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Currency Trading Interview Questions & Answers - Learning Mode

Currency Trading Interview Questions & Answers - Learning Mode

Currency Trading is the act of buying and selling (trading) different currencies of the world. The Foreign Exchange (or Forex) is the market that allows you to trade currencies in volume. The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of volume of trading, it is by far the largest market in the world. The main participants in this market are the larger international banks. Financial centres around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market does not determine the relative values of different currencies, but sets the current market price of the value of one currency as demanded against another.

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Currency Trading Interview Questions & Answers - Learning Mode
Try Currency Trading Interview Questions & Answers - Exam Mode
Question: What is Stop Loss order in a Currency Trading Market?

Answer: Stop Loss order in a Currency Trading Market is an order to buy or sell when a given price is reached or passed to liquidate part or all of an existing position. Source:
Question: What is Necessary Margin in a Currency Trading Market?

Answer: Necessary Margin in a Currency Trading Market is the guarantee (in monetary expression), which is required by the dealer to maintain an open position. Source:
Question: How are currency prices determined?

Answer: Currency prices are affected by a variety of economic and political conditions, but probably the most important are interest rates, international trade, inflation, and political stability. Sometimes governments actually participate in the foreign exchange market to influence the value of their currencies. They do this either by flooding the market with their domestic currency in an attempt to lower the price or, conversely, buying in order to raise the price. This is known as central bank interv Source:
Question: If there is 6 A of current through the filament of a lamp, how many coulombs of charge move through the filament in 1.75 s? A. 10.5 C B. 105 C C. 3.4 C D. 34 C

Answer: One Cancels the Other (OCO) Order in a Currency Trading Market is a combination of two orders in which the execution of either one automatically cancels the other. Source:
Question: What is Liquidation in a Currency Trading Market?

Answer: Liquidation in a Currency Trading Market is the closing of an existing position through the execution of an offsetting transaction. Source:
Question: Why exchange-traded futures? What's wrong with the currency forward market that has been existing in India for a long time?

Answer: The exchange-traded futures, as compared to OTC forwards, serve the same economic purpose, yet differ in fundamental ways. Exchange-traded contracts are standardised. In an exchange-traded scenario where the market lot is fixed at a much lesser size than the OTC market, equitable opportunity is provided to all classes of investors whether large or small to participate in the futures market. The other advantages of an Exchange traded market would be greater transparency, efficiency and accessibil Source:
Question: Who is Chartist in a Currency Trading Market?

Answer: Chartist in a Currency Trading Market is a person who attempts to predict prices by analyzing past price movements as recorded on a chart. Source:
Question: What is European Monetary System (EMS) in a Currency Trading Market?

Answer: European Monetary System (EMS) in a Currency Trading Market is the EU countries relation in currency sphere, which has a goal to provide a stable national currencies rates ratio. Another goal is the facilitation of stabilization of foreign economic relations in general. Source:
Question: What is Hedge in a Currency Trading Market?

Answer: Hedge in a Currency Trading Market is a transaction that reduces the risk on an existing investment position. Source:
Question: What are the benefits of trading in Currency Derivatives?

Answer: Currency Derivatives are very efficient risk management instruments and you can derive the below benefits:

i. Hedging: You can protect your foreign exchange exposure in business and hedge potential losses by taking appropriate positions in the same. For e.g. If you are an importer, and have USD payments to make at a future date, you can hedge your foreign exchange exposure by buying USDINR and fixing your pay out rate today. You would hedge if you were of the view that USDINR was going to Source:
Question: What is Closing a position in a Currency Trading Market?

Answer: Closing a position in a Currency Trading Market is the process of selling or buying a foreign exchange position resulting in the liquidation (squaring up) of the position. Source:
Question: What is Rate in a Currency Trading Market?

Answer: Rate in a Currency Trading Market is the price of one currency expressed in the unit price of another country's currency. Source:
Question: What is Market Close in a Currency Trading Market?

Answer: Market Close in a Currency Trading Market refers to the time of day that a market closes. In the 24 hour-a-day foreign exchange market, there is no official market close. 5:00 PM EST is often referred to and understood as the market close because value dates for spot transactions change to the next new value date at that time. Source:
Question: What is a Spot Market?

Answer: A spot market is any market that deals in the current price of a financial instrument. Futures markets, such as the Chicago Mercantile Exchange ( CME ), National Stock Exchange (NSE), MCX' SX, BSE offer currency futures contracts whose delivery dates may span several months into the future. Settlement of FOREX spot transactions usually occurs within two business days. Source:
Question: Which are the global exchanges that provide trading in currency futures?

Answer: Internationally, exchanges such as Chicago Mercantile Exchange (CME), Johannesburg Stock Exchange, Euronext.liffe, BM&FBOVESPA and Tokyo Financial Exchange provide trading in currency futures Source:
Question: What are the terms and conditions set by RBI for Banks to participate in exchange traded fx futures?

Answer: RBI has allowed Banks to participate in currency futures market. The AD Category I Banks which fulfill stipulated prudential requirements are eligible to become a clearing member and / or trading member of the currency derivatives segment of MCX-SX. AD Category I Banks which are urban co-operative banks or state co-operative banks can participate in the currency futures 09 market only as a client, subject to approval thereof, from the respective regulatory department of RBI. Source:
Question: What is Base Currency in a Currency Trading Market?

Answer: In terms of foreign exchange trading, currencies are quoted in terms of a currency pair. The first currency in the pair is the base currency. The base currency is the currency against which exchange rates are generally quoted in a given country. Examples: USD/JPY, the US Dollar is the base currency; EUR/USD, the EURO is the base currency. Source:
Question: In a series RLC circuit that is operating above the resonant frequency, the current A. lags the applied voltage B. leads the applied voltage C. is in phase with the applied voltage D. is zero

Answer: The last trading day of a futures contract on MCX-SX shall be two working days prior to the last working day (excluding Saturdays) of the month. The settlement price is the Reserve Bank of India's reference rate on the last trading day Source:
Question: What are the factors that affect the exchange rate of a currency?

Answer: "A country's currency exchange rate is typically affected by the supply and demand for the country's currency in the international foreign exchange market. The demand and supply dynamics is principally influenced by factors like interest rates, inflation, trade balance and economic & political scenarios in the country. The level of confidence in the economy of a particular country also influences the currency of that country." Source:
Question: What is a currency futures contract?

Answer: A currency futures contract is a standardized version of a forward contract that is traded on a regulated exchange. It is an agreement to buy or sell a specified quantity of an underlying currency on a specified date in future at a specified rate (e.g., USD 1 = INR 64.00). (Note: USD is abbreviation for the US Dollar, and INR for the Indian Rupee)." Source:

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