Q4 - Trading Quiz - 2

Based on estimations, the forex market is expected to amasses up to $2.409 quadrillion in 2022.

With regards to the statement above, which participant and its description listed below is correct?

• The Super Banks - the largest banks in the world may influence the exchange rate.

• The Speculators - take part in forex market for the means of doing business.

• Large Commercial Companies - regularly involved in forex to regulate the market.

• Government and Central Banks - engage in the forex market by the means of personal gains.

Jane surveys for financial instruments in the forex market in hopes to gain additional side income.

Based on her preference, she had listed down the following requirements:

1. Hassle less

2. Involves forex

3. Managed funds

From her requirements above, which financial instrument is suitable for her to invest in?

• Forex ETFs

• Forex Options

• Rolling Spot Forex

• Forex Futures

Rolling Spot Forex is one of the popular method to invest in forex market.

Which description listed below with regards to Rolling Spot Forex is incorrect?

• It is exchange traded, which requires a broker to gain access to.

• Involves trading the contract only.

• No physical ownership of the currency is required.

• Better known as CFD or Contract for Difference.

Alex got to know about forex trading from a close friend of his.

He has laid interest ever since and is currently reading about margin.

However, he does not understand the term Margin Call.

Based on the description below, which one best describes it?

• It is the notification sent to you by the broker when margin level falls below a certain threshold.

• It is the threshold (%) set by the broker to send out notification once it is triggered.

• It is the scenario that will occur when certain threshold is met and will lead to automatic closure of all orders.

• It is the threshold (%) set by the broker to automatically close all orders regardless.

Garret is currently trading with FBX. During the last hour, the forex market undergoes high volatility following the release of US Nonfarm Payrolls report.

The following is his account status:

Equity: $1,100

Open orders:

1. EURUSD - Used Margin: $500

2. GBPUSD - Used Margin: $400

3. AUDUSD - Used Margin: $500

4. XAUUSD - Used Margin: $800

Based on FBX, they have set margin call level and stop out level at 100% and 55% respectively.

From his account condition above, what is his margin level and which scenario has been triggered?

• Margin Level: 50%

  Scenario: Triggered Margin Call and Stop Out

• Margin Level: 200%

  Scenario: None is triggered

• Margin Level: 0.5%

  Scenario: None is triggered

• Margin Level: 50%

  Scenario: Triggered Margin Call

Manisha kickstarted her trading with ATX. She has placed several orders for the past few days.

Yesterday, she received a notification that her account has hit the Margin Call threshold and she will be required to deposit to avoid Stop Out.

Looking at her orders which a portion is still in profit region, she decided to ignore it.

Fast forward, she received a Stop Out notification today which renders her orders to be automatically closed.

Based on the information below, what is the possible Stop Out level for ATX?

Equity: $4,500

Used Margin: $15,000

• 30%

• 0.3%

• 333%

• 300%

Pikaa opened several orders in order to grab the opportunity from recent Federal Reserve policy announcement.

In order to avoid any losses, she decided to calculate her margin level based on the information below:

Assume that position size for all trades is $100,000

EURUSD - Required Margin: 2%

GBPUSD - Required Margin: 5%

NZDUSD - Required Margin: 7%

Equity: $37,580

What is her margin level?

• 268%

• 2.68%

• 37%

• 3.7%

Which description below is false with regards to Margin Call?

• Triggered once margin level rises above the margin call level.

• Notification will be sent once margin level is equivalent to margin call level.

• Deposit will be required in order to avoid from losses.

• Margin Call level is typically higher than Stop Out level.

Lie Suen was monitoring the market when volatility rises out of sudden due to political development in North Korea.

Due to this, her account experienced significant losses which ended up with Stop Out.

If the broker's Stop Out level is at 30% and Used Margin is at $7,500, what is her possible equity?

• $2,250

• $2,500

• $225

• $250

Which statement below best describes Margin Call?

• It is triggered when margin level falls below the margin call level.

• Margin Call is the scenario whereby the user will receive a notification and all his/her orders has been automatically closed.

• A notification will be sent to the user for additional deposit to be made in order to increase used margin level.

• It is the level whereby the amount of free margin available is higher than margin call level.