Risk Management – An Essential For Beginners
The post Risk Management – An Essential For Beginners appeared on BitcoinEthereumNews.com. Introduction “All covet, all lose” hardly applies so well as it does to the world of cryptocurrency and similar volatile investments. Since risk can only be minimized, but not taken out of equation altogether, it is wise to manage the risk appropriately. However, risk management itself requires adequate understanding of the nature of the problem: how many kinds of risks there are, and what strategies are to be adopted in response. Before moving ahead, it is important to keep in mind that risk is inherent to our lives, from crossing a road, driving a car, dealing with a stranger, or investing money. But the only difference is that we manage everyday risks unconsciously. Risks in financial matters need deliberate efforts and elaborate planning. Risk management in investment is not just a requirement; it is a systematic framework adopted by an individual or a company. The framework includes all the groundwork, comprising detailed analysis of the amount of risk and potential reward, leading to comprehensive strategies to avoid the risk as much as possible. Besides, the framework features taking care of various assets classes like cryptocurrencies, stocks, indices, futures, and commodities. The Types of Risk It is impossible to ensure risk management unless you know how many types of risks there are in the market in which you are investing or planning to invest. Market Risk Market risk is related to the price action of the asset you are trading. For example, you are trading a cryptocurrency on a weekend, there is usually low risk involved because of comparatively low trading volume. But any fundamental event can bring wild swings, which need to be taken into account when starting a trade. Tight stop-loss and take-profit orders may ward off market risks and save you from serious losses. Liquidity Risk Liquidity…
The post Risk Management – An Essential For Beginners appeared on BitcoinEthereumNews.com.
Introduction “All covet, all lose” hardly applies so well as it does to the world of cryptocurrency and similar volatile investments. Since risk can only be minimized, but not taken out of equation altogether, it is wise to manage the risk appropriately. However, risk management itself requires adequate understanding of the nature of the problem: how many kinds of risks there are, and what strategies are to be adopted in response. Before moving ahead, it is important to keep in mind that risk is inherent to our lives, from crossing a road, driving a car, dealing with a stranger, or investing money. But the only difference is that we manage everyday risks unconsciously. Risks in financial matters need deliberate efforts and elaborate planning. Risk management in investment is not just a requirement; it is a systematic framework adopted by an individual or a company. The framework includes all the groundwork, comprising detailed analysis of the amount of risk and potential reward, leading to comprehensive strategies to avoid the risk as much as possible. Besides, the framework features taking care of various assets classes like cryptocurrencies, stocks, indices, futures, and commodities. The Types of Risk It is impossible to ensure risk management unless you know how many types of risks there are in the market in which you are investing or planning to invest. Market Risk Market risk is related to the price action of the asset you are trading. For example, you are trading a cryptocurrency on a weekend, there is usually low risk involved because of comparatively low trading volume. But any fundamental event can bring wild swings, which need to be taken into account when starting a trade. Tight stop-loss and take-profit orders may ward off market risks and save you from serious losses. Liquidity Risk Liquidity…
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