Forex Quiz

[Julia Dodoo]

Belowis a small sample of the forex quiz published in Forex for Ambitious Beginners. Fill out the answers in the form on the right side and you'll receive the results within 48 hours. Do you have any questions about the quiz? Don't hesitate to contact us.

A The original Heinz Sandwich Spread, often simply called 'The Spread'.

B The difference between bid and ask price of a currency pair.

C The difference between the stop loss and the profit target.

D An erotic police film from the 1980s.

Question 7 You are a beginning trader and have put on a position to speculate on the euro going higher. You have set your stop loss at 30 pips. After about half an hour the trade is very close to your stop loss, but you have a feeling the price will still make a turn for the better. What do you do?

A A successful trader trades on instinct. Listen to your gut and move that stop loss down to give the trade more room.

B See if there are news events supporting your gut feeling. If so, move up the stop loss. If not, only move the stop loss if your gut feeling is unchanged.

C Nothing.

D Open a second trade, with the same target as the first. Leave the stop loss of the first trade unchanged

A Chase the breakout when your stop loss is triggered.

B Use stop losses that are too tight.

C Lose sight of the actual price development.

D Put on a trend trade with another currency pair.

A Never risk more than 10 percent of your trading capital.

B Never risk more than 20 percent of your trading capital.

C To have at least 10 times the trading capital needed to produce 1 winning trade on average.

D To have at least 20 times the trading capital needed to produce 1 winning trade on average.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Explanation: In the Fixed system the government maintains their exchange rate fixed either against gold or some other currency. Under the Clean floating system, exchange rate is freely determined by the market forces of demand and supply of foreign exchange with no interference by the central authority.

9. What is the nominal exchange rate? Number of units of domestic currency, one must give up to get an unit of foreign currency Price of foreign currency in terms of domestic currency Ratio of foreign to domestic prices, measured in the same currency Both a and b Ans. d

Explanation: Nominal exchange rate is the total number of units of domestic currency, anyone must give up to get one unit of foreign currency. Simply it refers to the price of foreign currency in terms of domestic currency.

Explanation: Devaluation is the fall in the value of domestic currency compared to foreign currency as planned by the Central Bank when exchange rate is not determined by forces of demand and supply under a fixed exchange rate system.

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Day Trading Buying Power is given to margin accounts that have completed more than 3 day trades in a 5 rolling business day period, and have a start of day margin equity value of over $25,000. If this occurs, your account will generally show a day trade buying power (DTBP) value.

Yes, to access this information, go to Monitor > Account Statement > Account Summary. Your monthly accrued interest is the difference between your Available Funds For Trading and your Option Buying Power as long as your funds are cleared for options trading.

Yes, the Analyze tab is a great resource to simulate potential trades to see how they may impact overall margin requirements prior to placing a trade. In addition, you can calculate theoretical max profit, max loss, breakeven points, as well as the Greeks.

Yes, to access it go to the Education Tab > Learning Center. In the Learning Center you can navigate to the thinkManual to learn about each tab on our platform. In addition, you can navigate to the Technical Analysis section to find in depth descriptions for Studies, Drawings, Patterns, and our proprietary programming language thinkScript.

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction for his or her own particular situation.

Market volatility, volume and system availability may delay account access and trade executions.

Investing involves risk including loss of principal. Past performance of a security or strategy is no guarantee of future results or investing success.

Trading stocks, options, futures and forex involves speculation, and the risk of loss can be substantial. Clients must consider all relevant risk factors, including their own personal financial situation, before trading. Trading foreign exchange on margin carries a high level of risk, as well as its own unique risk factors.

Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled "Characteristics and Risks of Standardized Options." Supporting documentation for any claims or statistical information is available upon request.

Multiple leg options strategies will involve multiple commissions.

Forex trading involves leverage, carries a high level of risk and is not suitable for all investors. Please read the NFA booklet Trading Forex: What Investors Need to Know prior to trading forex products.

Commodity interests and cash in futures accounts are not protected by SIPC. Futures trading involves a high level of risk and is not suitable for all investors. Certain requirements must be met to trade futures. Please read Risk Disclosure Statement for Futures and Options before considering any futures transactions.

Charles Schwab Futures and Forex LLC, a CFTC-registered Futures Commission Merchant and NFA Forex Dealer Member. Charles Schwab Futures and Forex LLC is a subsidiary of The Charles Schwab Corporation.

The reason all your trades start out slightly negative is due to the spread, which is the difference between the bid (sell) price and ask (buy) price in the market. If you buy to open a trade, then you must sell to close it. If you sell to open a trade, then you must buy to close it.

Therefore, you must overcome that price difference in order to break even on your trade. The spread varies from one currency pair to another based on liquidity and market conditions. As an example, you can see our live spreads

Going through your threads what seems to me the reason is your spreads. If you have learnt well about trading then you will get that spreads are the difference between the sell and buying price. Most of the trader like earn very good profit but for not having lowest trading spreads it gives negative result. So, if you overcome your spreads to lowest I guess your problem will solve out.

If your forex broker is not a market maker themselves, that only means they must offset your trades with another firm that is a market maker. This is because market makers perform a vital function, not only in forex, but in other financial markets, including the major futures and stock exchanges.

The cornerstone of the NYSE market model is the Designated Market Maker (DMM). DMMs have obligations to maintain fair and orderly markets for their assigned securities. They operate both manually and electronically to facilitate price discovery during market opens, closes and during periods of trading imbalances or instability. This high touch approach is crucial for offering the best prices, dampening volatility, adding liquidity and enhancing value.

DMMs apply their market experience and judgment of dynamic trading conditions, macroeconomic news and industry-specific intelligence, to inform their decisions. A valuable resource for our listed company community, DMMs offer insights, while making capital commitments, maintaining market integrity, and supporting price discovery.

Since market makers provide a valuable service used by retail traders and retail ECN brokers alike, rather than trying to avoid market makers altogether, it would be more productive to identify the reputable ones. For example, forex brokers regulated in the US are required to adhere to strict rules governing their finances and trade execution. Below is a quote from the CFTC site:

The final rules include financial requirements designed to ensure the financial integrity of firms engaging in retail forex transactions and robust customer protections. For example, FCMs and RFEDs [retail foreign exchange dealers] are required to maintain net capital of $20 million plus 5 percent of the amount, if any, by which liabilities to retail forex customers exceed $10 million. Leverage in retail forex customer accounts will be subject to a security deposit requirement to be set by the National Futures Association within limits provided by the Commission. All retail forex counterparties and intermediaries are required to distribute forex-specific risk disclosure statements to customers and comply with comprehensive recordkeeping and reporting requirements.

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