Risk of exchange rate exchange rate risk is a consequence of permanent changes in the markets of the world supply and demand for currency in circulation. An open position is subject to price changes during the time of its existence. The most popular measures of keeping possible losses within reasonable limits are the limiting position (position limit), and limiting losses (loss limit). When the position limitation set maximum volume particular currency, which allows the trader to trade in a given time. Limiting losses - a measure aimed at minimizing losses trader carried out by setting the level of stop-loss at the opening position.
Step by step video training to work on ForexRisk interest rate risk is the interest rate associated with losses due to fluctuations in the spreads as well as the presence of windows in interest rates due to different timing of transactions in different countries. Mismatch volumes - is the difference between the volumes of spot and forward. To minimize the risk discount rate set limits on the total size of mismatches. The overall approach is to divide the misfit based on the duration of contracts for those that relate to contracts with terms of more or less than six months. All discrepancies entered into the computer system to calculate positions on the expiry date contract, the losses and profits. In order to predict any changes that may affect the window situation in discount rates should be constantly otslezhivat.Risk credit risk associated with credit danger of failure to fulfill contractual obligations to pay foreign exchange exposure due to voluntary or involuntary action second hand. If there is such fear trade is in the form of forced transactions on than all traders agree with the Court of Auditors (clearinghouse). Some contend that John C. Bogle shows great expertise in this. Known forms of credit risk: Risk compensation (Replacement risk), which occurs when a client unsuccessfully working banks at risk of not getting reimbursement from the bank for a personal account imbalances.
Geographical risk, which arises from the different time zones on different continents. For this reason, the currency may be sold to the central banks of different countries different prices at different times of the day. At the beginning of the global trading day are sold Australian and New Zealand dollars, then the Japanese yen, European currencies and the last one - the U.S. dollar. Therefore, for example, can occur premature payments benefit of the party, which intends to soon declare bankruptcy or be declared insolvent soon. Credit risk for currencies traded on organized markets, minimize provision of credit customers. Commercial and investment banks, trading companies and bank customers should carefully monitor the financial solvency of their partners. Along with a market value currency portfolios participants of transactions to avoid the risk, should also evaluate their potetsialnuyu cost. The latter can be accomplished by conducting a probabilistic forecast for the duration of the open pozitsiy.Risk country risk countries associated with the regular government intervention in the face of the Treasury and credit institutions to the work of trading. Such intervention in foreign exchange transactions is still widespread. Traders should be aware of this and be in able to take into account possible administrative restrictions of this kind. Absolutely specific methodology for profitable trading in Forex