Chances % Risks at Forex Markets

Sat Aug 31, 2019 2:13 am
avatar  Forex

Extremely high risk of loss: The use of different levels of leverage is characteristic of FX trading. Leverage gives the opportunity to increase the effect of a single trade by a predetermined factor. While derivatives trading in the general equity and commodities market has leverages of 1: 500 available, leverage in most forex brokers is limited to a factor of 1:30. The resulting opportunity to achieve high returns even with small capital investments, however, is deceptive, especially for small investors, since not only the odds rise, but also the risk of loss.

In the meantime, the European Securities and Markets Authority (ESMA), in March 2018, has forced forex traders to restrict the leverage effect on binary options and CFDs for retail investors Provide an automatic loss limit, a margin requirement and provide a risk warning. All in all, this was a very significant intervention for the financial market, which for legal reasons had to be limited to the three-month period, but nonetheless shows the risks involved in trading in derivatives and binary options. Even in good running positions, you should never lose sight of this risk. Beware of greed and carelessness. They are the death sentence for FX investors.

Extremely high dynamics: Like no other market, the FX market is dependent on global political developments. Although this also applies to equities and ETFs, they can still hope for the securing economic strength of the associated companies during political crises. Such a backup is completely lacking in currencies, so that they can be subject to extreme fluctuations, especially in times of crisis.


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