Forex quizzes for beginners

A) Buying and selling currencies

Forex (foreign exchange) is the market where people swap one currency for another, such as euros for US dollars.

B) EUR

The first currency is the base. EUR/USD at 1.10 means 1 euro costs 1.10 US dollars.

A) It got stronger against the dollar

One euro now buys more dollars (1.1050 instead of 1.1000), so the euro rose.

C) The smallest usual price step, 0.0001 on most pairs

On EUR/USD, a move from 1.1000 to 1.1001 is one pip. On yen pairs such as USD/JPY, a pip is 0.01.

D) The gap between the buy price and the sell price

If you can buy at 1.1002 and sell at 1.1000, the spread is 2 pips. It is a cost you pay each time you open a trade.

C) 24 hours a day, Monday to Friday

Trading passes from Sydney to Tokyo to London to New York, so the market runs around the clock on weekdays and closes at the weekend.

B) If the euro rises against the dollar

Buying a pair means you expect the first currency to get stronger than the second.

D) If the pound falls against the dollar

Selling a pair means you expect the first currency to get weaker. In forex you can profit from prices going down as well as up.

A) 100,000

1 standard lot is 100,000 units, a mini lot is 10,000 and a micro lot is 1,000. Most beginners start with micro lots.

B) EUR/USD

Major pairs match the US dollar with another big currency, such as EUR/USD, GBP/USD or USD/JPY. They usually have the lowest spreads.

C) USD

USD is the US dollar. You will see it in pairs such as EUR/USD and USD/JPY.

A) The euro

EUR is the euro, the currency shared by the countries of the euro area.

B) Japanese yen

JPY is the Japanese yen. USD/JPY is one of the most traded pairs.

D) GBP

GBP stands for Great Britain pound. Traders also call it sterling.

C) Swiss franc

CHF comes from Confoederatio Helvetica, the Latin name for Switzerland.

A) Australian dollar

AUD is the Australian dollar, often called the Aussie.

C) CAD

CAD is the Canadian dollar. USD/CAD is a major pair.

D) CNY

CNY is the official code. Renminbi (RMB) is the name of the currency, and the yuan is its unit.

B) Gold

XAU is gold (Au is gold's chemical symbol). XAU/USD is the price of one ounce of gold in dollars. Silver is XAG.

D) New Zealand dollar

NZD is the New Zealand dollar, nicknamed the kiwi.

A) Sydney, Tokyo, London, New York

The trading day moves from Sydney to Tokyo, then London, then New York.

C) London

London handles the biggest share of forex trading in the world, so prices usually move most during its hours.

B) When London and New York are both open

For a few hours each afternoon (London time), both London and New York are open. More traders means tighter spreads and bigger moves.

C) Tokyo (Asian) session

Japanese banks and traders are active in the Tokyo session, so yen pairs see more trading then.

A) New York session

US reports such as Non-Farm Payrolls come out at 8:30 a.m. New York time, so prices can jump during the New York session.

B) They get wider

With fewer traders active, buy and sell prices are further apart, so trading at quiet times costs more.

D) News came out while the market was closed

The market closes at the weekend, but news does not stop. The price can open with a jump, called a weekend gap.

A) London

Both the euro and the pound are European currencies, so their pair is busiest when European markets are open.

C) Spreads are tighter and price moves are clearer

More traders means more buyers and sellers, which usually means lower costs and cleaner price moves.

D) To see when big news could move prices

The calendar lists upcoming news such as interest rate decisions. Prices can move fast around these times, so many beginners avoid trading just before them.

B) Closes a losing trade at a price you choose

Example: you buy at 1.1000 and set a stop-loss at 1.0980. If the price falls there, the trade closes and your loss stops at 20 pips.

A) Closes your trade automatically when it reaches your profit target

It locks in your profit at the level you planned, even if you are not watching the screen.

C) Never risk more than 1% of your account on one trade

If one trade goes wrong, you lose only a small part of your account and can keep trading.

B) $10

1% of $1,000 is $10. Set your stop-loss and trade size so a loss is no more than $10.

D) You risk $1 to try to make $2

Your possible profit is twice your possible loss. You can then be wrong more often than you are right and still not lose money overall.

A) It keeps you in the game after a run of losses

Lose 10 trades in a row at 1% each and you still have about 90% of your money. At 10% each, you would lose about two thirds.

C) One big move against you can wipe out much of your account

Prices can move a long way very fast, for example after surprise news. A stop-loss caps how much one trade can cost you.

B) Money you can afford to lose

Most retail traders lose money. Only trade money that would not hurt your daily life if it were gone.

C) 100%

$1,000 down 50% is $500. To get back to $1,000, the $500 must double, which is a 100% gain. Big losses are very hard to win back.

D) You are making almost the same bet twice

Both pairs often move the same way against the dollar, so if one trade loses, the other often loses too.

A) Buying power from your broker that lets you open a bigger trade than your deposit

With 1:100 leverage, $100 of your money controls a $10,000 trade. Your profit or loss is based on the full $10,000.

C) $10,000

$100 × 100 = $10,000.

B) Both your profits and your losses

Leverage works both ways. A small move against you can cause a large loss.

A) Money set aside from your account to keep a trade open

Margin is like a deposit. It is held while the trade is open and returned when you close it, plus or minus your profit or loss.

D) A warning that your account is running too low to keep your trades open

Losses have eaten into your account. You need to add money or close trades, or the broker may close them for you.

C) Your broker automatically closes trades because your account money is too low

When your account falls to the broker's stop-out level, it closes your trades to stop the losses growing.

B) You cannot lose more than the money in your account

Even after a very sudden market move, your balance will not go below zero, so you will not owe the broker money.

C) $0.10

A micro lot is 100 times smaller than a standard lot, so a pip is worth about 10 cents. That is why beginners start small.

A) No, lower leverage and small trades are safer

High leverage tempts you to open trades too big for your account. UK and EU rules limit retail traders to 30:1 on major pairs for this reason.

D) Money in your account that is not being used to hold open trades

Free margin is what you have left to open new trades or to absorb losses on the trades you already have.

B) A price area where a falling price often stops and bounces

At support, buyers tend to step in. Think of it as a floor under the price.

A) A price area where a rising price often stalls or turns down

At resistance, sellers tend to step in. Think of it as a ceiling above the price.

C) New support

The old ceiling often becomes the new floor. Traders call this a role reversal.

D) Price usually reacts around an area, not one exact price

Price often pokes a little past a level before turning. A zone gives it some room.

B) Many traders place orders near round numbers, so price often reacts there

Round numbers are easy to remember, so lots of buy and sell orders gather around them.

A) Price moves clearly past a support or resistance level

A breakout can be the start of a new move, but wait for confirmation, because many breakouts fail.

C) Price breaks a level and then quickly comes back

It traps traders who jumped in too early. Waiting for a candle to close beyond the level can help avoid it.

B) One price has bounced from several times, especially on daily or weekly charts

The more often a level has held, and the bigger the chart timeframe, the more traders are watching it.

A) Just below the support area

If price falls clearly below support, your idea was wrong, so the stop goes a little below the zone.

D) Higher highs and higher lows

In an uptrend, each peak and each dip is higher than the one before.

B) Rushing into new trades to win back money you just lost

Angry, rushed trades usually break your rules and lead to bigger losses.

A) Jump into a trade after a big move has already happened

By the time a move looks exciting, much of it may be over. Chasing it often means buying near the top.

C) Written rules for when to enter, when to exit and how much to risk

A plan decides for you in advance, so you are not making choices in the heat of the moment.

D) You spot mistakes you keep repeating so you can fix them

Write down why you entered, how you felt and what happened. Patterns soon become clear.

B) Taking too many trades, often out of boredom or to win back losses

More trades means more costs and more chances to break your rules. Quality beats quantity.

A) Accept it as a normal cost of trading and move on

Every trader has losing trades. A planned, small loss is part of the job.

C) Take a break and review what happened

A short break protects your money and your mood. Review the trades with a clear head before trading again.

D) Greed taking over from your plan

Changing the plan mid-trade often turns a winner into a loser when the price turns back.

B) You can practise with virtual money before risking real money

Mistakes on a demo cost nothing. Real money feels different, so start live with small trades.

A) Following your rules and managing risk every time

No one predicts every move. Consistent rules and small risk keep you trading long enough to improve.

B) GBP/USD

The name comes from the telegraph cable under the Atlantic that once carried pound-dollar prices between London and New York.

D) The US dollar

Greenback is a nickname for the US dollar, from the green ink on its notes.

B) Canadian dollar

Canada's $1 coin shows a loon, a water bird, so the Canadian dollar is called the loonie.

A) The Australian dollar

Aussie is short for the Australian dollar (AUD).

C) New Zealand dollar

The kiwi is New Zealand's national bird and appears on its $1 coin.

B) Swiss franc

Swissie is the Swiss franc (CHF).

C) EUR/USD

Some traders call EUR/USD Fiber. It is the most traded currency pair in the world.

A) British pound

Both mean the British pound (GBP).

B) GBP/JPY

GBP/JPY is the Guppy. It is known for big daily moves, so it is not the easiest pair for beginners.

D) The US dollar to rise

Buck is slang for the US dollar, and long means they bought it, so they expect it to rise.