Trading Glossary Explained

Trading is a complex process, which includes many actions that a person unfamiliar with the financial world will find puzzling. Once you launch your trading career, you will be swamped with trading terms whose meaning you will not know. You will not immediately grasp how the market value of a business differs from its book value. Nor will you understand what CPI stands for and how it is different from IPO, unless we supply you with a glossary of all confusing terms that you meet in a trading business.

To help you avoid confusion, we have compiled a comprehensive glossary of financial terms used at the markets. All trading glossary is presented in our glossary in the alphabetical order and is explained with linguistic precision. Any financial term that sounds baffling to you now will become crystal clear once you read its definition in our glossary below.

All | # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
There are currently 15 names in this directory beginning with the letter C.
Call Option
It is a contract that gives a buyer the right to buy a specific asset at a specific price on a specific date of expiry. The buyer is never obliged to do this, however. The value of a call option appreciates, if the asset’s market price goes up.
Candlestick Chart
A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, this area of the chart is not shaded.
Cash Flow
This is the amount of money coming into and going out of company’s accounts. It is reported in the company’s earnings announcements.
Closing Price
This is the last level at which an asset was traded before the market closed on any given day. Closing prices are used as a marker, when the assets’ movements over a longer period of time are evaluated.
Collateral
This is an asset given to secure a loan or as a guarantee of performance.
Commission
It is the charge which an instrument broker levies for making traders on a trader’s behalf.
Commodity
It is a basic physical asset, used as a raw material in the production of goods or services. In trading, commodities are of four types: metals, energy, agricultural, and livestock. The most common examples of commodities traded these days at financial markets are oil, natural gas, gold, silver, platinum, grains, and beef.
Contracts for Difference (CFDs)
This is a type of financial derivative used in CFD trading. they are used to trade a variety of financial markets like shares, foreign exchange, commodities, indices, and bonds.
Counter Currency
This is the second currency listed in a currency pair.
CPI
This is a Consumer Price Index, an average of several consumer goods and services used to give an indication of inflation.
Currency
This is any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Currency Option
It is a type of option contract that gives the holder the right to buy or sell a currency pair at a given price before a set time of expiry. The buyer is not obliged to do so, however. The holder of the option pays a premium to the seller.  
Currency Pair
These are the two currencies that make up a foreign exchange rate. For example, EUR/USD (Euro/U.S. Dollar).
Current Account
This is the sum of the balance of trade (exports minus imports of goods and services), net factor income (interest and dividends), and net transfer payments (foreign aid). The balance of trade is typically the key component to the current account.
Current Ratio
It is a measure used to establish a company’s ability to sell its tangible assets to pay off its short-term debt. The current ratio is useful in establishing the liquidity position of a business.
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