7 : Trading Mechanics Flashcards

1
Q

All markets go up in … and down in …

A

Up in ‘stairs’

Down in ‘escalators’

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2
Q

It is important to trade …

A

Equally, trade both long and short

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3
Q

What is leverage?

A

Betting with borrowed money.

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4
Q

What is margin?

A

Margin is like a deposit on a house

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5
Q

What has leverage recently been capped at?

A

10:1

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6
Q

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

A

50:1

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7
Q

What’s the difference between balance and equity?

A

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

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8
Q

How much is a ‘lot’

A

100,000

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9
Q

How much is a mini lot

A

10,000

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10
Q

How much is a micro lot

A

1,000

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11
Q

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

A

0.1

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12
Q

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

A

1

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13
Q

What’s the value of a pip in a lot

A

10

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14
Q

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

A

5%.

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

This should reduce to 1% as your capital grows.

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