1. 7. · A comprehensive database of more than 13 forex quizzes online, test your knowledge with forex quiz questions. Our online forex trivia quizzes can be adapted to suit your requirements for taking some of the top forex quizzes 4. 7. · In the following article, we've answered five of the biggest questions about forex trading, including why you would consider it, the risks of doing so, and what it all means. What Does Trading 4. 6. · Who created forex? There are wild guesses, but some think it is the Babylonians. Others believe it started over years ago in Amsterdam. Forex trading when to buy and sell? When the trading strategy signals you to buy or sell. Who owns forex trading? No one does. Every one is a participant. Will forex trading ever end?
6 Questions About Currency Trading
Do you want to explore yourself in Forex management then log on to Wisdom jobs online site. Forex management is planning of foreign exchange, forex questions, reserving, controlling, hedging and maximizes the consolidated earnings.
It requires its participants to enter the market to deliver and accept currencies at fluctuating exchange rates. This refers to the network of individuals, banks and organized financial exchanges that trade global currencies.
Today, scope of Forex management is very wide in companies, firms and individuals uses foreign currency for achieving their aims. It is also needed for importers, exporters, banks, tax departments. So, enhance your financial skills by upgrading yourself in the field of forex as chief manager, sales manager, in banks, in companies etc by looking into Forex management jobs question and answers given.
Question 1. Give A Full Definition Of The Market For Foreign Exchange? Answer : Broadly defined, forex questions, the foreign exchange FX market encompasses the conversion of purchasing power from one currency into another, bank deposits of foreign currency, the extension of credit denominated in a foreign currency, foreign trade financing, and trading in foreign currency options and futures contracts. Question 2. What Is The Difference Between The Retail Or Client Market And The Wholesale Or Interbank Market For Foreign Exchange?
Answer : The market for foreign exchange can be viewed as a two-tier market. One tier is the wholesale or interbank market and the other tier is the retail or client market. International banks provide the core of the FX market. They forex questions willing to buy or sell foreign currency for their own account. These international banks serve their retail clients, corporations or individuals, in conducting foreign commerce or making international investment in financial assets that requires foreign forex questions. Retail transactions account for only about 14 percent of FX trades, forex questions.
The other 86 percent is interbank trades between international banks, or non-bank dealers large enough to transact in the interbank market. Question 3. Who Are The Market Participants In The Foreign Exchange Market? Answer : The market participants that comprise the FX market can be categorized into five groups:. international banks, bank customers, non-bank dealers, FX brokers, and central banks.
Approximately to banks worldwide make a market in foreign exchange, forex questions, i. These international banks serve their retail clients, the bank customers, in conducting foreign commerce or making international investment in financial assets that requires foreign exchange.
Non-bank dealers are large non-bank financial institutions, such as investment banks, forex questions funds, pension funds, and hedge funds, whose size and frequency of trades make it cost- effective to establish their own dealing rooms to trade directly in the interbank market for their foreign exchange needs. Most interbank trades are speculative or arbitrage transactions where market participants attempt to correctly judge the future direction of price movements in one currency versus another or attempt to profit from temporary price discrepancies in currencies between competing dealers.
FX brokers match dealer orders to buy and sell currencies for a fee, forex questions, but do not take a position themselves.
Interbank forex questions use a broker primarily to disseminate as quickly as possible a currency quote to many other dealers, forex questions. Question 4. How Are Foreign Exchange Transactions Between International Banks Settled? Answer : The interbank market is a network of correspondent banking relationships, with large commercial banks forex questions demand deposit accounts with forex questions another, called correspondent bank accounts.
Forex questions correspondent bank account network allows for the efficient functioning of the foreign exchange market, forex questions. As an example of how the network of correspondent bank accounts facilities international foreign exchange transactions, consider a U. importer desiring to purchase merchandise invoiced in guilders from a Dutch exporter, forex questions. The U, forex questions. importer will contact his bank and inquire about the exchange rate.
If the U. importer accepts the offered exchange rate, forex questions, the bank will debit the U. Question 5. What Is Meant By A Currency Trading At A Discount Or At A Premium In The Forward Market?
Answer : The forward market involves contracting today for the future purchase or sale of foreign exchange. The forward price may be the same as the spot price, but usually it is higher at a premium or lower at a discount than the spot price. Question 6. Why Does Most Interbank Currency Trading Worldwide Involve The U. Answer : Trading in currencies worldwide is against forex questions common currency that has international appeal, forex questions.
That currency has been the U. dollar since the end of World War II. However, the euro and Japanese yen have started to be used much more as international currencies in recent years.
More importantly, trading would be exceedingly cumbersome and difficult to manage if each trader made a market against all other currencies. Question forex questions. Answer : Swap transactions provide a means for the bank to mitigate the currency exposure in a forward trade. A swap transaction is the simultaneous sale or purchase of spot foreign exchange against a forward purchase or sale of an approximately equal amount of the foreign currency.
To illustrate, suppose a bank customer wants to buy dollars three months forward against British pound sterling. The bank can handle this trade for its customer and simultaneously neutralize the exchange rate risk in the trade by selling borrowed British pound sterling spot against dollars. The bank will lend the dollars for three months until they are needed to deliver against the dollars it has sold forward.
The British pounds received will be used to liquidate the sterling loan. Question 8. Answer : The trader must think the Canadian dollar is going to appreciate against the U. dollar and therefore he is trying to increase his inventory of Canadian dollars by discouraging purchases of U.
Question 9, forex questions. What Is Triangular Arbitrage? What Is A Condition That Will Give Rise To A Triangular Arbitrage Opportunity? Answer : Triangular arbitrage is the process of trading out of the U.
dollar into a second currency, forex questions, then trading it for a third currency, which is in turn traded for U. The purpose is to earn an arbitrage profit via trading from the second to the third currency when the direct exchange between the two is not in alignment with the cross exchange rate. Most, but not all, currency transactions go through the dollar, forex questions. Certain banks specialize in making a direct market between non-dollar currencies, pricing at a narrower bid-ask spread than the cross-rate spread.
Nevertheless, the implied cross-rate bid-ask quotations impose a discipline on the non-dollar market makers. If their direct quotes are not consistent forex questions the cross exchange rates, a triangular arbitrage profit is possible. Question Over The Past Six Years, The Exchange Rate Between Swiss Franc And U. Would You Forex questions That Over This Six-year Period, The Swiss Goods Have Become Cheaper For Buyers In The United States?
Sf Has Gone From Sf1. Answer : The value of the dollar in Swiss francs has gone up from about 1. Therefore, the dollar has appreciated relative to the Swiss franc, and the dollars needed by Americans to purchase Swiss goods have decreased. What Does Trading Forex Mean? Forex questions : Trading forex means making transactions that involve currencies in the foreign exchange market.
Alternatively, an investor could sell the same pair, based on the belief the common forex questions will forex questions against the U. In addition to making basic purchase and sale transactions, traders have many ways to take positions on currency pairs, forex questions, including spot contracts, forwards, forex questions, derivatives and contracts for difference.
Why Should I Trade Forex? Answer : There are several reasons investors might opt to trade currencies instead of making use of other opportunities, forex questions. While certain assets may be more difficult to buy and sell, traders interested in currencies will likely find substantial opportunities. Liquidity risk can occur around major news events if liquidity providers seek to limit their exposure to market volatility.
However, it is important to keep in mind that risk is inherent to investment. While using leverage to make larger trades can amplify returns, it can also amplify the size of losses. By taking a more international approach, traders might diversify more successfully or potentially achieve higher returns by putting their money to work in areas that have greater forex questions. Once again, risk is inherent to investment, so no returns are guaranteed and investors must conduct their due diligence on regions.
How Risky Is Forex Trading? Answer : Like any form of investment, forex trading involves risk. The currency markets can experience sharp fluctuations, just like the stock, forex questions, bond or commodity markets. Liquidity risk can increase around major news events. It is also worth noting that there are some unscrupulous brokers out there, forex questions.
As a result, investors can benefit from performing substantial due diligence on any company they might work with. For example, you could trade the euro without owning it by buying or selling options that involve the currency.
In addition, purchasing spot contracts or forward contracts involving forex questions currency of choice would forex questions provide exposure. How Can I Compete With The Big Banks? Answer : When making trades, big banks employ professionals who may have significant education and experience. As a result, forex questions, you can benefit greatly by doing your best to be prepared.
FOREX FULL REVISION WITH QUESTIONS (SFM)
, time: 3:53:34Answers to 67 frequently asked questions about forex trading. » The Trader In you
4. 7. · How much does it cost to trade Forex? It depends mostly on the user; you can start an account for $ and risk only $1 per trade. What are the advantages of Forex trading? Forex trading 4. 6. · Who created forex? There are wild guesses, but some think it is the Babylonians. Others believe it started over years ago in Amsterdam. Forex trading when to buy and sell? When the trading strategy signals you to buy or sell. Who owns forex trading? No one does. Every one is a participant. Will forex trading ever end? 6. 5. · In this market, prices are typically cited to this fourth decimal place (1/ th of 1%) and the pip is equal to exactly that. To give an example, a bottle of shampoo at a drugstore would be priced at $ and in the FX market, it would be priced at $
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