Systematic Risk

Definition - What does Systematic Risk mean?

Systematic risk refers to the risks that are an inevitable part of the market and cannot be eliminated. Systematic risk refers to events and occurrences that affect the market as a whole. Systematic risks in forex trading include wars, financial crises and so on.

ForexDictionary explains Systematic Risk

Systematic risk is not related to a particular currency pair, so it can’t be eliminated by diversifying over different pairs. That said, most systematic risks have winners and losers when it comes to currency. A war in one region of the world may depress currency values there, but the currencies with which they are paired will not be as affected. In short, systematic risk in forex usually represents a trading opportunity. For an event to be bad news for all currencies, it would have to be even in its impact. Otherwise, currencies would fall and rise at different rates, creating opportunities with every fluctuation.
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