Welcome to the quiz
- Take the quiz as many times as you like. We'll record your best effort if you log in or sign up for IG Academy
- There's no time limit, so you can spend as long as you like on each question.
If you're anxious about the transition from a demo account to live trading with real funds, what SHOULDN'T you do?
Explanation
By sticking to small-size trades on markets you understand, and applying the tools and strategies that worked for you in your demo account, you should be able to stay within your comfort zone.
What will a trading plan help you to do?
Explanation
Your trading plan gives you a structure to follow in the complex world of the financial markets. By deciding what you want to achieve and planning how to get there before you start, you can avoid being side-tracked by emotions in the heat of the moment.
Which emotion might cause you to make a hair-trigger trade?
Explanation
When things have gone wrong, it's natural to feel anger. Angry traders sometimes respond by placing another trade without properly considering it, as a knee-jerk reaction. This is known as a hair-trigger trade.
What might you do if you go 'on tilt'?
Explanation
Emotions such as frustration and regret can place traders in a state of mind where they make irrational decisions rather than acting on common sense and hard evidence. This is called 'going on tilt'.
If you have a series of profitable trades, the chance that your next trade will also be profitable increases...
Explanation
The belief that 'I'm on a winning streak' is a common and dangerous delusion. Just because a certain market or set of circumstances has 'been lucky' in the past, it's not especially likely to be so again. Always assess the merits of each trade in its own right. The key to consistent profitability is your skill and care, not luck.
What might lead you to see only the news and information that supports your view of the markets?.
Explanation
If you're convinced that a particular market is set to rise, for example, you may find yourself dismissing any news or commentaries you read that indicate otherwise. Instead, you'll focus only on information that supports your view. This is confirmation bias.
Which of these personal characteristics are NOT likely to help you become a successful trader?
Explanation
Successful traders tend to be calm and rational. They act quickly and decisively when necessary, but are not impulsive or impatient. They know their own strengths and weaknesses, and have strategies to minimise the impact of their emotions on their trading.
What should you put in your trading diary?
Explanation
Your trading diary will help you review all the factors that contributed to your successes - or that had an impact when things didn't go so well. You should record everything that could potentially be relevant, including your emotional state at the time. This will help you replicate the things you did right and avoid repeating any mistakes. (Of course, if you think what you had for lunch could be relevant, by all means record it!).
Which of the following is NOT likely to help you time your trades correctly?
Explanation
Basing your trading decisions on facts rather than feelings is the most likely formula for success. Analyse the information available and plan your trades carefully. Tools such as stops, limits, alerts and algorithms can help you automate your trading, so you don't have to watch the markets constantly yourself.
A trend is a market's...
Explanation
Traders commonly misunderstand and misinterpret trends. A sudden change in market direction triggered by a news event is often temporary and probably doesn't mean the long-term trend has reversed.
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