Major risks related to the Forex market

Discussion in 'Finance' started by Ashton Ellis, Apr 23, 2018.

  1. Ashton Ellis

    Ashton Ellis New Member

    You may think Forex market is all good. You may think it can be traded without any issues. Well, you can keep on assuming for different things but it will never be the reality. Even the traders in the United Kingdom have wrestled to trade the Forex market. They did know the market too well to run away from the issues in trading. However, the traders in the United Kingdom were able to manage the risks in trading. If you look at the naïve traders, they may fear the market when they read this article. But need not fear because you can trade Forex in spite of the risks involved. If the traders in the United Kingdom had shied away like naïve traders, would they have become successful now? So you should understand that it is not impossible to become successful and it is not impossible to handle risks. What you should do is to get along with the market. You should focus on the market situation and risks before making a decision. If you are clear with the trading path, the rest of the journey wouldn't be THAT tough. You should have the plan, the trading journal and so on. However, it is better to be aware of the risks.

    The market can be extremely volatile in nature without any prior notice. But most of the time it’s become wild after the major economic news release. For this very reason, you need to be very careful about your trade execution during the high level of market volatility. Doing all the math will not give the perfect scenario to trade this market. You will always have to deal with unexpected variables to become a profitable trader. Make sure you are trading the market with a professional broker like Saxo so that you get the best possible trading environment. The elites class broker will ensure that you stop loss orders are being executed at the right time thus minimize your loss to a great extent.

    The Leverage Risks
    If you are trading Forex, you should have a trading platform as well as an account. Without these two, you will not be able to trade Forex. However, when trading you should a small investment. The small amount is called margin. You should have this small amount to access the substantial trades. If there are small fluctuations in the price, the investor or the trader will receive a margin call and then, an additional amount should be paid. It is important to be vigilant during the volatile market situations because it can bring good as well as bad. If you do not know to handle the leverage risks you should work on it. If you are not familiar with the leverage risks you should make sure to focus on it more before entering to the live accounts. It is a benefit for the naïve traders that they can practice demo and then move to the live account. You can spend some time until you are okay with the leverage risks.

    The Interest Rate
    The risks related to interest rates are dangerous. You would have learned that interest rates have links to the exchange rate of the currencies. If there are changes in the interest rate it will definitely affect the exchange rates. If a country's interest rate increase the currency value strengths automatically. There are many factors that influence this situation. However, you should be aware of the risks related to the interest rate when you are trading Forex.

    The transaction Risks
    This risk involves risk of the exchange rate as well as the time differences during the transaction. The Forex market is available for 24 hours and if any trades take place, there can be changes in the exchange rate before the trading procedure is completed. This kind of risks may scare the naïve traders. But remember, through proper practice, you can manage the risks.
     

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