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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.

 

Owh ... then, what's the difference?

Look, I will try to explain briefly

The first difference: if buying and selling at the money changer, no physical movement of goods while in forex trading there is no physical movement of goods. All transactions are conducted only in the form of contract.

Unlike the others again, if money changer, if we do forex trading, for example, we buy U.S. $ for $ 100,000 with the price of say USD. 9500 / U.S. $, then we wait until the selling price rose to USD. 9.700/US $, we will get the benefit of a spread (9700-9500) dollars multiplied by the volume traded (100,000) that is equal to 20 million rupiah.

In forex trading, we recognize the so-called margin trading, where we simply provide collateral to the broker for a certain percentage of the volume of transactions, such as 1%.

1% of this will be what we call leverage or leverage.

More detailed understanding of leverage, then we will discuss it later. In the meantime, we quite understand that with leverage, allows us only pledge a certain percentage of the value of the transaction to be able to perform the transaction (the sale).Of course this is very beneficial, because then we can save this capital for forex transactions.

Risks in Forex Trading

Ok. Now we get into discussion about the risks in forex trading.

I always recommend to prospective traders to understand the risks in forex trading first before get into this forex world

 

For investors who are rational, we must always compare between the risk with the possibility of profit we can get. Do not let us make an investment without the risks of investment are well aware that we do.

 

In forex trading, can basically say that we do risky investments commensurate with the possibility of profit we can get. Well, the duty of a trader to minimize this risk and maximize profits with a variety of ways, including use of analysis and trading system that can be accounted for.

 

There are many misconceptions that already spread among the public about these risks in forex trading. In fact, I often hear people assume that forex trading can cause a trader to engage the loan in an amount not less.

 

Here I feel the need to align the understanding of this matter doubtful debts before. I must emphasize, in relation to traders with brokers, there is no relationship accounts payable. So we are trading at a broker, we do not do debt contract with a broker. That there is, we make a deposit at the broker, whose numbers in accordance with the ability of each trader. There are even brokers who deposit a minimum of only $ 1. Well, the maximum loss that can be suffered by a trader is only for deposits that have been done. That is, if we make a deposit of $ 5, the maximum loss we yes that's only $ 5. Extremely, regardless of how our trading is mess, like a bad day, we have deposited capital is missing ...

 

Of course later we will discuss in next post, the basics of analysis that we can use, so we understand how trading in a way that can be accounted for so that the risk of capital loss that we avoid as much as possible.

 

Ok. got here I hope you've had a fairly a big picture of how and risks in forex trading, so if you are interested to explore this forex world, you will start with a correct understanding of the risks and hope.

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Forex is kind of investment program that high risk. may be the risk is bigger than hyip program. but the risk level can be decreased in forex by learn about trading knowledge as much as possible.

I think there is vast difference between forex and hyip because in forex you handling your own money but in hyip that other parson and its true there is full of risk in forex but its possible to reduce risk level also to decrease lots and other method also.

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Of course, every investment is risky but the risks of loss in trading off-exchange Forex contracts are even bigger. That's why once you decide to be the player in this market, you'd better realize the risks connected with this product for make suspended decisions before investing.

 

In Forex you are operating big sums of money, and it's always possible that a trade will turn against you. The Forex trader should know the tools of advantageous and careful trading and minimizing losses. It's possible to minimize the risk but no one can guarantee eliminating it. Off-exchange foreign currency trading is a very risky business and may not be appropriate for all market players. The only funds that can be used for speculating in foreign currency trading, or any kind of highly speculative investments, are funds that represent risk capital - for example, funds you can afford to risk without worsening your financial situation. There are other reasons why Forex trading may or may not be a suitable investment.

 

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I think there is vast difference between forex and hyip because in forex you handling your own money but in hyip that other parson and its true there is full of risk in forex but its possible to reduce risk level also to decrease lots and other method also.

 

I agree hyips are more risky and there is no way to know whether hyip admin is legit or a scammer.

On other hand it depends on our skills and luck how much we make in forex.

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The risk in forex is not that much as hyip,because in forex you may leave your account for even 1yrs and go for somthing else after closing all active position,and nothing will hapan to your money,but for hyip....day after your mind keep distoping you.

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Forex is very risky indeed but there are many tools for you to lower your risks. You can lower your risks by using stop loss at all time whether it be short or long term trade but leave a wide range to allow bounce back and allow profit taking and so you're not out of the trade as soon as you get in. Tight sl does not work well in some trades. I also use low capital and low leverage and build my profit steadily. Now building it steadily is better than quick trades as it carries way too much risk. I also absorb risks with long term trading as short term is too risky and less profitable. 

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While working on the Forex market, you need confidence, concentration, practice and persistence. After all, not absolutely everything depends on trading systems and chosen strategies. It is quite hard to work and overcome difficulties by yourself, but it will help you in trading and it will become one of the main factors of success.

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  • 5 months later...

understanding the market required and it lead traders to has appropriate knowledge to perform analysis. when traders take training on demo account, it doesn't mean that they just mastering the strategy. but observe the market and know how it behave necessary too.

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  • 10 months later...

@standart: For sure they did that, in order to obtain profit someone need to sacrifice something, also we need to observe the market closely so we could see some indicator for us when it is the right time to take an action. Understading market is actually understanding our risk in trading and it is not as easy as we may think.

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but some of the advantages of HYIP is that we do not need a special strategy to get maximum profit because our profit is determined by the hyip admin , not ourself. so I guess it is a weakness, let alone many of the hyip scam

 

100% of the HYIP will become scam sooner or later. HYIP admin reputation is just a way to promote the HYIP. Nothing else. Anyways it is individual's choice where to put his money. Everyone wants to take the easy way to get rich. But there is no easy way.

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I do agree with that but the problem is how long? There are some HYIPs that keep paying for one month or even one year or more. They paid instantly or in relatively shorter duration which increase the confidence from its investors. If you see the chance in this event, you can grab more profits by investing at the right time. You can applied it on forex, but with a bit modified parts like open a position at the right time which i am sure drastically reduce the risk.

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I do agree with that but the problem is how long? There are some HYIPs that keep paying for one month or even one year or more. They paid instantly or in relatively shorter duration which increase the confidence from its investors. If you see the chance in this event, you can grab more profits by investing at the right time. You can applied it on forex, but with a bit modified parts like open a position at the right time which i am sure drastically reduce the risk.

I think it is not good to compare HYIP and Foreign Exchange in this case. I don't know where it comes that it will reduce the risk drastically but forex is always be risky business, you can lose more than what you can invest and that is what any broker's claim on their site isn't it? Just realized the risk and understand how to reduce the risk to the lowest you can.

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I think it is not good to compare HYIP and Foreign Exchange in this case. I don't know where it comes that it will reduce the risk drastically but forex is always be risky business, you can lose more than what you can invest and that is what any broker's claim on their site isn't it? Just realized the risk and understand how to reduce the risk to the lowest you can.

Well why not? Fx and HYIP have the same similarity, forex is high risk investment and hyip also is a high risk investment. One thing that people should know here is that both has relatively minimum deposit compared to other businesses. Well back to the forex, its risk is high and we know and i agree that we should understand the risk so later we will be able to behave according to the right way.

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  • 5 weeks later...

The risk in forex is preferable and lower rather than in HYIP, also HYIP is made to be scam so if you are an early bird you may have the chance to survive the investment, and gain profit but if you are late investors then you are doomed, while in Forex there is no such as late investors, even i invest my money today i still won't be late and forex doesn't made for scam, it is the market and HYIP is the model, both are different.

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The risk in forex is preferable and lower rather than in HYIP, also HYIP is made to be scam so if you are an early bird you may have the chance to survive the investment, and gain profit but if you are late investors then you are doomed, while in Forex there is no such as late investors, even i invest my money today i still won't be late and forex doesn't made for scam, it is the market and HYIP is the model, both are different.

Yes, it made for scam, usually at least few hours or at most 2 or 3 years. All depend on how admin manages the money. You must act fast just like when you want to scalp if you want to survive in HYIP, as for foreign exchange you don't have to do that. The most important part of foreign exchange is the risk management and profitable strategy accompanied with good analysis.

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Yes, it made for scam, usually at least few hours or at most 2 or 3 years. All depend on how admin manages the money. You must act fast just like when you want to scalp if you want to survive in HYIP, as for foreign exchange you don't have to do that. The most important part of foreign exchange is the risk management and profitable strategy accompanied with good analysis.

Well talking about HYIP and Forex for sure people will prefer forex because it is more realistic compared to HYIP, also based on my view many HYIP is easier to scam rather than a forex broker to be scam. Forex also has bigger base compared to HYIP industry even still labeled as the high-risk business.

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  • 2 months later...

HYIP is ultra risk business but could be managed in the right path make it less risky business especially if you are a HYIP monitor admin :D . FX risk is equal to all traders, so it is up to you to decide how to manage the risk and increase your profit by applying a proper risk management.

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