Application Test
- 1. A _________ is equal to 0.01 for exchange rates expressed to two decimal places, or 0.0001 for exchange rates expressed to four decimal places.
- 2. A _________ is used by most forex brokers to close out an open position at the end of the business day, and reopen an identical position as of the next day.
- 3. A carry trade is based on the interest rate differential between two currencies. The idea is to hold _________ the currency with the higher interest rate, while holding _________ a currency with a lower interest rate.
- 4. If you have positive carry, your position _________ money while it is open, but if you have negative carry, you must _________ interest while the position is open.
- 5. "Trading on the technicals" refers to trading based on information derived from _________. This is also known as technical analysis.
- 6. "Trading on the fundamentals" - or "trading the news" - describes traders that attempt to predict the effect _________ such as interest rate changes and labor reports will have on an exchange rate.
- 7. Fundamental analysis is the study of _________ in an attempt to predict future market conditions.
- 8. A _________ order is executed immediately when submitted and is priced at the current spot market rate.
- 9. A _________ order is an order to buy or sell a currency, but only when certain conditions are met. These conditions are in the form of instructions and are attached when the order is first created.
- 10. A limit order that has not yet been executed, is said to be _________.