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Frequently Asked Questions

  • What are futures contracts?
    Futures contracts are agreements to buy or sell an asset at a predetermined price on a specified future date. They are standardized and traded on futures exchanges.
  • How does margin work in futures trading?
    Margin is a performance bond that traders must deposit to open a futures position. It allows traders to control a larger contract value with a smaller amount of capital.
  • What is the difference between options and futures?
    While both involve derivatives, options provide the right (not obligation) to buy or sell an asset, while futures obligate the buyer and seller to fulfill the contract.
  • What are options?
    Options are financial derivatives that grant the holder the right (but not the obligation) to buy or sell an underlying asset at a predetermined price before or at expiration.
  • What is a call option vs. a put option?
    A call option gives the holder the right to buy the underlying asset, while a put option gives the right to sell it. Both options have an expiration date and a strike price.
  • How does options trading differ from stock trading?
    Options trading provides the opportunity to profit from price movements in the underlying asset with less capital. It also involves complex strategies and additional risk.
  • What is Forex trading?
    Forex trading, or foreign exchange trading, involves the buying and selling of currencies on the foreign exchange market. Traders aim to profit from changes in currency exchange rates.
  • How does leverage work in Forex trading?
    Leverage allows traders to control a larger position with a smaller amount of capital. While it magnifies potential profits, it also increases the risk of significant losses.
  • What are major and minor currency pairs?
    Major currency pairs involve the most widely traded currencies, such as EUR/USD and USD/JPY. Minor pairs exclude the US Dollar, like EUR/GBP and AUD/NZD.
  • How can I manage risk in trading?
    Risk management involves setting stop-loss orders, diversifying your portfolio, and only risking a small percentage of your trading capital on each trade.
  • Is trading suitable for everyone?
    Trading involves risk, and it may not be suitable for everyone. It's crucial to educate yourself, start with a well-thought-out strategy, and consider seeking advice from financial professionals.
  • Where can I learn more about trading?
    Wealth Building Empire offers educational resources, and reputable financial websites, books, and courses can provide valuable insights. Additionally, consider joining trading communities for knowledge-sharing and support.
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