Forex trading is increasingly popular among investors for its easy operation and low risks. In this paper, WikiFX will explain how the
forex market puts traders into profits from two aspects.To get more news
about
WikiFX, you can visit wikifx official website.
1. Risks of the forex market
In the international forex market, the daily volatility of the
exchange rate could range from 0.5% to 1%. In the case of high trading
volumes, the volatility could reach more than 5%. The market involves
risks but also presents opportunities to earn high profits.
The risks, however, could be preset accordingly. For instance, one can
set a stop loss before trading. Once you have lost the predetermined
amount, the stop loss will trigger and automatically close your
position.
2. Functions of the forex market
Hedging forex risks: Traders can enter into a forward exchange
contract with the bank to avoid the losses that may incur due to
currency fluctuations. Based on the contract time, traders could sell
that currency forward to protect themselves from unexpected or adverse
movements in the currencies' future spot rates.
Facilitating central banks intervention: In order to maintain the
fixed exchange rates, central banks would control the volatile
short-term capital flows by buying/selling the surging/plunging
currencies, which is favorable for investors.
Download WikiFX (bit.ly/wikifxIN) to get lessons from experts who have traded forex for over 20 years.
