1. Excessive leverage:
Although currencies may fluctuate, violent fluctuations are not common.
2. Asymmetric risk return:
Experienced foreign exchange traders will keep the losses within a small range and offset them with profits when the price trend is favorable.
3. Platform or system failure:
Imagine that if your position is large and you can't close it due to platform failure or system failure, it may be power failure, Internet overload or computer crash, including abnormal fluctuation periods such as the failure of stop loss orders.
4. Exchange rate fluctuations:
High leverage means that trading capital may be quickly exhausted when the exchange rate fluctuates abnormally.
5. Characteristics of OTC market:
The foreign exchange market is an over-the-counter market, which is not as centralized and standardized as the futures market. This means that foreign exchange transactions are not guaranteed by clearing institutions, which increases the risk of counterparties.
6. Fraud and market manipulation:
There are occasional frauds 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.