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The Pitfalls of Forex Diversification and How to Avoid Them
The Pitfalls of Forex Diversification and How to Avoid Them
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The foreign exchange market, while lucrative, is fraught with risks that many traders fail to navigate effectively. A common misconception is that simply trading multiple currency pairs equates to diversification. This approach often backfires when correlated pairs amplify exposure to the same economic factors.
True diversification requires a shift from capital-based allocation to risk-weighted strategies. The highly Leveraged nature of Forex demands continuous calculation and a nuanced understanding of market dynamics. Regulatory complexities further underscore the need for technical precision balanced with accessibility.
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