Learning Forex Fundamentals Flashcards
(16 cards)
What is Forex trading?
The buying and selling of currencies in the global market to profit from price changes.
What is a currency pair?
Two currencies traded against each other, such as GBP/USD or EUR/JPY.
What does the base currency represent in a pair?
The first currency in a pair, which is the unit being bought or sold.
What is the quote currency?
The second currency in a pair, representing the amount needed to buy one unit of the base currency.
What is the smallest price movement called in Forex trading?
A pip, which is typically 0.0001 for most pairs.
What is the spread in Forex trading?
The difference between the bid price (buy) and the ask price (sell).
What does leverage allow traders to do?
Borrow capital to increase potential gains (or losses).
What is a lot in Forex trading?
The standardized unit of a trade; a standard lot is 100,000 units.
What is margin?
The funds required in your account to open a leveraged trade.
What are the main Forex trading sessions?
Tokyo, London, and New York, representing different time zones with unique market activity.
What is a stop-loss order?
An order that automatically closes a trade to limit losses at a specified price.
What is a take-profit order?
An order that secures profits by automatically closing a trade at a specified price.
Why is risk/reward ratio important?
It helps determine if a trade is worth the risk compared to its potential gain.
What is technical analysis?
Analyzing price charts and patterns to predict market movements.
What is fundamental analysis?
Examining economic, political, and social factors to assess currency value changes.
What is trendline analysis?
Identifying market trends to predict future price directions.
