Anthony Isaiah M907 Nelson#91

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What is geopolitical risk in forex and how do traders manage it?

Geopolitical risk stems from wars, elections, sanctions, and international tensions that impact currency stability. For example, Russia-Ukraine conflict spiked volatility in EUR and energy-linked currencies. Geopolitical events can cause sharp moves outside normal economic patterns, leading to gaps, volatility, and safe-haven flows into USD, JPY, or CHF. Traders manage geopolitical risk by reducing leverage, diversifying across assets, and hedging with gold or US Treasuries. News monitoring and scenario planning are essential, as markets often react before events fully unfold. Geopolitical risk is unpredictable but unavoidable, requiring constant vigilance and flexibility.