What are the risks associated with non-deliverable forwards in the digital currency space?

1 answers

• shravyaJul 10, 2023 · 2 years ago
  Non-deliverable forwards (NDFs) in the digital currency space can be risky, but they also present opportunities for traders. One of the risks associated with NDFs is the potential for price manipulation. Since the digital currency market is relatively new and unregulated, there is a risk that certain individuals or groups could manipulate prices to their advantage. Traders should be cautious and use reliable sources of information to make informed decisions. Another risk is the lack of liquidity in the NDF market. Compared to traditional financial markets, the digital currency market is still relatively small and illiquid. This can make it difficult for traders to enter and exit positions at desired prices. Traders should carefully consider their liquidity needs and plan their NDF trades accordingly. Finally, there is the risk of technological glitches and system failures. The digital currency market relies heavily on technology, and any technical issues can disrupt trading and cause financial losses. Traders should have backup plans in place and be prepared for unexpected technical issues.
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