Foreign exchange margin trading itself is a challenge with certain risks, but at the same time it can provide more profit opportunities for well-educated and experienced investors. However, before you really decide to join the foreign exchange market, you should first carefully consider and define your investment objectives, and fully understand your risk tolerance and experience level. The most important thing is to make investment transactions within the risk range you can bear.
In any foreign exchange transaction, there are certain risks that must be faced. Any foreign exchange transaction will be affected by, but not limited to, risks arising from various potential political and/or economic changes, which will have a significant impact on the exchange rate and liquidity of a certain currency.
In addition, the leverage of foreign exchange trading makes any change in the foreign exchange market have a proportional impact on the funds you invest. This influence may be beneficial to you, or it may make you suffer losses. It may even require you to continue to invest in subsequent funds after the initial margin of initial investment is exhausted to ensure your foreign exchange trading position. If you fail to put in the corresponding margin within a limited time, your trading position will be closed, and you will be responsible for any losses arising therefrom. In order to reduce the trading risk, investors can adopt various risk reduction strategies, including "stop loss orders", that is, stop loss orders or "limit orders". Similarly, when users use the Internet-based foreign exchange transaction delivery system, they must also bear various corresponding investment risks, including but not limited to the failure risk from hardware or software.
● Risk management of foreign exchange investment
Foreign exchange trading is the largest and most unpredictable financial market in the world. In the global economic environment, macroeconomics plays a very important role in foreign exchange transactions, which often determines the overall development trend of the market to a certain extent. Therefore, for active traders, the foreign exchange market has always been the most attractive paradise, and it is also the area where they can achieve the greatest success under normal circumstances. However, due to the main reasons given below, success in this market is often affected.
Many traders made wrong expectations of the possible trading profits from the beginning and failed to abide by various rules in trading. Short-term foreign exchange trading is not a job that an amateur trader can do, nor is it a shortcut to get rich quickly as people think. Although compared with traditional trading markets (such as stocks and futures), foreign exchange trading is more strange and difficult for us to grasp. However, this does not mean that the financial laws and universal logic laws that we have been following are no longer applicable. We know that huge investment returns are often accompanied by extraordinary investment risks. In foreign exchange trading, this means extremely unstable trading performance, which usually leads to heavy losses. Foreign exchange trading is not easy (otherwise everyone will easily become a millionaire), and many traders with years of experience will still lose money in a certain period of time. Everyone must be aware of mastering foreign exchange transactions.
The most attractive thing about foreign exchange trading is the high leverage it provides for investors. Capital leverage is very attractive to those who are eager to get rich quickly in a short time on the basis of limited initial capital. However, capital leverage has always been a double-edged sword. Although we know that each foreign exchange transaction ($65,438+00,000) only needs $65,438+000 as the minimum deposit, this does not mean that traders with $65,438+0,000 in their accounts can easily conduct foreign exchange transactions with $65,438+00. Every transaction with an account amount of10,000 USD should be seriously regarded as an investment with a value of10,000 USD, not just the value of the required margin. Make reasonable and wise transactions, but they tend to be overly speculative (that is, open too large a position relative to their margin). Therefore, they are often forced to close their positions under the most unfavorable circumstances.
For example, the capital in your account is $65,438+00,000, and you buy a sum of foreign exchange, then the leverage ratio of the capital in your account is actually 65,438+00 to 65,438+0. The leverage ratio of funds is a very important economic indicator, and many professional foreign exchange trading managers will not exceed 3 to 4 times. Trading strategies are gradually increasing, and from time to time.
● Stop using lost orders.
Stop loss order is a self-defined price order corresponding to foreign exchange position, and its purpose is to avoid greater economic losses caused by current foreign exchange position. For multi-positions (buying), a stop-loss order is a selling order to sell the corresponding foreign exchange at a specified price. Unless the customer cancels the stop loss order himself or the trading position is closed, the stop loss order will remain valid. For example, if an investor buys dollars at the price of 120.27, he may set a stop-loss order at the price of 1 19.49. When the dollar depreciates below 1 19.49, it will play a stop-loss role. In your foreign exchange trading, stop-loss orders will be a very important tool to control risks.