TH » Test: Forex Market Terminology

Test: Forex Market Terminology

Question 01: A currency pair is…

a) The price of one currency in relation to another

b) The combined price of two different currencies

c) The price of two similar currencies

d) The currencies of two allied nations

Question 02: In the currency pair GBP/USD, the base currency is:

a) GBP

b) USD

c) Both

d) Neither

Question 03: A pip is…

a) A unit of price

b) A unit of profit

c) A unit of efficiency

d) A unit of volatility

Question 04: A spread is…

a) The difference between the seller's price and the buyer's price

b) The difference between your stop-loss and target profit

c) In forex trading, the spread is the difference between the quote and the base currency

d) Options A and B

Question 05: Why are charts used in trading?

a) Charts are a visual representation of price movements and are used for analysis

b) Charts are a cheap and simple means of influencing price maneuvers

c) Charts provide an insight into the formation of potential price patterns

d) Options A and B

e) Options A and C

Question 06: What information does a Japanese candlestick chart not provide?

a) The opening price, the maximum price, the minimum price, and the closing price for a specific period

b) Whether demand and supply for the asset are rising or falling

c) Whether you will reach your profit or stop-loss levels

d) The average price of the asset over a specific period

e) A color indication of the price movement up or down

Question 07: A trading platform is definitely not…

a) An online forum where traders gather to discuss trading topic

b) A program that traders use to manage their orders

c) A program that traders use to execute trades

d) A program that traders use to analyze charts

Question 08: A trading instrument is…

a) Simply what you trade

b) Some sort of mathematical indicator for analysis

c) Another name for the second currency in a currency pair

d) A popular program among traders

Question 09: What does it mean when we say "open a position"?

a) Buy an asset

b) Sell an asset

c) Both statements are correct

Question 10: How can a stop-loss protect your capital?

a) It will automatically close the position when it reaches a point where losses become unacceptable

b) It will automatically close the position if it looks like the planned profit is unreachable

c) It will automatically close the position before the funds on your trading account run out

d) It will automatically open a counter position

Question 11: If a trader thinks the market will rise, in trader's slang he is:

a) Bull

b) Bear

c) Moose

d) Swan

Question 12: A trader who has opened a short position has done the following:

a) Opened a sell position

b) Closed a sell position

c) Opened a buy position

d) Closed a buy position

Question 13: Risk to reward ratio is…

a) Possible risk relative to potential reward

b) The risk to reward ratio measures the amount of profit a trader can expect

c) The risk to reward ratio shows the amount of money a trader can afford to lose

d) Options A and C

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