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

July 7, 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 are the rules for placing stop and limit orders in forex?

July 7, 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

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

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 foreign exchange market trade 24 hours a day?

July 7, 2024 No Comments

A: The forex market is the largest financial market in the world, trading around $1.5 trillion each day. Trading in the forex is not done at one central location, but is conducted between participants by phone and electronic communication networks (ECNs) in various markets around

What do the terms weak dollar and strong dollar mean?

July 7, 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

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

What does deflation mean to investors?

July 7, 2024 No Comments

A: The cause and effect of deflation are complex economic forces, which requires a short introduction to the concept and an explanation of how it affects investors. Deflation is a macroeconomic condition where a country experiences lowering prices. This is the opposite of inflation, which

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

What does rollover mean in the context of the forex market?

July 7, 2024 No Comments

A: In the forex (FX) market, rollover is the process of extending the settlement date of an open position. In most currency trades, a trader is required to take delivery of the currency two days after the transaction date. However, by rolling over the position

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