Q4 - Trading Quiz 8

Rolling Spot Forex is one of the common ways to engage in forex trading.

Based on the statement below, which one is not accurate with regards to rolling spot forex?

• It is done via OTC (Over-the-Counter)

• It involves contract which is known as Contract for Difference

• Trading will only involves the price of the underlying asset

• It will require physical asset to be purchased

Pikaa engaged in trading for the past few days as recent data release conjured vast opportunity in the market.

Her trading account snapshot are as follows:

AUDUSD - Required margin: 5%

NZDUSD - Required margin: 4%

GBPUSD - Required margin: 2%

Position size: USD100,000

Equity: USD4,500

Based on the information above, what is her margin level and which scenario will she trigger if:

Margin call - 100%

Stop out - 50%

• Margin level: 40.9%

  Stopped out

• Margin level: 40.9%

  None will be triggered

• Margin level: 244%

  Margin call

• Margin level: 244%

  None will be triggered

Garret received an email from FBX broker that his account has triggered margin call.

Feeling perplexed, he investigate his account by looking at the recent snapshot:

Equity - USD35,000

GBPUSD - Required margin: 10%

EURUSD - Required margin: 9%

AUDUSD- Required margin: 12%

Position size: USD100,000

Based on the information above, how much free margin does Garret's account has?

• USD4,000

• -USD4,000

• USD8,857

• -USD8,857

Manisha is currently seeking for a broker to kickstart her trading with the capital of USD10,000. Below are her findings:

ZFX - 1:2000

FBS - 1:1000

XM - 1:500

Based on the information above, what is the trading power for each broker?

• ZFX - USD20,000,000

  FBS - USD10,000,000

  XM - USD5,000,000

• ZFX - USD2,000,000

  FBS - USD10,000,000

  XM - USD5,000,000

• ZFX - USD20,000,000

  FBS - USD1,000,000

  XM - USD5,000,000

• ZFX - USD20,000,000

  FBS - USD10,000,000

  XM - USD500,000

Why is leverage referred as double edged sword in forex trading?

• Leverage allows you to control large sum of money with small sum of initial capital.

• With $1,000 and 1:200 leverage, you can control investment up to USD200,000.

• Leverage will amplify both our profit and loss capability.

• As leverage increases, the amount of required margin decreases.

Asset with high liquidity tends to have tighter spread.

Based on the quote above, which statement below best describe this phenomenon?

• High liquidity translates to high demand. Thus, brokers will have to keep the differences low for high demand products in order to avoid losing competitive edge.

• Low difference between bid and ask for major products are possibly due to collusion in between several major brokers in order to monopolize the forex market.

• The difference between bid and ask is lower due to high volatility in the market. It encourages people to trade more during such scenario.

• Bid and ask is determined by a centralized system that governs the entire forex market. The changes will be based on policies that were introduced throughout each week.

Willy is a long-term trader whereby he holds his position for several weeks.

The past few days, he has been contemplating to close his 9.78 lot of BUY EURUSD as it has been in the deep profit region for quite some time.

If we ignore the triple charge on Wednesday, what will be his swap charges on this order if it was held for 25 working days?

Swap rate:

Long: -8.54

Short: 5.82

Contract size: 100,000

• USD2,088.03

• USD1,422.99

• -USD2,088.03

• -USD1,422.99

Duy is contemplating to trade forex as he had some additional funds laying around in his savings account.

He tends to have a preference over which forex pair he will trade but he forgot its category.

Based on his deduction, the forex pair will have the following characteristics:

1. Currency pair are paired together among all 7 major currencies (Big 7), excluding US dollar

2. It has slightly lower liquidity.

3. The spread cost is slightly higher.

Based on his deduction, what is this category of forex pair called?

• Major Pair

• Minor Pair

• Exotic Pair

• Emerging markets pair

Any orders held past Wednesday will subject to triple charge.

Based on the statement above, which explanation below best describe such scenario?

• To account for Saturday and Sunday as it requires 2 working days to process the swap.

• The swap was triple charged in order to account for processing fee that occurs in the backend.

• It is based on general consensus that all forex brokers will need to charge triple.

• The triple charge was initiated in order to pay access fee that is required by the liquidity provider.

Following the announcement of CPI data from UK, GBPJPY dropped from 162.994 to 150.883. It continued to drop further down to 139.812. What is the number of pip or point for the first and total drop in price?

• First drop = 12111 points

  Total drop = 23182 points

• First drop = 1211.1 pips

  Total drop = 231.82 pips

• First drop = 121.11 pips

  Total drop = 231.82 pips

• First drop = 12.11 points

  Total drop = 23.18 points