Forex Trading Secrets by Sirajeddine JEMAA - HTML preview

Wrapping Up

Understanding the fundamentals of forex trading will help to limit the chances of making poor decisions that will eventually result in losses. The processes and techniques can be effectively maneuvered, to the advantage of the player if there is a complete and sound knowledge about forex exchange dealings.

The following are some of the risks that one should be aware of, when it comes to forex trading:

• Amplification of losses – although leverage is considered the big money making factor that makes the forex such an attractive money making tool, this same leverage can work negatively too causing massive losses when the actual price fluctuation value of the currency takes a downward turn.
• Constant fluctuations – this is a very dangerous ever present element in this style of trading as there is very little possibility of being able to constantly monitor the currency movements and the trading globally. This is mainly due to the fact that forex markets run on a 24 hour cycle as opposed to human participation that is limited to a potion of this cycle. Therefore trading at different levels and pricings will not keep the players consistent in the earnings projected, if there is no constant hand on involvement and monitoring exercises that function on a global platform.
• Lack of accurate information – when decision are made on one country’s economic situation without the relevant accurate knowledge of all the encompassing factors available, it can cause disastrous results in the forex. Elements such as the political situation, the geographical limitations or advantages and any other contributing factors that may constitute a particular scenario should play a role in deciding the forex movement and none should be considered only individually.
• Absence of global regulatory bodies – due to the various possibilities the maneuvering of transaction and currency manipulation presents, risks can be quite high as there are no effective bodies in place to be answerable to..