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Why Forex trading poses less risk than trading futures

by , 28 May 2013

The Forex market is a $4 trillion per day industry where you're able to buy, sell, exchange and monitor currencies. In addition, it poses less risk than when trading futures. Read on to find out why so you can be part of the largest financial market in the world.

Forex expert, Timon Rossolimos says in Forex Fundamentals that he’d rather put his money into Forex trading than into futures.

One of his reasons is that JSE Equity stock market has a yearly trading volume of $200 billion per year and that’s only 0.05% of what the Forex Market trades in a single day. And with this volume, you’ll be able to buy and sell your currency trades at any time of day or night making your Forex trading more efficient.

In addition, Rossolimos believes the Forex trading holds much less risk than when trading futures.

Here are the reasons why:

Discover why Forex trading is less risky compared to trading futures

  1. You never lose more than you‘ve deposited into your account. This means you can manage your risk by the capital you put in. Your broker won’t allow you to lose more than you’ve deposited in your trading account. Instead, they’ll automatically close your position when your account balance is close to zero.
  2. Major currency pairs are the most liquid in the world. This means they have much less risk of collapsing and are regarded as ‘safe’. So “you don’t have to have sleepless nights worrying about your Forex trade,” says Rossolimos.
  3. You don’t have to worry about the risk of liquidation like you do when trading shares. “While the JSE offers proven, inflation beating returns in the long-term, companies and markets have collapsed and prices can equally rise or fall, sometimes without plausible reason,” warns Francois Joubert, Senior Analyst at Red Hot Penny Shares.
  4. You’ll have early warning signals of a country’s pending financial meltdown giving you time to exit without a major loss.

There you have it. Now that you know why the Forex market poses less risk than futures, you can consider taking advantage of the gains the largest financial market in the world has to offer.

Why Forex trading poses less risk than trading futures
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