The foreign exchange market is the “Mother” of all markets, exceeding $5.3 trillion a day in turnover. When the total for international imports and exports combined for a year is less that $50 billion, one has to wonder why actual forex trading is thousands of multiples more? The answer is that there is a lot of speculation going on, as to how exchange rates might impact trade, investments, and capital flows across national borders. Even after backing out investment and hedging activities, some estimate that the amount of speculating in currency movements is easily over 80% of the activity.
Global banks, insurance companies, and hedge funds have a footprint in many markets across the globe, and, with this competitive advantage, they ply the carry-trade strategy to a great extent. Analysts estimate total current carry-trade positions to be in excess of $11 trillion, a coiled spring when it comes to forex risk, since a run for the exits would require enormous buying and selling, all at once. Volatility would go through the roof. The whipsaw effect could wipe out retail forex traders in a heartbeat. Similarly, when the Swiss National Bank removed the Swiss Franc peg to the Euro early this year, brokers and traders alike were wiped out in one gigantic tsunami of adverse market moves.
source : http://www.forexfraud.com/forex-articles/trading-foreign-exchange-is-truly-high-risk-here-are-the-reasons-why.html
visit : www.fxkart.com for foreign currency exchange
Global banks, insurance companies, and hedge funds have a footprint in many markets across the globe, and, with this competitive advantage, they ply the carry-trade strategy to a great extent. Analysts estimate total current carry-trade positions to be in excess of $11 trillion, a coiled spring when it comes to forex risk, since a run for the exits would require enormous buying and selling, all at once. Volatility would go through the roof. The whipsaw effect could wipe out retail forex traders in a heartbeat. Similarly, when the Swiss National Bank removed the Swiss Franc peg to the Euro early this year, brokers and traders alike were wiped out in one gigantic tsunami of adverse market moves.
source : http://www.forexfraud.com/forex-articles/trading-foreign-exchange-is-truly-high-risk-here-are-the-reasons-why.html
visit : www.fxkart.com for foreign currency exchange