What is the risk with Forex trading? Can I hedge or control it?
The risk in Forex trading is significant. The monetary policies of central banks can often change depending upon the economic climate. Ordinarily volatile markets can expand very rapidly, moving in a short amount of time. 100-pip moves over a few hours are not at all uncommon. You can hedge your investments by opening a contrary order to an existing order. However, this type of hedge is not allowed by U.S. regulators and U.S.-based dealers will treat this second order as an order to close the existing transaction. Proper money and trade management can help you control the risk in Forex. Leverage is a powerful tool, but when used unwisely, it can increase risk exponentially.