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FX trading is not appropriate for everyone and carries a high level of risk that may not be suitable to your investment objectives. The use of leverage creates additional risk and potentially magnifies loss exposure. Ensure that you review the Product Disclosure Statement of your platform or FX product provider prior to commencing trading. In addition, before you decide to trade FX, carefully consider your investment objectives, experience, and risk tolerance. You could lose all or more of your initial investment. Do not invest money that you cannot afford to lose. Ensure you fully understand the risks associated with foreign exchange trading and with leverage. Seek advice from an independent financial or tax advisor if you have any questions.
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For those who do intend to trade FX:
If you do intend to learn to trade in FX, you need to understand that “gaps” in price can, and do, occur in the FX markets. This is where liquidity (the market price) might disappear without warning, and then resurface somewhere else. This may cause you to be unable to close a losing position at your desired level, potentially increasing your losses. This most commonly happens when an unexpected news announcement is brought to market, or over a weekend, following a newsworthy event, when the price of a currency opens on a Monday at a different level from the previous week’s close. If you are not prepared to run these risks, you should not have a position.
“Slippage” is another hazard of trading in FX. Slippage occurs where an order is filled at a worse price than that desired by a customer. This most generally occurs with Stop Loss orders and is an inherent feature of trading FX. It is not always possible to fill an order at the desired level and may occur for any number of reasons including news announcements, excessive volatility or lack of liquidity in the markets. While every effort is made to avoid slippage, those who are not prepared to accept the fact that this happens should not be trading FX .