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Forex > Junior Year > Flashcards

Junior Year Flashcards

1
Q

True or false : Having a trading plan helps maximize thinking when you are in the heat of trading.

A

False

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2
Q

Which of the following is NOT a main ingredient of trading discipline?

a. Developing a trading plan
b. Sticking to the trading plan
c. Making lots of rules for your trading plan

A

Making lots of rules for your trading plan

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3
Q

True or false: Having a trading plan allows you to trade with less emotion and stress.

A

True

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4
Q

There are two types of wins: a justified one and an unjustified one. A justified win is a when…

a. You create a detailed trading plan and follow the plan.
b. When you win but do not follow the plan, does it matter?
c. You took the trade and won - that’s what matters!

A

You create a detailed trading plan and follow the plan.

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5
Q

Having a trading plan helps tip the _____ to work in your favour.

A

Law of Averages

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6
Q

The first step in building a trading plan is to…

a. Take a realistic, holistic view of yourself.
b. Take a partial view of yourself.
c. Ask yourself which pairs you will trade.

A

Take a realistic, holistic view of yourself.

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7
Q

True or false: If you are looking for a thrill (and wanna make consistent cash while you’re at it), then the forex market is just for you.

A

False

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8
Q

Goals should be specific and measurable, so that you can track your progress and see if you’re improving. Which of the following is a good example of a goal that is specific and measurable?

a. I want to make a lot of money.
b. I want to make money every week.
c. I want to make $100 every week.

A

I want to make $100 every week.

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9
Q

Your time availability will help determine your trading style. The shorter the timeframe you are trading, the ____ time you will need in front of the charts.

a. More
b. Less
c. Same

A

More

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10
Q

True or False: Swing traders need to spend less time on front of the computer.

A

Not necessarily

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11
Q

True or false : Drawdowns are an inevitable part of trading. Your tolerance for drawdowns will show how much you are willing to risk in order to meet your goals.

A

True

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12
Q

Developing a pre-market routine should help put you in the right mindset for trading. Which of the following should you probably exclude or avoid putting in your routine?

a. Review yesterday’s trades.
b. Get “up to speed” by reading Pip Diddy’s latest roundup.
c. Check your fantasy sports team right as the next session is beginning.

A

Check your fantasy sports team right as the next session is beginning.

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13
Q

True or False: A trading plan should always be a personalized plan that fits the individual goals, attitude to risk, and his/her lifestyle.

A

True

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14
Q

It is always good to have a contingency plan. Which of the following would be part of good Plan B?

a. Have a laptop and aircard ready at all times.
b. Have a fax machine so you can fax your broker when you lose your internet connection.
c. Give your Starbucks barista your sign in name and password so he can manage your trades for you if you lose power.

A

Have a laptop and aircard ready at all times.

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15
Q

You should only risk money that…

A

You can afford to lose.

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16
Q

The first step towards determining what type of trader you are is to determine how much _____ you can invest.

A

Time

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17
Q

Which of the following should you study least in your market analysis?

a. MLB scores
b. Current events
c. Chart analysis

A

MLB scores

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18
Q

If you like fast trading and excitement, ____ might be best for you.

A

Scalping

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19
Q

Which of the following probably requires the most time on chart commitment?

A

Scalping

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20
Q

If you’re a scalper, which of the following pairs should you trade?

a. GBP/USD
b. CAD/JPY
c. USD/MXN

A

GBP/USD

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21
Q

If you like analyzing the markets at the beginning of the day, monitoring your trade but don’t want to leave your position open overnight, ____ might be for you.

A

Day trading

22
Q

Taking trades against the current direction of price action is more commonly known as….

a. Trend trading
b. Counter-trend trading
c. Breakout trading

A

Counter-trend trading

23
Q

What type of day trading strategy waits for price to bust out of a range before entering?

a. Trend trading
b. Counter-trend trading
c. Breakout trading

A

Breakout trading

24
Q

If you have a day job and can only dedicate a couple of hours every day to analyzing the markets, _____ might be best suited for you.

a. Scalping
b. Day trading
c. Swing trading

A

Swing trading

25
Q

Which of the following might be a reason why you might not want to be a swing trader:

a. You don’t mind holding your trades for several days.
b. You don’t mind having large stop losses.
c. You get anxious when your trades go against you.

A

You get anxious when your trades go against you.

26
Q

Which of the following is probably the most affected by fundamentals?

a. Swing trading
b. Day trading
c. Position trading

A

Position trading

27
Q

Which of the following might be a reason why you might not want to be a position trader:

a. You love fundamental analysis.
b. You don’t mind having super large stop losses.
c. You aren’t patient.

A

You aren’t patient

28
Q

What type of trading system generates signals for the trader to take regardless of what is happening in the markets?

a. Discretionary
b. Mechanical
c. Magical

A

Mechanical

29
Q

True or false. With a mechanical trading system, you are supposed to follow the rules of your system no matter what.

A

True

30
Q

Which among these statements is TRUE?

a. Creating a mechanical system is extremely difficult.
b. Following the rules of a mechanical system can be difficult.
c. You can’t come up with your own system for free.

A

Following the rules of a mechanical system can be difficult.

31
Q

What are the two goals that must be considered when creating a mechanical system?

a. Identify trends early and avoid whipsaws.
b. Avoid losses completely and aim for big profits only.
c. Generate a bunch of signals and make quick pips.

A

Identify trends early and avoid whipsaws.

32
Q

What is the first thing that you must decide on when creating a mechanical system?

A

Time frame

33
Q

How can you best avoid whipsaws in your mechanical system?

a. Include indicators that confirm a trend
b. Set super tight stops
c. Consult market experts

A

Include indicators that confirm a trend

34
Q

What is the most important aspect of having a mechanical system?

a. Making huge profits
b. Having the most complex set of rules
c. Always sticking to your rules

A

Always sticking to your rules

35
Q

Which is an example of a mechanical trading system?

a. Huck’s HLHB system
b. The ‘So Easy It’s Ridiculous’ System
c. Both

A

Both

36
Q

True or false. The more complex a mechanical system is, the more likely it’ll yield profits.

A

False

37
Q

What are the two things you must do before trading your system live?

A

Backtest and demo trade.

38
Q

Why is keeping a trading journal important?

a. It helps keep track of one’s performance.
b. It guides you in improving your performance.
c. Both

A

Both.

39
Q

True or false. Keeping a trading journal is the same as copying the transaction history on your account.

A

False

40
Q

What differentiates a trading journal from your transaction history?

a. The former includes your psychology before, after, and during the trade.
b. The latter includes your psychology before, after, and during the trade.
c. There’s no difference.

A

The former includes your psychology before, after, and during the trade.

41
Q

True or false. A well-kept detailed trading journal can be as good as having a coach or mentor guiding you in trading.

A

True

42
Q

Which among these should be included in your trading journal?

a. Market views and philosophy
b. Market observations
c. Performance statistics
d. All of the above

A

All of them

43
Q

Why should you record your trading mistakes and missed opportunities?

A

To avoid making the same mistakes in the future

44
Q

Which among these is NOT part of our top five elements of a trading journal?

a. Entry trigger
b. Position size
c. Trade retrospective
d. None of the above

A

None of the above

45
Q

Your potential trading area stands between the current price and…?

a. Your entry trigger
b. Your stop loss
c. Support and resistance

A

Your entry trigger

46
Q

What is another term for a setup that lines up with your specific entry technique and makes sure that it’s “safe” to enter the market?

a. High probability setup
b. Sure-win trade
c. Fool-proof trade

A

High probability setup

47
Q

True or false. Using an entry technique as a stand alone strategy without a potential trading area is the recipe for success.

A

False

48
Q

What should you figure out before you enter a trade?

a. Potential scenarios and market reactions
b. How to spend your winnings
c. How to make up for your losses

A

Potential scenarios and market reactions

49
Q

What does trade retrospective refer to?

a. Looking back at the trade to record what you did right or wrong
b. Repeating the same trade all over again
c. Telling your friend about your recent trade

A

Looking back at the trade to record what you did right or wrong

50
Q

True or false. It’s okay if you’re not routinely executing your trades according to plan.

A

False

51
Q

Which among these should NOT be included in the performance statistics?

a. Win percentage
b. Loss percentage
c. What you plan to buy with your profits

A

What you plan to buy with your profits

52
Q

True or false. Keeping a trading journal is hard.

A

True

Forex (11 decks)

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