The Secret:

The secret to successful investing is learning your own style, or in other words trading method(s) that work for you. There is no correct approach that everyone should learn. However, every trader needs to assess how much risk they can comfortably handle. It is the single most important investment issue for long-term success in the Forex market.
Are you able to stomach the risk when the markets are moving up or down as fast as your nervous heartbeat? Do you carefully consider the various risks that are associated with each trade you make? The fact is, many people either don't have a clue how or don't feel they need to protect themselves from unnecessary risk. In most cases they don't even understand all the types of risk their investing is exposed to. We will be reviewing the various types of risk and proper risk management to maximize your personal performance, including:
- What is risk?- The different types of risk- The risk/Return Balance- Diversifying your trading

Default Risk

This is the risk that the company with whom you have your Forex trading account will be unable to pay out an investor's account balance when a withdrawal request is submitted. Many Forex traders remember the incident of Refco in the fall of 2005. Unfortunately Refco, one of the world's largest investment firms with brokerage arms within commodities, futures and forex filed for bankruptcy protection and each of the brokerages were auctioned off to competitors or former subsidiaries. Their clients were unable to withdraw profits and initial capital until the brokerages were sold off. As of yet the dust has not settled and it is still too early to tell if all former customers received complete compensation. Choosing a suitable, stable broker is more than choosing the biggest.

Country Risk

This refers to the risk that a country won't be able to honor its financial commitments. When a country defaults it can harm the performance of all other financial instruments in that country as well as other countries it has relations with. Country risk applies to stocks, bonds, mutual funds, options, futures and most importantly the currency that is issued within a particular country. This type of risk is most often seen in emerging markets or countries that have a severe deficit.

Forex Risk

When investing in foreign currencies you must consider that the currency exchange rate fluctuations of closely linked countries can drastically move the price of the primary currency as well. For example, economic and political events directly tied to the British Pound (GBP) have an effect on the Euro's trading (i.e. the EUR/USD might have similar reaction as GBP/USD even though they are both separate currencies and are not in the same currency pair). Knowing what countries effect the currency pairs you trade is vital to your long-term success.

Interest Rate Risk

A rise or decline in interest rates during the term a trade is open will affect the amount of interest you might pay per day until the trade is closed. Open trades at rollover are assessed either an interest charge or interest gain depending upon the direction of the open trade and the interest rate levels of the corresponding countries. If you sell the currency with the higher interest rate you will be charged daily interest at the time of rollover based on your broker's rollover/interest policy. For more specifics on understanding your interest risk, please consult your broker for complete details of their policy including time of rollover, interest price (also called swap) and account requirements to receive interest paid to your account.

Interest Rate Risk

A rise or decline in interest rates during the term a trade is open will affect the amount of interest you might pay per day until the trade is closed. Open trades at rollover are assessed either an interest charge or interest gain depending upon the direction of the open trade and the interest rate levels of the corresponding countries. If you sell the currency with the higher interest rate you will be charged daily interest at the time of rollover based on your broker's rollover/interest policy. For more specifics on understanding your interest risk, please consult your broker for complete details of their policy including time of rollover, interest price (also called swap) and account requirements to receive interest paid to your account

Market Risk

This is the most familiar of the risks we have discussed, and according to some, really the main risk to consider. Market risk is the day to day fluctuations in a currency pair's price; also referred to as volatility. Volatility is not so much a cause but an effect of certain market forces. Volatility is a measure of risk because it refers to the behavior, or "temperament," of your investment rather than the reason for this behavior. Because market movement is the reason why people can make money, volatility is essential for returns, and the more unstable the currency pair the higher the chance it can go dramatically either way.

Technology Risk

This is a particular risk that many traders don't think much about. However, with the majority of individual Forex traders executing trades online, we are all technology reliant. Are you protected against technology failure? Do you have an alternative internet service? Do you have back-up computers that you could use if your primary trading computer crashes?
As you can see, there are several types of risk that a smart investor should consider and pay careful attention to in their trading. Deciding your potential return (target profit) while respecting risk is the age old decision that each investors must make

The Risk Reward Balance

The risk/return balance could easily be called the iron stomach test. Deciding what amount of risk you can take on while allowing yourself to walk away from your computer without worrying and to get sound rest at night while you have long-term trades open is a trader's foremost important decision. The risk/return balance is the balance a trader must decide on between the lowest possible risk for the highest possible return. Remember to keep in mind that low levels of uncertainty (low risk) are associated with low potential returns and high levels of uncertainty (high risk) are associated with high potential returns. Trading is all about risk and probabilities. Understanding the inner functions of your trading strategy(s) and proper placement of entry and exit orders will assist in limiting your risk exposure while maximizing your profit potential.
What about how much of your account to place on each trade, or in other words the number of lots per trade? How much of your account have you lost in a single trade? Was it to much to swallow? If so you might not have utilized proper risk management and over leveraged your trade. Establishing the right level of leverage and corresponding margin requirements are a big part of managing risk. How are you doing?

There is Not One Correct Risk Level

Just as there is no single favorite food for everyone, there is no right risk level for everyone. Only you can determine what level of risk is right for you. You need to find the right balance between the amount of risk you are willing to take, and the amount of risk you can actually take. All too often investors think they are willing to take risk, but when it happens, they find out they aren't. Surviving in the market long-term is the most important way to make the market work for you. To do that, you need to learn your own risk tolerance ability. This could mean that you loose money during this learning process, but if this loss helps you achieve this level of understanding then you can financially afford the loss. This financial and emotional tuition is a valuable trading resource and something most experienced investors have paid through the process of trial and error.

In Conclusion

Different individuals will have different tolerances for risk. Tolerance is not static, it will change along with your skills and knowledge. As you become more experienced tolerance to risk may increase as your strategies or systems of trading become more and more proven in your mind and wallet. But don't let this fool you into not adhering to and thinking about proper money management practices. Achieving the right median between risk and return will ensure that you achieve your financial goals while allowing you to get a good nights rest.

Integrity

Our success is aligned with our customer’s success, therefore we always act ethically and honestly.

Dynamic Work Environment

Each employee’s unique ideas and original talents reflect the diverse nature of our world-wide business.

Innovation

Our company encourages innovation in the discovery, development and commercialization of breakthrough products.

Collaborative Teamwork

Concise and timely communication leads to the ideal atmosphere for collaboration and unity.

Wellness

We understand the importance of work/family balance, and encourage healthy lifestyles.

Learning and Continuous Improvement

We foster a culture that supports individual growth and personal development.

Political/Economic Risk

This represents the risk that a country's economic or political events will cause immediate and drastic changes in the currency prices associated with that country. Another example of this risk is government intervention that we typically see with Japan and the need to maintain low currency prices to bolster their exports.

Industry Leading Customer Service

Our unique customer oriented business model provides unmatched customer service.

Community Involvement

Be part of great causes such as: Susan G. Komen Race for the Cure, and the Utah Food Bank.

Making Work Fun

Whether it’s a chili cook-off, foosball tournament, or renting out a movie theater for the latest premier, we have fun!

2009 News Articles

IBFX Announces New Partnership with Dow Jones IBFX Takes Home Award for Online Innovation at 2009 Utah Business iQ Awards IBFX Wins Global Finance Award for Best Online Foreign Exchange Retail Trading System IBFX Announces Three New Customer Rewards Programs

2008 News Articles

IBFX Repeats as Best Foreign Exchange Broker at 2008 Shares Awards in London IBFX Named Best Online Broker at 2008 Middle East Money Summit Awards IBFX Posts Record Revenues Despite Market Woes IBFX Adds J.P. Morgan to Growing List of Liquidity Providers IBFX Adds Nine New Cross Currency Pairs to its Proprietary Trading Platform IBFX Tops Utah Business Magazine's "Fast 50" IBFX Named to 2008 Inc. 500 IBFX Crowned Best Online FX Provider at MoneyAM 2008 Online Finance Awards IBFX Adds PowerStats to Growing Library of Free Online Trading Tools IBFX Launches Summer Mini Challenge Extravaganza IBFX Recognized by EXHIBITOR Magazine For Excellence in Tradeshow Promotion Exhibit IBFX Named As Finalist for Three 2008 American Business Awards Promising Business Growth Prompts New Management Hires At IBFX IBFX Unveils New No-Swap Accounts System IBFX Provides Access to Multiple Bank Liquidity Partners

2007 News Articles

IBFX Honored by Shares Magazine as Best Foreign Exchange Broker 2007 New Customers at IBFX Earn Rebates Through Customer Rewards Program IBFX Daily Pivots - The Newest Trading Tool from IBFX IBFX adds IBFX Instrument Monitor to its Arsenal of Trading Tools IBFX Updates Industry’s First Online University IBFX Achieves Rapid Growth as the Industry Tightens Regulations IBFX Creates Custom Clarity for Forex Traders with New IBFX Mini Monitor Tool IBFX Named As a Finalist in 4th Annual Stevie® Awards for Women in Business New IBFX Software Helps Makes Sense of Currency Market IBFX Named #1 Performer in UVEF "Top 25 Under Five" Award IBFX Named as Finalist for Three 2007 American Business Awards IBFX Announces $40 Million Investment by Spectrum Equity Investors Dow Jones Newswires - Spectrum Equity Investors invest in IBFX Crosland Wins Ernst & Young Entrepreneur of the Year 2007 Award for Utah Region Deseret News - 'Interbank Reworks Foreign Exchange' IBFX Unveils Industry's First Online University