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Which of the following are correct with respect to foreign exchange market
A. Short position= supply of currency < demand="" for="" currency.="" b.="" short="" position="supply" of="" currency="" /> demand for currency.
C. Long position=supply of currency > demand for currency.
D. Long position=supply of currency < demand="" for="" currency.="" e.="" square="" position="supply" of="" a="" currency="demand" of="" a="" currency.="" 1.a="" c="" &="" e="" 2.="" b="" d="" &="" e="" 3.="" b="" c="" &="" e="" 4.="" a="" d="" &="" e?="" demand="" for="" currency.="" e.="" square="" position="Supply" of="" a="" currency="demand" of="" a="" currency.="" 1.a="" c="" &="" e="" 2.="" b="" d="" &="" e="" 3.="" b="" c="" &="" e="" 4.="" a="" d="" &="" />
A. Short position= supply of currency < demand="" for="" currency.="" b.="" short="" position="supply" of="" currency="" /> demand for currency.
C. Long position=supply of currency > demand for currency.
D. Long position=supply of currency < demand="" for="" currency.="" e.="" square="" position="supply" of="" a="" currency="demand" of="" a="" currency.="" 1.a="" c="" &="" e="" 2.="" b="" d="" &="" e="" 3.="" b="" c="" &="" e="" 4.="" a="" d="" &="" e?="" demand="" for="" currency.="" e.="" square="" position="Supply" of="" a="" currency="demand" of="" a="" currency.="" 1.a="" c="" &="" e="" 2.="" b="" d="" &="" e="" 3.="" b="" c="" &="" e="" 4.="" a="" d="" &="" />
Most Upvoted Answer
Which of the following are correct with respect to foreign exchange ma...
Understanding Positions in the Foreign Exchange Market
In the foreign exchange (Forex) market, traders take positions based on their expectations of currency movements. It's essential to understand the concepts of short and long positions correctly.
Short Position
- A short position occurs when a trader sells a currency they do not own, anticipating that its value will decline.
- This involves the supply of currency being greater than the demand, as traders are willing to sell more currency than they wish to buy.
- Therefore, the correct understanding is Short Position = Supply of Currency > Demand for Currency.
Long Position
- A long position is taken when a trader buys a currency, expecting its value to rise.
- In this case, the demand for the currency is greater than the supply because the trader is purchasing more currency than they are selling.
- Thus, the correct understanding is Long Position = Demand for Currency > Supply of Currency.
Clarifying Incorrect Statements
- Statement C ("Long position = supply of currency > demand for currency") is incorrect. A long position signifies higher demand than supply.
- Statement A ("Short position = supply of currency demand for currency") is also misleading. The correct relationship should emphasize that supply exceeds demand in a short position context.
Conclusion
Understanding these dynamics is crucial for effective trading in the Forex market, as it influences decision-making based on market trends and currency valuations.
In the foreign exchange (Forex) market, traders take positions based on their expectations of currency movements. It's essential to understand the concepts of short and long positions correctly.
Short Position
- A short position occurs when a trader sells a currency they do not own, anticipating that its value will decline.
- This involves the supply of currency being greater than the demand, as traders are willing to sell more currency than they wish to buy.
- Therefore, the correct understanding is Short Position = Supply of Currency > Demand for Currency.
Long Position
- A long position is taken when a trader buys a currency, expecting its value to rise.
- In this case, the demand for the currency is greater than the supply because the trader is purchasing more currency than they are selling.
- Thus, the correct understanding is Long Position = Demand for Currency > Supply of Currency.
Clarifying Incorrect Statements
- Statement C ("Long position = supply of currency > demand for currency") is incorrect. A long position signifies higher demand than supply.
- Statement A ("Short position = supply of currency demand for currency") is also misleading. The correct relationship should emphasize that supply exceeds demand in a short position context.
Conclusion
Understanding these dynamics is crucial for effective trading in the Forex market, as it influences decision-making based on market trends and currency valuations.
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Which of the following are correct with respect to foreign exchange market A. Short position= supply of currency demand for currency.C. Long position=supply of currency > demand for currency.D. Long position=supply of currency
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