What is foreign exchange?

July 8, 2024 No Comments

A: Foreign exchange, or forex, is the conversion of one country’s currency into another. In a free economy, a country’s currency is valued according to the laws of supply and demand. In other words, a currency’s value can be pegged to another country’s currency, such

What is hedging as it relates to forex trading?

July 8, 2024 No Comments

A: Hedging is a strategy to protect one’s position from an adverse move in a currency pair. Forex traders can be referring to one of two related strategies when they engage in hedging. Strategy One A forex trader can create a “hedge” to fully protect an

What is inflation and how should it affect my investing?

July 8, 2024 No Comments

A: Inflation is an economy-wide, sustained trend of increasing prices from one year to the next. An economic concept, the rate of inflation is important as it represents the rate at which the real value of an investment is eroded and the loss in spending

What are the most common currency pairs traded in the forex market?

July 8, 2024 No Comments

A: There are many official currencies that are used all over the world, but there only a handful of currencies that are traded actively in the forex market. In currency trading, only the most economically/politically stable and liquid currencies are demanded in sufficient quantities. For

What is the best method of analysis for forex trading?

July 8, 2024 No Comments

A: Forex analysis is used by retail forex day traders to determine buy or sell decisions on currency pairs. Forex analysis could be technical in nature, using resources such as charting tools. It can also be fundamental in nature, using economic indicators and/or news-based events.

What are the rules for placing stop and limit orders in forex?

July 8, 2024 No Comments

A: The high amounts of leverage commonly found in the forex market can offer investors the potential to make big gains, but also to suffer large losses. For this reason, investors should employ an effective trading strategy that includes both stop and limit orders to

What is the Big Mac index?

July 8, 2024 No Comments

What is the Big Mac index?A: The Big Mac index, also known as Big Mac PPP, is a survey done by The Economist magazine that is used to measure the purchasing power parity (PPP) between nations, using the price of a McDonald’s Big Mac as

What causes a recession?

July 8, 2024 No Comments

A: The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production and wholesale-retail sales.” A recession

What is the correlation between U.S. stock prices and the value of the U.S. dollar?

July 8, 2024 No Comments

A: The correlation between any two variables (or sets of variables) summarizes a relationship, whether or not there is any real-world connection between the two variables. The correlation coefficient will always be between -1 and +1, which signify two opposite extremes of perfect correlations. A

What do the terms weak dollar and strong dollar mean?

July 8, 2024 No Comments

A: The terms weak dollar and strong dollar are generalizations used in the foreign exchange market to describe the relative value and strength of the U.S. dollar against other currencies. The terms “strong,” “weak,” “strengthening” and “weakening” are interchangeable for any currency. Defining a Strong and Weak

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