Most Effective Ways to Overcome Forex Money Management’s Problem

The Foreign Exchange Currency market is the second largest financial market in terms of volume. The volatility in the currency market makes it a risky one. This Forex risk has become a key challenge for the treasury department. The currency rates fluctuate between the transaction date and cash flow date, and an unfavorable movement could compromise the profitability of the transaction. The effective ways to manage the Forex Money Management risk are –



Check the Forex conversion rates offered by banks - online, newspapers, etc give delayed rates and not real time data. Banks charge high margins, leaving very little profits for small companies.

In order to keep the focus on corporate finances, the Finance Manager may outsource the corporate Forex transactions.

Regularly conduct training for existing finance team to get them up the curve to handle Forex transactions better with the ever changing market conditions.

Have hedging strategies in place – through currency forwards, futures or option and trade finance.

To adhere to the Forex risk management techniques to optimize cash flows and avoid speculating on exchange rate trends.

Foreign Exchange Risk Management is a fundamental tool though often considered to be complex, expensive and time-consuming. But with a simple, tailored monitoring activity, it can neutralize currency fluctuations.

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Comments

  1. Elite Research and Investment AdvisoryMarch 26, 2019 at 3:01 AM

    Money Management is a defensive concept which keeps the trader in funds so that he can trade another day and bears outs profitable performance. It is the key factor

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