You might have listened that stock trading is risky. After listening this, you could have thought that what sort of risks can be associated with the stock trading. Here we have a list of potential risks which can be associated with stock exchange trading:
- Financial Risk
The most important and crucial sort of risk is the financial risk. You have your money at risk if you are sure about you decision. Before the trading day ends, you can never know the exact place of yourself but this can be mitigated through sufficient information and training.
- Psychological Risk
It can also be known as intuitive or decision making risk. If you make wrong decision once, you can lose your confidence for the next time most probably.
- Market Risk
Market forces are dynamic; they can move around any time and twist the scenario against the investor’s anticipations.
- Business Risk
Businesses can go default if their shares are over or under valued. This is a negative sign for market efficiency as well.
- Political Risk
There is no certainty of the politics in the country. As soon as any news appears on the screen, trading activity immediately starts reacting to it. This can entirely turn the market scenario.