Speculating on Foreign Exchange (FX, Forex) and Contracts for Difference (CFDs) enables investors to trade the financial markets without having to own a particular asset. The volatile nature of the markets presents traders with opportunities to make a profit on their investment, but also carries great risk of losing your entire capital if the instrument does not perform in the way you expected.
While it is impossible to neutralise this risk completely, you might be able to minimise its effect by expanding your knowledge and learning how to make informed trading decisions.
If you are new to Forex trading, you can also practice your investment strategy under real market conditions with a TradeFred demo account. This allows you to experience investing with absolutely no risk to your capital.
Leverage is an important tool for investors, as it permits them to open larger positions than their deposits would otherwise allow. For example, if you invest $500 with a leverage of 1:200, you would be able to make a trade worth $100,000. This would greatly enhance your profit if the market moves in your favour.
It is important to understand, however, that leverage can work both ways. Should an asset not perform as you expected, you will incur a greater loss than if you had traded solely with your invested capital.
Opening a TradeFred demo account will allow you practice trading with leverage with no risk to your capital. You can also try different leverage ratios to discover which one suits your investment style.
Why trust TradeFred
As a CySEC-regulated broker, TradeFred is committed to putting the needs of our clients at the forefront of our operations. That is why we have a range of features to help you minimise your trading risk.
We offer negative balance protection as standard, meaning you will never be able to lose more than your invested capital. This will enable you to reduce the amount you stand to lose if the asset does not perform the way you anticipated.
It is important to recognise that TradeFred cannot remove all elements of risk from Forex trading. However, by learning how to invest responsibly and utilising our management tools, you could greatly reduce the impact it could have to your finances.
View TradeFred’s full Risk disclosure here