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 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 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 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 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

What is the difference between inflation and stagflation?

July 8, 2024 No Comments

A: Inflation is a term used by economists to define broad increases in prices. Inflation is the rate at which the price of goods and services in an economy increases. Inflation also can be defined as the rate at which purchasing power declines. For example,

What is the difference between LIBID and LIBOR?

July 8, 2024 No Comments

A: Both LIBID and LIBOR are reference rates set by banks in the London interbank market. The London interbank market is a wholesale money market in London where banks exchange currencies either directly or through electronic trading platforms. The acronym LIBID stands for London Interbank

What is the difference between pips, points, and ticks?

July 8, 2024 No Comments

A: Point, tick and pip are terms used to describe price changes in the financial markets. While traders and analysts use all three terms in a similar manner, each is unique in the degree of change it signifies and how it is used in the markets.

All Rights Reserved