Forex

  1. What is forex?
    – The foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world. You buy one currency and sell another.
  2. When can it be traded?
    – It can be traded 24 hours a day from Monday-Friday.
  3. Why it is risky?
    – It is risky because if your prediction is wrong you can loose money very fast.
  4. What is liquidity?
    – Liquidity is how much money if flowing through the market at any one time i.e. hoe many traders are trading and their total volume. Average daily volume is $5.3 trillion.
  5. What is leverage?
    – The use of credit or loans to enhance speculation in the financial markets. Suppose, for example, that you take the $1,000 in your bank account to your stock broker and purchase $1,000 worth of stocks, bonds, or whatever. A leveraged purchase would let you use your $1,000 to buy, let’s say, $10,000 worth of stocks or bonds. The remaining $9,000 of the purchase price comes from a loan.
  6. What are 4 potential currencies that you would be interested in learning/trading?
    – USD, CAD, EUR and AUD.
  7. What are 6 steps to managing risk?
    Determine Your Risk Tolerance
    Customize Your Contracts
    Determine Your Timing
    Avoid Weekend Gaps
    Watch the News
    Make It Affordable
  8. What is selling short?
    – Short selling is the sale of a security that is not owned by the seller or that the seller has borrowed. Short selling is motivated by the belief that a security’s price will decline, enabling it to be bought back at a lower price to make a profit.
  9. What are trading orders?
    – Orders are critical tools for any type of trader and should always be considered when executing against a trading strategy. Orders can be used to enter into a trade as well as, help protect profits and limit downside risk.
    Market: A market order is the most basic order type and is executed at the best available price at the time the order is received.
    Limit: A limit order is an order to buy or sell at a specified price or better.
    Stop: A stop order triggers a market order when a predefined rate is reached.
    Trailing Stop: A trailing stop is a stop order that is set based on a predefined number of pips away from the current market price.
    Contingent Orders: Contingent orders combine several types of orders and are used to execute against a specific trading strategy.
    If/Then: An if/then order is a set of two orders with the stipulation that if the first order (known as the “if” order) is executed, the second order (the “then” order) becomes an active, unassociated, single order.
    If/Then OCO: An if/then OCO provides that if the first order (the “if” order) is executed, the second order (the “then” order) becomes an active unassociated one-cancels-other (OCO) order.