What causes a recession?

July 7, 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

How does the balance of payments impact currency exchange rates?

July 7, 2024 No Comments

A: A change in a country’s balance of payments can cause fluctuations in the exchange rate between its currency and foreign currencies. The reverse is also true when a fluctuation in relative currency strength can alter the balance of payments. There are two different and

How does the balance of trade impact currency exchange rates?

July 7, 2024 No Comments

A: The balance of trade influences currency exchange rates through its effect on the supply and demand for foreign exchange. When a country’s trade account does not net to zero – that is, when exports are not equal to imports – there is relatively more

How is rollover interest calculated?

July 7, 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 7, 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 7, 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 do I use On-Balance Volume (OBV) to create a forex trading strategy?

July 7, 2024 No Comments

A: On-Balance Volume, or OBV, is a technical indicator that operates based on the assumption that price movements are preceded by volume movements. Traders use this tool to forecast future trends and gauge bull and bear strengths, particularly in the short-term. Forex markets are well-suited

How often do exchange rates fluctuate?

July 7, 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

How do I use Relative Vigor Index (RVI) to create a forex trading strategy?

July 7, 2024 No Comments

A: A forex trading strategy designed to make maximum profits from a long-term uptrend can be created using the Relative Vigor Index, or RVI, in conjunction with other technical indicators. The RVI compares closing price to price range and provides a reading of the strength

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

July 7, 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

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