IS TRADING WITHOUT RISK A POSSIBILITY?

Upon scouring the internet for online trading advice, you may have stumbled across more than a few websites that offer subscribers a no-risk approach for trading. It can be tempting to take advantage of such offers, though one should take caution when engaging with these schemes; and by and large they are just that. Schemes.

Investing on the stock market provides plenty of opportunities to make incredible profits, but they always certainly come with risks. So, before you go off, wasting your efforts on those that claim to have no risk, why not find out more about the risks associated with trading shares, and how you can manage them to keep them low.

CAN YOU TRADE WITHOUT RISK?

Despite what you may have heard, stock market trading always comes with some degree of risk, with some investments carrying far more than others. Blue-chip companies may offer a safer, albeit slower acting investment, but even they are not completely devoid of financial dangers. Because of this, it is essential for all investors to draw up unique and comprehensive risk management plans that stop them from trading with more than they can afford to lose.

RISK MANAGEMENT

High risk is typically associated with high returns, although this isn’t always the case; high risks can also mean incredible losses. It will guide your trading strategies and approaches in a direction that protects your equity as an investor, by ensuring that you are either trading within your means, or are taking risks that are well worth the reward.

MARGIN AND LEVERAGE

Your leverage will determine how much extra capital you can leverage per amount of money invested, essentially showing you how much money you control per unit of invested trading capital.

Margins, on the other hand describe the amount of money that you will need to use as collateral for your investment, which is generally taken directly from your trading capital and kept there for the duration of your investment. A high leverage may yield better profits, but it also presents greater risks. And so it is essential to determine these factors when planning your risk management strategies.

USING A MINIMUM POSITION AND TRADE SIZE

Position sizing determines how many contracts you can viably risk on a trade, and will give you an answer as to which trade size would best suit your risk tolerance. While the minimum trade size in an excellent way to reduce your risks, it will also stunt your equity growth. Using a higher trade size might be ideal for achieving better growth, but it comes at a much higher risk, one which you might not be able to afford to take.

CONTACT STOCK MARKET COLLEGE TO LEARN MORE

If you would like more information on how to confidently enter the world of stock trading, contact one of our representatives from the Stock Market College today, or visit our website for further details on our courses and curriculum. Let us give you the head start to begin your future as a stock market trader.

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