7 : Trading Mechanics Flashcards
All markets go up in … and down in …
Up in ‘stairs’
Down in ‘escalators’
It is important to trade …
Equally, trade both long and short
What is leverage?
Betting with borrowed money.
What is margin?
Margin is like a deposit on a house
What has leverage recently been capped at?
10:1
As a novice trader you should be trading at a leverage of … or less
50:1
What’s the difference between balance and equity?
Balance is the money in your account which is safe. Equity is your balance +/- your live positions
How much is a ‘lot’
100,000
How much is a mini lot
10,000
How much is a micro lot
1,000
What’s the value of a pip in a micro lot
0.1
What’s the value of a pip in a mini lot
1
What’s the value of a pip in a lot
10
You should only risk …% of your trading capital on any single trade?
5%.
That means you can be wrong 20 times before your trading capital is gone.
This should reduce to 1% as your capital grows.