Monday, February 1, 2016

Identifying the Risks in Forex Trading: CHOOSING THE RIGHT BROKER

Foreign currency exchange, or widely known as forex trading, is an act of exchanging one currency to another in an effort of making a considerable amount of profit. Forex trading not only became a profitable method of investment, but also it easily became one of the best ways of making money at home. By trading foreign currencies through the Internet, apparently an individual can make money regardless of when and where they are. 

Despite all the advantages and benefits that the forex market has over other financial markets and investment forms, there is still a considerable amount of risks involved in trading foreign currencies. A successful forex trader is fully aware of these risks, and knows how to avoid or significantly reduce them. However, if you’re just beginning to trade in forex, you might be clueless about these risks. Just keep on reading this article and we’ll discuss about these risks.

Can Your Broker Make You Lose Money

There are two popular types of broker – the market maker and the ECN broker. Commonly, a market maker will encourage their clients to trade on a margin and set stop loss orders – which will enable the market makers to close out trades almost at will during busy markets at prices they have set. If the market maker does not offset the position of the trader, the loss generated when a stop loss is triggered will become the gain of the market maker. Often not considered as a scam, but they basically trick newbie and uninformed traders.

To avoid such risks, you must choose a broker that will not trade against you – such as an ECN broker. An ECN broker is similar to an interbank broker. They don’t trade against you, so manipulating the price is very unnecessary.

To further reduce the risks associated with forex trading, you must get more familiar with forex trading by reading our forex-related articles :)

Identify who the best forex brokers are, visit to find out!

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