115. Forex Trading Fundamentals Quiz - Test Your Knowledge



Lesson Link: http://www.informedtrades.com/26444-forex-trading-quiz-test-your-basic-forex-fundamentals-knowledge.html As we now have a basic understanding of how trade flows and capital flows move the forex market, the next step is to look at each of the individual currencies we will be focusing on so we can gain an understanding of their backgrounds, and the makeup of their economies. Once we have an understanding of this it will become clear what fundamental factors are the most important drivers of individual currencies, and therefore what we as traders should watch for. Before we get into this however it is very important that everyone has a sound understanding of how trade flows and capital flows move the forex market (which is covered in module 3 of this course) as well as the following concepts, all of which are covered in module 8 of our free basics of trading course located in the free course section of InformedTrades.com: - We all need to understand what the business cycle is. - The difference between monetary and fiscal policy. - What a central bank is and how they go about changing interest rates. In module 8 of the basics of trading course we cover the Federal Reserve which is the central bank in the United States. While the central banks that we are going to be covering going forward may differ in how aggressive they are with monetary policy in relation to the Federal Reserve, the methods they use to conduct monetary policy, and the reactions of the forex market that monetary policy generates, is basically the same no matter what central bank you are looking at. - The first currency we will be covering will be the US Dollar, so you should have a good understanding of the basic components of the US Economy. I am going to give everyone 10 questions here that you should now have the knowledge to answer if you have been through module 8 of my free basics of trading course, and module 3 of this course. To help make it interesting for everyone, I will offer a free copy of Kathy Lien's excellent book Day Trading the Currency Market, to the first person that posts the correct answers to all 10 questions in the comments section of this lesson on InformedTrades.com. If you are watching this video on Youtube you can find a link to this lesson on InformedTrades to the right of the video. Ok so here we go: 1. If inflation is low and a Central Bank is concerned about recession, what would the expected monetary policy response be? 2. If inflation and growth are both high what would the expected monetary policy response be? 3. If a central bank raises interest rates, what affect if any is this expected to have on the currency of that country, all else being equal? 4. If a central bank lowers interest rates, what affect if any is this expected to have on the currency of that country, all else being equal? 5. If a country's imports grow and all other trade and capital flows remain equal, what affect would this have on the current account and what would be the expected affect on the currency if any? 6. If a country's exports grow and all other trade and capital flows remain equal, what affect would this have on the current account and what would be the expected affect on the currency if any? 7. If a country is a major exporter of gold and the price of gold moves up by 50% over the course of a year, what would be the expected affect if any on that country's currency all else being equal? 8. Japan is a major importer of oil and Canada is a major exporter of oil. If the price of oil goes up by 50% over the course of a year, then what affect if any should this have on the CAD/JPY currency pair all else being equal? 9. Traders who follow US Dollar fundamentals pay particular attention to any numbers which reflect the overall health of the consumer. Why? 10. The US Economy in the past was referred to as an Industrial Economy, now it is referred to more as a ________________ Economy. Once the first person posts the right answers to all 10 questions I will send a private message to them via the forum to request the mailing address where they would like their free copy of Day Trading the Currency Market sent. That's our lesson for today. In tomorrow's lesson we will begin a discussion on the fundamentals that move each of the main currencies we will be focusing on, starting with the US Dollar, so I hope to see you in that lesson.

Comments

  1. has someone won ?
  2. 6. Increasing the value of the currency, increase demand for the currency
    7. Currency value goes high because of demand for the currency to buy gold
    8. Jpy will rise in value
    9. Explaination needed
    10. Explaination needed..
  3. 4. Lowering the currency value because of no demand for that currency
    5. Lower the value of the currency , increase supply of the currency in the market
  4. 1. Lower the tax rate, and increaing GDP
    2. Increasing the taxes and decreasing govt spending
    3. Increasing the currency value because of the demand for that currency
  5. Hihi, have you seen the Thaintorm Forex System? (google it). My mate says it helps people gain plenty of profits.
  6. You guys should check out this EXTRAORDINARY website called FIREPA.COM . You can make money online and start working from home today as I am! I am making over $3,000+ per month at FIREPA.COM ! Visit Firepa.com and check it out! The gold bisons the part. How does the sky act the absurd stretch?
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  8. 1 lower interest rate 2 raise interest or print more cash 3 currency rise 4 currency decrease 5 negative current account balance and decrease in currency 6 positive current account balance and increase in currency 7 currency decrease 8 increase in CAD and decrease in JYN 9 more consumption means higher interest rate, and vise versa 10 service 6
  9. anyone seen #113?
  10. Hey Forexfrenzy, For some reason sometimes the videos don't play but I haven't removed any of the videos so if you refresh the screen normally it will start to play even when it says its no longer available. Best Regards, Dave


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