-Carefully consider your investment funds and objectives.
Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available to educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose.
-Consider market volatility.
There is a considerable exposure to risk in any foreign exchange transaction. Any transaction involving foreign currencies is exposed to risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency. More over, the leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin call within the time prescribed, your position will be liquidated and you will be responsible for any resulting losses. Investors may lower their exposure to risk by employing risk-reducing strategies such as ‘stop-loss’ or ‘stop-limit’ orders.
-Consider a possibility of software and hardware failure.
There are also risks associated with utilizing an Internet-based deal execution software application including, but not limited, to the failure of hardware and software. Commerce Bank employs back up systems and contingency plans to minimize the possibility of system failure, and phone trading is always available.