Risk Management Strategies in Stock Market

• by Admin - 2016-09-23

In today trend people wants to invest their money in stock market. Some are new and some are well trained or you can say that some are very educated about stock market. But those people are new they will get loss in the stock market. So, the risk is open here. Because we don’t know about the stock market, when will it goes up and goes down. So, there is a risk in the stock market. So, people should make risk management strategies to avoid risk in stock market. In stock market risk is bigger then return.

Two type of risk comes under the financial market which is Market Risk and another one is Inflation Risk. Inflation risk comes due to rise and fall of goods and services and Market risk comes due to rise and fall of financial market.

Risk  Management Strategies

Risk management is the process or you can say the way to assessing risk over the return by making strategies, increase the return and decrease the risk. The main definition of risk management strategies is to remove the risk during the investing in the stock market. We consider few strategies:-

Consider Market Trend: - This is the first and best main thing which is comes during the risk management, which is market trend. Everyone should follow or consider the market trend before investing in  stock market. Because no one knows about the stock market some time it goes up some time it goes down. So, always follow the stock market then do investing in it. Market trend and stock market change every interval of time. People can do investing on day trading, short term trading or long term investing.

Portfolio: - One another very important risk management strategy is investment portfolio. If we talk about Indian stock market so there are so many products come like mutual funds, bonds, stock (shares), equities and derivatives. So diversify your investment and consider it into your portfolio from different-different sectors, companies and asset classes. So people can opt for more than one financial product. Every company has their own portfolio select the best one for your product.   

Plan the Trading: - Everybody knows that you can make plan before any exam or war then you can easily win the war or your exam. So before trades you need to make planning then you can make money very easily. Before trading you need to select the best stock broker company or you can say before investing you need to have best online trading platform in India. Then you buy stocks or investing in any product first analyse buy and sell price and also the hit price. Set the position for your stock or shares then you will get the big financial loss. Because if you will net set the position, if stocks value goes high then you will get the big loss. So always make planning before investing in stock market.

Be Patient and Avoid Fast  Decision: - When market shows its little movement or when market shows it’s little up and down then investor takes very quick and very fast decision. They should avoid the take fast decision. When you are investing in stock market you should be patient during movement of market.

Stop Loss And Take Profit: - When market goes its lowest price then investor think to sell but never sell your stocks during this movement otherwise you will get the big loss so stop loss. If the stock market goes its good position and you think you should sell then you should sell and make your profit. Always be updated with the stock market.

So, at the end stock market is too risky so new investor should keep updated with the stock market and then investing. And always follow the risk management strategies which we define in this article.