Futures Knowledge - Risk Awareness

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Home > Forex > Risk Awareness
Article By Rick Thachuk
World Link Futures

FOREX trading is risky. Anyone who is contemplating FOREX trading should understand the following:
THE RISK OF LOSS IN TRADING FOREX CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. FOREX TRADING IS NOT SUITABLE FOR EVERYONE.

ALWAYS TRADE WITH RISK CAPITAL, THAT IS, MONEY THAT YOU CAN AFFORD TO LOSE.

LEVERAGE CAN WORK FOR YOU OR AGAINST YOU. If you are trading with high leverage, then even a small move against your position may result in a large loss, including the loss of your entire initial deposit. And keep in mind that the market can always move against you. No one can predict prices with certainty.

The trading system could break down. If you are using an Internet-based or other electronic system to place trades, some part of the system could fail. In the event of a system failure, it is possible that, for a certain time period, you may not be able to enter new orders, execute existing orders, or modify or cancel orders that were previously entered. A system failure may also result in loss of orders or order priority.

In the FOREX market, you are relying on the creditworthiness and reputation of the other party to the transaction. FOREX trades are not guaranteed by a clearing organization. Furthermore, funds that you have deposited to trade FOREX may not be insured or receive a priority in bankruptcy.

See Also:
Managing the Risk

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