The use of the “stop loss order” or the “stop limit” order is a risk reducing strategy to help mitigate against complete loss of your margins, when participating in Forex trading. For example: a stop loss order can be issued for 5% below the price you paid for the forex and will limit your loss to that 5%.
As such, you have pre- determined the amount of losses that you are willing to take. You do not need to take unwarranted risk, employ the use of the “stop loss” in the event that you miss a margin call within the specified, as they will liquidate your funds without prior notification and you alone will be responsible for your losses.
Invest but invest wisely and be sure to research and employ all best practices that you can to ensure that your losses are minimal but your returns are large.
The risk associated with Forex trading is different than that associated with the local trading of stocks such as: NASDAQ and Dow Jones are that the market is not centralized and the slightest movement in the market will have a proportional impact on your investment, good or bad. This is so as you are dealing in the currencies of different countries.
The value of these currencies at any point in time can be impacted by: change in the political landscape, their international credit ratings and any other factors that may contribute to the price or liquidity of the currency.
This will no doubt substantially impact your investment. However, it is important to note that the major currencies that are normally traded are the: British Pound, Japanese Yen, US Dollar, Euro Dollar and the Swiss Franc; and the economies of these countries are relatively stable in comparison to others. So it is not all doom and gloom, but be sure to measure to acquire all the knowledge you can about the various markets and when in doubt enlist the assistance of a licensed trader.
You can read more at http://forex.pn/