. ©JASONMcCONNELL 2024/2025 ALL RIGHTS RESERVED
Forex Trading Exam Questions With Correct
Answers 100% Verified.
How much money should you generally start with with forex trading? - Answer✔£250.00
what is the price of the currency a reflection of? - Answer✔a reflection of what the market thinks
about the current and future condition of a country's economy compared to other economies.
what are the two main aims of a forex trader? - Answer✔To buy a currency pair when exchange
rates are expected to rise and to sell a currency pair when exhcange rates are expected to fall.
what are the currency pairs divided into?
What currency pairs should you start off trading? - Answer✔Majors, exotics and crosses.
the common currency pairs.
what are majors? - Answer✔developed economies, most liquid, low spreads, stable are
predictable in relation to other asset classes.
what are the top major currencies? - Answer✔USD, EUR, JPY, GBP
What are crosses? - Answer✔currency pairs with the absence of the us dollars. you can have
different dominated crosses such as: euro crosses, yen crosses and the pound crosses.
what are exotic currencies? - Answer✔currencies from developing countries, extremely liquid,
very high spreads.
whta does this pair tell you ? - EUR / USD 1.2302 - Answer✔that one euro is worth 1.2302 us
dollars.
describe a micro lot - Answer✔They are the smallest trading size, they = 1,000 units of currency,
their volume(trading size) is 0.01 and they are worth 10p. 10 pips = £1.00 with a micro lot.
describe a mini lot - Answer✔They are 10x the micro lot, they = 10,000 units od currency, their
volume(trading size) = 0.1 and they are worth £1.00. 10 pips = £10.00 with a mini lot.
describe a standard lot - Answer✔They are the original and largest trading size, they = 100,000
units of currency, their volume (trading size) = 1.0 and they are worth £10. 10 pips = £100 with a
standard lot.
1|Page
, . ©JASONMcCONNELL 2024/2025 ALL RIGHTS RESERVED
What does PIP stand for and what does it represent? - Answer✔price interest point, it represents
the smallest change in a currency pair
what does this reading represent? 1..2304 - Answer✔the 1.2302 = selling price and the
1.2304 = the buying price. the difference between 4 and the 2 is called the spread. Clearly here,
you would have received a loss.
a smaller spread = what ? - Answer✔a more liquid currency which means the currency moves
quickly because it is easier to make profits... higher spread meas you need more pips.
how do central banks influence currency rates? - Answer✔by interest rates and quantitative
easing (increasing money supply to encourage investments and lending).
how does the national economy influence currency rates? - Answer✔via GDP (gross domestic
product- the value of the market of all the final products and services), inflation, deflation, trade
balance reports, employment statistics.
what are trade balance reports? - Answer✔Trade balance reports shows a nation's imports and a
nation's exports. If their is a postitive value (surplus) it means that they have more exports
meaning many are buying from them then they are, if they have a negative value (deficits) , it
means that they have more imports, meaning they are buying more and less are buying from
them.
how do politics influence currency rates? - Answer✔stability of government, public statements,
change of officials and military conflicts.
what size trade should you use? - Answer✔always start SMALL, no matter how much money
you have in your trading account to begin with, use a micro lot! All new traders get some
damage so don't put all your money at risk by using a big trading size!
how long should you use your demo account for until you switch to the live account? -
Answer✔Approx 30 days to ensure you have a real view of the market, then, make sure that you
have at least £1,000 in your account before you switch to a live account.
what is your equity in your trading account? - Answer✔it is your balance after all the profits and
losses.
what is your margin? - Answer✔it is the down payment that you put into a trading account. That
money is no longer yours.
what is your free margin? - Answer✔it is the money is your account that you have to use on
other margins that you want to give out... this is your money.
what is the margin level%? - Answer✔it is the percentage that is set, once your free margin
reaches that percentage, all of your trades will be closed down as it means that you do not have
enough free margin left to give out any other margins. ALWAYS AIM FOR A HIGH MARGIN
LEVEL %
how can you ensure that your margin level% stays high? - Answer✔by trading in SMALL
sizes(lose or gain only small amounts of money) using micro lots of mini lots... never use
2|Page
Forex Trading Exam Questions With Correct
Answers 100% Verified.
How much money should you generally start with with forex trading? - Answer✔£250.00
what is the price of the currency a reflection of? - Answer✔a reflection of what the market thinks
about the current and future condition of a country's economy compared to other economies.
what are the two main aims of a forex trader? - Answer✔To buy a currency pair when exchange
rates are expected to rise and to sell a currency pair when exhcange rates are expected to fall.
what are the currency pairs divided into?
What currency pairs should you start off trading? - Answer✔Majors, exotics and crosses.
the common currency pairs.
what are majors? - Answer✔developed economies, most liquid, low spreads, stable are
predictable in relation to other asset classes.
what are the top major currencies? - Answer✔USD, EUR, JPY, GBP
What are crosses? - Answer✔currency pairs with the absence of the us dollars. you can have
different dominated crosses such as: euro crosses, yen crosses and the pound crosses.
what are exotic currencies? - Answer✔currencies from developing countries, extremely liquid,
very high spreads.
whta does this pair tell you ? - EUR / USD 1.2302 - Answer✔that one euro is worth 1.2302 us
dollars.
describe a micro lot - Answer✔They are the smallest trading size, they = 1,000 units of currency,
their volume(trading size) is 0.01 and they are worth 10p. 10 pips = £1.00 with a micro lot.
describe a mini lot - Answer✔They are 10x the micro lot, they = 10,000 units od currency, their
volume(trading size) = 0.1 and they are worth £1.00. 10 pips = £10.00 with a mini lot.
describe a standard lot - Answer✔They are the original and largest trading size, they = 100,000
units of currency, their volume (trading size) = 1.0 and they are worth £10. 10 pips = £100 with a
standard lot.
1|Page
, . ©JASONMcCONNELL 2024/2025 ALL RIGHTS RESERVED
What does PIP stand for and what does it represent? - Answer✔price interest point, it represents
the smallest change in a currency pair
what does this reading represent? 1..2304 - Answer✔the 1.2302 = selling price and the
1.2304 = the buying price. the difference between 4 and the 2 is called the spread. Clearly here,
you would have received a loss.
a smaller spread = what ? - Answer✔a more liquid currency which means the currency moves
quickly because it is easier to make profits... higher spread meas you need more pips.
how do central banks influence currency rates? - Answer✔by interest rates and quantitative
easing (increasing money supply to encourage investments and lending).
how does the national economy influence currency rates? - Answer✔via GDP (gross domestic
product- the value of the market of all the final products and services), inflation, deflation, trade
balance reports, employment statistics.
what are trade balance reports? - Answer✔Trade balance reports shows a nation's imports and a
nation's exports. If their is a postitive value (surplus) it means that they have more exports
meaning many are buying from them then they are, if they have a negative value (deficits) , it
means that they have more imports, meaning they are buying more and less are buying from
them.
how do politics influence currency rates? - Answer✔stability of government, public statements,
change of officials and military conflicts.
what size trade should you use? - Answer✔always start SMALL, no matter how much money
you have in your trading account to begin with, use a micro lot! All new traders get some
damage so don't put all your money at risk by using a big trading size!
how long should you use your demo account for until you switch to the live account? -
Answer✔Approx 30 days to ensure you have a real view of the market, then, make sure that you
have at least £1,000 in your account before you switch to a live account.
what is your equity in your trading account? - Answer✔it is your balance after all the profits and
losses.
what is your margin? - Answer✔it is the down payment that you put into a trading account. That
money is no longer yours.
what is your free margin? - Answer✔it is the money is your account that you have to use on
other margins that you want to give out... this is your money.
what is the margin level%? - Answer✔it is the percentage that is set, once your free margin
reaches that percentage, all of your trades will be closed down as it means that you do not have
enough free margin left to give out any other margins. ALWAYS AIM FOR A HIGH MARGIN
LEVEL %
how can you ensure that your margin level% stays high? - Answer✔by trading in SMALL
sizes(lose or gain only small amounts of money) using micro lots of mini lots... never use
2|Page
