Market Risk Assessment

What is risk assessment?

Risk assessment in foreign currency trading is used to identify potential risk factors that could generate losses. It is used to analyze and evaluate risks associated with the foreign exchange market and to determine the best ways to control and minimize the risks.

Measuring and managing foreign exchange risk is crucial in order to reduce the negative effects of a volatile market on profit margins and asset value.

Risk assessment should be an ongoing process to be re-evaluated and adapted to the foreign currency market’s realities.

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Managing Risk in Foreign Currency Trade

Foreign exchange, also known as forex or FX is driven by supply and demand. As such, it fluctuates like any other market.

At Falcon Global FX, a team of market risk assessment professionals make sure all those aspects are covered in order to minimize risks.

When dealing in foreign currency exchange, as with any type of market trading, there are elements of risk that might affect the trade.

There are 4 main negative impacts of foreign currency trade which are part of any sensible market risk assessment plan.

1

Liquidity risk

this occurs when an individual or a business has to buy above or sell below market value, thus suffering a loss.
2

Interest rate risk

this relates to the fluctuation of interest rates which affects foreign exchange prices.
3

Leverage risk

commonly believed to be high risk because the potential loss is higher than the trading capital.
4

Currency risk

also referred to as exchange-rate risk, currency risk happens when the value of a currency’s price in relation to another fluctuates.

Professionals in Market Risk Assessment

Market risks are next to impossible to eliminate because of the volatility of international markets. However, at Falcon Global FX, we believe that risk can also be part of good business if it is managed efficiently.

You want your cash flow to be as predictable as possible while being able to generate some profit from currency trading. Call on our professionals to come up with the best risk management plan for your international business. We can make a substantial difference between profits and losses.

Whether you are a business or an individual, you know you are in good hands with Falcon Global FX. We are professionals in foreign exchange trade. Our business is to facilitate your FX transaction with the best exchange rate and the lowest fees around.

Open an account today using our online form. It’s easy, quick and secure. Let Falcon Global help you manage the risks that come with foreign currency trading.

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