BabyPips

Question 1

What is the best session to trade?

Answer 1

London – New York Overlap

Question 2

What are the best days of the week to trade forex?

Answer 2

Tuesday, Wednesday, Thursday

Question 3

When two sessions are overlapping, is that a good time to trade forex?

Answer 3

yes

Question 4

The middle of the week typically shows the ____ movement, as the pip range widens for most of the major currency pairs.

Answer 4

most

Question 5

Is Sunday a good day to trade?

Answer 5

no

Question 6

Are holidays a good time to trade?

Answer 6

no

Question 7

Should you trade forex around major news events?

Answer 7

no

Question 8

Should you trade forex during an episode of Game of Thrones, the NBA Finals, or the Superbowl.

Answer 8

no

Question 9

Can’t seem to trade during the optimal sessions? Don’t fret. You can always be a swing or position ______.

Answer 9

trader

Question 10

Currencies are always quoted in ____, such as GBP/USD or USD/JPY.

Answer 10

pairs

Question 11

Which currency is listed first in the pair?

Answer 11

base

Question 12

Where is the quote currency listed in the pair?

Answer 12

on the right side of the pair

Question 13

The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency. In caveman talk, “buy ___, sell ___.”

Answer 13

EUR, USD

Question 14

You would buy the pair if you believe the base currency will appreciate (gain value) relative to the _____ currency.

Answer 14

quote

Question 15

You would ____ the pair if you think the base currency will depreciate (lose value) relative to the quote currency.

Answer 15

sell

Question 16

If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader’s talk, this is called “going long” or taking a “long position.” Just remember: long = ____.

Answer 16

buy

Question 17

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called “going short” or taking a “short position”. Just remember: short = _____.

Answer 17

sell

Question 18

All forex quotes are quoted with two prices: the bid and ___.

Answer 18

ask

Question 19

For the most part, the bid is _____ than the ask price.

Answer 19

lower

Question 20

The ___ is the price at which your broker is willing to buy the base currency in exchange for the quote currency. This means the bid is the best available price at which you (the trader) will sell to the market.

Answer 20

bid

Question 21

The ___ is the price at which your broker will sell the base currency in exchange for the quote currency. This means the ask price is the best available price at which you will buy from the market.

Answer 21

ask

Question 22

Another word for the ask price is the _____ price.

Answer 22

offer

Question 23

The difference between the bid and the ask price is popularly known as the ______.

Answer 23

SPREAD

Question 24

What is the spread on the pair below?

Answer 24

2 pips

Question 25

EUR/USD In this example, the euro is the base currency and thus the “basis” for the buy/sell. If you believe that the U.S. economy will continue to weaken, which is bad for the U.S. dollar, you would execute a ___ EUR/USD order. By doing so, you ______ have euros in the expectation that they will rise versus the U.S. dollar.

Answer 25

BUY, bought

Question 26

EUR/USD If you believe that the U.S. economy is strong and the euro will weaken against the U.S. dollar you would execute a SELLEUR/USD order. By doing so you have sold euros in the expectation that they will ____ versus the US dollar.

Answer 26

fall

Question 27

Margin Trading When you go to the grocery store and want to buy an egg, you can’t just buy a single egg; they come in dozens or “lots” of 12. In forex, it would be just as foolish to buy or sell 1 euro, so they usually come in “\_\_\_\_” of 1,000 units of currency (Micro), 10,000 units (Mini), or 100,000 units (Standard) depending on your broker and the type of account you have.

Answer 27

lots

Question 28

How much is a mirco lot?

Answer 28

1,000 units of curreny

Question 29

How big a lot is 1,000 units of currency?

Answer 29

a micro lot

Question 30

How many units of currency is a micro lot?

Answer 30

10,000 units of currency

Question 31

How many units of currency is a standard lot?

Answer 31

100,000 currency units

Question 32

What are the three lot sizes from smallest to biggest?

Answer 32

micro lot = 1,000 units of currency mini lot = 10,000 units of currency standard lot = 100,000 units of currency

Question 33

“But I don’t have enough money to buy 10,000 euros! Can I still trade?” You can with _____ trading!

Answer 33

margin

Question 34

Margin trading is simply the term used for trading with ________ capital.

Answer 34

borrowed

Question 35

What’s even better is that, with the development of retail forex trading, there are some brokers who allow traders to have _______ lots.

Answer 35

custom

Question 36

For positions open at your broker’s “cut-off time” (usually 5:00 pm EST), there is a daily ________ interest rate that a trader either pays or earns, depending on your established margin and position in the market.

Answer 36

rollover

Question 37

If you do not want to earn or pay interest on your positions, simply make sure they are all closed before _____ EST, the established end of the market day.

Answer 37

5:00 pm

Question 38

Since every currency trade involves borrowing one currency to buy another, interest ________ charges are part of forex trading.

Answer 38

rollover

Question 39

Interest is ____ on the currency that is borrowed.

Answer 39

PAID

Question 40

Interest is ________ on the currency that is bought.

Answer 40

EARNED

Question 41

If you are buying a currency with a higher interest rate than the one you are borrowing, then the net interest rate differential will be positive (i.e. USD/JPY) and you will ____ funds as a result.

Answer 41

earn

Question 42

True or false: Retail brokers do adjust their rollover rates based on different factors (e.g., account leverage, interbank lending rates).

Answer 42

true

Question 43

Don’t even think about trading until you are comfortable with ___ values and calculating profit and loss.

Answer 43

pip

Question 44

The unit of measurement to express the change in value between two currencies is called a “\_\_\_.”

Answer 44

pip

Question 45

What is a pip?

Answer 45

The unit of measurement to express the _change in value between two currencies_.

Question 46

If EUR/USD moves from 1.1050 to 1.1051, that .0001 USD rise in value is ONE \_\_\_.

Answer 46

PIP

Question 47

A pip is usually the \_\_\_\_decimal place of a quotation.

Answer 47

last

Question 48

Most pairs go out to _ decimal places, but there are some exceptions like Japanese Yen pairs (they go out to two decimal places).

Answer 48

4

Question 49

How many decimal places does the Japanese yen quote go to?

Answer 49

two (2)

Question 50

There are brokers that quote currency pairs beyond the standard “4 and 2” decimal places to “\_ and \_” decimal places.

Answer 50

5, 3

Question 51

What are the 5 and 3 decimal place quotes called?

Answer 51

fractional pips

Question 52

What's a slang word for fractional pips?

Answer 52

pipettes

Question 53

What does this calculation do for you? Multiply/divide the “found pip value” by the exchange rate of your account currency and the currency in question.

Answer 53

Puts the pip value in your account currency.

Question 54

Do you need to know how to calculate pip values?

Answer 54

No, your broker does it or you can use a pip value calculator.

Question 55

How many currency units is a nano lot?

Answer 55

100

Question 56

The change in currency value relative to another is measured in “pips,” which is a very, very small percentage of a unit of currency’s \_\_\_\_\_.

Answer 56

value

Question 57

To take advantage of this minute change in value (pips), you need to trade large amounts of a particular ________ in order to see any significant profit or loss.

Answer 57

currency

Question 58

When you ___ a currency, you will use the offer or ASK price.

Answer 58

buy

Question 59

When you buy a currency, you will use the offer or\_\_\_ price.

Answer 59

ASK

Question 60

When you sell, you will use the ___ price.

Answer 60

BID

Question 61

The _____ most frequently traded currencies (USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD) are called the major currencies or the “\_\_\_\_\_\_.” These are the most liquid and the most sexy.

Answer 61

eight majors

Question 62

The ____ currency is the first currency in any currency pair. The currency quote shows how much the base currency is worth as measured against the ______ currency.

Answer 62

base second

Question 63

The _____ currency is the second currency in any currency pair. This is frequently called the pip currency and any unrealized profit or loss is expressed in this currency.

Answer 63

quote

Question 64

A ___ is the smallest unit of price for any currency.

Answer 64

pip

Question 65

Nearly all currency pairs consist of _____ significant digits and most pairs have the decimal point immediately after the first digit, that is, EUR/USD equals 1.2538.

Answer 65

five

Question 66

What is a pipette?

Answer 66

One-tenth of a pip. Some brokers quote fractional pips, or pipettes, for added precision in quoting rates.

Question 67

What is the bid price?

Answer 67

The bid is the price at which the market is prepared to buy a specific currency pair in the forex market. At this price, the trader can sell the base currency. It is shown on the left side of the quotation.

Question 68

The __________ is the price at which the market is prepared to sell a specific currency pair in the forex market.

Answer 68

ask/offer

Question 69

Are ask price and offer price the same thing?

Answer 69

yes

Question 70

What is the Bid-Ask spread?

Answer 70

The difference between the bid and ask price.

Question 71

What is this? Base currency / Quote currency = Bid / Ask

Answer 71

It's how exchange rates in the forex market are expressed. It's also known as the Quote Convention.

Question 72

The critical characteristic of the bid/ask spread is that it is also the transaction ____ for a round-turn trade.

Answer 72

cost

Question 73

What is a Round Turn Trade?

Answer 73

Round-turn means a buy (or sell) trade and an offsetting sell (or buy) trade of the same size in the same currency pair.

Question 74

What is a Cross Currency?

Answer 74

A cross currency is any pair in which neither currency is the U.S. dollar.

Question 75

Is Margin like a security deposit for a given trade?

Answer 75

yes

Question 76

What does this decribe? ## Footnote The ratio of the amount capital used in a transaction to the required security deposit (margin).

Answer 76

leverage

Question 77

The term “\_\_\_\_\_” refers to how you will enter or exit a trade.

Answer 77

order

Question 78

True or false: Different brokers accept different types of forex orders.

Answer 78

true