Want to Make Money from Forex? Avoid the 6 Biggest Traps to Not Become a "Victim" of the Trading Platform

Forex trading attracts countless investors with high profits, but the risks involved in forex investment are also significant. If you do not fully understand the dangers behind large numbers, this article will help you become aware before losing money unnecessarily.

Before Investing, You Need to Understand What a Forex Broker Is

Foreign exchange (Forex) is not a currency, but a trading platform where you buy and sell currency pairs like EUR/USD or GBP/JPY. The special point is that you can make money even when the market declines, as long as you predict the direction correctly.

However, unlike stocks or digital currencies, Forex allows the use of leverage (leverage), enabling you to trade with amounts exceeding your actual capital. This excuse has led to countless unnecessary losses.

6 Major Risks When Investing in Forex That Beginners Often Overlook

1. Exchange rate and interest rate volatility are “The Sword”@

When a country raises interest rates, its currency usually becomes stronger because investment capital flows in search of higher returns. Conversely, when interest rates decrease, the currency will be sold off.

This change not only affects the price of currency pairs but also alters your entire trading strategy. Investors who do not pay attention to the central banks’ interest rate trajectory will easily fall behind.

2. Geopolitical Events - Unexpected Saboteurs@

When a country faces political instability, investors will rush to withdraw their money from that currency, causing liquidity to collapse. At this point, if you hold a position, you will be stuck and unable to sell.

Even more, governments may intentionally devalue their currency to make exports cheaper. This measure causes Forex investors holding that currency to suffer immediate losses.

3. High Leverage - A Double-Edged Sword@

This is the biggest difference between Forex and other investment types. Because the value of a standard lot (100,000 EUR) is too high, trading platforms allow leverage up to 1:500 or even higher.

The good thing is that profits can increase very quickly. The bad thing is that losses do too. Just a 50 pip deviation on a standard lot, and you lose $500. With 1:100 leverage, a capital of $5 can cause such losses.

4. Defaulted Trading Platforms - Losing Everything Without Knowing@

In 2015, the “Black Swan” phenomenon occurred when the Swiss National Bank unexpectedly abandoned the peg of the CHF. Within minutes, the EUR/CHF exchange rate dropped from 1.20 to 0.90, shocking the market.

What was the result? Many large forex brokers like FXCM suffered heavy losses and could not pay their clients. Lucky investors might recover part of their capital through bankruptcy procedures, but most lost everything.

5. Slow Order Execution - Price Slippage That Cannot Be Avoided@

You place a buy order for EUR/USD at 1.2000, but due to poor technology at the broker, the order is not executed immediately. When it finally executes, the price has risen to 1.2050. You get in, but already lose $500 on one lot from the start.

This type of risk occurs constantly on unreliable brokers. Choosing a broker with good technology and solid finances is mandatory.

6. Forex Scams - The Current Malpractice in Many Countries@

This is the biggest risk. Every year, thousands of investors are lured into scams promising huge profits like “earn 10% weekly” or “100% winning trading secrets.”

In reality, no one can guarantee consistent profits in Forex. If you do not understand the basics, you will easily become prey to scammers.

So Should You Invest in Forex or Not?

Legal Aspect@

In Vietnam, the State Bank has not licensed any entity to operate genuine Forex trading. However, most current platforms operate under CFD (contract for difference), a form that is not explicitly banned.

This means Forex remains in a legal gray area in Vietnam. You must take responsibility when participating.

Safety Aspect@

Forex is not necessarily unsafe. If you:

• Study the market mechanisms thoroughly
• Manage risks carefully (never use excessively high leverage)
• Choose reputable brokers with international licenses
• Control emotions and stick to your trading plan

…then Forex can indeed provide stable profits.

The problem is that 90% of new investors fail to do these things, leading to losses. The risk in forex investment does not come from the market or the broker, but from the investor’s lack of knowledge and discipline.

Conclusion

Before clicking “Buy” or “Sell” on your Forex trading platform, make sure you have:

• Fully understood the 6 major risks above
• A specific risk management plan
• Chosen the right broker
• Started with small amounts to learn

Successful Forex traders are not lucky, but those who know how to manage risks. Make sure you belong to the second group.