When you transact in the forex markets, you are taking on risk. Risk is defined as the potential to lose money. There is a risk-free rate of return, which means that you are taking no risk. For example, if you invest in the US 1-year treasury bill, you will earn 2.4%, and the only risk is the credit of the United States Government. If you want to earn more, you need to accept risk. If you are risk-averse, you are best off with safe bets like treasury bills.
Forex trading terminology is vast and it’s worth taking the time to learn about the more frequently used terms. The Trading Academy on One Financial Markets is a great place to become more familiar with specific trading jargon.
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