Aaron_ Wilson#90

View translation

What is systemic risk in forex markets?

Systemic risk arises when shocks in one area trigger global contagion. For example, the 2008 credit crisis led to USD funding shortages worldwide, destabilizing forex liquidity. Institutions prepare with capital buffers, stress tests, and swap lines. Retail traders cannot eliminate systemic risk but can mitigate by avoiding overleverage and diversifying across assets. Benefits: recognizing systemic risk avoids overconfidence. Risks: underestimating it leads to collapse during crises. Forex is deeply interconnected—systemic shocks prove no trader is isolated from global finance.