Forex Dictionary Terms


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Definition – What does Risk mean?

Risk is the possibility that a trade or trading position will have a different outcome than the one desired by the trader. There are many ways to measure risk in forex trading as it applies to the value of a trade or a trading account. A forex trader can measure risk by the percentage or account value exposed to the trade, the dollar value of the trade before the stop loss is triggered and so on.

ForexTerms explains Risk

Risk comes in many flavors. The common usage for forex traders is the risk of losing money on a trade or not making as much money as planned. This risk can be summed up as uncertainty, and it has to be balanced out with the potential of a reward to make the trade worthwhile. That said, the forex market and forex traders are impacted by various risks, including political risk, exchange rate risk, interest rate risk and so on.

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