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

What is the difference between extensive margin and intensive margin in economics?

July 8, 2024 No Comments

A: Trading on margin is not commonly done in stock trading except by professional investors and institutional traders. However, trading on margin is standard practice in the futures markets and forex trading. The ability to trade on relatively low margin, with high leverage, is part

How is rollover interest calculated?

July 8, 2024 No Comments

A: In the forex market, all trades must be settled in two business days. Traders who want to extend their positions without having to settle them must close their positions before 5pm Eastern Standard Time on the settlement day and re-open them the next trading

How is spread calculated when trading in the forex market?

July 8, 2024 No Comments

A: First, remember that in the forex markets investors trade one currency for another. Therefore, currencies are quoted in terms of their price in another currency. In order to express this information easily, currencies are always quoted in pairs (e.g. USD/CAD). The first currency is

How is the forex spot rate calculated?

July 8, 2024 No Comments

A: The forex spot rate is determined by supply and demand. Banks all over the world are buying and selling different currencies to accommodate their customers’ requirements for trade or to exchange one currency into another. For example, an American bank receives a deposit from

How often do exchange rates fluctuate?

July 8, 2024 No Comments

A: Exchange rates float freely against one another, which means they are in constant fluctuation. Currency valuations are determined by the flows of currency in and out of a country. A high demand for a particular currency usually means that the value of that currency

In the forex market, how is the closing price of a currency pair determined?

July 8, 2024 No Comments

A: The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, institutional investors and speculators. The forex is the largest market in the world and is considered a 24-hour market because currencies are traded

Is it possible to trade forex options?

July 8, 2024 No Comments

A: Yes. Options are available for trading in almost every type of investment that trades in a market. Most investors are familiar with stock or equity options, however options are available to the retail forex currency trader as well. Currency Option Trading There are two

Is scalping a viable forex trading strategy?

July 8, 2024 No Comments

A: One way that investors borrow funds from brokerages is through margin accounts; it is these interest charges that allow them to charge such low commission rates. How do we calculate the interest charges? Well, each brokerage has a different method of calculation, so you

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