Any form of investing involves some degree of risk, no matter how infinitesimal that risk may be. What sets successful investors apart from novices who blow their accounts up in a matter of months is risk management. The ability to understand and proactively manage risk equates to investment success in the long run. If you wish to manage risk, start by identifying the riskiest investments on the market.
Options are appealing to traders, particularly undercapitalized ones, since they allow you to amplify the potential profits by also leveraging the position at a lower per-share cost. Typically, traders speculating on an underlying financial asset aim to profit from a short-term price move by purchasing an options contract. As a novice in the options market, it can be difficult to predict prices and read the general direction of the market at times.
You often hear the term “penny stock” thrown with the phrase “pump and dump schemes,” and for a good reason. Penny stocks are any stock under $5. This subcategory of stocks is notorious for making sharp and abrupt price moves. While you can make money when you enter before the stock gets pumped, you also risk losing a significant portion of your capital if you come in too late as the stock is being dumped.
If you’re in the investing space, you’ve probably heard about cryptocurrencies and tokens. While pioneers in the space, like Bitcoin and Ethereum, now have more stable prices and higher liquidity that pose less risk for investors, newly minted tokens that are created from the same technology and networks, such as SHIBE and DOGE, are still very infantile and thus have more erratic prices and supply.
Initial public offerings sound promising, but they sometimes fall short of what is promised to their initial investors. If you do decide to invest on the ground floor, make sure the company that’s about to debut has current outstanding shares and enough company data for you to be able to at least analyze the company’s projected business model and a chance of success.
While these investments are risky, you can still consistently profit if you implement the right risk management measures. Diversify your available capital into different assets, set hard stop losses and target profits, and be conservative when using your available margin.
“Some information on this website was written by BrandYourself, a non-affiliate of Cetera Advisors LLC”