The Two Stock Market Risks You Should Know

December 15th, 2020 When people decide to invest in the stock market for the first time, they are usually told that there is either money to be made, or that there is a lot of risk. Both are true, however if you know the risks and ways to mitigate them, you can have a very profitable portfolio. Here are two major risks to consider when entering the stock market: Timing Risk The most obvious risk in stock market trading is that the direction of the economy can change at any given moment. This means that stocks can rise and fall without any warning. Pundits will tell you to buy your stocks low and sell them high, but it's easier said than done when you realize that stock prices are constantly changing. As a novice trader myself, I have found that the best types of decisions are informed decisions. If you are looking to invest in a company, take the time to research the financials of that company. I bought my first shares in Apple (APPL) a day before their September event and the reward proved to be worth the risk. Market Risk Market value risk refers to what happens when the market turns against or ignores your investment. It happens when the market goes off chasing the "next hot thing" and leaves many good, but unexciting companies behind. It also happens when the market collapses because good stocks, as well as bad stocks, suffer as investors stampede out of the market. Some investors find this a good thing and view it as an opportunity to load up on great stocks at a time when the market isn't bidding down the price. The downside, however, is that it can be hard to tell when to get out. If the stock has a history of volatility, the best thing you can do is set a timeframe of when to pull out. For example, if you are going to invest in H&R Block stocks, you would see in the stock history that there is an uptick in March and it goes down by the end of the month. So, your goal would be to pull out of H&R Block (HRB) by, or before, the end of March. Tips4Traders For more awesome tips, news and information, visit our site... Register now This email is a paid advertisement. It is for a product or service that is not offered, recommended or endorsed by Tips4Traders.com and neither the company nor its affiliates bear responsibility or control over the content of the advertisement and the product or service offered. There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Tips4Traders.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for any trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. By downloading this book your information may be shared with our educational partners. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Tips4Traders.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.

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