Top 3 Common Risks In FOREX Trading
Published on May 28th, 2015 | by Joan Makai
FOREX or Foreign Exchange trading has made a lot of men rich in the past few decades. And with a lot of people joining in the bandwagon, it still continues to give people of all ages and backgrounds a chance at more profitable lives.
But the one sure thing about FOREX is that it is risky. True, people have been winning in this game. But there are others who have lost millions as well.
So we’re counting down some of the common risks in forex trading which might cost you an arm and leg in this market. Knowing all these will help you be prepared and, hopefully, lessen the probability of squandering thousands of dollars in the process.
Political and Economic Crises
Because FOREX literally deals with currency trading, it is affected by economic crisis in any parts of the globe. Political events in a country millions of miles away from you have the ability to destabilize the economy as well. While some may sleep soundly at night knowing that it won’t spread to their neighborhoods, those dealing in FOREX should always be on the loop if they want to get the best chance of earning big in the trade.
The Death of Your Broker
One of the first things which you should look for if you do decide to involve yourself in this volatile world is a broker. Remember that your broker is the one responsible for your money. He, she or the company is the one making sure that you win and earn money. Make sure that you choose well because even the best in the business fails too. Things would go downhill if that broker went bankrupt or, worse, died.
Believe it or not, a seemingly simple thing such as power outage can make you lose your money in currency trading. Do remember that the FOREX market is open 24 hours, seven days a week. Trading happens at any time of the day. You have to be on the lookout at all times because the slightest fluctuation could mean thousands of dollars already. And while you’re waiting for the “ever-reliable” power company to bring back your electricity, you may have already lost your chance of getting those big deals.
How to Prepare In Case of These Instances
Choose a healthy broker who knows what he’s doing (or who won’t die any time soon). Get two, if you think you can afford it, for different set of currency you’re trading. Always have a back-up generator in case power outages take place. Be on the watch for any political or economic news so that you can make good decisions when it comes to your money.