Study Guide for Come Into My Trading Room - Forex Factory

88 ANSWERS AND RATING SCALES
tance between the market order and the transaction price; it is small in
quiet markets, greater in boiling markets. No expense is meaningless—
they all raise barriers to your success. Commissions and, at times, slippage
are what you pay for the privilege of entering a trading arena, and
their combination cannot be reduced below a certain minimum.
Answer 6
5. Give yourself five points for choosing the correct answer.
An important survival factor is the maximum percentage of the account
risked on any given trade. It would take a string of 50 losses to knock
traders 4 and 5 out of the game, but a mere five losses can dispatch
trader 3. A bigger account offers several advantages: the cost of services
eats up a smaller percentage and diversification is easier.
Answer 7
C. 3 and 4. Give yourself five points for choosing the correct answer,
or two points if you answered B (one correct out of two).
Earnings are important, but the market’s reaction to them is even
more telling. When a stock refuses to decline after a bad earnings
report, it shows that the bottom is near. A steep drop after a mildly disappointing
earnings report indicates further weakness ahead. Futures
can fall below the cost of production when desperate producers dump
their overstock, but they cannot stay there for long. Real-time data only
distracts beginners, as does watching a multitude of markets. Weekly
charts provide the essential long-term perspective, while the best software
in the hands of a yahoo is useless because knowledge and skills
carry more weight than any tools.