Forex Trading - Know The Risk Management Part 1

Risk Warning

Trading foreign currencies is a
challenging and potentially profitable opportunity for educated and experienced
investors. However, before deciding to participate in the Forex market, you
should carefully consider your investment objectives, level of experience and
risk appetite. Most importantly, do not invest money you cannot afford to lose.

There is considerable exposure to
risk in any foreign exchange transaction. Any transaction involving currencies
involves risks including, but not limited to, the potential for changing
political and/or economic conditions that may substantially affect the price or
liquidity of a currency. Moreover, the leveraged nature of FX trading means
that any market movement will have an effect on your deposited funds
proportionally equal to the leverage factor. This may work against you as well
as for you. The possibility exists that you could sustain a total loss of
initial margin funds and be required to deposit additional funds to maintain
your position. If you fail to meet any margin call within the time prescribed,
your position will be liquidated and you will be responsible for any resulting
losses. Investors may lower their exposure to risk by employing risk-reducing
strategies such as 'stop-loss' or 'limit' orders.

There are also risks associated with
utilizing an internet-based deal execution software application including, but
not limited, to the failure of hardware and software and communications difficulties.

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