CFD Flashcards
Explain Lot
Lot is a standard unit size of a transaction, one standard lot is usually equally to 100,000 units. Used to calculate margin, free margin, leverage, pip value
What is the standard contract size for Standard Cent Account
The standard contract size would be 100,000 units of cent. For example 1 lot of USDJPYc is a 100,00 USC / 1000 USD
Formula for trading volume? And calculated in what currency?
Trading Volume = Lot x Contract Size and is calculated in the base currency
Spread.
Explain and state the formula
Spread is the difference between the bid and ask price. Our main profit as a market maker broker. Spread is always calculated in pips.
Formula = Spread = Ask - Bid price / pip size
How many types of Spreads are there in general? Which one does Exness offers?
In general there are 2 types; Fixed and Floating Spread.
Exness offers Floating Spread:
Dynamic - constant changing
Stable spread - fixed most of the time
Why do different brokers have different prices and spreads?
Because different brokers have different
- Liquidity providers
- Supply and demand
- Ways of creating price also may be different. (refer to Exness quote creation mechanism
How is our spread displayed on our website? Is it different from MT4/MT5?
Website: Average spread from previous trading day displayed in pips
Exness terminal: current spread in pips
MT4/MT5 : current spread in points
Are the spread numbers the same for different accounts? Why/Why not?
No they are not the same because each accounts is targeted for different clients and have different supply and demand
Explain margin, leverage and their relationship
Margin is the amount of funds withheld by the broker for keeping an order open. It is not a fee or a transaction cost it works like a deposit, it will be given back to you once you close your trade.
The relationship: Having a margin account allows you to have leverage and having leverage allows you to trade positions that are bigger than whatever funds you have in your account.
Maximum and minimum leverage for all accounts
Maximum:
1: 200 by default all accounts
1: unlimited is available if eligible for MT4 and MT5 accounts
Minimum:
1:2
What factors limit the maximum leverage when trading?
- Equity in traders account
2. some trading instruments have fixed margin requirement.
Margin Call/ Stop Out levels for all account
Standard : 60%
Pro: 30%
Stop Out (ALL) : 0%
How is margin requirement shown in our website? How to get that number? How to apply in margin calculation?
Shown in percentage / Leverage x 100
Lot x Contract Size x Fixed Margin Requirements
Explain Swap. Applied to which instrument?
Swap is an overnight commission, added or deducted when a client holds a position overnight.
Long swap is for buy orders
Shot swap is for sell orders
Applied to - Forex, Metal (except XAUUSD) and Energies
Explain all swap free programs in Exness
Swap free programs is offered in muslim countries. For clients signing up from a muslim country will automatically have swap free accounts.
For non muslim, there is no swap free programs. Only offering extended swap free programs however may be revoked if a client leave a trade open overnight for a long time, basically abusing the program. Extended swap free programs also offers more instrument that is swap free than standard account.
