If you’ve been into forex for some time, you must be aware of the concept of spread forex, one of the safest and most profitable trading options.
Simply put, we’re talking about the difference between buying and selling prices when it comes to the assets you’re currently trading. At the same time, the spread is also an income source for the brokers, as each one of them has a so-called “liquidity provider”, directing the trades to the market and helping both the broker and the trader make payouts.
However, this doesn’t mean that financial trading, whether it’s spread forex or not, doesn’t include at least a slight amount of risk. But let’s talk a bit about the risks of this type of trading options…
The risk of trading with high leverage
One thing is clear: the financial spread forex involves high leverage. Sure, it gives you many opportunities to make important amounts of money with just a small starting capital, but let’s not forget about the risk it involves.
There are several traders who aren’t familiar at all with leveraged trading, so they take the position of too large trading. As a result, in most cases, they tend to lose all their money rapidly.
The risk of market volatility
A secondary major risk factor, usually ignored by some spread bettors, especially beginners, is market volatility.
The financial market is often moving exponentially, influenced by the latest economic events, but also news thus changes in the interest rates. We’re talking about jumping at great heights and, at the same time, go down drastically, which only confirms how uncertain and unpredictable the market is.
As a spread forex “user”, you should be aware of all the worst-case scenarios. Because rapid price changes may not be in your favor sometimes!
To wrap it up, if you are smart and inspired enough, you can easily avoid these risks, even if you’re a beginner. Just pay attention to the tiny details and always, but always, do your ‘homework’!