Risk Management Strategies
In This Chapter
• Exploring the risks
• Borrowing money to trade
• Facing volatility
• Losing liquidity
Trading in foreign currency is risky business. Currency markets can be volatile, and it is highly speculative. You could lose the entire amount you deposited in your forex account in a matter of minutes if the market moves against you.
You must understand the risks before you start trading. Many of the risks are similar to those you face in the stock market, but others are unique to foreign currency trading. In this chapter, we introduce you to the risks you may face when trading currency.
All currency traders use leverage to attempt to make a profit trading currency. Leverage is the use ...