Friday, November 7, 2008

Forex Trading Risk

Forex offers an excellent opportunity to invest for people around the globe. People invest to make money. If the rate of returns on investment
is an indicator for successful investment forex tops on that list. It gives great returns on investment. There are many factors that make it special. Is it a safe investment? The answer is probably yes and no.

Forex trading gives us a unique opportunity to be part of a market with trillions of turnover. The percentage of profit it gives on investment is unmatched in any form of business. It is a market which is open 24 hours, 7 days a week. Though it is an opportunity which is great considering other opportunities, it has considerable amount of risk involved too.
Forex is one business which gets affected by a host of factors. To manage the negative impacts of those factors and turn them in to big business strategies, a forex trader, should be a person who is ready for challenges and risk taking. He should also be a person of wisdom and knowledge. A well trained person can trade here with a lot of comfort. If you love challenges and risk taking it is a business you can relish.

One of the greatest merits of the forex business is its high leverage margin option provided by forex brokers. To trade 100000 USD forex brokers require margin of 1 percent which is as low as 1000 USD. This great advantage in itself is one of the biggest risks in this trade. In a market with significant fluctuations, couple of hours of fluctuations could well clean your entire margin. The forex brokers are responsible only up to the margin amount.
You may encounter risk from the changes in the political, social and economical factors. Then there are third party reports, demands for a particular currency and many more factors. These are risks which require your active participation in the market. Unless you react to those factors you may lose your investment.
To turn these negative factors in to positive money making ideas you should have the backing of knowledge. With knowledge and wisdom you can turn these potential disasters in to money spinning machines.

Accounts Funding

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