5 Factors Increasing Risks in Forex Market

When investing in the Forex market, some factors increase the risks. In this article, we have shared which of them are respectively.

5 Factors Increasing Risks in Forex Market

There are some risks involved in forex, which we talk about as an advantageous market. You should not forget that there are risks in every investment you make. This applies not only to forex but to all other financial markets. In short, we can say that there is a risk wherever money is involved. At the same time, there are factors that increase and prevent these risks. If you are aware of these, you can carry out your transactions by taking risks under control.

The biggest factor that causes the risks to increase in the Forex market is the lack of knowledge and experience. If you do not know how to invest in forex, you can lose easily. As there are many opportunities to make money in Forex, you also have many opportunities to prevent your risks and improve yourself. You can both increase your income and control your risks by taking advantage of opportunities such as training, orders to limit risks, and transaction facilities.

There are 5 factors that increase the risks in the Forex market. Let’s take a closer look at these factors:

Inexperience and Ignorance

The first factor is that if you do not know and how to trade in the Forex market you cannot solve the investment logic. The reason for this is your lack of knowledge and experience. If you want to invest in the Forex market and make money, you should get training before starting the transactions. You can determine the duration of this training according to your own level of knowledge. Free training is provided by Forex companies such as GrapheneFx for people who want to learn. Anyone can benefit from these lessons.

Inexperience and ignorance can be big problems in the advanced structure of the forex market. There is a rapid flow because of the daily transaction volume of close to 10 trillion dollars. If you are inexperienced, it will be very difficult for you to keep up with this flow. Even if you know how to do everything, you can make mistakes in this huge market because you are a beginner. For this reason, you increase the risks involved and face losses. What you need to do is to gain both knowledge and experience. Forex tutorials already give you this easily. You can acquire theoretical knowledge with books, e-books, training videos; With demo accounts, you can both test the accuracy of the information you have acquired and gain experience.

Not Knowing How to Use the Leverage System

The leveraged trading system, which is the attractive feature of the Forex market, is the biggest risk factor. Because if an inexperienced investor or a person with a passion for making money deals with high leverage ratios, it will result in frustration. You should be able to use leverage ratios correctly, stay away from money-making, and control your emotions. Remember, you can’t get rich by doing a few trades. Using high leverage by setting unrealistic profit targets will cause you to lose.

Among the most common mistakes made in Forex, using high leverage is in the first place. Everyone wants to make money, and the way to do it is clear. By using high leverage ratios, you should not dream of making a big profit. By using lower leverage ratios that are compatible with your collateral, you both prevent your risks, have a chance to compensate when you make a mistake, and earn a safer profit. In demo accounts, you can improve yourself by paying attention to the use of leverage ratios and seeing what will happen to you when you use high leverage without losing money.

Choosing the Wrong Broker

One of the most important issues to be considered in the Forex market is the choice of a brokerage firm. In our country, in August 2011, when the forex market was legally accepted, many regulations were introduced for intermediary institutions. Institutions that comply with these regulations have been granted licenses certifying that they are legal. On the other hand, audits were carried out continuously and regularly, and it was tried to prevent investors from experiencing problems. At this stage, inspection and competent authorities are doing their part. As an investor, you need to know these and agree with the right brokerage houses to defend your rights.

The worst thing that can happen to you when choosing a brokerage firm is to deal with an illegal institution. After a while, they disappear with your money by disappearing. It is almost impossible to claim any rights. For this reason, you should not forget that you should choose one among licensed brokerage firms. After determining the licensed intermediary institutions, you should check the opportunities they offer, their technical infrastructure, and the presence of experts in their business. Especially if you agree with an intermediary institution that does not have a strong technical infrastructure; You will encounter problems such as disconnections from the system, slowdown, incorrect data, delayed graphics during operations. In this case, you will make a mistake and increase your risk of losing. You should not rush to choose an intermediary institution, and you should not forget that you should make your choice by researching the features that you will constantly need, without getting caught up in the campaigns and gifts they offer.

Not Recognizing Orders and Not Knowing How to Use them

The orders of the Forex market, unlike other financial markets, work much more simply and are transmitted to the market. For example, you cannot send your orders directly to the market in the stock market. You send your stock order to your brokerage house and then you have to wait for the orders to match. But you will place a buy order in the forex market; All you need to do is to open your trading platform, select the investment instrument you are interested in and enter the relevant levels in the window that opens and press the Buy button. Thus, your transaction will be executed in seconds and you can even have it stop automatically if you wish.

Stop-loss/take-profit orders are one of the most important order types in the forex market. While it allows you to limit the risks, it also facilitates the automatic termination of the transaction and the reflection of your profit or loss in your account. Forex orders, even if they work with a simpler logic than others; As in every market, you need to understand how they are used and experience what happens in response to the orders you place. You should see what you encounter when you change the stop points you set with the stop-loss order, or when you set it incorrectly. In this way, you will both understand the working systems and ensure your profit while preventing your risks.

Getting Excited, Being Impatient

You should never let your emotions go in any environment where money is involved, including Forex. You should calmly plan the transactions and act patiently without getting excited in the face of a wave of gains that you catch on the price charts. Being excited will not only increase the risks but also cause you to make erroneous transactions and skip important points. You can see how you will do that transaction and the profitable result you will get; but because of your excitement, you say B when you are going to say A and you lose. Here is the result caused by the excitement, so obvious.

Transactions involving money cannot be governed by emotions. You should make your investments in a planned and disciplined way, by controlling your emotions. You should be able to dispose of investment instruments without establishing an emotional attachment to them. This is a big problem, especially for stock investors. But investing accepts neither excitement nor impatience nor sentimentality. For this reason, you should put your emotions aside and remember that you should approach the transactions you will make by making analyzes within the framework of logic.

SEE ALSO: Does It Make Sense to Trade Oil in the Forex Market?

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Daura Gwem

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