Minimizing risks for Forex market investors with the help of IAFT

As a stable system of relations, both economic and organizational, between financial institutions (banks and brokerage companies), the Forex market provides ample opportunities for traders to effectively increase the level of their passive income by investing. However, although the Forex market is an area of truly highly profitable investment, it, due to the high parameter of volatility, is characterized by quite significant risks, the size of which is directly proportional to the size of the potential profit. IAFT experts, analyzing all possible risks for the Forex market investor, recommend effective measures to minimize them.



The main types of risks of investing Forex
Now experts, speaking about Forex risks, divide them into two main groups:

• Trading – related to the loss of capital due to the wrong decision, for example, ill-considered use of leverage, as a result of which the entire deposit can be quickly lost. According to IAFT experts, a trader who trades independently will be able to minimize trading risks only by acquiring the necessary experience that allows him to understand the nuances of the foreign exchange market, correctly project general economic events onto his actions, draw up long-term, taking into account the maximum possible number of factors, strategies, etc.;
• non-trading, which are in no way related to trading and differ in the fact that constantly arising real situations (often random), practically do not lend themselves to accurate forecasting.

Causes of non-trade risks
Experts believe that the emergence of non-trading risks is mainly due to:

• the termination of the functioning of the broker for any reason, from its bankruptcy to deprivation of the license, which threatens the trader with the loss of the entire deposit, and, at best, only a part of it;
• litigation between traders and brokers, fraught with significant costs that may not be compensated, even in the case of a favorable outcome;
• Currency risks arising from the subsidence of the base currency (the most significant group of non-trading risks), the consequences of which investors can not deal with;
• other factors – caused, for example, by the global economic crisis, the collapse of a state, the inevitable depreciation of its currency and many other circumstances.

According to ITF professionals, any investor, especially a beginner, can achieve minimization of the main risks (except, of course, currency and non-trading general economic) by choosing a reliable experienced broker, necessarily licensed and able to provide favorable conditions.