With any trade or investment, you will come across risks, and Forex is no different. We have outlined a few of the significant risks below.
Although a highly volatile market can have its advantages, it can also increase the risk of losing money. The constant changes and announcements in the economy can make it difficult for traders to judge the market. In addition, certain assets could become increasingly unstable and cause the market to drop and cause more losses suddenly.
It is one of the most significant disadvantages the Forex market faces. Because it is decentralised, it is predominantly taken over by brokers. The trader may not have any control over how their trade orders are fulfilled. It is a good idea to use a regulated platform like ourselves that follows the guidelines of our regulators. So you can trust to get the best price on the market for your trades with us.
Another major risk is scammers. As mentioned, it is essential to choose a reliable and regulated broker so that incidents are less likely to occur. Before choosing a broker, verify that it’s licensed by the appropriate regulators, such as the Cyprus Securities and Exchange Commission (CySEC) for Europe.
At CAPEX, we are known to strictly follow international regulations and remain transparent in our fees, commissions and trading conditions. Client funds are always stored in segregated accounts, and users get negative balance protection. Also, we are regulated by CySEC, the Seychelles Financial Services Authority (FSA), the Financial Sector Conduct Authority (FSCA), and the ADGM Financial Services Regulatory Authority (FSRA).
Interest rates vary from country to country and have a direct impact on the current exchange rates. So if a country’s interest rates rise, the currency will strengthen because there is an increase in the number of investments the country’s assets are taking in. On the other hand, if interest rates fall, the currency will weaken as investors and traders start to take back their investments. This correlation between interest rates and exchange rates can potentially cause the prices in the Forex market to change drastically as a result.
Conclusion – Understanding and reducing risk at CAPEX
We believe that having a good core understanding of the Forex market can lower the risks of trading. With the help of Forex signals from our automated analyst Trading Central and the use of Forex indicators MT5 (MetaTrader 5) and in our WebTrader, you should develop your Forex trading skills. At CAPEX, we know that trading does come with its risk, but the more you practice, the more you will understand the trends in the market and know when to buy or sell your currency pairs. It is always good to start with a small investment when trading with us and then work your way up as your understanding and profit grow.