Importance of stop loss
All you need to know about the Risk management in Stock Market
This is an important article for all the investors and traders, go ahead and read it.
This article is an introduction to the risks of stock investing. In this basics of investing article, we're going to take a look at the dangers of putting money into shares in a general way.
Before moving on to take a look at how to place a stop loss with trading and how important it is to set a price alert as a way of helping to manage your risk, so first of all, all the risks involved in investing in shares will the simple answer to that is yes. Risks are investing in shares, which is considered higher risk than cash investments, such as putting the hard-earned money in a savings account or investing money in bonds. Generally speaking, we usually expect that the risk of an asset to correlate in some way to the potential return. An investor, after all, isn't going to take on additional risk unless they have the promise of potentially higher returns as a kind of compensation for taking on that extra risk. Now in a future article, we are going to break down some of the specific risks that a share investor might face things as liquidity risk, currency risk, systemic risk, and show you how to mitigate some of these risks by diversifying a portfolio.
For this article, we just want to keep things really simple, though. And the thing you need to bear in mind is that stocks can go down as well as up. Although the stock market as a whole has historically shown an attractive rate of returns, crucially, it hasn't. The stock market doesn't move in a straight line so that we can have long periods of lulls in between the periods where the stock markets are going up generally. And these can be tricky to navigate in the short term.
What does this mean when you invest?
Money in a company at some point your investment may be worth less than you bought it for, and at that point, managing the risk is in your hands. What we want to show you now is a simple way to give an instruction to close out your position.
If the share price moves out, it moves against you by a certain amount that you specify. This is called a stop loss. Hence setting a stop loss is essential so that you can keep on top of how your investment is moving.
DISCLAIMER :
We are not SEBI registered. This article is for education purposes only. The data provided is only for educational purposes. The information provided here is not intended to be any kind of financial advice, investment advice, and trading advice. As know investing in the stock market is very risky and trading stocks, options, and other securities involves risk. The risk of loss in the stock market can be substantial.
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