he Risky Business of the Foreign Exchange Market
>> Monday, August 15, 2011
There is no doubt that the foreign exchange market is a risky place. This is because it is all about risk. Banks and other institutions trading in Forex online must learn how to assess, price, and manage risk -- their success in the foreign exchange market depends on it.
One of the risks of trading foreign exchange is called market risk. The Federal Reserve Bank of New York defines market risk as the price risk or exposure to price change. When it comes to market risk, dealers in foreign exchange may face exchange rate risk and interest risk. These are defined as risks of adverse change in a currency rate or in an interest rate. In order to stay on top of the latest forex tips it is important to understand all of the risk involved. Generally, the risks involved in trading foreign exchange are no different from those in selling other financial products. In addition to market risk, other risks that apply to forex trading via Etoro and other online software include credit risk, liquidity risk, legal risk, and operational risk.
