Financial Dictionary

Cable is the market nickname for the GBP/USD exchange rate. It dates from the 19th century, when the rate was sent between London and New York by a transatlantic cable.

The CAC 40 tracks 40 of the largest companies listed on Euronext Paris. Luxury goods, energy and banking groups carry heavy weights in the index.

A candle wick, or shadow, is the thin line above or below a candlestick's body, showing the high and low of the period. Long wicks show that price was pushed away from those levels.

A candlestick chart shows each period's open, high, low and close as a candle with a body and wicks. The body's colour shows whether price closed higher or lower than it opened.

Capital expenditure is money a company spends on long term assets such as buildings, machinery and technology. Rising capex can signal confidence in future growth.

A capital gain is the profit from selling an asset for more than it cost. How capital gains are taxed depends on local rules, so traders should check their own position.

Capitulation is a burst of heavy selling when many holders give up and sell at any price. It is sometimes seen near the bottom of a decline, though it is only clear in hindsight.

Cardano is a proof of stake blockchain, and ADA is its native token. It is used to pay fees and to stake on the network.

A carry trade means borrowing in a currency with a low interest rate and holding a currency with a higher rate to earn the difference. It can unwind sharply if the higher yielding currency falls or rate expectations change.

Cash flow is the money moving into and out of a company over a period. Positive cash flow shows a business can fund its operations, debts and dividends.

A central bank manages a country's money supply and interest rates and oversees its banking system. Its rate decisions and guidance are among the biggest drivers of currency and bond markets.

Chaikin Money Flow measures buying and selling pressure by combining price and volume over a set period, usually 20 or 21 days. Values above zero suggest buying pressure and values below zero suggest selling pressure.

A channel is formed by two parallel trendlines that contain price movement, sloping up, down or sideways. Traders use the upper and lower lines as possible resistance and support.

A chart pattern is a recognisable shape formed by price movements, such as a triangle, flag or head and shoulders. Traders use patterns to anticipate whether a trend will continue or reverse, though none works every time.

The FTSE China A50 tracks 50 of the largest companies whose A shares trade on the Shanghai and Shenzhen exchanges. It is a widely used guide to mainland Chinese stocks.

A choppy market moves up and down without a clear direction. Trend following strategies tend to struggle in it, as signals often reverse quickly.

A circuit breaker is a temporary halt in trading that an exchange triggers when prices fall or rise too far, too fast. It gives the market time to absorb news and limits panic selling.

Client money protection refers to rules that require providers to keep client funds separate from their own money. It is meant to protect traders' funds if the firm gets into difficulty.

The closing price is the last price at which an asset trades in a session. Many indicators and charts are based on closing prices.

Cocoa is the bean used to make chocolate, traded as a futures contract in New York and London. Most supply comes from West Africa, so weather and crop disease there drive prices.

A commission is a fee a provider charges for carrying out a trade, either as a fixed amount or a percentage of trade value. It is charged on top of the spread, where one applies.

A commodity is a raw material or primary product, such as oil, gold, wheat or copper, that is traded in standard quantities. Prices respond to supply, demand, weather, politics and the US dollar.

The Commodity Channel Index measures how far price has moved from its statistical average. Readings above 100 suggest strong upward momentum or overbought conditions, and readings below minus 100 suggest the opposite.

A commodity currency belongs to a country whose economy relies heavily on exporting raw materials, such as the Australian dollar, Canadian dollar or Norwegian krone. These currencies often move with prices of the goods those countries export.

Compounding is when gains are reinvested so that later returns are earned on both the original amount and previous gains. Losses compound too, which is why large drawdowns are hard to recover from.

Confirmation bias is the tendency to look for information that supports an existing view and ignore what contradicts it. It can lead traders to hold losing positions too long.

Consolidation is a period when price moves sideways within a range, as buyers and sellers are in balance. It often comes before a breakout in either direction.

Consumer confidence measures how optimistic households feel about the economy and their own finances. Higher confidence usually points to stronger spending.

The Consumer Price Index measures the change in prices of a basket of goods and services that households buy. It is the main gauge of inflation and can move interest rate expectations, currencies and stocks.

Contango is when futures contracts for later delivery trade at higher prices than nearer contracts or the spot price. It is common in commodities with storage costs, and it can add a cost when positions are rolled forward.

A continuation pattern is a chart pattern that suggests the existing trend will resume after a pause. Flags, pennants and some triangles fall into this group.

A contract for difference is an agreement to exchange the difference in an asset's price between when a position opens and when it closes. Traders can go long or short without owning the asset, and because CFDs use leverage, losses can build quickly.

Contract size is the amount of the underlying asset that one CFD or futures contract represents, such as 100,000 units of currency or one barrel of oil. It determines how much each price movement is worth.

A convertible bond is a corporate bond that the holder can swap for a set number of the company's shares. It pays a lower coupon in return for that option.

Copper is an industrial metal used in wiring, construction and electric vehicles. Because demand tracks industrial activity, its price is often seen as a guide to global growth.

Core inflation measures price changes excluding volatile items such as food and energy. Central banks watch it closely because it shows the underlying trend more clearly.

The core PCE price index measures changes in US consumer prices excluding food and energy, based on personal consumption expenditures. It is the Federal Reserve's preferred inflation measure.

Corn is one of the most widely traded agricultural commodities, used for food, animal feed and ethanol. US crop reports and weather in the growing season move its price.

A corporate action is an event a company carries out that affects its shares, such as a dividend, stock split, rights issue or merger. CFD and share positions are usually adjusted to reflect it.

A corporate bond is a bond issued by a company to raise money. It usually pays a higher yield than a government bond because the risk of default is higher.

A correction is a fall of about 10% to 20% from a recent high. It is shorter and shallower than a bear market and can happen within a longer uptrend.

Correlation measures how closely two assets move together, on a scale from minus 1 to plus 1. Holding highly correlated positions can multiply risk, because they tend to win or lose at the same time.

Cotton is a soft commodity traded as a futures contract in New York. Demand from textile makers and weather in major growing countries drive its price.

A coupon is the interest a bond pays, expressed as a percentage of its face value. A bond with a 5% coupon and a face value of 1,000 pays 50 a year.

A credit rating is an agency's assessment of how likely a borrower is to repay its debt, shown as a grade such as AAA or BBB. A downgrade can raise borrowing costs and push bond prices lower.

A credit spread is the difference in yield between a corporate bond and a government bond with the same maturity. Wider spreads signal that markets see more risk of default.

A cross currency pair is a pair that does not include the US dollar, such as EUR/GBP or AUD/JPY. Spreads on crosses are often wider than on the major dollar pairs.

A crossover is when two lines on a chart cross, such as a fast moving average crossing a slow one. Traders often treat crossovers as buy or sell signals, though they can lag in choppy markets.

Crude oil is unrefined petroleum and the most heavily traded commodity in the world. Brent and WTI are the two main price benchmarks.

Crypto mining is the process of using computers to validate transactions and add new blocks to a proof of work blockchain. Miners earn newly created coins and fees in return.

A crypto whale is an individual or entity holding a very large amount of a cryptocurrency. Large transfers by whales can move prices.

A cryptocurrency is a digital currency that runs on a blockchain rather than being issued by a central bank. Prices are highly volatile and can move sharply on regulation, sentiment and liquidity.

A cup and handle is a bullish chart pattern with a rounded bottom followed by a small, shallow pullback. A break above the top of the handle is read as a buy signal.

Currency intervention is when a central bank buys or sells its own currency to influence the exchange rate. It can cause sudden, sharp moves.

A currency pair shows the price of one currency in terms of another, such as EUR/USD. The first is the base currency and the second is the quote currency.

A currency peg is a policy of fixing a currency's exchange rate to another currency or a basket of currencies. The Hong Kong dollar, for example, is held within a narrow band against the US dollar.

The current account records a country's trade in goods and services plus income and transfers with the rest of the world. A persistent deficit means the country relies on foreign capital, which can weigh on its currency.

The current ratio divides a company's current assets by its current liabilities. A ratio above 1 suggests it can cover its short term debts.

Cyclical stocks are shares in companies whose earnings rise and fall with the economy, such as carmakers, airlines and banks. They tend to do well in expansions and poorly in recessions.