Disclaimer Info
Risk Disclosure
Forex trading can be challenging, sophisticated and experienced traders may make a profit. However, before deciding to enter the foreign exchange market, you should carefully consider your investment objectives, level of experience and your personal tolerance of the associated risk.
More importantly you should realistically gauge your level of investment, do not invest all your funds.
Any foreign exchange transactions carry with them a significant risk. Currency related transactions will be exposed from risks in the areas of but not limited to, potential changes in the political environment and / or economic conditions of said specified currency. Such changes may result in a significant impact on the price or liquidity of a specific currency.
In addition, Foreign exchange trading is by nature a leveraged trade, that is to say various market dynamics have the ability to affect your deposited funds. However the impact of said leverage will always be proportional to your personal selections. Your personal decisions towards leverage may work against you, however they may also be to your personal advantage.
You may sustain a total loss of your initial margin, and may require a margin call to maintain your position. In the event you are unable to establish a margin call within the specified time, your position will be liquidated and said losses will be absorbed at your own risk.
Investors may be using various hedging strategies to reduce risks, such as “STOP”, or “Limited” orders.
Risk Management
The Forex market is the worlds largest and most liquid of the various financial markets available. Macroeconomic strength of the global economy at any time is a major factor in the current real time monetary value of a foreign currency, therefore the various trends are most easily observed and recognizable through the observation of various currency law.
Thus for positive type traders, the forex market is a very attractive option and in theory they are the most likely to be successful. However successful traders are limited by many factors, the main factors include but are not limited to Many initial traders have an unrealistic expectation of profit potential and can lack the necessary trade principles to be a competent trader.
Short term trading is not suitable for amateur investors, for the majority of people short term trading is not a shortcut to quickly gain wealth. Although the foreign exchange market has its own unique characteristics and an investors familiarity and experience with the foreign exchange market does not directly correlate with that of traditional markets, (i.e equities, future and other various markets) this does not mean investors should disregard basic financial rules and simple logical judgement.
Investors cannot expect not to take any risk and obtain a high yield profit. Doing so may result in an unstable trading performance, and often the investor can be subjected to high losses. Currency trading is not simple, many trader with years of experience still often suffer losses. Investors must be understand that it takes time to learn forex trading and become competent, this process has no shortcuts.
Foreign exchange transactions most attractive feature is the use of high leverage. For those investors with the expectations of taking a small initial fund and generating a high yield in a short period of time utilizing leverage can be very attractive.
However leverage must be viewed as a double edged sword. On the One hand, a single lot of (US $ 10,000) Currency really only requires a minimum deposit of $ 100, but that does not mean that funds of the account in the amounts of $ 1,000 trades can easily trade ten lots of said currency. A lot is equal to the amount of US $10,000, therefor 10 lots are equal to that of $100,000 rather than the initial margin of US $1000.
Most investors will conduct technical analysis and / or fundamental analysis, and then under his own judgment place the order (trade). Unfortunately, these investors are also easily exposed to excessive use of leverage (that is, the position size is too large, exceeding the capacity of its portfolio), the direct consequences of such a situation are that they are often forced to close the lot at the wrong time.
For example, if your account value is $ 10,000 and pending orders One hand, your actual leverage ratio of 10 to 1, which is already a quite high leverage. The majority of professional money managers will not exceed a leverage amount in excess of 3 / 4 times.
In forex trading, if you use a gradual increase in the trade volume control, and the utilization stop loss orders to protect your positions, you will have a greater chance of success.