{"id":3727,"date":"2008-08-25T11:57:30","date_gmt":"2008-08-25T16:57:30","guid":{"rendered":"http:\/\/magic1host.com\/blog\/2008\/08\/25\/5-risks-that-the-novice-forex-trader-needs-to-be-acquainted-with\/"},"modified":"2008-08-25T11:57:30","modified_gmt":"2008-08-25T16:57:30","slug":"5-risks-that-the-novice-forex-trader-needs-to-be-acquainted-with","status":"publish","type":"post","link":"https:\/\/magic1host.com\/blog\/?p=3727","title":{"rendered":"5 Risks That The Novice Forex Trader Needs To Be Acquainted With"},"content":{"rendered":"
by Donald Saunders<\/div>\n

Foreign currency trading trading, just like almost all other forms of trading, has risks and those new to foreign currency trading need to be acquainted with these before beginning to trade. Here we look at the five most common risks of foreign currency trading.<\/p>\n

1. Forex scams. In the past few years the industry has done a great deal to put its house in order and nowadays Forex scams are unquestionably far less common than they once were. They do however still exist.<\/p>\n

It is fairly easy to open a trading account, particularly using the Internet, and a Forex scam is simply a case of a crook setting up a website posing as a broker, inviting you to establish an account and deposit money into it and then disappearing without a trace.<\/p>\n

To make sure that you are not caught out you must check out any broker very carefully prior to opening an account. Pick a broker who has an association with a major financial institution (for example, a bank or insurance company) and who is additionally registered as a broker. In the US brokers are either registered with the Commodities Futures Trading Commission (CFTC) or are a member of the National Futures Association (NFA).<\/p>\n

2. Exchange Rates. One of the attractions of the foreign exchange market is that it can be particularly volatile with currencies moving significantly against each other in very short periods of time giving rise to fast and sizeable gains. However, the other side of the coin is that the volatility in themarket also produces large and rapid losses.<\/p>\n

Fortunately traders do have tools available to limit this risk and novice traders should learn how to use these tools and ensure that they make full use of them each time they enter a trade.<\/p>\n

3. Credit<\/a> Risk. As there are always two parties (a seller and a buyer) taking part in each trade there is always a chance that one party will fail to honor his or her commitment once a deal is completed. Normally this occurs when a bank or other financial institution declares insolvency.<\/p>\n

It is possible to lessen any credit risk considerably by trading only on regulated exchanges that insist on members being monitored to ensure their credit worthiness.<\/p>\n

4. Interest Rates. When you are trading a pair of currencies you need to llok for discrepancies between the interest rates in the two countries in question as a discrepancy can produce a difference between the predicted profit and that which you actually receive.<\/p>\n

5. Country Risk. Sometimes a government will intervene in the Forex markets in order to to restrict the flow of its country’s currency. This is unlikely to happen in the case of a major world currency but could occur in the case of less often traded minor currencies.<\/p>\n

Of course, these are merely some of the risks of foreign exchange trading and novice traders will have to familiarize themselves with the others as they go along. Nevertheless, a good understanding of the 5 risks detailed here is essential before you enter the trading arena.<\/p>\n

\n
About the Author:<\/div>\n
Visit LearningForexTradingOnline.com to learn about everything from automated Forex day trading<\/a> to real time Forex charts<\/a><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Foreign currency trading trading, just like almost all other forms of trading, has risks and those new to foreign currency trading need to be acquainted with these before beginning to trade. Here we look at the five most common risks of foreign currency trading.<\/p>\n","protected":false},"author":1543,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[77],"class_list":["post-3727","post","type-post","status-publish","format-standard","hentry","category-business","tag-business"],"_links":{"self":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3727","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/users\/1543"}],"replies":[{"embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3727"}],"version-history":[{"count":0,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=\/wp\/v2\/posts\/3727\/revisions"}],"wp:attachment":[{"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3727"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3727"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/magic1host.com\/blog\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3727"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}