Forex Trading Forex Trading Fundamentals 2

Question 1

What is the 'spread' in Forex trading?

Accepted Answer

The difference between the bid and ask price

Answer

The spread is the difference between the bid (sell) price and the ask (buy) price, representing the broker's primary source of income.

Question 2

Which Forex trading session overlaps with both the Asian and European sessions?

Accepted Answer

London open

Answer

The London open overlaps briefly with the tail end of the Asian session and dominates the European session, creating high liquidity.

Question 3

What does 'going long' mean in Forex?

Accepted Answer

Buying the base currency expecting it to rise

Answer

Going long means buying the base currency of a pair with the expectation that it will increase in value relative to the quote currency.

Question 4

What is a 'margin call' in Forex trading?

Accepted Answer

A broker's request to deposit more funds to maintain open positions

Answer

A margin call occurs when a trader's account equity falls below the required margin level, prompting the broker to request additional funds or close positions.

Question 5

Which of the following best describes a 'cross currency pair'?

Accepted Answer

A pair involving two major currencies but excluding the US Dollar

Answer

A cross currency pair consists of two major currencies that do not include the US Dollar, such as EUR/GBP or AUD/JPY.

Forex Trading Practice Test

Forex Trading Practice Test

Forex Trading Forex Trading Fundamentals 2