.

Candlestick chart

As with a bar chart, this graph shows the high, low, opening and closing prices, and the shape of the candle reflects the relationship between these prices. The candles are either green or red, depending on whether the closing price is higher than the opening price (green) or below it (red). The main body, or ‘wax’, represents the range between the opening and closing price and the ‘wicks’ show the highs and lows. It shows a visual representation of the prevailing trend and current market sentiment.


The wealth, either monetary or in assets, owned by an individual or company.

Carry cost

The cost incurred as a result of holding a position (e.g. The carry cost incorporated into the price of a commodity future consists of insurance costs, storage costs, interest charges and other related costs).

Carry trade

A strategy in which a trader sells a certain currency with a low interest rate and uses the funds to purchase a different currency yielding a higher interest rate, attempting to capture the difference between the rates. Common low yielding currencies include the USD and JYP and common high yielding currencies include the AUD and NZD.

Cash market

The actual, underlying market on which derivatives contracts are based.

Cash price

The price of an asset for immediate delivery. In other words, the actual price of an instrument right now. This term is often used for stock indices, whereas the synonymous term of spot is more often applied to forex and commodity prices. Also see Spot rate.

Central bank

A government or quasi-governmental organisation that manages a country's monetary policy. For example, the UK’s central bank is the Bank of England, and the US central bank is the Federal Reserve.


An upward or downward trend on a chart where the boundaries are marked by two straight lines. A break above or below the channel lines signals a potential change in trend.


A range of techniques that use past price charts, along with other indicators, to anticipate future price movements.

Close out

Selling a buy position or buying back a sell position, which closes the position, so that you no longer have any exposure to changes in the market price.

Closed position

An equal and opposite transaction (for instance buying 1000 BT shares then selling 1000 BT shares) which results in the position automatically being closed.

Closing price

The closing price is the last price for a tradable instrument at the time the market closes.


A fee charged by a broker or agent for carrying out transactions/orders.


A physical good, such as food, metal or fuel, that is interchangeable with other commodities of the same type. The quality of a commodity may differ slightly, but it is basically uniform across all producers, as any commodities that are traded on an exchange must meet specific minimum standards. A commodity is any basic good that investors can ‘buy’ or ‘sell’. Some popular commodities include: crude oil, coffee, gold, natural gas, silver, corn, sugar, cotton and wheat.

Consumer Price Index (CPI)

An index that measures changes in the price of goods and services purchased by consumers. The figure measures the average change over time in the price of a sample of various common goods and services purchased by typical urban households.


A situation where the futures price of a product is above the expected future spot price. Also see Backwardation.

Contract (unit or lot)

The standard trading unit on certain exchanges. For stock index, forex and commodity positions, it is the amount of base currency profit or loss per point movement in the market.

Contract for difference (CFD)

Contracts for difference (CFDs) are derivative products which enable you to trade on the price movement of underlying financial assets (such as indices, shares and commodities). A CFD is an agreement to exchange the difference in the value of an asset from the time the contract is opened until the time at which it is closed. With a CFD, you never actually own the asset or instrument you have chosen to trade, but can still benefit from, if the market moves in your favour.

Controlled risk

A position which has a strictly limited maximum loss by virtue of a guaranteed stop. Also see Limited risk.

Core inflation

A measure of inflation that excludes items that are subject to volatile price movements. Vegetable prices are an example of items where prices fluctuate widely based on seasonal conditions. These products are excluded from the calculation as they can give a false measure of inflation because prices can diverge from the overall trend.

Corporate Action

Any event initiated by a corporation which impacts its shareholders. For some events, shareholders may or must respond to the corporate action or select from a list of possible actions. Examples of corporate actions include dividend payments, mergers, rights issues and stock splits. Also see Dividend and Rights issue.

Cross currency

A pair of currencies traded in forex that do not include the US dollar, for example EUR/JPY.

Cross rate

An exchange rate between two currencies, both of which are not the official currency of the country in which it is quoted. Also refers to currency quotes that don’t involve the US dollar.

Crossed price

A situation where the bid price exceeds the offer price. This is usually indicative of an issue on the venue or of the market being in an auction period.

Currency pair

Refers to the price quotation of currencies traded in the foreign exchange market. To determine the value of a currency, it must be compared to the currency of another country (example GBP/USD). In currency pairs, the price amount shows how much of the second currency is required to buy one unit of the first currency.