Risks Accessment Consideration

Trading currency exchange will carry certain level of risk which may not be fitting all investors' appetite. Prior to trading, investor should take consideration of their experience level, monetary objectives, financial management plan and risk-bearing. Credit risk Due to intended or unintended action by counter party, an outstanding currency position may not be paid off as agreed due to voluntary or involuntary action by counter party. Replacement risk When you cannot get refund from the counter party and induce your account deranges, instantly clear off your books to hold the currency price rate. Settlement risk Due to different prices at different time zones between you and your counter party, transaction payment might possible to be declared not enough money before payment is executed. Exchange rate risk Variation of currency rate is due to the worldwide market supply and demand. Price changes may bring to loss from profitable position. Interest rate risk Because of variation of currency rate, in forward spread , there might be some maturity gaps and transaction mismatch. Dictatorship risk. Dictatorship (sovereign) risk refers to the government's interference in the Forex activity. Ttraders have to realize that kind of the risk and be in state to account possible administrative restrictions.