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Exchange rate risk
Exchange rate risk is the potential loss due to fluctuations in exchange rates.
It is important to know that the cryptocurrency market is much more volatile than Forex or the Stock Exchange. The large price movements are favourable for well-timed trades made by a robot. If the currency you want to buy is fundamentally sound and you are not thinking short term, but long term, then the exchange rate risk is minimal.
It may be that your currency is 25% down at the time of purchase, but three months later the 25% loss is only -8% due to continued profit generation!
For example, BTC starts trading in August at $23,000. The exchange rate drops to $17 250 by November. At that point our exchange loss is 25%. Since our trading was continuous, the robot always made a profit. So our balance is not showing a 25% deficit, but only an 8% deficit! When the market turns around and starts to rise, our balance turns positive much sooner than everyone else's. By the time the BTC price reaches $23,000 again we will be well in the black and way ahead of the market!
If we are well set up and have enough time, we don't have to worry about exchange rate risk.
It is important to choose fundamentally sound cryptos and diversify! Fundamentally bad cryptocurrencies may not recover after a bear market, they may even lose all their value.