Risk management in share market means finding the potential risk and developing strategies to minimize the risk and earn maximum returns. It is said to be a major part of stock market investing because without there are certain risks you can control thoughtful investment selections that meet the goals and risk profile keep individual stock and bond risks which are at an acceptable level. Many investors believe that if they will invest against the market trends they can earn higher returns However, this trend is one of the most important share market strategies to mitigate the investment risk. The difficulty in this strategy is being able to identify the trend because the markets are constantly changing.
Some of the risk management strategies are first one is following market trends this strategy is important because it helps more to mitigate risk the problem with this strategy is being able to identify the risk because as i have said earlier that market is dynamic and is changing regularly.
Second strategy is being patient and avoiding quick decisions several investors make quick decisions with even small movement of price of investments and another point is that many investors didn’t give enough time to their research before starting to invest in this market and taking Intraday calls from any consultant to neutralize the risk any trader or investor should in order to minimize the risk.
Most obvious risks of investing is that the economy can go bad as we can see earlier with the market bust in 2000 the economy settled into a sour spell. A combination of factors saw the market indexes lose to some significant percentages and for new investors is that if they can can increase their positions in good companies foreign stocks are good when the domestic market is in dumps.
Then comes the market value risk which refers to what happens when the market turns against or ignores any investment It happens when the market goes off chasing the next thing It also happens when the market collapses good stocks,as well as bad stocks and suffer as traders stampede out of the share market.