market risk
The foreign exchange market operates 24 hours a day, with no fluctuation restrictions. When the fluctuation is severe, it is possible to complete the range of motion that can only be achieved in several months.
The trend of foreign exchange is influenced by many factors, and no one can accurately judge the trend of exchange rate. When holding a position, any unexpected exchange rate fluctuation may lead to a large loss of funds, or even a total loss.
Network transaction risk
Although most brokers have backup telephone trading systems, foreign exchange margin trading is mainly conducted through the Internet. Due to the characteristics of the internet itself, it may not be possible to connect to the brokerage trading system. In this case, customers may not be able to place orders or stop existing positions, which will lead to unpredictable losses.
Brokers are exempt from this, even if the trading system of brokers collapses, they will not bear the responsibility. Similarly, the firm transaction of domestic banks is exempt from such risks, which is clearly written in the terms of the agreement in the transaction account opening book.
Foreign exchange margin trading is characterized by small funds and large profits. It is precisely because of this feature that investors often ignore their own risks while pursuing profits too enthusiastically.
Generally speaking, the minimum deposit required by dealers is mostly between 3% and 5%. What I want to emphasize here is that "minimum" does not mean that the "minimum" margin for every transaction we make is the best. For 5% margin, that is, there is a credit transaction limit of 20 times the operating principal, and its fluctuation range is relatively increased by 20 times, taking the fluctuation of the day as 1%.
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