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Forex broker interview questions

Опубликовано в The best forex news | Октябрь 2, 2012

forex broker interview questions

From these conversations you get a lot more forex tips, tricks and advice to help you become a more informed and profitable trader. Do you have any questions. Interviews with the Forex brokers help to understand the broker's structure and its vision on the traders. If you are already trading actively with some broker. Interview Questions for Traders: · 1. What do you think are the qualities that make a good Trader? · 2. What was the best trade you have ever made? · 3. What was. FINANCIAL AID FRAUDS It helps below guide months ago. The warnings can send a circular that are beans, whole. As a for power was no that set it apart.

Such that a swap transaction is the continuous sale or purchase of spot foreign exchange against a forward purchase or sale of an approximately equal amount of the foreign currency. In order to illustrate this, let us suppose a bank customer wants to buy dollars three months forward against British pound sterling.

Now the bank can handle this trade for its customer and simultaneously neutralize the exchange rate risk in the trade by selling borrowed British pound sterling spot against dollars. The bank will lend the dollars for three months until they are needed to deliver against the dollars it has sold forward. The British pounds received will be used to liquidate the sterling loan.

Triangular arbitrage can be defined as the process of trading out of the U. The sole objective is to earn an arbitrage profit via trading from the second to the third currency when the direct exchange between the two is not in alignment with the cross exchange rate. Most, but not all, currency transactions go through the dollar. Certain banks specialize in making a direct market between non-dollar currencies, pricing at a narrower bid-ask spread than the cross-rate spread.

Such that the implied cross-rate bid-ask quotations impose a discipline on the non-dollar market makers. If their direct quotes are not consistent with the cross exchange rates, a triangular arbitrage profit is possible. Some of the reasons due to which investors go to trade currencies instead of making use of other opportunities are - 1. Accessibility - Forex trading takes place on many different exchanges across the world, and as a result, investors can make currency trades 24 hours a day during weekdays.

Liquidity - Since there is so much activity, the global forex markets provide substantial liquidity to traders. While certain assets may be more difficult to buy and sell, traders interested in currencies will likely find substantial opportunities. Liquidity risk can occur around major news events if liquidity providers seek to limit their exposure to market volatility.

Leverage: Investors can potentially access far more leverage when trading currencies than they can when trading other assets. However, it is important to keep in mind that risk is inherent to investment. While using leverage to make larger trades can amplify returns, it can also amplify the size of losses. Global Exposure: Forex trading provides investors with an opportunity to obtain exposure to economies across the world. By taking a more international approach, traders might diversify more successfully or potentially achieve higher returns by putting their money to work in areas that have greater potential.

Once again, risk is inherent to investment, so no returns are guaranteed and investors must conduct their due diligence on regions. Low Trading Expenses: Because there are so many buyers and sellers, spreads are low and trading costs are modest. Indeed forex trading involves risk. The currency markets do experience sharp fluctuations, just like the stock, bond or commodity markets. Liquidity risk can increase around major news events.

Also there are some unscrupulous brokers out there. Due to which investors can benefit from performing substantial due diligence on any company they might work with. For instance they could trade the euro without owning it by buying or selling options that involve the currency. Additionally purchasing spot contracts or forward contracts involving currency of choice would also provide exposure.

When making trades, big banks employ professionals who may have significant education and experience. Due to which we can benefit greatly by doing your best to be prepared. When evaluating currency pairs, some traders use fundamental analysis, which involves analysing economic fundamentals in different countries. When using this technique, investors might look at GDP, inflation and unemployment in the two nations involved in an exchange rate.

Another resource traders can use is technical analysis, which require reading charts to get a better sense of the market sentiment surrounding a specific currency pair. On the other hand some traders may use both fundamental and technical analysis before making any transactions.

By doing so, they might be able to increase their chances of competing successfully with big banks. Trading forex on margin carries a risk of losses in excess of the deposited funds and may not be suitable for all investors. Forex Trading is not centralized on an exchange, as with the stock and futures markets. The Forex market is considered an Over the Counter OTC or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

It is truly a hour market, such that Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Such that investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

No forex trading is not expensive. Since most online Forex brokers allow customers to execute margin trades at up to leverage. But it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. Also a more pragmatic margin trade for someone new to the Forex markets would be but ultimately depends on the investor's appetite for risk.

We can consider margin essentially as a collateral for a position. Margin allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. In trading a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. In the given scenario, the investor benefits from a rising market. Where on the other hand a short position is one in which the trader sells a currency in anticipation that it will depreciate.

In this situation the investor benefits from a declining market. However, it is important to remember that every Forex position requires an investor to go long in one currency and short the other. Intraday positions are all positions which are opened and closed anytime during normal trading. Overnight positions are positions that are still on at the end of normal trading hours, which are usually rolled over by your Forex broker based on the currencies interest rate differentials to the next day's price.

Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, 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 intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices.

However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time. One of the most common risk management tools in Forex trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received.

Where a stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. The liquidity of the Forex market ensures that limit order and stop loss orders can be easily executed. Often a client will want to do an outright forward in which a transaction is locked in at a certain price for a future date.

Typically forwards will involve settlements in the near-term under a few weeks , but can hypothetically go out years. These points can either be negative in value or positive thus the forward rate can be above or below the current spot rate observed in the market. Importantly, what informs forward points is not the expectation of the future trading level of the currency per se, but rather the interest rate differential.

Forward points can be calculated by the following formula:. Where E2 is the secondary interest rate, E1 is the dominate interest rate, and t is the number of days to maturity. This gives us This can then be applied to the spot rate to get our ultimate forward rate.

This will decrease the value of the forward all else being held equal. So, if we look at the example above and increase the EUR 1 year rate of interest to 1. Similarly, if the interest rates of the base currency decrease, that will lead to an increase in the forward value.

Not too long ago I received an e-mail from someone who was going through the sales and trading prep course I put together. They were quite interested in EM FX because they knew an impressively large number of European languages. However, they were worried about the future of the industry due to how much automation has occurred in FX over the past few decades. The reality is that FX sales or trading within any large investment bank is a great training ground.

In fact, over the past ten years it's been one of the best. This is because with the rise of crypto trading platforms, crypto-focused hedge funds, and general fin-tech companies focused on cross-currency payments there has never been a greater demand for those who have been properly trained in FX at a large investment bank.

When you work at a large bank part of what you learn about is infrastructure. You learn how the sausage is made; how liquidity pools together, what to look for when markets feel tight, and how to deal with large flows of capital. Personally, I can't possibly see the number of people on FX desks within major investment banks declining over the next ten years.

The reality is that all the automation that really could have happened has already happened. That's perfectly understandable. However, when you join a desk that has solid exit opportunities always available to you, that should diminish any concern you have. Working at a fancy investment bank that's hard to break into will give you the kind of pedigree and prestige necessary to move to other exiting roles in burgeoning areas. If you're looking to join a sales and trading program, keep in mind that interviews are always for generalist positions.

Meaning even if you want to work in FX, for example, you won't be asked just FX questions. Here's a larger list of sales and trading interview questions I put together to help you in your prep. Just added to your cart. Continue shopping. Close search. FX Interview Questions If you want to skip around to some of the questions asked here, just click the links below.

Let's say you make a market for clients on JPY at Now, JPY is being quoted How is a forward rate arrived at in FX? What happens to a forward if the base currency's interest rates increase? Conclusion Not too long ago I received an e-mail from someone who was going through the sales and trading prep course I put together.

Best of luck!

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FOREX LOGICAL STRATEGY

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Some of the questions are very basic ones about the Forex market and how to trade currencies. There are other questions which get into the proposed legislation and further regulation of Forex trading and even the ethics of Spot Forex currency brokers! Thankfully, Josh Lampel was willing to rise to the occasion. I also wanted to allow him to provide you with the best, detailed answers possible. I told him that if he was going to do this he had to take the hard questions too, not just the easy ones.

Josh agreed without hesitation. Unfortunately I had a lot of trouble with the video after it was done and it was almost impossible to use … but after several days of wrestling with it and buying some new software, I was able to break it down into small chunks of about 10 minutes each and share it with you.

You can download GOM Player by clicking here. There was a lot of interest and I received hundreds of questions! I recorded the interview and put it in video format so he could share some slides as well. Here are some of the questions in the interview: What is Forex? What is the ideal capital requirement for a beginner?

What are the most important fundamentals? Where to get news? Do the insiders manipulate the market? By doing so, they might be able to increase their chances of competing successfully with big banks. Trading forex on margin carries a risk of losses in excess of your deposited funds and may not be suitable for all investors. Answer : Forex Trading is not centralized on an exchange, as with the stock and futures markets.

The Forex market is considered an Over the Counter OTC or 'Interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Answer : The Forex market is called an 'Interbank' market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks.

However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators. Answer : A true hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York.

Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night. Is Forex Trading Expensive? Answer : No. Most online Forex brokers allow customers to execute margin trades at up to leverage. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great.

A more pragmatic margin trade for someone new to the Forex markets would be but ultimately depends on the investor's appetite for risk. Answer : Margin is essentially collateral for a position. It allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. Answer : In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price.

In this scenario, the investor benefits from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every Forex position requires an investor to go long in one currency and short the other.

Answer : Please check our extensive Glossary for detailed definitions of all Forex related terms. Answer : Intraday positions are all positions which are opened and closed anytime during normal trading. Overnight positions are positions that are still on at the end of normal trading hours, which are usually rolled over by your Forex broker based on the currencies interest rate differentials to the next day's price.

How Are Currency Prices Determined? Answer : Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, 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 intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time. How Do I Manage Risk? Answer : The most common risk management tools in Forex trading are the limit order and the stop loss order.

A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor's position. The liquidity of the Forex market ensures that limit order and stop loss orders can be easily executed.

Answer : Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, whereas fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor. The most dramatic price movements however, occur when unexpected events happen.

The event can range from a Central Bank raising domestic interest rates to the outcome of a political election or even an act of war. Nonetheless, more often it is the expectation of an event that drives the market rather than the event itself. How Often Are Trades Made? Answer : Market conditions dictate trading activity on any given day. As a reference, the average small to medium trader might trade as often as 10 times a day. Most importantly, because most Forex Brokers don't charge commission, traders can take positions as often as necessary without worrying about excessive transaction costs.

How Long Are Positions Maintained? As a general rule, a position is kept open until one of the following occurs:. What Is A Limit Order? Answer : A limit order is an order with restrictions on the maximum price to be paid or the minimum price to be received. Answer : A stop loss order is an order type whereby an open position is automatically liquidated at a specific price.

Often used to minimize exposure to losses if the market moves against an investor's position. As an example, if an investor is long USD at Popular Interview Questions. All Interview Questions. Forex Management Practice Test.

IT Skills. Management Skills. Communication Skills. Business Skills. Digital Marketing Skills. Human Resources Skills. Health Care Skills. Finance Skills. All Courses. All Practice Tests. Financial Accounting Interview Questions Question 3. Answer : The market participants that comprise the FX market can be categorized into five groups: international banks, bank customers, non-bank dealers, FX brokers, and central banks.

Financial Management Tutorial Question 5. Financial Management Interview Questions Question 6. Auditing Interview Questions Question Financial Accounting Interview Questions Question Banking Interview Questions Question Accounting Reports Interview Questions Question Financial Management Interview Questions Question What Is Margin?

Financial Advisor Interview Questions Question Management Information systems Interview Questions Question As a general rule, a position is kept open until one of the following occurs: realization of sufficient profits from a position.

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