Quiz | IG South Africa

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Question 1 of 10

If you have a full-time job, which of the following trading styles would not suit you?

Please select all answers that apply

Scalping
Momentum/swing trading
Position trading
Day trading

Explanation

Scalping and day trading require you to dedicate many hours of your day to monitoring your open positions. This is unlikely to suit someone with a full-time career.

Question 2 of 10

True or false: a drawdown is when one losing trade or investment dents 2% of your capital and negatively impacts your overall portfolio.

A True
B False

Explanation

A drawdown is when you have one or more losing trades or investments that significantly dent your capital, drawing down the total value of your portfolio.

A reckless or negligent trading strategy could cause heavy losses, even in a single trade.

Question 3 of 10

Say you’re building your portfolio and choose to include volatile stocks and several leveraged derivatives. Which risk profile is most applicable to your strategy?

A Risk averse
B Low risk
C Medium risk
D High risk

Explanation

Leveraged derivatives and volatile stocks are considered high risk because of their complexity.

Question 4 of 10

Which of the following financial instruments are leveraged?

Please select all answers that apply

Exchange-traded funds
Company shares and bank bonds
Contracts for difference
Exchange-traded commodities

Explanation

Contracts for difference are leveraged derivatives and allow you to take a larger position on an underlying market by paying a relatively small outlay.

Question 5 of 10

Which of the following could be considered benefits of trading with leverage?

A You can trade on rising and falling markets
B Take a larger position with a relatively small outlay
C Potential profits (and losses) are magnified
D All of the above

Explanation

All of the above answers (A,B and C) are true. However, leveraged trading is not exempt from risk.

Question 6 of 10

You open a CFD and buy three contracts on the FTSE 100 (R10 per contract) and two contracts on the NASDAQ (R15 per contract). If both indices rise by two points, which position will give you a greater profit?

A Both will give you an equal profit
B FTSE 100
C NASDAQ

Explanation

Although you bought fewer contracts on the NASDAQ, the larger contract value increases the overall gain which matches the value of your contracts on the FTSE 100.

Your FTSE 100 profit is 3 x R10 x 2 = R60

Your NASDAQ profit is 2 x R15 x 2 = R60

Question 7 of 10

Say a share in Apple Inc is currently trading at 195.420. Marie thinks that the market price will appreciate, so she purchases 100 share CFDs. By the time she closes the trade, the price has fallen to 194.210. What would her profit or loss be?

A R121 profit
B R121 loss
C R21 profit
D R21 loss

Explanation

Because Marie went long and the market fell, she didn’t benefit. Her loss would be calculated as follows:

([195.420 – 194.210] x R100) = R121, excluding any additional costs.

Question 8 of 10

Which of the following statements defines the difference between a spot price and futures price?

A They’re the same thing
B The spot price is the market price for an asset in a particular location while the futures price is the price of a futures contract for an asset
C The spot price is the current market price for an asset while the futures price is the guaranteed value of an asset tomorrow
D The spot price is the current market price for an asset while the futures price is the price of a futures contract for an asset

Explanation

Spot prices refer to the price at which sellers and buyers value a particular asset right now, which means they deal with immediate transactions. On the other hand, futures prices are created with delayed payments in mind.

Question 9 of 10

John believes that the price of GBP/EUR is likely to fall. If he wants to trade it with an option, which course of action will result in a profit if his prediction occurs?

A John should buy a call option
B John should buy a put option

Explanation

Because he thinks the market is likely to depreciate, John should buy a put option as it will give him a short position.

He’d have the right to sell at a price that he set, which may be higher than the market. The further the market drops, the more profit John could make.

Question 10 of 10

True or false: a multi-product strategy includes both trading and investment products and creates diversification in your portfolio.

A True
B False

Explanation

While a multi-product strategy does create diversification in a portfolio, it doesn’t always include both trading and investment products – it can include different products from one category.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. Clients can lose more than they deposit. All trading involves risk.

IG is a trading name of IG Markets Limited and IG Markets South Africa Limited. IG Markets South Africa Limited offers domestic accounts and IG Markets Limited offers international accounts.

IG Markets South Africa Limited is authorised and regulated by the Financial Sector Conduct Authority (in South Africa) as an over-the-counter derivative provider and an authorised financial services provider (FSP No 41393). IG Markets Limited is authorised and regulated by the Financial Conduct Authority (in the UK).

IG provides execution only services and enters into principal-to-principal transactions with its clients on IG’s prices. Such trades are not on exchange. Whilst IG Markets South Africa Limited is a regulated FSP and acts as an intermediary as understood in the FAIS Act in relation to the international accounts offered by IG Markets Limited, CFDs issued by IG are not regulated by the FAIS Act as they are undertaken on a principal-to-principal basis. CFDs issued by IG Markets South Africa Limited are regulated by the Financial Markets Act, and IG Markets South Africa Limited is a licenced over-the-counter derivative provider.

South African residents are required to obtain the necessary tax clearance certificates in order to utilise their foreign investment allowance should the South African resident wish to open an international account with IG Markets Limited.

The information on this site is not directed at residents of the United States or Belgium or any particular country outside South Africa and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Voted SA’s top CFD provider in Business Day Investors Monthly Annual Stockbroker Awards in 2012, best platform for Active Day Traders in 2013 and 2014, SA's best Online Broker in 2015 and 2017 and SA's best CFD provider in 2020 as well as SA's Top CFD Broker in 2021.

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Welcome to the quiz

If you have a full-time job, which of the following trading styles would not suit you?

Explanation

True or false: a drawdown is when one losing trade or investment dents 2% of your capital and negatively impacts your overall portfolio.

Explanation

Say you’re building your portfolio and choose to include volatile stocks and several leveraged derivatives. Which risk profile is most applicable to your strategy?

Explanation

Which of the following financial instruments are leveraged?

Explanation

Which of the following could be considered benefits of trading with leverage?

Explanation

You open a CFD and buy three contracts on the FTSE 100 (R10 per contract) and two contracts on the NASDAQ (R15 per contract). If both indices rise by two points, which position will give you a greater profit?

Explanation

Say a share in Apple Inc is currently trading at 195.420. Marie thinks that the market price will appreciate, so she purchases 100 share CFDs. By the time she closes the trade, the price has fallen to 194.210. What would her profit or loss be?

Explanation

Which of the following statements defines the difference between a spot price and futures price?

Explanation

John believes that the price of GBP/EUR is likely to fall. If he wants to trade it with an option, which course of action will result in a profit if his prediction occurs?

Explanation

True or false: a multi-product strategy includes both trading and investment products and creates diversification in your portfolio.

Explanation

Markets

CFD trading

Trading platforms

IG analysis

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