Articles of category "Currency risk management"

Your business is open to risks from movements in competitors' prices, raw material prices, competitors' cost of capital, foreign exchange rates and interest rates, all of which need to be (ideally) managed. Responsibility for exchange risk management rests at the top and if the senior executives do not understand what is going on they must find out. It would be nonsense to suggest that they should know every detail of all that is happening in a business but their job is to ensure adequate systems and controls are put in place.

The most common and important tool of forex risk management in trading is the stop-loss order. A stop-loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against a trader's position. Liquidity of the Forex market ensures stop-loss orders can be easily executed.