Lesson 11 of 11 · 12 min
Course check: test yourself Ten questions across the whole course, and flashcards for every term you have met.
By the end you'll be able to
Recall the key terms from every lesson in the course Answer mixed questions on pairs, pips, leverage, orders and sizing Decide whether you are ready to move on to Reading Price Charts Free course
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Flashcards
Flip through the terms from the course. If one makes you hesitate, follow the link back to its lesson in the sidebar.
Forex Foundations terms
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Term Base currency Tap to reveal Definition The first currency in a pair. In EUR/USD it is the euro. The price tells you how much of the quote currency one unit of the base is worth. Term Quote currency Tap to reveal Definition The second currency in a pair. In EUR/USD it is the US dollar. Profits and losses are first measured in this currency. Term Bid price Tap to reveal Definition The price at which you can sell a currency pair. Always slightly lower than the ask. Term Ask price Tap to reveal Definition The price at which you can buy a currency pair. Always slightly higher than the bid. Term Spread Tap to reveal Definition The difference between the bid and the ask price. It is the main cost of trading and is paid the moment a trade opens. Term Pip Tap to reveal Definition The standard unit of price movement: 0.0001 for most pairs, or 0.01 for pairs quoted in Japanese yen. Term Pipette Tap to reveal Definition One tenth of a pip, the fifth decimal place many brokers display. Term Lot Tap to reveal Definition A standard trade size. A standard lot is 100,000 units of the base currency; a mini lot is 10,000; a micro lot is 1,000. Term Leverage Tap to reveal Definition Borrowed exposure from your broker that lets you control a larger position than your deposit. It magnifies both gains and losses. Term Margin Tap to reveal Definition The deposit your broker sets aside to keep a leveraged trade open. It is returned when the trade closes. Term Margin call Tap to reveal Definition A warning from your broker that your equity has fallen close to the margin required. If it keeps falling, positions are closed automatically. Term Equity Tap to reveal Definition Your account balance plus or minus the running profit or loss on open trades. Term Market order Tap to reveal Definition An order to buy or sell immediately at the best available price. Term Limit order Tap to reveal Definition An order to buy below the current price or sell above it. It waits until the market reaches your price. Term Stop order Tap to reveal Definition An order to buy above the current price or sell below it, triggered when the market reaches that level. Used to enter on breakouts. Term Stop loss Tap to reveal Definition An order that closes your trade automatically at a set price to limit your loss. Term Take profit Tap to reveal Definition An order that closes your trade automatically once it reaches a set profit. Term Trading session Tap to reveal Definition The hours when a major financial centre is open: Sydney, Tokyo, London and New York. The market is busiest when sessions overlap. Term Swap (rollover) Tap to reveal Definition The interest paid or earned for holding a position overnight, based on the interest-rate difference between the two currencies. Term Commission Tap to reveal Definition A fixed fee some brokers charge per trade, usually quoted per lot, instead of or in addition to a wider spread. Term Market maker Tap to reveal Definition A broker that takes the other side of your trade itself rather than passing it to the market. Term ECN / STP broker Tap to reveal Definition A broker that passes your orders through to liquidity providers rather than taking the other side itself. Term Risk per trade Tap to reveal Definition The amount you would lose if your stop loss is hit, usually expressed as a percentage of the account. Common guidance is 1 to 2%. Term Position size Tap to reveal Definition How much you trade, in lots or units. Set from your stop loss and the amount you are willing to risk, not the other way round. Term Demo account Tap to reveal Definition A practice account with virtual money that works like a real one. Used to learn a platform and test ideas without risk.
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Course quiz
Course quiz: 10 questions
Question 1 of 10
USD/CHF = 0.9000. What does this mean?
A One franc costs 0.90 dollars B One dollar costs 0.90 francs C The dollar fell 10% against the franc
Next question Question 2 of 10
You believe the euro will weaken against the pound. Which trade?
A Buy EUR/GBP B Sell EUR/GBP C Buy GBP/USD
Next question Question 3 of 10
GBP/USD is quoted 1.2700 / 1.2702. You sell one mini lot and immediately buy it back. What did it cost?
A Nothing, the price did not move B $2 C $20
Next question Question 4 of 10
USD/JPY moves from 150.20 to 149.70. How many pips?
A 5 pips B 50 pips C 500 pips
Next question Question 5 of 10
At 1:30 leverage, the margin for a $30,000 position is:
A $300 B $1,000 C $3,000
Next question Question 6 of 10
Which statement about leverage is true?
A Higher leverage makes a 50-pip move worth more B Leverage sets what you can open; position size sets what you risk C Margin is a fee paid to the broker
Next question Question 7 of 10
EUR/USD is at 1.0850. You want to sell only if it breaks below 1.0820. Which order?
A Sell limit at 1.0820 B Sell stop at 1.0820 C Buy stop at 1.0820
Next question Question 8 of 10
When is EUR/USD usually cheapest to trade?
A During the London–New York overlap B During the Sydney session C Just after New York closes
Next question Question 9 of 10
Which cost grows the longer a trade stays open?
A Spread B Commission C Swap
Next question Question 10 of 10
Account $10,000, risk 1%, stop 40 pips on GBP/USD. Position size?
A 0.25 lots B 2.5 lots C 0.025 lots
See my score What next
Scored 8 or more: you are ready for Reading Price Charts , which starts with candlesticks and trends.
Scored 5 to 7: revisit the lessons behind the questions you missed, then retake the quiz.
Below 5: go through the course again at a slower pace. There is no rush; the market will still be there.
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