1.Exchange Rate Risk or Currency Risk
2.Interest Rate Risk
3.Credit Risk
4.Country Risk
5.Marginal or Leverage Risk
6.Transaction Risk
1.CURRENCY RATE RISK
It the risk involved based on the effect of continuous volatile shift in the worldwide market supply. The risk that a business operation or investment's value will be affected by changes in the exchange rates. It is also known as Exchange Rate Risk For example, if money must be converted into different currency to make a certain investment, changes in the value of the currency relative to American Dollar will affect the total loss or gain on the investment when the money is converted back. The market moves based on the fundamental and technical factors. This Risk usually affects individual investors who makes international investments.
2.INTEREST RATE RISK
The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship is known as Interest Rate Risk. It generates profit and loss by fluctuations in the forward spreads, along with forward amount mismatches and maturity gaps among transaction in the foreign exchange book. The possibility of reduction in the value of security, especially a bond, resulting from a rise in the interest rates. This risks can be reduced by diversifying the duration of the fixed income investment that are held at a same time. Interest Risk most commonly affects bond holders. As interest rates rises, bond prices fall and when interest rates fall, bond prices rise. Continuous analysis of the interest rate environment is necessary to forecast any changes that may impact on the outstanding gap. For example a 4% bond is worth move if interest rates decreases from 4% to 1%.Since the bond holders receive in a saving account offering the 1%.Such risk usually affect securities inversely and can be reduced by diversifying.
The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship is known as Interest Rate Risk. It generates profit and loss by fluctuations in the forward spreads, along with forward amount mismatches and maturity gaps among transaction in the foreign exchange book. The possibility of reduction in the value of security, especially a bond, resulting from a rise in the interest rates. This risks can be reduced by diversifying the duration of the fixed income investment that are held at a same time. Interest Risk most commonly affects bond holders. As interest rates rises, bond prices fall and when interest rates fall, bond prices rise. Continuous analysis of the interest rate environment is necessary to forecast any changes that may impact on the outstanding gap. For example a 4% bond is worth move if interest rates decreases from 4% to 1%.Since the bond holders receive in a saving account offering the 1%.Such risk usually affect securities inversely and can be reduced by diversifying.
3.CREDIT RISK
Credit risk is usually something that is concern of banks and corporations. In other term it is also defined as the risk involved with your trading partners becoming insolvent, defaulting on payment,.committing fraud or being unwillingly to accept goods. Credit risk is very low for the individual traders as this holds true for companies registered in and regulated by the authorities in G-7 countries. For example, if you lend cash to a small bank, in the form of saving account or bond purchase,in a small and unstable country, there is increased credit risk because there is a chance the bank will be unstable to pay you back in the future.Credit risk arises whenever a borrower's is expecting to use future cash flows to pay a current debt.
4.COUNTRY RISK
Country Risk is a collection of risk with investing in a foreign country.It varies from one country to another. This type of risk includes economic risk, exchange rate risk, political risk and sovereign risk. It is the risk of capital which is being frozen by government action.
5.LEVERAGE RISK
In Forex Trading a minimum low margin funding is normally required. This margin policies has high degree of Leverage. For example, if at the same time of purchase,10% of the price of a contract were deposited as margin, a 10% decrease in the price of the contract would, if the contract were then closed out, result in a total loss of the margin deposit before any deduction for brokerage commissions. A decrease of more then 10% would result in a total loss of the margin deposit. Traders should be very much aware that the massive use of leverage will increase losses during unfavorable performance.
6.TRANSACTION RISK
Transaction Risk is the risk which is associated with time delay between entering into contract and setting it. If there is a high time difference between the entrance and settlement of the contract, at this condition higher will be transaction risk because there is more time for two exchange rates to fluctuate. 
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