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Mr. DVD Trading > BabyPips > Flashcards

BabyPips Flashcards

1
Q

What is the best session to trade?

A

London – New York Overlap

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2
Q

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

A

Tuesday, Wednesday, Thursday

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3
Q

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

A

yes

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4
Q

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

A

most

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5
Q

Is Sunday a good day to trade?

A

no

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6
Q

Are holidays a good time to trade?

A

no

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7
Q

Should you trade forex around major news events?

A

no

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8
Q

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

A

no

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9
Q

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

A

trader

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10
Q

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

A

pairs

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11
Q

Which currency is listed first in the pair?

A

base

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12
Q

Where is the quote currency listed in the pair?

A

on the right side of the pair

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13
Q

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 ___.”

A

EUR, USD

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14
Q

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

A

quote

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15
Q

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

A

sell

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16
Q

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 = ____.

A

buy

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17
Q

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 = _____.

A

sell

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18
Q

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

A

ask

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19
Q

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

A

lower

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20
Q

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.

A

bid

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21
Q

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.

A

ask

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22
Q

Another word for the ask price is the _____ price.

A

offer

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23
Q

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

A

SPREAD

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24
Q

What is the spread on the pair below?

A

2 pips

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25
Q

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.

A

BUY, bought

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26
Q

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.

A

fall

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27
Q

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.

A

lots

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28
Q

How much is a mirco lot?

A

1,000 units of curreny

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29
Q

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

A

a micro lot

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30
Q

How many units of currency is a micro lot?

A

10,000 units of currency

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31
Q

How many units of currency is a standard lot?

A

100,000 currency units

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32
Q

What are the three lot sizes from smallest to biggest?

A

micro lot = 1,000 units of currency

mini lot = 10,000 units of currency

standard lot = 100,000 units of currency

33
Q

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

You can with _____ trading!

A

margin

34
Q

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

A

borrowed

35
Q

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

A

custom

36
Q

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.

A

rollover

37
Q

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.

A

5:00 pm

38
Q

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

A

rollover

39
Q

Interest is ____ on the currency that is borrowed.

A

PAID

40
Q

Interest is ________ on the currency that is bought.

A

EARNED

41
Q

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.

A

earn

42
Q

True or false:

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

A

true

43
Q

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

A

pip

44
Q

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

A

pip

45
Q

What is a pip?

A

The unit of measurement to express the change in value between two currencies.

46
Q

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

A

PIP

47
Q

A pip is usually the ____decimal place of a quotation.

A

last

48
Q

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

A

4

49
Q

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

A

two (2)

50
Q

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

A

5, 3

51
Q

What are the 5 and 3 decimal place quotes called?

A

fractional pips

52
Q

What’s a slang word for fractional pips?

A

pipettes

53
Q

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.

A

Puts the pip value in your account currency.

54
Q

Do you need to know how to calculate pip values?

A

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

55
Q

How many currency units is a nano lot?

A

100

56
Q

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 _____.

A

value

57
Q

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.

A

currency

58
Q

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

A

buy

59
Q

When you buy a currency, you will use the offer or___ price.

A

ASK

60
Q

When you sell, you will use the ___ price.

A

BID

61
Q

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.

A

eight

majors

62
Q

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.

A

base

second

63
Q

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.

A

quote

64
Q

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

A

pip

65
Q

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.

A

five

66
Q

What is a pipette?

A

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

67
Q

What is the bid price?

A

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.

68
Q

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

A

ask/offer

69
Q

Are ask price and offer price the same thing?

A

yes

70
Q

What is the Bid-Ask spread?

A

The difference between the bid and ask price.

71
Q

What is this?

Base currency / Quote currency = Bid / Ask

A

It’s how exchange rates in the forex market are expressed.

It’s also known as the Quote Convention.

72
Q

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

A

cost

73
Q

What is a Round Turn Trade?

A

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

74
Q

What is a Cross Currency?

A

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

75
Q

Is Margin like a security deposit for a given trade?

A

yes

76
Q

What does this decribe?

The ratio of the amount capital used in a transaction to the required security deposit (margin).

A

leverage

77
Q

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

A

order

78
Q

True or false:

Different brokers accept different types of forex orders.

A

true

79
Q
A

Mr. DVD Trading (5 decks)

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