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Advantage of Bitcoin trading

 Advantage of Bitcoin trading, What are the risks involved in Forex trading?

 

1- Risks of leverage and margin system

As we mentioned, financial leverage is one among the features of the exchange market. to start with, it must be clarified what the financial leverage is in short . Leverage simply means providing small investors with the chance to trade large amounts by trading their accounts which are small as compared .


 

Given that the currency market or Forex trading was initially limited to large investors and owners of huge accounts, brokerage firms tried to supply facilities for little individual traders to enter the exchange market.

 

The leverage allows small investors to trade forex sometimes the dimensions of their capital, and therefore the brokerage firm's facilities may reach leverage that exceeds 1,000 times the dimensions of the first capital.

 

2- rate of interest and rate of exchange risk

Forex trading is predicated on traders within the currency market switching the currency of 1 country to shop for another country's currency or selling one currency in exchange for purchasing another, and changes within the relative value of a currency may result in profits or losses.

 

When buying or selling currencies within the Forex market, you're depending on the change within the exchange value between the currencies of the 2 countries against one another .

 

And if all the opposite factors are fixed and equal, then if you purchased a currency and ended up increasing its value against the opposite currency, then you'll make profits, but if the worth of the currency decreases, then this may cause you more losses.

 

It should be noted that the rate of exchange is closely associated with the rate of interest in each country. Higher interest rates tend to draw in more investment within the country and its currency. On the contrary, low-interest rates will cause a withdrawal of investment, which weakens the country's currency and reduces its value.

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