How Risky is Forex Trading, and What Returns Can Be Expected?

Regarded as one of the riskiest ventures, Forex serves as stellar grounds for making profits today, but at a cost. Foreign exchange has been quick to top the charts and hold a trading value of $5 trillion. With several other markets to invest in, like stocks, contracts, options, etc., why do traders incline more towards Forex? Though the risks are high, currency trades birth tremendous profits. The journey is arduous, but the rewards are plenty!
 

As a beginner, knowing why FX trading is risky will be of immense help. 

Risk Factors in Forex Trading

Here are 4 reasons why currency exchange is incredibly risky:
 

1) Leveraged Environment: One of the most advantageous provisions, and also one of the riskiest, is leverage. In order to hold positions of high value, traders are provided with leverage by their brokers. This borrowed sum elevates your position, allowing you to trade more. However, when you lose a leveraged trade, you lose your invested capital and the borrowed money! This sum adds up to a substantial amount, making it a risky ordeal.
 

2) No Two Winners: Forex is a zero sum field. While markets like stocks allow multiple traders to reap benefits, Forex doesn't. For every person who wins a trade, someone must lose. This makes it very scary when you're on the straw's shorter end!
 

3) Volatile Domain: One minute a price goes up, the next minute it comes plummeting down - and all the while you won't be able to decide the perfect time to invest! Forex is a very volatile field, with little to no support to lean on. Its fast-paced online trading environment won't fit every trader. This requires immaculate focus and a strong grip over market movements and price volatilities!
 

4) Big Wins, Bigger Losses: The irony in Forex, is that to win big, you have to risk big; however, when you take a substantial risk, the chances of losing go up through the roof. While on one side, you can make good profits, the same trade can lead to bigger losses.
 

With an adept Forex broker by your side, victory will always be attainable. No matter how vicious a trade gets, WesternFX will always assist you! Call us today and avail our FX solutions. We will provide unparalleled brokerage, and ensure you come on top of Forex trading in the Philippines!