Wednesday, November 30, 2011

Risks of Forex

The main risks arising from work in the Forex market are associated with margin trading, telecommunication means and channels, the peculiarities of the foreign exchange market, the broker.

Margin Trading

High leverage is a potentially high profits and large losses. Even a slight change in the exchange rate in an unfavorable position for the trader side can lead to losses in the amount of your investment.

To reduce these risks, comply with the minimum rules of money management: use in commercial transactions only part of the funds to protect the commercial position of excessive damages.


Market volatility

High volatility, periods of volatile market with jerky movements of exchange and price breaks, as answer to economic, political and other world events may not be able to bargain for the best price, including the use of pre-exposed (pending) orders.

Since the Forex market is the OTC, and there is no single source of foreign exchange quotes, quotes one broker may be more or less preferred one time or another.

Hardware, software


Disruptions in the specialized software for trading, breakdown of equipment, problems with internet access and other technical failures may make it impossible to conduct the transaction.

In that case, the broker will always provide an opportunity to place a trade order by phone.

Broker

In the absence of the Russian Federation legislation directly governing the relationship of participants Forex among market operators are not only legal forms of brokerage services in Forex, and a variety of gray schemes. The controversial status of "brokers" who do not have any major regulatory bodies, or licenses to conduct financial transactions or programs to protect investors in case of insolvency of a broker, questioned the safety of customers and capital affects the quality of order execution. In this regard, hiring the right choice broker.


The above list does not cover all possible risks.

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