Retail Forex

Question 1

What is Retail Forex?

Answer 1

A secondary OTC market for poorer traders to participate in the forex market

Question 2

Who grants retail traders access to the forex market?

Answer 2

Brokers (in the US)

Question 3

What do brokers do for retail traders?

Answer 3

Brokers trade in the OTC market on the trader’s behalf. They find the best available price and add a “markup” before displaying the prices on their platform

Question 4

Describe the phrase rolled forward.

Answer 4

Involves closing the existing postion at the present exchange rate at the daily close and then reentering the trade when the market opens the next day.

Question 5

In retail forex it is important to remember that you are trading a contract to deliver the __________ __________ rather than the _________ itself.

Answer 5

underlying currency; currency

Question 6

Retail traders can “take or make delivery” on leveraged spot forex contracts
True or False

Answer 6

False, they cannot do that

Question 7

What does leverage allow a trader to do?

Answer 7

Leverage allows a trader to control large amounts of currency for a very small amount

Question 8

Retail forex transactions are closed out by entering into an:

Answer 8

equal but opposite transaction with your forex broker

Question 9

When you have a position left open at the close of the business day, what happens?

Answer 9

It will be automatically rolled forward to the next value date to avoid the delivery of the currency

Question 10

A retail forex broker will automatically keep rolling over your spot contract indefinitely until it is closed.
True or False

Answer 10

True, they will

Question 11

The procedure of rolling a currency pair over is known as

Answer 11

tomorrow-next

Question 12

When positions roll over, it results in ________ being paid or earned by the trader.

Answer 12

Interest

Question 13

Swap fee (or rollover fee):

Answer 13

is charged when you keep a position open overnight

Question 14

Retail forex trading is considered

Answer 14

speculative

Question 15

What does speculating mean in the context of forex trading?

Answer 15

traders are trying to make bets and profit from the movement of exchange rates

Question 16

Retail traders are not looking to take physical possession of the currencies they buy or sell.
True or False

Answer 16

True