What risks should be paid attention to in foreign exchange trading

The foreign exchange rate is influenced by many factors and is unpredictable. Customers may make profits or suffer losses when trading real foreign exchange, depending on whether the customer's judgment of the market conditions is accurate, which is the so-called "market risk". 1. Safety of funds: The most important issue in trading is the safety of funds. The NFA clearly states in the official promotional materials for OTC retail foreign exchange speculators: OTC foreign exchange speculators do not have the guarantee of a settlement institution, and the deposits used by customers to buy and sell foreign exchange contracts are not protected by any regulatory agency, and are not given priority in the event of bankruptcy; even if the customer's funds are deposited by the broker in a bank account with FDIC insurance, the customer's funds are not protected in the event of the broker's bankruptcy.

Even if RefcoFX is registered with and regulated by the NFA and CFTC, domestic clients' funds are not protected, not even "clients". According to US bankruptcy law, stock or commodity clients have priority to settle claims, so when the broker goes bankrupt, the chances of them saving all their funds are quite high. However, since foreign exchange spot is neither a stock nor a commodity, foreign exchange spot clients are neither stock nor commodity clients. It is precisely because of the lack of legal status that in RCMaccount openingOf domestic foreign exchange investors cannot enjoy "customer" treatment in bankruptcy liquidation, and can only enter the bankruptcy liquidation process as an unsecured creditor, which will likely lead to the loss of money.

2. Market risk:foreign exchange marketIt runs 24 hours a day and has no limit on the rise and fall. When the fluctuations are severe, it is possible to complete the movement range that can only be reached in a few months. The trend of foreign exchange is affected by many factors, and no one can accurately judge the trend of the exchange rate. When holding a position,Daocheng ForexAny unexpected exchange rate fluctuation could result in a large or even complete loss of funds.

3. High leverage risk: Every investment involves risk, but because foreign exchange margin trading uses a high capital lever model, the amount of losses is magnified. Especially in the case of high leverage, even a small change in the opposite of your position can lead to huge losses, even including all the opening funds. Therefore, the funds used for this speculative foreign exchange speculation must be risky funds; that is, even if the total loss of these funds will not have a significant impact on your life and finances.

4. Online trading risks: Although most brokers have backup telephone trading systems, foreign exchange margin trading is mainly conducted through the Internet. Due to the characteristics of the Internet itself, there may be a phenomenon that cannot be connected to the broker's trading system. In this case, customers may not be able to place orders or lose existing positions, which will lead to unforeseen losses. Brokers are exempt from liability for this, and they will not be held responsible even if the broker's trading system crashes. Likewise, domestic bank real transactions are also exempt from such risks, which is clearly written in the terms of the agreement of the trading account opening letter.

In addition, as mentioned earlier, whether it is domestic real-estate foreign exchange speculation or foreign exchange margin trading, it is more common to be unable to connect to the broker's trading system during certain specific periods (such as when major data are released in the United States, or when market prices fluctuate violently). Investors should be fully aware of this risk.

When some unexpected events occur, the exchange rate may fluctuate rapidly in a short period of time. The bank may not be able to guarantee that the transaction will be completed in accordance with the market order and order order you issued to the bank or at the price you specified. Failure to ensure the transaction or the failure to ensure the transaction at the price you specified may bring you profits, but in most cases it will bring you losses, which is the so-called "transaction risk". Generally speaking, only the real foreign exchange trading method through the Internet can enable you to have a certain ability to deal with fast market conditions from the hardware conditions. Similarly, when the international market exchange rate fluctuates sharply, the bid-ask spread will increase, and the bank you open an account with will adjust the bid-ask spread it offers to customers in order to protect against the risks it faces. At this time, your transaction costs will be much higher than usual.