7 : Trading Mechanics

Question 1

All markets go up in … and down in …

Answer 1

Up in ‘stairs’

Down in ‘escalators’

Question 2

It is important to trade …

Answer 2

Equally, trade both long and short

Question 3

What is leverage?

Answer 3

Betting with borrowed money.

Question 4

What is margin?

Answer 4

Margin is like a deposit on a house

Question 5

What has leverage recently been capped at?

Answer 5

10:1

Question 6

As a novice trader you should be trading at a leverage of … or less

Answer 6

50:1

Question 7

What’s the difference between balance and equity?

Answer 7

Balance is the money in your account which is safe. Equity is your balance +/- your live positions

Question 8

How much is a ‘lot’

Answer 8

100,000

Question 9

How much is a mini lot

Answer 9

10,000

Question 10

How much is a micro lot

Answer 10

1,000

Question 11

What’s the value of a pip in a micro lot

Answer 11

0.1

Question 12

What’s the value of a pip in a mini lot

Answer 12

1

Question 13

What’s the value of a pip in a lot

Answer 13

10

Question 14

You should only risk …% of your trading capital on any single trade?

Answer 14

5%.

That means you can be wrong 20 times before your trading capital is gone.

This should reduce to 1% as your capital grows.