## Welcome to the quiz

• There's no time limit, so you can spend as long as you like on each question.
Question 1 of 10

### What's the best way to ensure a position will be closed at exactly the level where you want to exit, if you make a loss?

• A Set a limit order
• B Set a stop order
• C Set a guaranteed stop
• D Watch the market constantly, day and night

### Explanation

A stop is a resting order that will close your position if the market hits the level you specify. Using a guaranteed stop means you won't experience any slippage beyond that price.

Question 2 of 10

### What are the benefits of setting a stop? (Select all that apply)

• You don't need to be logged in to your platform to close a position
• You don't need to make a difficult decision under pressure
• You're more likely to make a profit on the trade
• Your position will close if losses reach a level you specify

### Explanation

A stop automates the process of closing a trade if the market moves against you. So you can choose your exit point, then leave it to your platform to execute the decision you've made.

Question 3 of 10

### When is the best time to set a stop?

• A While opening the position
• B As soon as you go into profit
• C As soon as you start to make a loss
• D When your loss hits an unacceptable level

### Explanation

Ideally you should set your stop at the outset, so your position is never left unprotected. You can move stops later if necessary.

Question 4 of 10

### What is a risk vs reward ratio?

• A The number of losing trades you make versus the winners
• B A measure of your attitude towards risk
• C A comparison between the potential loss and profit on a trade
• D The mathematical probability of success on a trade

### Explanation

A risk vs reward ratio compares the amount you risk losing on a trade with the amount of profit you could possibly make.

Question 5 of 10

### Which of these techniques would you expect a professional trader to use to maximise their chances of profitability? (Select all that apply)

• Try to out-predict other traders and beat the market
• Focus more on levels of risk than potential returns
• Look for potential profit to exceed possible loss on each trade
• Adopt a negative risk vs reward ratio

### Explanation

It's impossible for humans to predict the future, so rather than focusing on winning more trades, professional traders tend to concentrate on reducing the impact of loss. Adopting a positive risk vs reward ratio means that the capital a trader risks is worthwhile in terms of the potential profit.

Question 6 of 10

### Explanation

It's possible to be profitable even if you're wrong 60% of the time, when you use a 1:2 risk vs reward ratio. Remembering our example of a coin game, if you flipped ten times, you'd lose £6 from your six failures, but make £8 from your four successes.

Question 7 of 10

• A 1:1
• B 1:2
• C 1:4
• D 4:1

### Explanation

Your risk is 100 pips and your potential profit is 400 pips, giving you a 1:4 risk vs reward ratio.

Question 8 of 10

• A True
• B False

### Explanation

You always need to consider the amount of trading capital you could lose on any one trade, even if you're using the recommended 1:2 risk vs reward ratio. A single bad trade can be enough to erase your account balance if you take on too much risk.

Question 9 of 10

• A 1-5%
• B 10%
• C 50%
• D 100%

### Explanation

For new traders, it's wise to risk no more than 1% of your trading capital per position. This will leave 99% of your account equity intact if the trade doesn't work out. More experienced traders could consider risking up to 5%, but remember that markets are by nature unpredictable and any trade can go wrong.

Question 10 of 10