Technical Anaylsis

Question 1

“Pyramiding” is a speculative trading strategy that:

Answer 1

Uses trading profits as margin for adding to a futures position in decreasing increments.

Question 2

From the standpoint of a technical analyst, which of the following are attributes of a congestion area when it comes to commodity futures?

Answer 2

A congestion area describes sideways price movement. It represents a time period where supply and demand are relatively equal, prices remain within a somewhat narrow range until there is a break, and investors may find it difficult to cover short positions.

Question 3

As a whole, speculation does not seem to destabilize futures markets.

Answer 3

True - As a whole, speculation does not seem to destabilize futures markets.

Question 4

Open Intrest

Answer 4

Open interest is the sum of either the longs or the shorts, not the sum of both. There is one long and one short for each futures contract.

Question 5

Fundamental Analysis

Answer 5

Fundamental analysis is the study of the factors that affect the supply and demand for the underlying commodity or other asset and therefore will affect the price of futures contracts.