Importance of Risk Management

2. What Is Risk In Forex? • Any investment that offers potential profit also has downside risk, up to the point of losing much more than the value of your transaction when trading on margin. This article can help understand the risks so you trade successfully. • The following are the major risk factors in FX trading: • Exchange Rate Risk • Interest Rate Risk • Credit Risk • Marginal or Leverage Risk • Volatility Risk For Best Forex Signals www.equidiousresearch.com

3. What Is Risk In Forex?

4. Margin Risk What exactly is margin trading?  Margin trading allows you to utilize leverage.  Usually, when you are placing a forex trade, it is necessary for you to put up only a portion of the total value of the position as good faith.  Your trade is considered leveraged if you are able to enhance your position size with borrowed capital.  The amount which is required to be placed upfront is deemed as the margin requirement.  Many forex brokers allow their forex trading clients to leverage up to 100:1. But just because they allow such high leverage, doesn’t necessarily mean that is it a good idea for you to use it. For Best Forex Signals www.equidiousresearch.com

5. Volatility Risk Volatility Risk describes the degree of fluctuations within the markets and should certainly be included in a trader’s thought process.  Although many forex traders generally look at volatility in terms of being a negative uncertain risk element, there are many positive components of volatility as well.  Without at least a certain degree of volatility, it would be nearly impossible for a trader to benefit in their trading activities.  It’s usually during high impact news events that volatility can spike and become inordinately high. It is especially during these times that volatility can adversely affect a trader’s position. For Best Forex Signals www.equidiousresearch.com

6. Credit Risk Credit risk refers to the possibility that an outstanding currency position may not be repaid as agreed, due to a voluntary or involuntary action by a counterparty. Credit risk is usually something that is a concern of corporations and banks. For Best Forex Signals www.equidiousresearch.com

7. Exchange Rate Risk Exchange rate risk is the risk caused by changes in the value of currency. It is based on the effect of continuous and usually volatile shifts in the worldwide supply and demand balance. For the period the trader’s position is outstanding, the position is subject to all price changes. This risk can be quite substantial and is based on the market's perception of which way the currencies will move based on all possible factors that happen (or could happen) at any given time, anywhere in the world. For Best Forex Signals www.equidiousresearch.com

8. Interest Rate Risk Acountry’s interest rates and currency exchange rates are often linked hand and hand.  By carefully monitoring interest rate changes, you will know where big institutions are investing their assets in order to receive the greatest return possible. Many times big institutions focus on the carry trade, which is an interest rate differential based trade.  Generally, the higher yielding interest rate currency pairs attract greater demand. For Best Forex Signals www.equidiousresearch.com

9. Join 300,000+ traders who stay ahead of the market, submit your details with us by filling our CONTACT FORM. For the Best Forex Signal| Accurate Stock Signal| Profitable Comex Signals, Try Equidious Research Services. We have a team of best and well experienced Research Analysts.