Forex Trader Training 1

Question 1

How big is a STANDARD LOT?

Accepted Answer

100,000 currency units

Answer

In Forex trading, a standard lot represents 100,000 units of the base currency. This is a common unit of measurement for trade sizes, with smaller lots like mini lots (10,000 units) and micro lots (1,000 units) also available for traders with smaller capital.

Question 2

Describe LIMIT order.

Accepted Answer

An order to buy or sell at a specific price with no room for negotiation

Answer

A limit order is an instruction to buy or sell a security at a specific price or better. For a buy limit order, the order will only execute at the specified limit price or lower, while a sell limit order will only execute at the specified limit price or higher, ensuring the trader gets their desired price without negotiation.

Question 3

Describe market order.

Accepted Answer

A purchase order placed at the going rate

Answer

A market order is a directive to buy or sell a security immediately at the best available current price. It prioritizes execution speed over a specific price, meaning the trade will be completed as quickly as possible at whatever the prevailing market rate is. This makes it suitable for investors who want to enter or exit a position without delay, accepting the current 'going rate'.

Question 4

What does the REVERSAL pattern's name mean?

Accepted Answer

Double bottom

Answer

In technical analysis, a 'reversal pattern' indicates a change in the direction of a price trend. The 'Double bottom' is a classic bullish reversal pattern, signaling that a downtrend may be ending and an uptrend is about to begin. It forms when the price makes two distinct lows at roughly the same level, with a moderate peak in between.

Question 5

What does having GO LONG actually mean?

Accepted Answer

You purchased the base currency with the expectation that it will increase.

Answer

To 'go long' in trading means to buy an asset, such as a currency, stock, or commodity, with the expectation that its price will increase over time. Traders who go long profit if the asset's value rises, allowing them to sell it later at a higher price. This strategy is based on a bullish outlook for the chosen asset.

Trading Jobs Practice Test

Trading Jobs Practice Test

Forex Trader Training 1