Trading Jobs Forex Trader Training 2 — Questions and Answers
Question 1: A forex pair quote of EUR/USD = 1.0850 means what?
- 1 euro buys 1.0850 US dollars (Correct answer)
- 1 US dollar buys 1.0850 euros
- The pair lost 1.0850%
- The spread is 1.0850 pips
Correct answer: 1 euro buys 1.0850 US dollars
In a quote the base currency (EUR) equals the number of quote-currency (USD) units shown.
Question 2: If EUR/USD moves from 1.1000 to 1.1004, how many pips is that?
- 4 pips (Correct answer)
- 40 pips
- 0.4 pips
- 400 pips
Correct answer: 4 pips
For most pairs a pip is the fourth decimal place, so a 0.0004 move equals 4 pips.
Question 3: What does a trader's stop-loss order do?
- Closes a position once losses reach a set level (Correct answer)
- Guarantees a profit target
- Increases leverage automatically
- Doubles the position size
Correct answer: Closes a position once losses reach a set level
A stop-loss automatically exits a trade at a predefined adverse price to cap losses.
Question 4: Leverage of 100:1 means a $1,000 margin controls how much position size?
- $100,000 (Correct answer)
- $10,000
- $1,000,000
- $1,000
Correct answer: $100,000
100:1 leverage lets each dollar of margin control 100 dollars of position value.
Question 5: Which session typically has the highest forex liquidity?
- London–New York overlap (Correct answer)
- Sydney open
- Tokyo lunch hour
- Weekend hours
Correct answer: London–New York overlap
The London and New York session overlap concentrates the largest trading volume and tightest spreads.
Question 6: What is the 'spread' in forex trading?
- Difference between bid and ask price (Correct answer)
- The total daily price range
- The leverage applied to a trade
- The overnight interest charge
Correct answer: Difference between bid and ask price
The spread is the gap between the buy (ask) and sell (bid) prices, representing a trading cost.
Question 7: A 'long' position in USD/JPY profits when?
- USD strengthens against JPY (Correct answer)
- JPY strengthens against USD
- Both currencies weaken equally
- Volatility falls to zero
Correct answer: USD strengthens against JPY
Going long means you profit if the base currency (USD) rises against the quote currency (JPY).
Trading Jobs Forex Trader Training 2
A forex pair quote of EUR/USD = 1.0850 means what?