It’s no secret that every activity that is related to finance, and related to risks. Therefore, if work on the Forex market, then you should know what risks you may encounter.
So get down to substantive consideration of the risks:
- A low liquidity
Even at the very beginning – investment problem may be the imperfection of this market. If there is no demand, then the trader will not be able to realize their full transaction amount, respectively, profit will be lower. In order to avoid such uncomfortable conditions of online trading you need to conduct a thorough analysis of market liquidity, as well as provide specific terms of cooperation with broker.
- Unfair trade practices
Quite a common situation in the financial markets is illegal or insider activities of some companies. Although, currently, number of countries are already struggling with this problem. There is a risk of “get into the network” unscrupulous broker. But such operations are taking as a basis for the internal market manipulation, can only have a negative impact on the situation, causing an unfair price for the shares. In this case, the market is ruled by speculation, which ultimately could lead to loss-making trade.
- Reliability of the “old market”
It should be noted that a relatively “young” markets rather difficult to predict, especially to perform technical analysis. Analysis of figures and models may not be so true, because there is no market history and the history of laws. Therefore, you should choose the markets with more impressive “experience” of work and careful technical analysis.
- The system of corporate governance
Today, the markets are developing quite weak corporate governance that may change due to the decision of the manager, not the shareholders. Also, do not cooperate with the company, where the voting rights of shareholders are determined selectively.
- The bankruptcy of the company
Investment activity of any company connected with its management, transparency of financial transactions and accounting. Therefore, if performed level of control over the company is low and the value of the shares is overstated, it can lead to its bankruptcy.
- Instability in the political sphere
If in the country there are different political changes, then it is directly displayed in the investment market. So always follow the latest developments and take the right decisions.
Finally, it should be noted that the stock market – it is not only profit; it’s also a great risk. Therefore, you should always carry out a thorough analysis and be aware of all the news and events of the world.