IP Lesson 5 Flashcards
With regards to FXCM, why are it’s low transaction costs preferable to other discount brokers?
Discount brokers may actually trade against their clients.
Why might discount brokers trade against their clients?
They must make money somewhere to support their business.
Regardless of which broker you choose, what is absolutely necessary on your part?
Good record keeping!
Why are good records needed with respect to your broker?
It allows me to launch a dispute if necessary.
Do most professional traders use charting software linked to their broker, or independent software?
Independent.
Why do most professional traders use independent charting software?
It ensures the integrity of the data.
With regard to currency pairs, are some pairs “more profitable” than others?
No.
If certain currency pairs are not more profitable than others, where does profit come from in pair selection?
The ability to stick with a currency list.
Why is the ability to stick with a currency list a key factor in profitability?
Because consistency over time determines profitability.
When should you swap your currency list around?
Never! Don’t do it!
When will a good strategy bear fruit?
Over time ;)
What in regards to Forex, is your broker?
A company that executes my trades.
What should you do if other currency pairs appear to be performing better than those on your list?
Remain consistent and stick to my pairs.
Where are the currency pairs you subscribe to found?
In the dealing rates window.
Where on your platform is the dealing rates window found?
Top left.
Are advanced or simple dealing rates most commonly used?
Simple.
When choosing a currency list, what is the most important consideration, apart from keeping to the major 8?
Deciding how many pairs to trade.
What is the biggest factor in deciding how many pairs to trade?
Appetite for risk.
Why is one’s appetite for risk the most important consideration in choosing the number of currency pairs for your list?
Because the currency pair correlation affects risk.
What will happen as a result of currency pair correlation when there is a big fall or a huge win?
Any pairs that involve that currency will be affected.
What does currency pair correlation mean for other pairs with the common currencies?
They will tend to move in the same direction.
What effect will currency pair correlation have upon account equity?
It will move in the same cycle as the dominant currency in my portfolio
What is the best decision regarding a currency list for beginners?
A balanced portfolio
What is the definition of a balanced portfolio?
and equal distribution of 4 pairs of 8 total currencies
