Day Trading MCQs (Chapterwise Multiple Choice Questions)

What is a simple technique a beginning day trader would use?

Options contracts trading

Fundamental analysis

Regression analysis

News trading — using news releases about companies as indicators of stock prices

Answer & Explanation

Correct Answer: News trading — using news releases about companies as indicators of stock prices

Note: This Question is unanswered, help us to find answer for this one

What is "fundamental analysis"?

Stock analysis based on price and volume

Stock analysis based on the fundamentals of a company such as financial reports

Stock analysis based on a normal trading band

Stock analysis based on the previous day's trading mistakes

Answer & Explanation

Correct Answer: Stock analysis based on the fundamentals of a company such as financial reports

Note: This Question is unanswered, help us to find answer for this one

What is the best way to reduce variable expenses?

Working at the library using their computers

Working with a brokerage which charges low commissions from frequent traders

Refusing to pay commissions

Refusing to pay the margin requirements

Answer & Explanation

Correct Answer: Working with a brokerage which charges low commissions from frequent traders

Note: This Question is unanswered, help us to find answer for this one

What is meant by "range trading"?

Trading in stocks of appliance manufacturers

Trading in stocks based on news releases

Trading in stocks based on the analysis of company financials

Buying and selling stocks based on the history of trading within a certain price range

Answer & Explanation

Correct Answer: Buying and selling stocks based on the history of trading within a certain price range

Note: This Question is unanswered, help us to find answer for this one

What view of the market does a short seller have?

Bearish

Bullish

Indifferent

It does not factor into short selling.

Answer & Explanation

Correct Answer: Bearish

Note: This Question is unanswered, help us to find answer for this one

Why do arbitrage opportunities seldom exist?

Because the SEC looks for them and fixes them before traders can profit

Because the profits are so small they are not worthwhile

Because the law of one price — supply and demand will close the gap quickly

Because they are illegal

Answer & Explanation

Correct Answer: Because the law of one price — supply and demand will close the gap quickly

Note: This Question is unanswered, help us to find answer for this one

What would be an entry point for a range trader who is going long?

The high point in a price band

A price in the middle of a price range band

A price near or at the typically lower end of the range for a security

When the stock of an appliance manufacturer hits a new low

Answer & Explanation

Correct Answer: A price near or at the typically lower end of the range for a security

Note: This Question is unanswered, help us to find answer for this one

What does a limit order do?

It limits other traders' ability to buy the same stock.

When the stock price hits a certain trigger point, a market order to sell or buy a stock becomes effective.

It limits your taxation.

It limits how many transactions you can make in a day.

Answer & Explanation

Correct Answer: When the stock price hits a certain trigger point, a market order to sell or buy a stock becomes effective.

Note: This Question is unanswered, help us to find answer for this one

How can an investor ensure a specific entry point?

By placing stop loss orders

By placing a limit order

By short selling a stock

By not trading it

Answer & Explanation

Correct Answer: By placing a limit order

Note: This Question is unanswered, help us to find answer for this one

What is the concept of ignoring predetermined exit points to allow for further profit?

Short selling

Selling options contracts

Letting a stock run

Margin trading

Answer & Explanation

Correct Answer: Letting a stock run

Note: This Question is unanswered, help us to find answer for this one

Day Trading Quick Quiz

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