So what problems will you encounter? The survey is summarized as follows:
1. Asymmetric risk of return: Experienced foreign exchange traders keep small losses, and when their currency bullish is proved to be correct, they will offset these losses with considerable gains. However, most retail investors do the opposite. They made a small profit on some positions, but then lost money for a long time, resulting in huge losses. This will also lead to losses exceeding the initial investment.
2. No information advantage: the largest foreign exchange trading bank has large-scale foreign exchange trading business, which is closely linked with the foreign exchange world and has information advantages that retail investors cannot obtain (such as commercial foreign exchange flows and secret government intervention).
3. Currency fluctuation: High leverage ratio means that during the period of abnormal exchange rate fluctuation, trading funds may be rapidly exhausted.
4. Over-the-counter market: The foreign exchange market is an over-the-counter market, unlike the futures market, which is centralized and strictly regulated. This means that foreign exchange transactions are not guaranteed by clearing institutions, which increases the risk of counterparties.
5. Fraud and market manipulation: Occasionally, fraud occurs in the foreign exchange market. The market manipulation of foreign exchange interest rates is also rampant, and some of the biggest participants are also involved.