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Foreign Exchange and it's risk

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Forex Trading and risk

 

You may often heard the term forex and forex trading, especially now that many new brokers who are actively promoting so-jealous bid to "play" forex can be easily found, both in the real world let alone advertising in cyberspace.

 

Unfortunately, many people who do not really understand what is meant by this forex trading. Even many who because of the lack of balanced information, finally got a negative impression about forex. This is compounded by various news slanted about this activity, ranging from the number of bids in forex investments with the lure of profit is teasing without a correct understanding of the risks which then ended in disappointment and accusations of fraud.

 

Well, before we judge good and bad forex trading, there is little good we know, what forex trading actually is, how it works and how risk

 

What is forex trading?

Ok, we take a look first, what is forex trading actually is?

 

Forex trading can be defined as an investment instrument in the form of foreign exchange trading in pairs.

 

I deliberately chose the word "investment instruments" because I want to emphasize that in forex trading, we will work as an investor, not a gambler (gamblers). That is why I like to feel uncomfortable when someone uses the term "playing" In forex trading forex, we essentially are doing business investment, not doing gambling game. Rationally, we will only invest after understand well how the possible benefits and risks.

 

So, if you consider forex trading as a short way toward getting rich ... I recommend: do not do the forex trading is

Indeed, forex trading is one way to monetize the virtual world (online), but everything can be achieved if we have a basic understanding of the true, not only with speculative capital. Strong willingness to continue learning, including learning from failure, the main prerequisite for starting to learn forex trading.

Ok. We proceed on the basis of this understanding in forex trading. Most people who heard about forex trading will ask: is it the same as money changer? Mmm ... well, you could say the same is the basic understanding, because we will benefit from the difference between the buying and selling price.

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Well i earn a little information about forex trading today,i am very eager to learn how this work coz im planning to join into forex trading but still lack of knowledge and still finding more info on how to do this.I will continue reading all information about forex trading ,maybe in the future i will be on this quest.

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Just open three accounts. I suggest you join mt5, fxfred and forexpeople. try to post in here and earn funds to trade in forex and same time try to familiarize yourself about the broker sites you have and use demo account to make same strategy testing. In this three I also started and so far I earn about 15 dollars minimum. I also loss more than that every month.

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Covering the foreign exchange risk is term as hedging the risk. If the company does not want to hedge , it means it is taking a view that the future movements of exchange rates will move in its favor. Even if the company wants to adopt the policy of hedging everything , still economic exposure cannot be eliminated and this give rise to “ opportunity cost” . If suppose the company hedged the exposure and if the spot rates moved in favor of the company due to shift in the economic factors between the date of invoice and conversion of currency , the company may lose out or incur and opportunity cost by hedging the exposure if the rates moved against.

Corporate Managers specially companies operating in several; countries have the advantage of containing the exposures by their own management techniques by –

a. Opening foreign currency accounts where there are receivables payable in the same currency (our Foreign Exchange regulations permit opening of foreign currency A/Cs in certain cases).

b. Netting group exposure and reduce the risk by currency switches between asset and liabilities.

c. In case of manufacturing companies , switch the base of manufacturer so that cost and revenue are in the same currency.

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Forex trading is full of risks. All traders cannot able to able it in safe way. Newbies should make lose by lack of knowledge. Risking should be limited and investment should be in a limit that can afford to lose. There are some control factors which is called as Money managemnet plans.

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risk in forex trading in line with the advantage. and its important to trader knowing the risk and not know the advantage only. by know the risk, trader will be able to create risk management plan and its also able to control the greedy nature.

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Yes, there are significant risks in forex. Its easy to lose a lot of money in forex so you have to beware and not use high capital or leverages or else you will lose money. You should practice in a demo to avoid considerable high losses and you will be able to use it to test out your hypothesis and then use it in a real account. You should also choose a trusted and well known broker and only leave little money in those account. 

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thank for your information it is a good one and a help way of letting newbies to know that is risk in it but that wouldn't stop any one from trading all you need is the right process to follow

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trading is not just about decide to buy or sell. its beyond than that. if traders assume that this business easy, they are don't realize the risk yet. they need to take further learning and not advisable to start risking real money in live account. traders should start to take demo practice first and enrich knowledge plus experience there.

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Forex itself not a playground, it is business which has its own risk, also the risk meter is high. You will find out that someone who cannot manage their risk in forex become a loser, their money could swapped in seconds and they lost it all instantly.

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Any risky business is a good business.Forex might be a risky venture but you can also gain a lot if you take care of what you are doing.What forex needs,is a good study,planning and making strategic decisions.Many are harvesting a lot in forex and many have taken it as a part-time jopb.I prefer Mt5 since you can gain credit for trading by simply posting.

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Any risky business is a good business.Forex might be a risky venture but you can also gain a lot if you take care of what you are doing.What forex needs,is a good study,planning and making strategic decisions.Many are harvesting a lot in forex and many have taken it as a part-time jopb.I prefer Mt5 since you can gain credit for trading by simply posting.

I do agree with your statement that we can gain a lot of if we take care what we are doing. This is proven to be right. Since most of big traders are the one who can manage their money well, not the one who can earn big money. Risk is the nature of forex so it is up to us how to manage those risk well and make forex less risky.

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So if you already know the risk of foreign exchange i think you should take care of it isn't it? First this is high risk business so coming up with better risk maangement is important, second knowing the risk of forex you shouldn't hoping so much here high risk means high gain but see it is still high risk. Third and the last invest only what you can afford to lose, since forex is risky you should invest with cold not by so called hot money.

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@sidejob


 So? Hot money of course logically can be use for forex trading, while cold money is the same it is possible to use it in forex, but cold money hold lesser risk rather than hot money, the risk of course will be presently lower when someone choose to invest with cold money. I also agree that risk management is important but without profitable strategy all will be nothing, you can just minimize the risk and slowly dying without any chance to shine like stars :D

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there is still a high risk on trading forex so i will advise people to trade on funds that you can afford to loose most especial if you are not a good trader,as for hot or cold money just as you said i think that all are the same so you should'nt be greedy on trading forex

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The risk is there with everything not just with Forex but one of the major risk is wrong broker, as this is something we have to really get right. It’s seriously risky if we are not having a quality broker to work with.
 

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