How to manage stock trading risk?
There was a time when stock trading was considered so dangerous that it amounted to gambling. It is no longer associated with such stigma because of the evolution of risk management techniques in stock trading. If investors are not careful, stock trading involves many risks. Stock trading has been fraught with risks.
The most obvious, common and most common risk in stock trading comes from fluctuations in the stock market. Stock market experts often abolish security guards as soon as possible, such as unexpected tsunami attacks, and at all times remove all precautions and predictions. In addition to volatility, there are a number of other risks:
First and foremost risk is inherent in the stock market itself. Market corrections and bear markets have wreaked havoc on a large number of investors, who simply put in towels and lock in their losses. When the market correction occurs, the stock market value of 10% to 20%.
Interest rate-related risks are always faced by investors, especially when prices fall as interest rates rise. If interest rates rise sharply, people tend to sell stocks and invest in fixed-income securities such as high-yield bonds and other money-market funds. When the stock is widely dispersed, the value of the stock declines. This will cause losses to investors, especially those who buy stocks at higher interest rates.
The third risk comes from the monetary value. When money grows, people experience the loss of foreign securities. On the contrary, when the interest rate of the local currency declines, the investor receives a bonus on the increase in the return on his investment. Fluctuations in exchange rates will affect investors holding short-term funds.
Any investor who does not invest in diversification puts all the eggs in one basket, especially when he puts all the money into the stock when the market falls and may bear the brunt. Short-term investors who invest in stocks have suffered the most.
Most stock market investors can not successfully manage their portfolios because they lack the expertise of investment specialists. They can not predict market trends and losses.
In addition to these, some of the risks associated with certain investment sectors. People who invest in narrow-field portfolios (such as health care, etc.) suffer losses.
Changes in tax laws will also reduce the value you hold.
How to manage the risk in stock trading?
1. Slowly and steadily win the game.
The motto is good in all areas of human activity, including stock trading investments. If you carefully sow the seeds of investment and continue to feed your money regularly with money, your money plants can grow steadily, spend and spend time providing fruit and shade throughout the home life. The only thing needed is patience, patience and regular investment. This virtue defeats all the stock markets.
You can guarantee your future even if you do not have the funds. You can make small-scale investments even in high-value stocks. Just need to find a stockbroker to give WHO the right mechanism to complete a scoring investment for you. You do not have to buy large stocks of stock at one time, say, at least 100 high-priced stocks. You can buy a share, or even a fraction of the share. In this way, you can diversify your investment in many high-value stocks with a strong foundation that can withstand unpredictable and volatile market changes.
2. Smearing the Backward Stocks
Every stock trader. You must continue to focus on your portfolio's performance. It's best to clear stocks that have been underperforming for some time.
3. The use of cost averaging techniques
A smart investor uses some of his income for routine investment in a particular stock per month. This is a great way to build wealth, face the market level, which is an inevitable part of stock trading.