RISKS OF THE FOREX MARKET

The forex market is the biggest and the fastest growing financial market in the world. While an investor trading on the Forex market, they simultaneously buying one currency and selling another one. For example; Euro/US Dollar (EUR/USD). If an investor buying Euro and selling US Dollar at the same time, there must be another eager investor who wants to make the opposite of this trade. As a result, forex trading is a zero sum game and there should be a looser against every winner. Because of the over optimistic approach of the investors in forex market, they can easily be mistaken by delusive advertisements, and ultimately they ignore the riskiness of the market. The Forex market allows to made financial transactions bigger than the deposited funds via leverage mechanism. Leverage is the main reason of risk at the Forex market. Due to the increase in investor victimization cases and complaints, with the recent regulation at 10.02.2017, the leverage ratio in Turkey is lowered from 1:100 to 1:10. Under the same regulation, minimum deposits has been determined as 50.000 Turkish Liras (or foreign currency equivalent to this) for leverage procedure. The agents of the companies within forex market do not approve this new regulation since it would cause to downsize the sector and to close down the companies. According to them, the latest 1:10 leverage ratio has not been attractive to investors and they will prefer to go abroad or shadow Forex companies to invest with higher leverage. All the recent developments in the sector are the motivation of searching the risks of forex market in detail.